Please, No Tanks: Is Pentagon Spending on Autopilot?

PentagonAccording to the semi-official U.S. National Debt Clock, America is now $15.5 trillion dollars in the red (and counting). How did we get here? In part, by putting government spending on autopilot -- automatic payments of interest on the debt and annual increases in Social Security payouts.

And this month we learn that we're making automatic purchases of military hardware that no one wants or needs.

Over in Washington, where most of America's money gets spent, there's a scandal brewing on Capitol Hill. Congress wants to pass an appropriations bill that would (among other things) spend $255 million to purchase 42 M1 Abrams main battle tanks. There are just a few problems with this plan.

First off, we don't really have any enemies to "point" the new tanks at. The Soviet Union is kaput. China, arguably too valuable a trading partner to fight a war with in the first place, also happens to be located on the wrong side of an ocean. As for the enemies we do want to point guns at, years of battling tank-less foes in Iraq and Afghanistan have taught the U.S. Army that oftentimes, a mix of Humvees, MRAPs, and Strykers is better suited to modern warfare.

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Which brings us to the final and most crucial reason why we might not want to spend a quarter-billion dollars on a few dozen main battle tanks: The Pentagon doesn't even want them.

Turns out, the only reason Congress is even considering spending this money is to try to keep General Dynamics' (GD) tank factory in Lima, Ohio, open -- just in case we might need to build tanks in the future.

We don't, and we won't.

Giving It Away


The fact is, we've already got so much surplus "tankage" in the U.S. that last year we offered to give Greece 400 M1 Abrams tanks for free. (We did ask the Greeks to pay the shipping, however. Our generosity has its limits.)

As it turns out, this is standard operating procedure for the Pentagon. In 2010 the U.S. tried a similar fire sale on military equipment, offering to give Romania 24 slightly used F-16s -- also for the low, low price of zilch.

America's "buy, mothball, then give away" strategy works out well for defense contractors like Lockheed Martin (LMT) and General Dynamics. But it's probably not the best stewardship of taxpayer dollars.

Fool contributor Rich Smith holds no position in any company mentioned. The Motley Fool owns shares of General Dynamics and Lockheed Martin.

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