Obama Challenges Congress to Dogfight

Slap!

That was the sound of Congress throwing down the gauntlet and defying the president of the United States to put up or shut up.

In April, Defense Secretary Robert Gates declared that the U.S. can ill afford Lockheed Martin's (NYSE: LMT  ) vaunted air superiority fighter -- priced at a budget-busting $140 million apiece. Gates suggested that Congress fund a limited Raptor production in the fiscal 2010 defense budget and then call it quits at a grand total of 187 planes.

Congress ... hungry!
Congress wants more. Last week, the House approved a 2010 budget including $369 million as a "down payment" on a dozen new F-22s. Yesterday, the Senate Armed Services Committee recommended spending $1.75 billion to buy seven F-22s outright.

Now, the full Senate may vote otherwise. But if the Senate endorses its committee recommendation, the F-22 will head into reconciliation between the House and Senate versions -- and thence to a White House where President Obama has threatened to veto it.

Pick your battles, Obama
Far from shunning that fight, House Democrats including Rep. John Murtha seem to be spoiling for it. Murtha, who chairs the House Appropriations Committee's defense subcommittee, wants not three, not seven ... not even a dozen more F-22s -- but 20. (Murtha also backs buying Boeing's (NYSE: BA  ) F/A-18 to fill the gap while Lockheed's other new warplane, the F-35, ramps up.)

Fools, I'm all in favor of fiscal restraint -- and Lockheed and Boeing both have Pentagon money pouring out of their ears already -- but I've got real doubts that Obama will follow through on his veto threat. Why?

  • Mainly, because the F-22 backers have a point. It's a dangerous world out there, what with North Korea continuing nuclear material production and testing, and Iran making periodic threats to disrupt oil supplies. Do we really need more F-22s? Maybe not, but better safe than sorry.
  • Second, according to Senate Republicans, 95,000 jobs at Lockheed and suppliers ranging from Northrop Grumman (NYSE: NOC  ) to Honeywell (NYSE: HON  ) to General Electric (NYSE: GE  ) are directly or indirectly tied to the F-22. And that's just building the plane. There's something to be said for spending money on homegrown defense projects in a recession.
  • Last but not least ... Obama wants to veto a $680 billion bill because he doesn't like how $369 million (or, alternatively, $1.75 billion) within it is being allocated? Um, $369 million is minuscule, Mr. President ...

Foolish takeaway
The veto is an empty threat. The F-22 will live to fly another day.

Make the Fool your source for all things investing and defense investing. Read:

Fool contributor Rich Smith owns shares of Boeing. The Motley Fool has a disclosure policy.


Read/Post Comments (4) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 26, 2009, at 4:49 PM, Boredkid wrote:

    "There's something to be said for spending money on homegrown defense projects in a recession."

    Yea, there's something to be said for spending money on something which holds no long term economic value. Instead, allocate the money to where it may drive our long term growth.

  • Report this Comment On June 26, 2009, at 5:23 PM, shanelevy wrote:

    I'm with boredkid. Jobs are important, but spending that much on fighter planes to preserve jobs is akin to building a bridge to nowhere to preserve jobs. Re-allocate the money to healthcare, clean energy, infrastructure upgrades, education, hell...give it to california before we go bankrupt. All of those uses would save jobs, and they would be jobs our economy really really needs.

    Face it: we aren't going to war with Iran or North Korea. Its just not happening. Republicans fought the stimulus package, which invests in our future, tooth and nail. Now they are fighting for this defense spending on the grounds that it is, you guessed it, stimulus!

    Disgusting.

  • Report this Comment On June 26, 2009, at 5:38 PM, kamuirei wrote:

    Or you could hire 43k teachers for a year.

  • Report this Comment On June 26, 2009, at 7:03 PM, justintime1003 wrote:

    I know it’s a dangerous world out there and I’m not a technical expert on the F-22, but how will it stop a nuclear missile launched by Iran or North Korea?

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