Missile Defense Program Faces Cuts Under Kerry

Safer America with Kerry? Yea, right.

link to Bloomberg

Boeing, Lockheed Missile Defense Program Faces Cuts Under Kerry

Aug. 16 (Bloomberg) -- The $53 billion U.S. missile defense shield being developed by Boeing Co., Lockheed Martin Corp. and Northrop Grumman Corp. may be derailed by a John Kerry presidency.

Kerry, the Democratic nominee, plans to rein in spending on the program, which President George W. Bush has doubled since taking office. Kerry's ``New Military to Meet New Threats'' platform includes ``reducing total expenditures on missile defense'' and shifting money from other large weapons programs, according to campaign literature. Advisers say Kerry will focus on boosting military pay, troop levels and readiness.

``Given our national security priorities, the question is how much money do we need to spend on this system that has yet to complete operational testing,'' campaign spokesman Mark Kitchens said in an interview.

The U.S. will spend $7.7 billion this year to develop the shield, the most for any Pentagon program, budget documents show. Work on the shield pushed Boeing's military sales to a record $27 billion last year and provided 10 percent of Lockheed's $32 billion in sales. Congress approved $9.2 billion for fiscal 2005, and Defense Department documents show the Missile Defense Agency intends to ask for $10.2 billion in 2007.

Slam the Brakes

``Under Bush, missile defense was a top priority and the biggest single line for a program in the defense budget for the past two years,'' David E. Baker, managing director of Schwab Soundview Capital Markets' Washington Research Group, said in an interview. ``Kerry would do more than just tap the brakes,'' he said. Kerry ``would slam on the emergency brakes.''

Bush, citing the threat of a ballistic missile attack from rogue nations such as North Korea, is pressing to fulfill a goal he set in 2002 to install the first interceptors, designed to destroy missiles headed for the U.S., before the end of this year. Boeing is in charge of installing the interceptors in Fort Greeley, Alaska, and gets about $2.5 billion in annual sales from the entire missile defense program.

Kerry is putting a priority on his pledge to hire 40,000 soldiers and may seek savings from the missile shield program to finance that goal, Jason Furman, Kerry's economic policy director, said in an interview.

Senate Record

``We cannot afford to spend billions to deploy an unproven missile defense system,'' Kerry, 60, said in a speech in June while in Missouri. ``Not only is it not ready, but it's the wrong priority for a war on terror where the enemy strikes with a bomb in the back of a truck, or a vial of anthrax in a briefcase.''

Credit Suisse First Boston analyst James M. Higgins said in a report last month that government officials considered missile defense under a Kerry presidency to ``be at real risk of curtailment -- although not outright cancellation.''

Kerry, a four-term U.S. senator from Massachusetts who earned three Purple Heart medals for combat wounds in the Vietnam War, has a track record that shows he is likely to rein in spending on missile defense, Baker said. Kerry voted against U.S. withdrawal from the anti-ballistic missile treaty, which would have prevented the U.S. from developing the shield, and gave speeches in the Senate questioning the effectiveness of the technology.

If elected, Kerry would evaluate the missile-defense program, campaign spokesman Kitchens said. ``John Kerry believes that it's critical that we develop an effective missile defense system,'' Kitchens said. He declined to discuss the matter further, and repeated requests to question Kerry and his foreign policy adviser, Rand Beers, about Kerry's intentions on missile defense were denied.

`Biggest Difference'

``Missile defense is clearly the biggest difference on defense spending between Bush and Kerry,'' said Douglas Berenson, a military budget analyst at Washington-based consultancy DFI International. ``Anywhere else, it's on the margins.''

Bush, following the Sept. 11 terror attacks, ushered in the largest increases in U.S. military spending since the 1980s as he waged war in Afghanistan and Iraq and ramped up development of weapons programs. More than $100 billion has been added to the Pentagon's budget since the attacks, government data show, and the Pentagon has been allotted a record $416 billion for the fiscal year that begins Oct. 1.

Furman, Kerry's economic policy director, said Kerry understands the U.S. is at war and supports a ``substantial increase'' in overall defense spending in the next decade.

``You don't hear either candidate talking about cutting defense'' overall, Northrop Grumman Chief Executive Ronald Sugar said in a June interview. ``The threat is driving it.''

`Capable Program'

Boeing Chief Executive Harry Stonecipher expressed similar sentiments in an interview July 28. ``No matter who the president is, they have an awesome responsibility of ensuring the security of the American people and our allies,'' Stonecipher said.

Boeing, once the world's largest maker of commercial airplanes, now gets more sales from its defense businesses, largely as result of increased spending since Sept. 11 on the missile defense shield and battlefield communications systems.

``We are involved in a very capable program that is in the process of being deployed in Alaska and that will clearly contribute to America's national security,'' Boeing spokesman Doug Kennett said.

As the beginnings of Boeing's ground-based missile-defense system will already be operational before the election, that program is in less danger than other programs in earlier stages of development, Baker said.

Northrop, Raytheon

Kerry would likely seek to slow research and development on less advanced components, such as ``boost phase intercept'' programs designed to shoot down missiles moments after launch, Berenson said.

The largest program in that category is one led by a Northrop team, which includes Waltham, Massachusetts-based Raytheon Co.

``We believe national missile defense is widely recognized as a vital component of our nation's security,'' Raytheon spokesman James Fetig said. ``It is premature to speculate about what may happen.''

Los Angeles-based Northrop, the third-largest U.S. defense company, got a $4.5 billion contract in December to design and build the Kinetic Energy Interceptor, which is intended to shoot down missiles within five minutes of launch.

Bethesda, Maryland-based Lockheed, the biggest U.S. defense contractor, is in charge of creating the communications network for the system worth about $1.2 billion through 2009. It's also participating as a subcontractor on other programs, enough for Lockheed to generate $3 billion in sales from missile defense last year.

Wider Deficit

Shares of Boeing, the second-largest U.S. military contractor, rose 18 percent for the year through Friday, while both the Standard & Poor's 500 Index and the Dow Jones Industrial Average were down. Lockheed is up 21 percent so far this year and Northrop Grumman shares have climbed 31 percent.

The Pentagon budgeted $12.8 billion through 2009 for ground- based development and procurement -- about 80 percent of which would flow to the Boeing industry team, according to the U.S. Government Accountability Office, Congress's auditor. This is in addition to $12.4 billion spent between 1996 and 2003, the GAO said in an April 23 report. Such spending is vulnerable to being cut because of projected budget deficits.

The White House Office of Management and Budget expects the budget deficit to widen to a record $445 billion by the end of the fiscal year. Bush has blamed a 2001 recession and terrorism, while Kerry links it to Bush's $1.7 trillion in tax cuts.

``You've got top-line pressure coming from the deficits,'' said John Murray an analyst at Delaware Investments, which owns shares of Boeing and Lockheed. ``The pressure on (weapons programs) is enormous.''

Rumsfeld Renames

Bush, 58, has made it clear he will move forward with the missile shield. On Aug. 5, he signed the fiscal 2005 defense appropriations bill, which set aside about $10 billion for systems to counter a ballistic missile attack, including the $9.2 billion specifically for the Missile Defense Agency.

``Later this year, the first components of America's missile defense system will become operational,'' Bush said at a signing ceremony at the White House. ``It will fulfill a pledge I made to the American people more than four years ago.''

The U.S. Missile Defense Agency, named by Defense Secretary Donald Rumsfeld in 2002, is the Pentagon department in charge of developing a series of separate systems that can destroy ballistic missiles at launch, while in space or as they are heading to Earth.

The agency, previously called the Ballistic Missile Defense Organization, is scheduled to conduct final tests on the system this month and plans by late October to install six interceptors at Fort Greeley and four at Vandenberg Air Force Base in California. Another 10 boosters are scheduled to be installed by December 2005.

Behind Economy, Education

``The most serious threat to our homeland will, I firmly believe, come from proliferated ballistic missiles,'' Northrop CEO Sugar said in a speech in Boston in June. ``The impact of a conventional terrorist attack would pale in comparison to a single ballistic missile carrying a weapon of mass destruction.''

In an interview following the speech, Sugar said politicians often focus too much on the last threat rather than looking forward to future threats.

``To say that we are going to abandon missile defense so we can do a better job of screening containers in the ports is probably not a prudent policy,'' Sugar said in the interview.

A Pew Research poll in January asked people to rate which of 22 issues should be ``top priorities.'' The poll found 35 percent rated missile defense a top priority. By contrast, 79 percent selected fixing the economy, 78 percent chose protecting the country from terrorism and 71 percent named education. Strengthening the military was rated ``a top priority'' by 48 percent.

`Easy Target'

``It is something that people think about to some extent,'' said Pew Research Director Michael Dimock. ``They care about the state of the military, especially with as much as they see it in the news these days.'' The telephone survey included 1,503 adults and had a 3 percent margin of error.

Bush boosted spending on the program that began in 1984 under President Ronald Reagan, who used his so-called Star Wars missile defense idea to intimidate the former Soviet Union. In the past four years, Congress approved $32 billion for missile defense on Bush's request, more the double the previous four years of spending under Bill Clinton.

``This is a serious problem for national security and for the defense industry if Kerry goes ahead with his suggestion that he would cut missile defense,'' said former Pentagon analyst Daniel Goure, who is now vice president of the Lexington Institute in Washington. ``Being opposed to missile defense is almost a mantra among Democrats. It's an easy target for him.''

If Kerry wins election, he can expect resistance in Congress, including from House Speaker Dennis Hastert, whose district is near Boeing's Chicago headquarters. Hastert's spokesman, John Feehery, said Republican leaders will push to retain funding.

``We will fight to preserve research into missile defense,'' Feehery said. ``It is still a winning issue with the American people.''


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Also in L.A. Times (subscription)... related article, not about Kerry, just about the program..

Ready or Not, Missile Defense
* Southland is focal point for work on the system, which critics say is being deployed prematurely.

link to LA Times


By Peter Pae, Times Staff Writer

About 100 miles southeast of Fairbanks, Alaska, crews at Ft. Greely last month gingerly lowered a 54-foot-tall, three-stage missile into a concrete silo.

It's the first weapon designed to destroy an enemy nuclear warhead in space from the sheer force of a pinpoint collision at 15,000 mph. And it is proving explosive in another way too, helping boost the business of Boeing Co., Raytheon Co. and others with operations in the Southland.

"All the defense companies in Southern California have their fingers in the missile-defense pie," said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp.

The Alaskan installation marked the first step in the Bush administration's ambitious plan to implement a missile-defense shield with systems on land, on sea and in the air. By next year, 20 interceptors are set to be in place, including four at Vandenberg Air Force Base in Santa Barbara County.

The missile interceptors are also the first weapons that derive from President Reagan's "Star Wars" defense project. In 1983, Reagan directed the Pentagon to develop an antimissile shield using futuristic, high-tech weaponry, including laser beams and nuclear-powered reactors in space. The current system is more modest than what Reagan envisioned, yet it remains technologically complex, costly — and controversial.

The interceptors mark "the end of an era where we have not been able to defend our country against long-range ballistic missile attacks," said Maj. Gen. John W. Holly, director of the ground-based element of the program.

Much of the design work on the interceptor was performed in California.

Chicago-based Boeing, the lead contractor on the interceptor program since 1998, has 500 engineers working on the project in Anaheim, plus 700 more toiling on other missile-defense work in Palmdale and Seal Beach. All told, Boeing reaps $3 billion in annual revenue from missile-defense work, accounting for about 5% of its total sales.

After the Sept. 11, 2001, terrorist attacks, spending on missile defense soared from $4.8 billion to nearly $10 billion this year. And the Bush administration wants to commit an additional $40 billion over the next four years on missile defense.

Critics, however, continue to assail the administration, saying it is deploying the interceptors prematurely, given that the missiles hit their target only five times in eight tests.

"We know we have not fully tested the system, but it's our view that it is better to have a system deployed that is not fully tested than to not have a system at all," said James Albaugh, president of Boeing's defense business.

Another beneficiary of the interceptor project is Raytheon, whose sprawling electronic systems unit in El Segundo built many of the sensors, radar and targeting equipment used in the missile system.

In December, Century City-based Northrop Grumman Corp. won a $4.5-billion, eight-year contract to develop a rocket that can destroy ballistic missiles right after takeoff. About 1,000 Northrop engineers locally are working on various missile-defense projects, such as early-warning satellites to detect missile launches.

"We see missile defense as a significant area of growth for us," Northrop Chief Executive Ronald D. Sugar said.

Another Northrop effort involves building lasers to shoot down airborne missiles immediately after takeoff. Northrop's lasers are being tested using an Air Force 747 jumbo jet at Edwards Air Force Base. If all goes well, the Pentagon hopes to put the lasers into use by 2008.

Yet the first batch of interceptors promises to be deployed far quicker. Designed to destroy in mid-flight enemy warheads heading for the U.S., they are expected to be fully ready for use in a few months.

A key component of the interceptor is a table-top-sized device, dubbed the "exoatmospheric kill vehicle," that is released in space. This vehicle uses its own guidance system to avoid decoys and countermeasures and slam into an enemy warhead. The 4-foot-long device caries no explosives and destroys its target by the massive force of a collision, at five times the speed of a bullet.

The kill vehicle was developed by Raytheon's El Segundo engineers. It carries optics to navigate, antennas to receive data from ground radar, a small computer and a refrigeration unit to form krypton ice cubes for cooling sensors.

Waltham, Mass.-based Raytheon also is constructing a complex X-band radar system to track enemy missiles and then guide the interceptor to its target. About the size of a house, the radar system will be placed on an oil-rig-like platform off the coast of Alaska sometime in the fall of 2005.

Still, critics contend that the vast missile-defense program has mainly been a boondoggle for defense firms, with many cost overruns and delays. They peg the cost of the entire system since the Reagan administration at more than $160 billion.

Criticism increased in recent years as the Pentagon conducted tests of the interceptor, with mixed results. The military launched a Minuteman ballistic missile, acting as a dummy enemy warhead, toward the Marshall Islands in the western Pacific. Prototype interceptors were then fired from the islands, knocking out the "enemy" missiles five out of eight times.

But critics say the tests were rigged. The targets were often equipped with homing devices that provided information an enemy would never provide, to help the interceptor spot it. Pentagon officials insist the homing devices were necessary to test the interceptor's guidance systems.

"It's taken billions of dollars from other defense and homeland security priorities, and it doesn't work," said Philip Coyle, a former Pentagon chief for testing and evaluating weapons. "We're deploying a system that doesn't work and hasn't been adequately tested."

Defense analysts predict that the missile-defense debate will intensify if Democratic presidential candidate John F. Kerry wins the White House. Kerry has said he would add 40,000 more troops and help pay for them by cutting back on missile-defense spending, though he probably would face stiff opposition from Republicans in Congress.

Of course, there's little doubt where the area's defense contractors would come down in the debate. "The U.S. will have for the first time in history initial defense capability against ballistic missile attack," said Rick Yuse, head of Raytheon's missile- defense business. "That's extremely significant."

 

DO you not understand that this cuts jobs, and our defenses, all in one fell swoop?

Duh!


Nice.

 

Nice.