Please ensure Javascript is enabled for purposes of website accessibility

Meet the Arms Program That Dwarfs Lockheed's Trillion-Dollar Super-Fighter

By Rich Smith - Dec 29, 2013 at 5:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

$1.1 trillion used to sound like a lot of money ... before we heard about this.


America's F-35 fighter jet program -- spending money at Mach 3. Source: Lockheed Martin.

Five years ago, when word began filtering out about Lockheed Martin's (LMT 0.36%) new F-35 fighter jet potentially costing taxpayers $440 billion, people were shocked. More recent revelations that the plane could conceivably cost as much as $1.1 trillion left taxpayers dumbfounded.

Well, if you were one of those upset about the cost of the F-35 program, you'd probably better sit down for this next bit: The Pentagon's working up a weapons program now that could cost twice as much as the F-35.

Defense spending goes nuclear
That's the upshot of a new report out of the nonpartisan Congressional Budget Office, which this week estimated that upgrades and expansions to the U.S. nuclear arsenal could cost as much as $355 billion over the next 10 years.

Now, the math here is somewhat tricky, so bear with me for a moment. At first glance, the F-35 program's sticker price -- $1.1 trillion -- looks like a bigger number than the nuclear upgrades cost of $355 billion. But notice: The nuke upgrade spending will take place over a 10-year span, from 2014 to 2023. In contrast, the F-35's trillion-dollar cost will be spread over 60 years of service.

So per year, the numbers work like this: Nukes -- $35.5 billion per year. F-35s -- closer to $18.3 billion .... or roughly half the anticipated annual cost of spending on America's nuclear arsenal.

And what do we get for that?
Spending on America's nuclear deterrent will be spread out among multiple nuclear "delivery" systems, from nuclear ballistic missile submarines ("boomers") to long-range bomber aircraft -- to the silo-based ICBMs, whose upgrades could begin any moment now, if the contract that GenCorp (AJRD 0.36%) won earlier this month works out as planned.


In December, GenCorp won a contract to demo a new stage III rocket booster for Minuteman III missiles like this one. Source: Wikimedia Commons.

According to CBO, all three of these delivery systems are in need of upgrading, modernization, or replacement with newer systems such as next-gen cruise and ballistic missiles. An anticipated purchase of 100 new "Long-Range Strike-Bombers" could cost taxpayers perhaps $55 billion all on its own, and generate $55 billion in revenues for the defense contractors vying to build it. (At last report, each of Lockheed, Boeing (BA 1.42%), and Northrop Grumman (NOC 0.11%) were planning to bid -- so at least all this spending is good news for someone.)


Northrop Grumman's B-2 Stealth Bomber looks like nothing else in the air. Source: Wikimedia Commons.

CBO anticipates that funds will also need to be spent on:

  • Maintaining the nuclear warheads themselves.
  • Nuclear reactors that power the boomers.
  • Department of Energy nuclear weapons programs.
  • The command and control and communications systems, and early warning systems, that weave together all the disparate threads of America's nuclear deterrent.

Then there's the cost of cleaning up nuclear contamination and disposal of waste, funds for nuclear non-proliferation activities, and security at nuclear sites. Finally, in the interests of being thorough, CBO adds an additional $59 billion to its estimates, to account for likely cost overruns on any or all of these programs.

It all adds up to a massive Pentagon spending program -- that's twice as big as the F-35.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Lockheed Martin Corporation Stock Quote
Lockheed Martin Corporation
LMT
$431.52 (0.36%) $1.56
The Boeing Company Stock Quote
The Boeing Company
BA
$138.66 (1.42%) $1.94
Northrop Grumman Corporation Stock Quote
Northrop Grumman Corporation
NOC
$479.11 (0.11%) $0.54
Aerojet Rocketdyne Holdings, Inc. Stock Quote
Aerojet Rocketdyne Holdings, Inc.
AJRD
$40.74 (0.36%) $0.14

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
311%
 
S&P 500 Returns
110%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.