April 9, 2012

Corruption Watch: Congressmen Awarding Big Defense Contracts to Companies in Which They Own Stock

Congressmen Michael McCaul and Kenny Marchant of Texas and Richard Hanna of New York all have two things in common. One, according to their personal financial disclosures, they own stock in defense contractor Pratt and Whitney. Two, they are all members of the F-35 Caucus, a group of Congressmen dedicated to awarding more contracts to defense contractors like, well, Pratt and Whitney.

The Secretary of Defense, the Pentagon, White House officials, and Senator John McCain (R-AZ) all agree: Spending hundreds of millions for new F-35 engines are a waste of taxpayer money. The planes have already cost taxpayers over $56 billion in research and development. Constant cost overruns have turned a plane that was supposed to cost $69 million each into one that now comes with a $156 million price tag. Some suggest that the entire F-35 program could spiral out of control and cost taxpayers more than $1 trillion over fifty years.

Defense contractors are pushing back against proposed cuts aggressively. In addition to increased lobbying spending and pro-F-35 advertisements in the Metro stops of Washington D.C., members of Congress agreed to form a “F-35 Caucus” to keep the taxpayer money flowing to the companies. As the Center for Responsive Politics noted, the F-35 Caucus members collectively received over $325,400 in contributions from the companies that make the F-35, including Pratt & Whitney, Lockheed Martin, Northrop Grumman, and BAE Systems.

Republic Report has reviewed the personal finance disclosures of F-35 caucus, and found that a number of the lawmakers are also personally invested in the companies that produce the F-35:

— F-35 Caucus Member Congressman Michael McCaul (R-TX) owns between $350,000 and $750,000 in stock in the parent company of Pratt & Whitney.

— F-35 Caucus Member Congressman Kenny Marchant (R-TX) over $11,000 in stock with Northrop Grumman, over $5,000 in stock with Lockheed Martin, and over $5,000 in stock with the parent company of Pratt & Whitney.

— F-35 Caucus Member Congressman Richard Hanna (R-NY) owns up to $50,000 in stock with Lockheed Martin, and up to $15,000 in stock with the parent company of Pratt & Whitney.

Congressman Norm Dicks (D-WA), whose campaign committee is a top recipient of F-35 contractor cash, is helping to lead the F-35 Caucus along with Congresswoman Kay Granger (R-TX).

In February, Congress refused to attach Senator Sherrod Brown’s (D-OH) strong reform amendment to the Stock Act that would have forced legislators to place their investments in a blind trust. So, this form of corruption goes on as perfectly legal.

This post was written with valuable research help from intern Haley Streibich.