Christmas Comes Early for Boeing

Dec. 19, 2001

Christmas Comes Early for Boeing

Congress Poised to Pass $26 Billion Sweetheart Deal; Public CitizenJoins McCain and Gramm in Denouncing Corporate Welfare

WASHINGTON, D.C. ? Congress should reject the Defense Department appropriations bill scheduled for a December 20 vote because it includes an enormous corporate welfare handout to Boeing that would compel taxpayers to lease 100 new tanker jets that the Air Force doesn?t want, Public Citizen said Wednesday. If Congress does approve this legislation ? which also includes four VIP jets for members of Congress ? then President Bush should veto the bill and make Congress send him a new version without the flying pork in it.

In a yet unfiled conference committee report obtained by Public Citizen, an amendment offered by Sen. McCain to allow the president to “reprogram” the funds away from tanker leases was removed. Instead, House and Senate negotiators padded their own nests and added language allowing the government to procure four Boeing 737s for VIP use ? at a cost of $80 million each.

“If the president nevertheless signs the defense appropriations bill into law, he should publicly state that he will request Congress to allow him the discretion to shift the Boeing tanker funds to other purposes that may be of greater need to the military,” said Frank Clemente, director of Public Citizen?s Congress Watch.

The $26 billion Boeing boondoggle is aimed at helping the giant jet manufacturer, which may cut up to 30,000 jobs due to slowing sales in the wake of the September 11 terrorist attacks. Boeing also lost its bid for a lucrative contract to build the new Joint Strike Fighter. (At $200 billion, the Joint Strike Fighter deal is the most expensive contract ever handed out by the Pentagon.)

While Boeing?s workers may be in need of some help, the tanker lease plan included in the Defense appropriations bill is not the solution. It is a classic case of pork barrel spending. Sen. John McCain (R-Ariz.) called the deal “the envy of corporate lobbyists,” and Sen. Phil Gramm (R-Texas) said, “I do not think, in the 22 years I have been here, I have ever seen anything equal to this.”

Public Citizen agrees with McCain?s assessment and denounces the deal for the following reasons:

  • The Pentagon will shell out $26 billion to lease 100 planes for 10 years, according to the Office of Management and Budget (OMB). The costs include about $60 million per plane to convert the commercial aircraft to tankers and then reconvert them back at the end of the lease, and $1.7 billion to build new hangars and other government costs (current tanker hangars are not large enough to fit the 767s).
  • The lease deal is actually more expensive than purchasing the jets. According to an OMB analysis, it will cost taxpayers $800 million more to lease the jets than it would to purchase them ? and that?s just to use the jets for 10 years. Boeing then will be able to sell the jets to other parties ? allowing the company to sell the use of the jets two or more times. If the government bought the jets outright we could get many more years of service as tanker jets now in the Air Force fleet last 42 years. Moreover, taxpayers have spent $2.5 billion in recent years to modernize the existing fleet of tankers.
  • The Air Force doesn?t really want the planes. The proposed new tanker jets (which would be converted Boeing 767s) were not in the President?s July budget submission nor did the Air Force testify of the need for them before the Senate defense authorizing or appropriations committees. Moreover, the tankers were not on the Air Force?s wish list for the short or long term. Specifically, the Air Force?s “Unfunded Priority List” for FY 2002 ? which is a 60-item “wish” list of Air Force priorities ? does not include new tankers. Similarly, the Air Force?s six-year, long-term procurement plan does not include a request for new tankers.
  • The Bush administration is not keen on the deal either. Despite suggestions that the planes are urgently needed as part of the Bush administration?s war on terrorism, the first of the new 767s would not roll out of the factory until the year 2005. According to a Senate aide, OMB Director Mitch Daniels has been “equivocal” about the Boeing deal.
  • Neither the House nor Senate held any public hearings on the legislation to examine the need for the tankers or the best way to procure them. Instead, the Boeing boondoggle was inserted into the Senate defense appropriations bill at the full committee just prior to its consideration.
  • Congress made sure to feather its own nest in the deal. According to Senate sources, the Defense Appropriations bill that was approved by House and Senate negotiators on December 18 also includes a provision, inserted at the request of House Speaker Hastert, to lease four new Boeing 737 jets that would be used for congressional VIPs.

“If he is sincere about his desire to cut government waste, President Bush should tell Congress he intends to veto this bill and make Congress send him a new version without the pork,” said Frank Clemente, director of Public Citizen?s Congress Watch.

“The holiday season is a time for giving. But that?s no reason for Congress to give $26 billion worth of corporate welfare to Boeing ? and to give themselves four new VIP jets,” Clemente added. “Instead, lawmakers should give taxpayers a break this Christmas and scrap this sweetheart deal.”

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Click here to read a fact sheet on Boeing and the proposed deal to lease 100 tanker jets