WASHINGTON -- Early in December, two senior Defense Department officials met to wrap an early Christmas present for U.S. taxpayers. There was no announcement, no publicity and, on the contrary, a reluctance to reveal what had happened. They had killed a generous helping of corporate pork for the hard-pressed Boeing Co.
Pentagon Comptroller Dov Zakheim and Assistant Defense Secretary (Acquisitions) Pete Aldridge, meeting as the department's "leasing panel," vetoed a sweetheart deal under which the Air Force would temporarily lease Boeing airliners at a cost of at least $20 billion to taxpayers. Actually, they postponed further consideration until March, but the handwriting is on the wall. "It was decided that no deal was to be made," a Pentagon official told me. The deal is dead.
The Bush administration has been loath to broadcast this good news for ordinary Americans because it is such bad news for the power elite: a bipartisan bloc of pro-Boeing members of Congress including House Speaker J. Dennis Hastert, the Air Force secretariat, and K Street lobbyists. This marks a rare defeat for the military-industrial complex thanks to President Bush's policies, persistence by Budget Director Mitchell Daniels and alarms sounded for more than a year by pork-fighting Sen. John McCain.
What's more, the Boeing boondoggle was derailed a few days after a $1.8 billion loan guarantee for financially reeling United Airlines was rejected by the Air Transportation Stabilization Board, which was following White House guidelines. The Boeing and United denials were politically uncomfortable for Bush because both companies are now headquartered in Illinois, the home of so important an ally of the president as Hastert. Politics aside, Bush opposes in deed as well as name an "industrial policy" to rescue distressed corporations.
These two companies signed up operatives who usually overcome mere presidents. United Airlines in August hired as lobbyists former Rep. Bud Shuster, who long reigned as the king of pork heading the House Transportation Committee, and Dan Mattoon, a former aide to Hastert and now a partner in a powerhouse lobbying firm. Boeing is currently represented by 16 blue-ribbon Washington lobbyists.
Boeing appeared to have succeeded last year. In the dead of the night, congressional appropriators approved, without hearings and unrequested by the Pentagon, a deal dressed up as a wartime measure. With the market collapsed for Boeing's 767 airliners, the Air Force would lease 100 of them and then return them to the manufacturer 10 years later. The cost of conversion to military tanker and reconversion to airliner would be borne by the taxpayer. This deal, McCain told an inattentive Senate more than a year ago, is "the envy of corporate lobbyists from one end of K Street to the other."
The arrangement was concocted by Boeing, its lobbyists and its friends in Congress. The Air Force, viewing the extra tankers as found money, eagerly signed up. "I strongly endorse beginning to upgrade this critical war-fighting capability," wrote Air Force Secretary James Roche, a career naval officer who later worked for Northrop Grumman. That's the way the military-industrial complex works.
John McCain did not give up. During the past summer, he bombarded the administration with unavailing requests for information about the leasing deal. In letters to Mitch Daniels and Defense Secretary Donald Rumsfeld, McCain concluded with an identical plea: "The American taxpayers are counting on you."
The trust was not misplaced. After I heard the Boeing deal had been killed, I spent days trying to confirm it. The Office of Management and Budget (OMB) wanted any confirmation to come out of the Defense Department, and official channels at the Pentagon were mute. McCain's office was similarly rebuffed when it sought information. Not until I had learned by unofficial means of the "leasing panel's" action did an Air Force spokesman deceptively say there would be "no final decision" until March.
The Pentagon was not inclined to confirm that the secretary of the Air Force had been overruled, and the OMB did not want to pick a fight with the speaker of the House. Nevertheless, such good news should not be suppressed. No administration has ever really assaulted corporate welfare, and denying bailouts to Boeing and United marks a good start for George W. Bush.