For the Air Force, replacing its current fleet of KC-135 refueling tankers—a model in service since 1957—is a top acquisition priority.  The age of the planes has led to concerns that a structural failure could result in the grounding of every KC-135 at the same time. 

Enter the so-called KC-X program, estimated to cost $35 billion.  Originally, the Air Force had planned to “sole-source” the deal to Boeing, leasing planes for $30 billion.  However, Sen. John McCain got the whiff of corruption, and through dogged investigation, it was determined that the deal was a racket.  Indeed, the Air Force’s top acquisition chief at the time ended up going to jail. 

So in 2004, the Air Force started the bidding process over again.  Boeing, of course, made a bid, but so did a partnership between Northrop Grumman and Airbus, the European plane manufacturer.  In spite of the earlier scandal, Boeing was widely expected to win the contract.  They didn’t. 

Politicians from Kansas and Washington state, the two places where most of Boeing’s production facilities are, led the “Buy America” charge. “I cannot believe that we would create French jobs in place of Kansas jobs,” said Rep. Todd Tiahrt. Boeing has formally protested the decision to the Government Accountability Office.

The appalling part of this is the tendency for Members of Congress to send military spending projects to their districts, rather than to the project which fits the needs of the military. 

On the other hand, there is a strong argument for maintaining America’s industrial base for the sake of military production.  Imagine, for instance, if a war cut off our supply lines to Europe and our other trading partners.  In that instance, it would be absolutely essential to have a self-sufficient means of manufacturing weapons.  And the industrial base can’t be created overnight. 

Most experts do not think the tanker contract going to the Northrop Grumman/Airbus consortium will hurt the industrial base. But if there is an argument that it could—that’s the argument Boeing should be making, rather than talking about “Kansas jobs.”

Wake up, Middle Class Americans. David Walker, comptroller general of the GAO (Government Accounting Office), issued a report that blasts today's elected leaders and policy makers:

Mr Walker’s views carry weight because he is a non-partisan figure in charge of the Government Accountability Office, often described as the investigative arm of the US Congress.  In an interview with the Financial Times, Mr Walker said he had mentioned some of the issues before but now wanted to “turn up the volume”.

“I’m trying to sound an alarm and issue a wake-up call,” he said. “As comptroller general I’ve got an ability to look longer-range and take on issues that others may be hesitant, and in many cases may not be in a position, to take on. “One of the concerns is obviously we are a great country but we face major sustainability challenges that we are not taking seriously enough,” said Mr Walker, who was appointed during the Clinton administration to the post, which carries a 15-year term.

The fiscal imbalance meant the US was “on a path toward an explosion of debt”.

[Presidential Candidates] “need to make fiscal responsibility and inter-generational equity one of their top priorities. If they do, I think we have a chance to turn this around but if they don’t, I think the risk of a serious crisis rises considerably”.