Sharing America's Defense Technology with China

While it didn't garner much global attention, one of America's larger multinational conglomerates was recently found guilty of sharing secrets with China, the newest threat to Washington's dominance as the world's sole superpower.

  

Here are the lead pages of the charging letter from the Department of State for Honeywell International Inc.'s alleged violations of the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR) as found on the U.S. Department of State's Directorate of Defense Trade Controls website:

 

Honeywell twice voluntarily reported that it was responsible for ITAR violations between July 2011 and October 2015 and again between June and July 2018.  All of the violations involved the unauthorized exports or retransfers of technical data resulting from the "failure to exercise appropriate internal controls."

 

Between 2011 and 2015, Honeywell Aerospace's Integrated Supply Chain organization sent Requests for Quotations to U.S. and foreign suppliers which contained drawings of parts for which suppliers were asked to supply price quotations.  By March 2017, Honeywell's internal investigation identified 71 ITAR-controlled drawings that had been exported to Canada, Ireland, the People's Republic of China and Taiwan.  These drawings contained engineering prints showing layouts, dimensions and geometries for manufacturing castings and finished parts for (but not limited to) the following aircraft:

 

F-35 Joint Strike Fighter,

 

B-1B Lancer Long-Range Strategic Bomber,

 

F-22 Fighter Aircraft,

 

C-130 Military Transport Aircraft,

 

A-7H Corsair Aircraft,

 

A-10 Aircraft,

 

Apache Longbow Helicopter,

 

M1A1 Abrams Tank,

 

Tactical Tomahawk Missile, and

 

T55 Turboshaft Engine

 

After reviewing the 71 drawings, the U.S. government determined that exports to and retransfers in the PRC of drawings for certain parts and components for the engine platforms for the F-35 Joint Strike Fighter, B-1B Lancer Long-Range Strategic Bomber, and the F-22 Fighter Aircraft harmed U.S. national security.

 

In its second voluntary disclosure Honeywell described additional ITAR violations involving the additional exporting of 2 drawings to Canada, 2 drawings to the People's Republic of China and 23 drawings to Mexico which contained similar technical information as in the first offence for the following aircraft:

  

F-35 Joint Strike Fighter,

 

F/A-18 Hornet,

 

F135 turboshaft engine,

 

F414 turboshaft engine,

 

T55 turboshaft engine, and

 

CTS800 turboshaft engine.

 

In these cases, after reviewing the documents, the U.S. government determined that exports to and retransfers in the PRC of drawings for certain parts and components of the CTS800 gas turbine engine harmed U.S. national security.

  

Charges were laid as follows:

 

Now, let's look at the penalties that were assessed as released by the Department of State on May 3, 2021:

 

A $13 million settlement for a company that had net income of $4.865 billion in 2020 is laughable at best as shown here:

 

 

Just for fun, let's look at Honeywell's  involvement in Washington's political theatre.  Thanks to Open Secrets, here is a summary of Honeywell's campaign contributions going back to 1990:

 

Honeywell's campaign contributions of nearly $4.7 million during the 2020 election campaign put it into 143rd place out of 21,691 contributors in Open Secret's database.

  

Here is a summary of Honeywell's spending on lobbying:

 

Honeywell's lobbying expenditures of $4.7 million put it into 71st place out of 5,561 lobbying groups in Open Secret's database.

  

So, as you can see, if you spend enough money on getting Washington to see things your way, somehow, Washington will find your "sins" nearly forgivable or at least forgivable after you pay a token sum to "buy" your way out of trouble, particularly if you are a key player in the nation's military-industrial complex.

Or, maybe it's all just a happy coincidence.

The Technology Tyrants - How to Buy Influence in Washington

As I have said before, Washington is for sale and Corporate America has proven itself quite willing to buy politicians at just about any cost.  A recent study by Public Citizen, a "nonprofit consumer advocacy organization that champions the public interest in the halls of power" examines two of the largest lobbyists in the hallowed halls of the nation's capital as shown here:  

 

This report is particularly pertinent given the growing power of the technology sector with its near monopoly on social media outlets and the current political and health (i.e. COVID-19) narrative and, in the case of Amazon, its growing presence as the world's retailer.

 

The authors of the study used data provided by the Center for Responsive Politics (i.e. Open Secrets) to analyze how Big Tech has "blanketed Capitol Hill with lobbyists and lavished members of Congress with campaign contributions", in other words, buying influence in Washington that far outstrips the meagre to basically nonexistent influence that voters have on lawmakers....other than casting their vote.

  

Let's look at a bit of history.  Back in 2010, when associations, federations, trade groups and other consolidated corporate spenders are excluded, there was not a single big technology company represented among the top eight lobbyists unless you include Verizon Communications.  In 2017, Google (Alphabet Inc.) rocketed to the top of the list and was the only technology sector representative followed by the usual defense sector players.  In 2020, this changed substantially as shown on this table:

 

Here is another table showing how much each of these corporations spent on lobbying in 2020:

 

 

Here is a graphic that looks back in time at the growth in lobbying expenditures for both Facebook and Amazon compared to two of the more influential members of Corporate America in the past:

 

Now, let's look at overall spending by Big Tech on both lobbying and campaign contributions going back to 2010:

 

During the 2020 election cycle, Big Tech spent 5.2 percent more on lobbying and campaign contributions than it did during the 2018 cycle, hitting a total of $108 million in lobbying 2020.  

  

Let's look at the two biggest technology sector lobbyists and how their spending on lobbying has grown over the past decade:

 

1.) Amazon:

 

2.) Facebook:

 

There is an upside; all of this lobbying creates jobs for one sector of the economy, lobbyists as follows (for 2020):

 

1.) Amazon - 117 lobbyists

 

2.) Google - 97 lobbyists

 

3.) Facebook - 71 lobbyists

 

4.) Apple - 48 lobbyists

 

In 2020, the biggest tech sector behemoths retained the services of 333 lobbyists, up from less than 100 a decade earlier.  It is also important to note that half of the top ten lobbyists who contributed amounts ranging from a paltry $324,258 to a more substantial $571,744 just happened to be lobbyists representing Big Tech in 2020 as shown here:

 

Big Tech also shelled out $3.2 million in campaign funds for representatives on four key Congressional committees that hold jurisdiction over antitrust and privacy legislation including the House Judiciary Committee, the House Energy and Commerce Committee, the Senate Committee on the Judiciary and the Senate Committee on Commerce, Science and Transportation as shown here:

In general, more of the funds went to Democratic members of these Congressional committees with $1.678 million going to the Democratic members and $1.409 million going to the Republican members.

 

Given the dominance of the American technology sector oligopoly, it is not terribly surprising that Big Tech and its lobbyists are willing to throw around tens of millions of dollars to ensure that Washington sees things its way.  Let's close with this quote from the paper's conclusion:

  

"Big Tech’s increasingly dominant role in our economy and everyday lives is worsening social problems that need a political response. Yet as Big Tech converts its enormous economic and social power into political influence, our political system is hamstrung from addressing those increasingly serious issues. This problem is reflective both of Big Tech’s extraordinary wealth and power and a broken political system that works for giant corporations but not the rest of us. It is not susceptible to easy solutions.

 

As I said at the beginning of this posting, Washington is for sale and Corporate America, particularly the technology tyrants, are in a buying mood.

Israel's Influence in Washington - 2019 Edition

Thanks to the non-partisan Center for Responsive Politics and its Open Secrets website, those of us on the outside, get a glimpse of how the "wheels" of Washington are "greased".  Open Secrets provides an up-to-date database of the role that money plays in politics through lobbying and campaign donations.  In this posting, I want to take a look at one of Washington's more influential parties, the nation of Israel. 

We will open this posting with an examination of the pro-Israel lobby in Washington.  Here is a summary of the pro-Israel lobby from Open Secrets:

"One of, if not the most, powerful international issue lobby is that of the pro-Israel crowd. Well-financed and politically powerful, the pro-Israel lobby is a major force on American foreign affairs that looks to continue America's military and fiscal support of the Jewish nation-state."

Here is a graphic showing how much the pro-Israel lobby has spent on convincing Washington to see things its way going back to 1998:

The pro-Israel lobby spent a record $5.02 million in 2018, up slightly from $4.96 million in 2017 but up substantially from $1.71 million a decade earlier in 2007.

Here are the biggest pro-Israel lobbying organizations in order of the amount spent on lobbying:

American Israel Public Affairs Committee or AIPAC is, by a wide margin, the biggest spender on lobbying, accounting for 70.1 percent of the total spent by all pro-Israel lobbyists.

Of the 26 reported lobbyists working for 9 clients, there are 6 "revolvers" as shown here:

Open Secrets defines "revolvers" as former federal government workers who now work as lobbyists, consultants and strategists.  These people have access to the key players and key decision makers in Washington that Main Street America can only dream of.

Now, let's look at the pro-Israel campaign contributions.  Here is a summary of the top contributors during the 2018 midterm elections:

Here is a table showing the pro-Israel campaign contributions going back to the 1990 election cycle:

Here is the same data in graphic form:

You will note that among all groups donating to politicians running for office in Washington that the pro-Israel lobby is ranked between 24th place overall (in 1990) to 60th place in 2000 and, in 2018 was ranked in 50th place.  The 2018 midterm election saw the pro-Israel lobby donate a record amount of money to a midterm cycle with donations totalling $14.9 million compared to $12.1 million during the 2014 midterm election.  In addition, the pro-Israel lobby seems to prefer candidates running for the Democrats; over the nearly three decades, the pro-Israel lobby has donated 60 percent or $85.365 million to the Democrats compared to 40 percent or $54.308 million to the Republicans.

Here is a graphic summarizing the political donations from the pro-Israel lobby during the 2018 midterm cycle for both political parties in the House and the Senate:

Here are the top 20 recipients of pro-Israel lobby during the 2018 midterm cycle:

Here are the top 20 recipients who are Members of the House:

Here are the top 20 recipients who are Senators:

I believe that is enough to absorb for this posting.  According to the Pew Research Centre, here is a breakdown of religious affiliation in the United States from its Religious Landscape Study:

Given that not all Jews and Evangelical Christians support Israel's agenda, it is interesting to see how less than one-quarter of Americans are driving Washington's pro-Israel agenda and its accompanying narrative.  This suggests the extreme power that the pro-Israel lobby exerts in the nation's capital.  Given all of this data, it is most important to keep in mind that taking an anti-Israel/anti-Netanyahu stance does not mean that one is anti-Semitic or that one doesn't believe that Israel has a right to exist, it simply means that there is not universal approval of Israel's actions in the Middle East and its ability to sway governments to see things its way by spending millions on lobbying and influence American elections through donations to its preferred candidates.

How the Defence Industry Buys Washington

I haven't posted on this specific subject for some time and, given the upcoming midterm elections and the meeting between the leaders of Russia and the United States, I thought it was time to revisit one of the most powerful groups in the United States, the defence industry.  Thanks to Open Secrets, we have ready access to how much the defence sector has contributed to politicians and how much it spends on lobbying.  This is particularly pertinent given the hundreds of billions of dollars that are transferred from American taxpayers to a handful of companies every year. 

Let's start by looking at the defence industrys' contributions to those who are supposed to represent Americans in Washington.  Here is a graphic showing the sector's long-term political contributions:

In total, since 1990, the defence sector has donated $275.739 million to politicians/wannabe politicians with $74.3 million coming from individuals and $182.1 million coming from political action committees (PACs).  With data from only half of 2018 available, we can see that the current mid-term cycle could well be a record year for political contributions given that the former peak was $29.7 million and that we are already at $19.3 million.

Here is how the money has been split between Democrats and Republicans:

Since 1990, $114.8 million has been donated to Democrats (42 percent of the total) and $157.6 million (58 percent) has been donated to Republicans.

Here is a list of the defence companies that are the top contributors in the current cycle and which parties/groups have received these generous gifts:

Here is a listing of the top 20 donors and how their donations are split along party lines for the 2018 cycle:

The donations highlighted in green show those companies that have inconsistent distributions between the support of Democrats - Liberal and Republicans - Conservative outside spending groups.

Here is a summary listing of donations during the current cycle, how the donations are split along party lines for both the House and Senate and the average contributions made to the lucky members that received funding from the defence industry:

Going back to 1990, here is a list of the top twenty recipients of the defence industry's largesse:

Here are the top twenty recipients from the 2016 presidential election cycle:

Not surprisingly, John McCain appears well up in both lists given his position on the Senate Armed Services Committee.

Now, let's look at the other key aspect of Washington, lobbying.  Here is a graphic showing how much the defense industry has spent on lobbying on an annual basis since 1998:

So far in 2018, the defense aerospace sector has spent $20,110,774 ($69.126 million in 2017), the defense electronics industry has spent $9.110,952 ($35,915,369 million in 2017) and the miscellaneous defense sector has spent $5,435,510 ($22,360,639 million in 2017).

Here is a graphic showing the number of defense sector lobbyists, working hard to get Washington to spend your tax dollars:

In total, the defense sector has 786 lobbyists in Washington (in 2018, down from a peak of 1303 back in 2007.  Of the total, 558 or 71 percent are considered "revolvers", that is, they are former White House employees that are now employed as lobbyists, consultants and strategists by K Street.

When we look at the defense sector's actions in Washington, both as political donors and as lobbyists, we can see why one can draw a pretty straight line between Washington and the military-industrial complex.  The defense sector is only too willing to spend hundreds of millions of dollars to buy Washington and those that we elect to serve us in Washington are only too willing to avail themselves of money from the sector of the economy whose job it is to design even more imaginative and high tech ways to kill people.

Lobbying and Taxation - Two Partners in the Washington Swamp

While the mainstream media focuses on the advantages and disadvantages of the current debate on tax legislation, there is one group that has already benefitted substantially from the endless back and forth; lobbyists.   Here is a brief summary of a report by Public Citizen looking at how Washington is still the land of the "Swamp", despite the President's draining efforts.

To put this posting into perspective, let's get a bit of background information on one of Washington's favourite pastimes, lobbying.  According to Open Secrets, this is what has been spent on lobbying on an annual basis since 1998:

This is how many unique, registered and active lobbyists there are on an annual basis since 1998,  pounding the pavement in Washington, doing their very best to get Congress to see things their way:

And, last but not least, here is a listing of the top lobbying clients for 2017 (to October 21) and how much they have spent:

With that background, let's look at lobbying as it relates to the current tax debate.  According to the study by Public Citizen, a total of 6243 or 56.9 percent of lobbyists currently actively working in Washington have disclosed that they are working on issues involving taxation during the first three quarters of 2017 with more than 4200 working specifically on "tax reform".  This means that there are 11.7 lobbyists working on some type of taxation issue for each of the 535 Members of Congress.

Let's look at a table showing which industries have hired at least 150 lobbyists to work on tax issues in the first three quarters of 2017, keeping in mind that some lobbyists work for more than one client:

There are also twenty organizations that have hired at least 50 lobbyists to work on tax issues during the first three quarters of 2017.  Here is list of the top ten hiring organizations and a sample of the issues that concern them, noting that some organizations also use in-house employees in addition to outside firms to lobby Washington:

1.) U.S. Chamber of Commerce: 100 lobbyists/2 outside firms - estate tax, corporate tax inversions, repatriation of multinational business earnings, international competitiveness of corporate tax, interest deductibility.

2.) Verizon Communications: 97 lobbyists/17 outside firms - corporate tax reform/rates/tax deductions, carried interest, dividend taxation.

3.) Comcast: 90 lobbyists/23 outside firms - corporate tax rate, bonus depreciation, interest deductibility. 

4.) Anheuser-Busch InBev: 90 lobbyists/19 outside firms - tax reform, interest deductibility, bonus depreciation 

5.) Blue Cross/Blue Shield: 86 lobbyists/14 outside firms - health insurance tax, tax provisions of the Affordable Care Act.

6.) Microsoft Corp.: 81 lobbyists/16 outside firms - comprehensive tax reform, international tax, foreign tax credit, R&D tax credit.

7.) General Electric: 65 lobbyists/7 outside firms - corporate tax rate/reform, taxation of international operations.

8.) Novartis: 65 lobbyists/9 outside firms - comprehensive tax reform, international corporate taxation, interest deduction, anti-inversion tax.

9.) Amazon: 64 lobbyists/6 outside firms - corporate tax reform, international tax issues.

10.) NCTA the Internet and Television Association - 64 lobbyists/12 outside firms - reducing tax rates across the board, tax reform issues, interest deductibility, estate tax repeal.  

As you can see from this posting, the lobbying sector is already one of the beneficiaries of the ongoing (and seemingly endless) tax debate that paralyzes Washington on a regular basis.  While it seems to be a rule of thumb that changes to the tax regime benefit the wealthy among us, we can clearly see that the lobbyists and lobbying firms in America benefit substantially from Washington's paralysis when it comes to changing the tax code.

At the very least, the "Swamp" is alive and doing well from the perspective of the lobbying industry.