The Boeing Boondoggle

Even old Washington hands sometimes find themselves with their mouths agape at the brazenness of the latest corporate innovation in ripping off the public.

Such a jaw-dropping moment occurred in December, as Boeing-friendly members of Congress inserted a provision in the Defense Appropriations bill requiring the Air Force to lease Boeing 767s. Under the Boeing lease provision, the Air Force will lease 100 Boeing 767s for use as tankers, over a 10-year period.

Follow the bouncing ball to see exactly how outrageous this deal is.

First off, these are planes even the Air Force doesn't want, or least not enough to include in a list of its top 60 priorities. The request for the planes did not appear in the president's budget, or in the bill considered by the relevant Congressional appropriations subcommittees. As the full Senate appropriations committee was considering the Defense appropriations bill, the lease provision was inserted at the last minute at the behest of Senator Ted Stevens, R-Alaska, the ranking member of the Senate appropriations committee, and Patty Murray, D-Washington. (Murray apparently retains her loyalty to Boeing, even though the company has moved its headquarters out of Seattle.)

Second, the lease arrangement will be far more expensive than an outright purchase would be. The Air Force will lease the planes at a price tag of $20 million per plane per year, for a $20 billion expenditure (100 planes, 10 years). There are laws prohibiting lease arrangements that are more expensive than direct purchases, but Congress waived those rules in appropriating the money for the Boeing 767s.

Third, the government will accrue extra expenses to convert the commercial aircraft to military configurations. The cost will be about $30 million a plane (total cost: $3 billion). There's more: Because the planes are to be acquired through lease, rather than sale, the government has to return the planes to Boeing--in the condition in which they were purchased. When the 10-year lease is over, it will cost the government another $30 million a plane to reconfigure the planes back to commercial format. That's a total of another $3 billion.

To his credit, Senator John McCain, R-Arizona, tried valiantly to block the deal, but with no success. The Boeing giveaway, he said, "I'm sure is the envy of corporate lobbyists from one end of K Street to the other." McCain estimated the cost of the lease deal was, in total, more than five times the cost of an outright purchase.

A coalition of individuals and citizen groups from across the political spectrum joined McCain in denouncing the "gross exhibition of corporate welfare."

In a joint letter, Ralph Nader, Public Citizen, the Project on Government Oversight, the Congressional Accountability Project, Taxpayers for Common Sense, Ronnie Dugger of the Alliance for Democracy, Grover Norquist's Americans for Tax Reform, Citizens Against Government Waste and the National Taxpayers Union argued that, "If some in Congress believe Boeing needs to be subsidized, then they should propose direct subsidies to the company, and let Congress fully debate and vote on the issue before the American people, following comprehensive public hearings on the proposal."

But even as McCain and the citizen groups sounded the alarm, not only did the appropriations bill speed through Congress, it actually got worse. In conference committee, where different versions of bills passed by the House of Representatives and Senate are reconciled, negotiators added a provision for the 10-year lease of four Boeing 737s. These were designated for executive travel, but will likely be used primarily for Members of Congress. The whole package has now been enacted into law.

Why did Congress agree to this plunder of public resources? Key committee members--Stevens, Murray, plus Representative Norm Dicks (D-Washington) in the House of Representatives--pushed hard for the lease arrangement. They proceeded with stealth, moving when their few opponents would have virtually no opportunity to block the deal. In the wartime hysteria, money is flowing freely to the Pentagon--apparently even for items the Defense Department doesn't particularly want. There also seemed to be a sense that the lease giveaway was a consolation prize for Boeing, which recently lost out to Lockheed in the bidding to be primary contractor on the new Joint Strike Fighter--a project worth a tidy $200 billion.

It's hard to find words to describe the obscenity of the Boeing boondoggle. Consider this: While the US government will be spending more than $25 billion on planes even the Air Force does not want, it is refusing to spend more than a couple hundred million dollars a year on the Global Fund for AIDS, malaria, and tuberculosis. The money wasted on those planes could literally save millions of lives.

Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime Reporter. Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor. To subscribe to weekly corp-focus e-mail service, send an e-mail message to listproc@essential.org with the following all in one line: subscribe corp-focus 'your name' (no period).

(c) Russell Mokhiber and Robert Weissman