New boom for arms makers as US military spending increases

WASHINGTON: The prospect of growing military threats from both China and Russia is driving bipartisan support for a surge in Pentagon spending, setting up another potential boom for weapons makers that is likely to extend beyond the war in Ukraine. Congress is on track in the coming week to give final approval to a national military budget for the current fiscal year that is expected to reach approximately $858 billion – or $45 billion above what President Biden had requested.
If approved at this level, the Pentagon budget will have grown at 4.3% per year over the last two years – even after inflation – compared with an average of less than 1% a year in real dollars between 2015 and 2021, according to an analysis by Center for Strategic and Budgetary Assessments for New York Times. Spending on procurement would rise sharply next year, including a 55% jump in army funding to buy new missiles and a 47% jump for the navy’s weapons purchases.
On Friday, Jake Sullivan, Biden’s national security adviser, put the buildup in strategic terms, saying the war in Ukraine had exposed shortfalls in the nation’s military industrial base that needed to be addressed to ensure the United States is “able to support Ukraine and to be able to deal with contingencies elsewhere in the world”.
Lockheed Martin, the nation’s largest military contractor, had booked more than $950 million worth of its own missile military orders from the Pentagon in part to refill stockpiles being used in Ukraine. The army has awarded Raytheon Technologies more than $2 billion in contracts to deliver missile systems to expand or replenish weapons used to help Ukraine.
“We went through six years of Stingers in 10 months,” Gregory J Hayes, Raytheon’s chief executive, said in an interview earlier this month, referring to 1,600 of the company’s shoulder-fired antiaircraft missiles sent by the US to Ukraine. “So it will take us multiple years to restock and replenish.”
But those contracts are just the leading edge of what is shaping up to be a big new defence buildup. Military spending next year is on track to reach its highest level in inflation-adjusted terms since the peaks in the costs of the Iraq and Afghanistan wars between 2008 and 2011, and the second highest in inflation-adjusted terms since WWII – a level that is more than the budgets for the next 10 largest cabinet agencies combined.
Even more orders are coming in to military contractors from US allies in Europe and Asia, as they too have concluded they must do more to arm themselves against rising global threats. Japan moved this month to double its spending on defense over the next five years, putting aside a pacifist stand it has largely maintained since 1945.
And none of this counts an estimated $18 billion of planned but now delayed weapons deliveries by the United States to arm Taiwan against a possible future attack by China.
The combination of the Ukraine war and the growing consensus about the emergence of a new era of superpower confrontation is prompting efforts to ensure the military industrial base can respond to surges in demand. The issue has become urgent in some cases as the US and its Nato allies seek to keep weapons flowing to Ukraine without diminishing their own stocks to worrisome levels. The Ukrainian military has run through years’ worth of the missile production capacity of Western suppliers in a matter of months.
The annual military authorisation bill that passed the Senate on Thursday prevents the air force and navy from retiring aging weapons systems that the military would like to take out of service. At the same time, it includes billions of dollars in extra money to build even more new ships and planes than the Pentagon itself asked for, including $2.2 billion alone for an extra navy-guided missile destroyer, according to the Senate Armed Services Committee. Spending could be even higher, as Congress is also considering a request for an extra $21.7 billion for the Pentagon, above the already expanded 2023 annual budget, to allocate more money to resupply materials used in Ukraine.

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