Eliminating Taxpayer Subsidies for Arms Sales

Top Ten Arms Export Subsidy Transparency Issues for the 106th Congress
Top Ten Arms Export Subsidy & Transparency Issues for 1998
ASMP REPORT: Recycled Weapons: American Exports of Surplus Arms
1998 Pentagon World Tour: Air Shows and Arms Bazaars
Pending Legislation to Reduce Arms Sales Subsidies
Top Ten Arms Export Subsidy & Transparency Issues for 1996
Project Publications on Arms Export Subsidies

U.S. arms corporations assiduously promote exports to maintain their profits. (Publicly, of course, they talk about the need to maintain jobs and the "defense industrial base.") These corporations are among the largest in the world, and they have tremendous political influence. Arms industry executives sit on federal advisory commissions at the Commerce, Defense and State Departments dealing with arms export policy issues, ensuring that their preferences are well known to administration policymakers. In addition, the industry provides hundreds of thousands of dollars annually to Congressional campaigns, ensuring that their lobbyists have access to Members of the House and Senate. They also pump cash into Presidential campaigns (usually to both sides, just to be safe), ensuring access at the very highest levels.

Using this clout, arms exporters have arranged it so that the American public pays $6-7 billion annually to market and finance sales of their product. On top of that, the public bears the costs of researching and developing the weapons in the first place. One of the corporate lobbyists' top priorities in past years was to have Congress repeal a statute which mandated that foreign customers be charged a fee to refund U.S. taxpayers for some of the R&D costs. The arms industry claimed that this feeŚwhich has returned several hundred million dollars annually to the TreasuryŚraises the price of the weapons and makes them less competitive.

The Clinton administration and the Republican 104th Congress both supported the repeal of this "recoupment" fee. The ASM Project fostered citizen and Congressional opposition to this plan by publicizing it widely through the media. However, in 1996, Congress effectively abolished the requirement that Foreign Military Sales include "recoupment fees" on weapons systems being exported around the world. More information on Recoupment.

The arms industry lobby continues to press for new financing (or easing of the regulations for current financing programs) to underwrite arms sales. Information we obtained from the Pentagon allowed us to expose the massive amount of outstanding military loans for which the U.S. government is liable, and the amount of these loans which are currently in default. More information on the recently created Defense Export Loan Guarantee program.

Industry has (effectively, thus far) sought to paint these subsidies as a matter of national security: If taxpayers don't subsidize arms sales, the industry might lose a deal to a foreign competitor; this would lead to the shutdown of a production line, thereby endangering America's very security. Never explained is why America needs to maintain surplus arms production lines in the first place. (If U.S. forces were still buying the weapon system, loss of foreign sales would not affect the continuation of the production line.)

Campaigning for Change: We continue to work to expose and oppose the use of taxpayer funds to market and finance arms exports. In the coming year, we will identify many of the constituencies that are being negatively impacted in the current budget debate and educate them about the extent to which public money is being expended to promote arms exports. We will seek to activate them in opposition to such programs. In addition, we will build a relationship with the conservative taxpayer/good government groups and deficit hawks in Congress to encourage them to oppose government funds for arms exports.

Recent Project Publications on Taxpayer Subsidies for Arms Exports

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