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Ted Kennedy Will Be Missed By Defense Contractors (Sort of)

Senator Ted Kennedy (D-MA) is dead if you don't know. One of his many legacies, good and bad, will be the Massachusetts defense industry. A politician and defense companies have a symbiotic relationship. One provides money and benefits the other sends tax payer dollars their way. As part of this the Defense Department gets some of the equipment they want at a price they can afford. At least in theory it all works out well.

Just by the fact that Kennedy served in the Senate about forty-five years gave him the power to structure the defense budget and his home state's industry. His longevity and seniority allowed him to work with colleagues to keep funding flowing to his state's contractors. Two of the main beneficiaries have been Raytheon and General Electric. Now he is gone there is concern that his replacement won't be able to keep the funds flowing home from DoD.

The GE plant in Lynn, MA is sort of an anachronism. A major defense manufacturing plant left in the Northeast of the United States. Many contractors moved to California and Arizona then the South to take advantage of weather and labor. Labor costs especially in the Southern States are less with little chance of unions to worry about. Sikorsky was badly hurt by a strike four years ago with its assembly line workers that also seriously affected UH-60 Black Hawk production. Most companies would have moved the GE plant a long time ago. Senator Kennedy kept it open by funneling money to it.

The second engine for the JSF is a perfect example of this. Currently the main engine is made by United Technologies Pratt & Whitney division. GE and Rolls-Royce are being paid to develop a second one. Obama wants to end that program as a diversion of funds citing no need for two suppliers. The counter argument is to have some competition in price as well as have enough capability to build the number of engines needed. Currently the program remains funded despite it not being requested in the 2010 budget.

Of course like many of the liberal Democrats in Congress this policy of supporting home state industries led to rank hypocrisy by Kennedy. During the last two major arms build-ups in the Eighties and the last ten years he would criticize foriegn policy and defense spending while at the same time funneling it to his state. Senator Patrick Leahy (D-VT) one of the biggest critics of the Iraq war is the same recently praising a large MRAP-ATV related contract given to a local company. Part of this situation is due to the feeling in Congress that the tax payer money is theirs to spend the way they see best. It doesn't matter what the Defense Department wants or says they need through earmarks and pressure the money will go where Congress wants it.

With Kennedy gone and replaced by a new Senator this may allow the defense contractors involved to begin examining staying in Massachusetts. There are certainly reasons to stay including established bases of operations as well as the highly-trained work force and the support network of educational establishments. There are negatives as well including the high cost of living that drives up wages as well as the tax structure of Massachusetts. That does not even take into account peripheral issues like weather, traffic and so on. Chances are there won't be a mass exodus of companies but certainly some may take advantage of the situation.

In the future as the debt increases and the amount of money available for this kind of spending declines the pressure on Congress to reform their spending ways will ramp up. It will take almost a whole sale attitude within both the House and Senate for this to end.

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