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Your tax dollars enriched Pentagon contractors at the expense of better healthcare, education, clean air and water, disaster management, and more.
Ever wonder where your taxes go? Each year, the Institute for Policy Studies releases a tax receipt so you can find out.
One item always stands out: the Pentagon—and the contractors who profit off it.
In 2023, the average taxpayer spent $2,974 on the Pentagon. Of that, just $705 went to salaries for the troops, who often have to rely on programs like food stamps. A much larger sum—$1,748—went to corporate Pentagon contractors. That’s more than the average American’s monthly rent, $1,372.
Maybe we should spend more on regulating companies like Boeing than subsidizing them?
From Lockheed Martin (the top federal contractor and longtime weapons maker) to SpaceX (which Elon Musk runs when he’s not spewing racist and antisemitic tropes), these corporations don’t need your support. And they aren’t operating with your well-being in mind.
Enriching them comes at the cost of better healthcare, education, clean air and water, disaster management, and more. Here are just five examples from the average tax bill.
1. Pentagon contractors ($1,759) vs. the Child Tax Credit ($110).
In 2024, the Pentagon budget is set to increase by $27 billion, bringing the department’s budget to about $825 billion. About half of that will go to for-profit contractors.
Meanwhile, an expansion of the Child Tax Credit during the pandemic succeeded in cutting the child poverty rate almost in half—progress that was almost immediately reversed when the expansion expired in late 2021.
Lifting kids out of poverty can have lifelong effects on their health, education, and employment. Isn’t that worth more than a tiny fraction of our spending on military contracts?
2. Lockheed Martin ($249) vs. renewable energy ($11).
Lockheed Martin is perhaps best-known as the maker of the always over-budget, never-quite-ready F-35 jet fighter, which has spontaneously caught fire three separate times. Despite claims that programs like this are job creators, Lockheed recently made moves to cut jobs.
Meanwhile, despite the necessity of addressing climate change and reducing our reliance on fossil fuels, the average taxpayer’s contribution to renewable energy programs tops out at just $11.
3. Boeing ($87) vs. the Federal Aviation Administration ($23).
From commercial flights that crashed to others that fell apart in midair, Boeing’s commercial safety record lately has been abysmal. Yet the company is also among the top five Pentagon contractors. Among other military aircraft, it’s the maker of the V-22 Osprey that crashed and killed eight service members in November.
The FAA, of course, is the understaffed, underfunded government regulator responsible for the safety of commercial flights. Maybe we should spend more on regulating companies like Boeing than subsidizing them?
4. Federal prisons ($32.29) vs. substance use and mental health programs ($31.69).
With about 2 million people incarcerated nationally, about one in three Americans will have an immediate family member who has been in prison or jail. Your federal income tax dollars support this system, which often treats substance use and mental health challenges as issues best confined to a prison cell.
By contrast, help for substance use disorder or mental health issues can still be profoundly hard to get, as any affected person or family member will tell you. What if we spent more on treating these health conditions than punishing them?
5. Foreign militaries ($112) vs. wildfire management ($14).
From Afghanistan and Iraq to Ukraine and now Gaza, it feels like the U.S. is always either starting a war, fighting a war, or subsidizing a war. These wars are increasingly unpopular—and they’re not making us any safer.
Meanwhile, a growing number of Americans have experienced the direct or indirect effects of wildfire in recent years. These disasters cost upward of $394 billion each year. Isn’t that threat worth addressing?
Pentagon contractors want us to think we need what they’re selling, but wrong-headed priorities like these mean we’re actually worse off. Spread the word: Every taxpayer deserves better
"If Congress will stop debt relief for pilots now, they'll do it to nurses tomorrow, teachers the next day, and social workers the day after," campaigners said.
Campaigners have issued a "red alert" over language included in the 2024 Federal Aviation Administration Reauthorization Act that could pave the way toward banning student loan cancellation.
The current draft of the routine bill bars executive branch officials from cancelling or forgiving student loans taken out to pursue flight training or education at the undergraduate level, the Debt Collective warned on Wednesday.
"They're trying to make relief illegal," the group posted on social media.
"Student debtors and their allies need to stick together and stick up for each other."
Buried 1,000 pages in, the language flagged by the Debt Collective comes under the heading, "Prohibition on mass cancellation of eligible undergraduate flight education and training programs loans."
"The secretary, the secretary of the treasury, or the attorney general may not take any action to cancel or forgive the outstanding balances, or portion of balances, on any federal direct unsubsidized Stafford loan, or otherwise modify the terms or conditions of a federal direct unsubsidized Stafford loan, made to an eligible student, except as authorized by an act of Congress," the text reads.
The Debt Collective named Sen. Chuck Schumer (D-N.Y.), Rep. Hakeem Jeffries (D-N.Y.), Sen. Maria Cantwell (D-Wash.), Sen. Tammy Duckworth (D-Ill.), and Rep. Rick Larsen (D-Wash.) as particularly responsible for the language.
"Forty-five million student debtors need to see this and get very, very loud," the group said.
While the language only prohibits the executive cancellation of a certain subset of loans, experts and advocates warned lawmakers would not stop there.
"Make no mistake, this is a test flight," author and Debt Collective co-founder Astra Taylor wrote on social media. "If they can make student debt cancellation illegal for some people, they will do it for others. Student debtors and their allies need to stick together and stick up for each other."
Taylor urged anyone concerned about the language to contact the legislators flagged by the Debt Collective.
The Debt Collective called the language a "test run."
"If Congress will stop debt relief for pilots now, they'll do it to nurses tomorrow, teachers the next day, and social workers the day after," the group said.
Former Ohio state Sen. Nina Turner, meanwhile, called out the lawmakers for hypocrisy.
"The same members of Congress who had PPP loans forgiven, want to make it illegal to cancel student debt," Turner wrote on social media, referring to the pandemic-era Paycheck Protection Program.
The question of who has the authority to cancel student loan debt has been a major stumbling block for the Biden administration's efforts to tackle the issue. The U.S. Supreme Court struck down President Joe Biden's student loan forgiveness plan in June 2023, arguing in part that the administration did not have the authority to forgive as much debt as it had without authorization from Congress.
Despite the ruling, the administration has found ways to forgive $143.6 billion for almost 4 million borrowers, though that's only a fraction of more than $1.7 trillion Americans owe in student loans.
You’d think that Boeing would not compromise on safety, given that one small production error or software glitch could down a plane worth hundreds of millions of dollars while killing hundreds of people in one blow. But you’d be wrong.
On January 5th, a door plug blew out of the side of a Boeing 737 Max 9 plane flying for Alaska Airlines from Portland, Oregon, to Ontario, California. (A door plug is a section of the plane’s fuselage bolted in to take the place of an optional emergency exit. It is meant to be an integral part of the plane’s body.)
Miraculously, during the twenty minutes it took for the plane to circle back and land, no one was sucked out of the gaping hole. But for two decades leading up to the incident, wealth has been sucked out of the company via legalized stock manipulation to benefit Wall Street and Boeing CEOs.
Since 2013, the Boeing Corporation initiated seven annual stock buybacks. Much of Boeing’s stock is owned by large investment firms which demand the company buy back its shares. When Boeing makes repurchases, the price of its stock is jacked up, which is a quick and easy way to move money into the investment firms’ purses. Boeing’s management also enjoys the boost in price, since nearly all of their executive compensation comes from stock incentives. When the stock goes up via repurchases, they get richer, even though Boeing isn’t making any more money.
Rather than reinvesting more deeply in the company’s products, Boeing chose to pay off stockholders and Boeing executives.
As a result, Boeing has two missions: 1) Produce profitable and safe products for their airplane-buying customers, and 2) Produce stock buybacks for Wall Street and CEOs. Unfortunately, for the rest of us, these missions are in conflict.
Finding the money for stock repurchases inevitably leads to cost-cutting. Most often, the first move is to lay off as many workers as possible. But other more subtle strategies include cutbacks in preventive maintenance and environmental controls, the outsourcing of work to lower-wage firms, skimping on health and safety protections, and underfunding quality control. The goal is to become lean and mean, skating out to the very edge of cost reductions without jeopardizing the product. Or, well, at least not harming it too much.
You’d think that Boeing would not compromise on safety, given that one small production error or software glitch could down a plane worth hundreds of millions of dollars while killing hundreds of people in one blow. But you’d be wrong.
Boeing is a world leader in stock buybacks. Between 1998 and 2018, the plane manufacturer also manufactured a whopping $61.0 billion in stock buybacks, amounting to 81.8 percent of its profits. Add in dividends and Boeing’s shareholders received 121 percent of its profits. (Data compiled by William Lazonick and The Academic-Industry Research Network, from Boeing 10-K SEC filings.)
How much is that really? Well, according to Lazonick and Mustafa Erdem Sakniç, writing in The American Prospect in 2019, Boeing facing the obsolescence of its 737 planes, could have created an entirely new airplane from scratch with fully modern technology. Instead, the company decided to re-engineer the older model, name it the 737 MAX, and save $7 billion dollars. Perhaps not coincidentally, the $7 billion dollars “saved” is the amount of the stock buybacks Boeing made each year between 2013 and 2019.
Rather than reinvesting more deeply in the company’s products, Boeing chose to pay off stockholders and Boeing executives. In the three years before Boeing software glitches caused two 737 MAX crashes in 2018 and 2019 that killed 346 people, Boeing’s CEO Dennis A. Muilenburg received $95.9 million in gross pay. Lazonick and Sakniç report that nearly all of it was via stock incentives, since his annual salary never exceeded $1.7 million. (Perhaps again, not coincidentally, a Texas court ruled in October 2022 that the passengers killed in the two 737 MAX crashes are legally considered “crime victims.”)
And just to make sure that stock buyback production would always be a top CEO priority, Boeing announced that “beginning in 2014, a significant portion of our named executive officers' long-term incentive compensation will be tied to Boeing's total shareholder return as compared to a group of 24 peer companies.” If shareholder return is the metric used to judge executive performance, stock buybacks become an executive’s most valued tool.
What CEO could possibly resist pushing stock buybacks, given that nearly all of his or her income is based on stock incentives?
Of course, every CEO, especially in the airline industry, will say that safety is their top priority. If pressed about stock incentives, they say there is no conflict between stock buybacks and safety. They say that the door plug blow-out had nothing at all to do with years and years of massive stock buybacks, nor all the cost-cutting to find the money for those repurchases.
Give me a break!
What CEO could possibly resist pushing stock buybacks, given that nearly all of his or her income is based on stock incentives?
Between November 1998 and January 2024, Boeing filed 491 Worker Adjustment and Retraining Notifications (WARN) amounting to approximately 45,000 layoffs. This is in a company with about 140,000 employees. Might those layoffs have had something to do with why the FAA grounded 171 Boeing 737-9 MAX airplanes after the door plug blew out of the fuselage? Might that be a reason why the FAA is now investigating “manufacturing practices and production lines, including those involving subcontractor Spirit AeroSystems, bolstering its oversight of Boeing, and examining potential system change?”
And it gets worse, because Boeing’s subcontractor, Sprit AeroSystems, subcontracted the faulty door plug production to another facility based in Malaysia, reports the National Transportation Safety Board. Good luck with that investigation.
Will government regulators have the guts to expose the chain that connects Wall Street-induced stock buybacks to cost cutting to layoffs to subcontracting to safety problems? The jury is out.
While the door-plug investigation will certainly put the spotlight on Boeing, the problem is systemic. In research for my book, Wall Street’s War on Workers, we found that more than 30 million workers have lost their jobs in the last three decades due to mass layoffs. Money that could have been spent on research, development, safety, and employee compensation in all kinds of industries was instead used to enrich shareholders. Literally trillions of dollars in stock buybacks have killed jobs and corporate reinvestment, leading to countless production problems throughout the economy. And that’s in addition to how workers, their families, and their communities have suffered indirectly during mass layoffs.
Until stock repurchases are outlawed, as they essentially were before 1982, Wall Street and its CEO partners in corporation after corporation will continue to deploy what Lazonick correctly calls a license to loot.
It's a massive problem. Overall, approximately 70 percent of all corporate profits go into stock buybacks, up from 2 percent in 1982. (Data compiled by the Academic-Industry Research Network.)
Until stock repurchases are outlawed, as they essentially were before 1982, Wall Street and its CEO partners in corporation after corporation will continue to deploy what Lazonick correctly calls a license to loot.
Next time you stuff yourself into an airline seat that is ridiculously cramped, just remember that seat you’re sitting in was shaped by stock buybacks. And if you get a coveted exit row seat to stretch out a bit, you’d better think good thoughts about the underpaid, overworked, sub-contracted workers who may have made the door.