Defense !—F-35—A2: Inefficiency

Defense !—F-35—A2: Inefficiency

Here in the 21st century, "trillion" may be the new "billion" -- but it's still not a lot of money. Not when you consider what we get for it. For one thing, a "trillion dollars" spent over the anticipated 50-year lifetime of the Lockheed F-35 only works out to about $20 billion a year. Add in the flyaway cost of the plane itself, and the tally rises to $27.7 billion -- or less than $100 a year per U.S. citizen. When you consider that: the F-35 isn't "just another airplane," but the single fighter jet designed to replace multiple fighters already in our air forces according to Joint Chiefs Chairman Admiral Mike Mullen, this is the last manned fighter jet we'll ever but and that the $1.385 trillion figure covers the cost of the planes, their fuel, maintenance, training -- plus the cost of hangars, spare parts, and inflation even I submit to you that we're really "not paying a lot for this muffler." The F-35's annual cost will make up all of 4.1% of our 2012 defense budget -- and that's not a lot of money to buy an air force.

In short, this "trillion-dollar price tag" really isn't as big a deal as the Journal makes it out to be -- at least not for taxpayers. In contrast, a trillion dollars is pretty significant to the companies that will be building and maintaining the plane -- subcontractors like GE, UTC, Honeywell (NYSE: HON ) , Northrop Grumman (NYSE: NOC ) , and FLIR Systems (Nasdaq: FLIR ) (these latter three being responsible for the plane's wheels and brakes; its software, fire control radar, and communications; and its infrared radar, respectively.) And of course, to Lockheed itself. Make no mistake: The F-35 is crucial to the U.S. military's long-term planning. It will make up an important, and growing, portion of the revenue streams of Lockheed's partners. But as I think I've mentioned before, the F-35 is absolutely central to the investment case for Lockheed itself. Revenues from U.S. F-35s alone could secure an average of 60% of Lockheed's annual revenue stream for the past 12 months -- for the next half-century. Factor foreign F-35 sales into the mix, and Lockheed could put perhaps 75% of its revenue stream in the bag from this one product alone.

UQ – No New Spending

But the tea party is still a powerful presence on Capitol Hill, especially within the House Republican conference. While only 57 of 241 Republicans formally joined the House Tea Party Caucus, most conservatives share the movement’s focus on cutting spending and reining in the size of government. Moreover, Republicans, including tea party Republicans, are wary that appearing to cave to Democrats on spending could leave them vulnerable to primary challenges from the right in 2012. “Democrats know that if main street Republicans and tea party Republicans split, it’s all over,” says 10-term Rep. Jack Kingston (R) of Georgia.

Really? The polling I’ve seen indicates that voters don’t want tax hikes at all as a solution to the budget deficit. The latest came this week from The Hill, in which the largest plurality — 45% — wanted cuts alone. Only 28% were willing to personally pay higher taxes. Coburn does frame this as the only “plan that would ever make it out of Congress,” but is that so? Republicans control the House and aren’t likely to vote for tax hikes at all. Democrats control the Senate, but a large number of them have to face voters, and they have to be cognizant of the national mood — especially after the object lesson delivered to their colleagues in the midterms about voter anger. Barack Obama might veto a budget without tax hikes, but producing that kind of a budget from Congress is more likely at this point than getting John Boehner to commit political seppuku by pushing through a tax increase even before fighting for spending cuts.