My answer to To what extent was the Iraq War a boon for the American economy?
Answer by Ken Larson:
The Military Industrial Complex benefited as the largest defense companies had the best years in their history.
But the “Boon” as you have stated for that sector alone was financed by a National Debt that ballooned to nearly $20 Trillion.
Although not particularly profitable, Defense companies passes on millions in overhead and G&A to the taxpayer on cost plus and time and material contracts.
The huge volume of overhead and G&A costs they pass on the the taxpayer is the answer to your question.
Profitability has never been a strong suit of these corporations in terms of their defense business segments, but they expense the costs of their executive suites in their G&A rates and cost center overhead rates.
The Military Industrial Complex of the Unites States passes on operating cost in the billions and they lobby the government to undertake incursions in order to sell supplies and services for just that reason.
Every major aerospace company from IBM to Lockheed Martin and Boeing has totally stand alone divisions that serve as cost centers and pursue monumental interests in the politics of government and the billions in service contracts that are outsourced there. This has gone on for years. I watched it for 3 decades on the inside of these companies.
These companies routinely spend more in lobbying expenses than they pay in income taxes each year.
The interests of these firms is now changing slightly with Sequestration and many are making acquisitions and marketing services in the Health Care sectors or escalating their interests in civil aviation, education and other fields.
Top 10 Contractors FY 2010
1. LOCKHEED MARTIN CORPORATION – $34,288,619,722
2. THE BOEING COMPANY 19,358,512,809
3. NORTHROP GRUMMAN CORPORATION 15,472,742,729
4. GENERAL DYNAMICS CORPORATION 14,903,216,900
5. RAYTHEON COMPANY 14,880,453,061
6. L-3 COMMUNICATIONS HOLDINGS, INC. 7,629,644,919
7. UNITED TECHNOLOGIES CORPORATION 7,330,023,190
8. OSHKOSH CORPORATION 7,197,520,183
9. SAIC, INC. 6,595,330,339
10. BAE SYSTEMS PLC 6,587,705,335