May 2, 2022 - Politics & Policy

Biden learns to love defense contractors

Illustration of aviator sunglasses with camouflage reflected in the lenses

Illustration: Annelise Capossela/Axios

When President Biden travels to a Javelin missile factory in Troy, Alabama, on Tuesday, he’ll embrace a group his immediate Democratic predecessors kept at a distance: defense contractors.

Why it matters: Much like the energy industry, Biden needs defense contractors in this time of war. Not only does he want more anti-tank and anti-aircraft missiles, he also wants to send a clear message to Russia's Vladimir Putin.

  • "This will be the most publicized visit of a Democrat to a defense contractor since Michael Dukakis jumped into a tank," Joe Cirincione, a fellow at Quincy Institute for Responsible Statecraft, told Axios. "You can bet his team will be keenly aware of the optics."
  • In his FY23 budget, Biden asked Congress for a 4% increase in military spending — for a total of $813 billion. And in Troy, he'll celebrate the anti-tank Javelin, which President Obama refused to send to Ukraine.
  • "He is not getting any significant blowback for a budget this large," said Circincione, a former president of the Ploughshares Fund, a nonproliferation group. "The arms control and peace community are too weak and ineffective to punish him."

Driving the news: Biden will also use his visit to the Lockheed Martin facility to press Congress to pass a China competitiveness bill.

He'll draw an explicit link between supporting Ukraine and the bill's $55 billion for the semiconductor industry.

  • Each Javelin requires more than 200 semiconductor chips.
  • Passing the bill is a priority for the president, but he needs the House and Senate to resolve their differences.

Go deeper: Just like Biden needs the oil and gas industry to ramp up production to lower prices at the pump, the president wants defense contractors to produce more of their product to help defeat Russia and President Putin.

  • But the defense industry is eager for more than just rhetoric. It wants the Pentagon to offer — and sign — new contracts.
  • “You speak to the private sector through a contract,” Eric Fanning, who served as Army secretary under Barack Obama, told Axios.
  • “That’s how you send a very clear demand signal,” said Fanning, who's now the president and chief executive officer of the Aerospace Industries Association.

Some lawmakers also want Biden to invoke the Defense Production Act.

That would marshal the resources and prioritize manufacturing the anti-tank Javelins and anti-aircraft Stingers, Axios has reported.

  • Greg Hayes, the chief executive of Raytheon, which also makes Javelins as well as Stingers, said last week that increasing production "is going to take us a little bit of time,” Defense News reported.

By the numbers: Ukraine has asked for 500 Javelins and Stingers — each — per day, according to CNN.

  • Lockheed's Troy facility has the capacity to produce up to 2,100 Javelin missiles per year.
  • The U.S. has sent 5,500 Javelin anti-armor systems to Ukraine "to support the Ukrainian people’s fight for freedom," White House press secretary Jen Psaki said Monday.

The other side: The defense industry has been hit by inflation, and some industry insiders privately suggest Biden's budget increase will amount to a real decrease.

  • The administration also signaled it won't exempt the industry from its vigorous anti-trust approach.
  • It sued to block Lockheed Martin’s planned acquisition of Aerojet Rocketdyne.
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