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Defense Firms Stock Up on Hill Allies

Industry Donations Rise as Administration Eyes Cuts to Military Contracts

As the Obama administration moves to restrain Pentagon spending, nervous defense contractors have increased their contributions to Congressional candidates, who could have the final say on the fate of multibillion-dollar weapons systems.

Political giving by defense companies is on pace to hit record highs this election cycle, according to a CQ MoneyLine analysis of Federal Election Commission reports.

Defense analysts say it is no surprise that the industry has picked up its political activity. Many of the large aerospace and defense firms are bracing for stiffer competition for federal contracts that have been the backbone of their business, these insiders say.

“The major defense contractors are beating the bushes to get their employees to contribute to their PACs because layoffs are looming as a result of decreased defense spending and canceled weapons systems,” defense lobbyist Michael Herson said.

After a decade in which military budgets have more than doubled, Defense Secretary Robert Gates has warned that such increases can’t continue. Gates wants to restrict growth of the $530 billion Pentagon budget to 1 percent next year.

That has led defense and aerospace firms to donate more than $13 million to Congressional candidates through the end of August. That figure is close to what they doled out for the entire 2008 election cycle and is more than $3 million more than in the 2006 season.

Since companies and interest groups generally accelerate their giving in the final months of the campaign, defense donations are likely to far exceed past amounts when final numbers are reported at the end of the year.

The defense activity is also notable because it is ahead of the pace of other industries and interest groups, who have yet to catch up to last cycle’s contributions.

[IMGCAP(1)]For example, medical stakeholders so far have contributed $10 million less than they did in the 2008 cycle, and labor unions have shelled out almost $20 million less than they did in the previous election period. Overall, giving from political action committees is almost $110 million less so far this cycle than in the 2008 season.

Some of the largest defense firms have already topped what they gave last cycle.

Lockheed Martin Corp. has contributed $2.5 million to candidates, leadership PACs and party committees. In the entire 2008 cycle, the defense giant gave $2.2 million, about the same as it did in the 2006 cycle.

“Our PAC membership has increased as have some of the contributions by our PAC members,” a statement from Lockheed Martin said.

Loren Thompson, a defense analyst with the Lexington Institute, said Lockheed Martin’s political activity is a good barometer of the industry.

“Lockheed Martin is sort of like a trending stock for the whole defense sector,” he said.

Honeywell International Inc., which ranks among the top PACs in giving, has contributed almost $4.5 million so far this cycle, compared with $3.1 million in 2008 and $1.6 million in 2006.

“Honeywell’s political action committee supports those who support the policies that are most important to our company,” a statement issued by the company said.

Raytheon has spent more than $2.2 million so far this cycle, compared with just under $2 million in 2008 and $1.3 million in 2006.

Aerospace giant Boeing Co. has donated $2.3 million, up from almost $1.9 million in 2008 and $1.3 million in 2006.

“There are a lot of issues that are important to us that are out there this year,” Boeing spokesman Doug Kennett said.

Boeing is in a fierce competition with EADS North America, the owner of Airbus, for a defense contract to supply the Pentagon with the next generation of aerial refueling tankers, a project worth about $40 billion. The fight has been going on for years and until recently involved Northrop Grumman Corp., which dropped out of the competition in the spring.

EADS also has stepped up its giving this cycle, donating $246,000 compared with $189,000 in 2008 and $54,000 in 2006. Northrop Grumman has donated $1.6 million this cycle, about the same as it did in 2008 and about $200,000 more than 2006.

As with most other industries, defense company PACs favored the majority party on Capitol Hill. In this election cycle, the defense sector gave $7.4 million to Democratic candidates and $5.6 million to Republicans.

“The normal default setting for the defense industry is to give money to people in power,” Thompson said.

But he added that defense companies, aware of the possibility that the GOP may gain control of one or both chambers, are “hedging their bets” by increasing their contributions to Republicans.

It’s clear that some firms are playing both sides as they split their money between candidates and party committees.

Democratic candidates received almost 58 percent of Lockheed Martin’s PAC contributions. But the company contributed $91,000 to GOP party committees compared with $61,000 to Democratic committees.

Incumbents from both parties who sit on relevant committees also benefited from the defense sector’s largess.

Rep. Norm Dicks (D-Wash.), chairman of the House Appropriations Subcommittee on Defense, has collected more than $100,000 from industry PACs so far this cycle, including the maximum amount of $10,000 from Boeing, Honeywell and BAE Systems.

Rep. Bill Young (R-Fla.), ranking member on the subcommittee, also took in more than $100,000 from defense companies.

House Armed Services Chairman Ike Skelton (D-Mo.), who faces a tough reelection challenge, has raked in more than $147,000 from defense firms this cycle, while ranking member Buck McKeon (R-Calif.) has collected more than $123,000 from the defense sector.

The defense industry’s investments in those Members makes sense. At a recent Armed Services hearing, Skelton and McKeon expressed skepticism about Gates’ budget request and complained that the secretary had not made his case.

Skelton kicked off the hearing by saying, “I do not support cutting the defense budget at this time.”

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