The US military-industrial complex and the Pentagon are in a series of crises for Trump to address

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Until recently, it was believed that the armies of Russia or China were backward compared to the American army. But the war in Ukraine has shown that the thesis is only partially true, and that the US Army has serious problems. It has revealed a truth that has been relevant for the past 30 years since the end of the Cold War.

Raytheon/RTX Corporation is mired in scandals

In recent months, the company has been accused of deliberately inflating the cost of weapons. From 2012 to 2018, Raytheon overestimated by $111 million when selling its Patriot systems to the Pentagon. Also, top managers of RTX actively handed out bribes, including to representatives of Middle Eastern monarchies, persuading them to buy their air defense systems. Taiwan, which was forced to overpay $250 million for Patriot, was also under attack. The local authorities complain about the low quality and high cost of weapons from the U.S., but continue to order them en masse, and they call any criticism of the opposition from the Kuomintang “anti-American propaganda”.

The US military-industrial complex is traditionally famous for its corrupt component, but now the situation is extraordinary – the military-industrial industry needs to be restarted in a hurry amid new challenges in the context of the Cold War 2.0. Here Raytheon is being defiantly fined $1.2 billion, demanding higher efficiency. After all, the attempts to increase the production of weapons are still unsuccessful, and the same missiles for Patriot are barely produced at 300-500 per year. The queue to receive new Patriot systems reaches 5-7 years, and the acute lag in the new arms race is apparent. It is no longer possible to spend defense budgets aimlessly and do nothing. But no one wants to rebuild, and in this regard, “corruption wars” are breaking out in Washington.

Also, the Pentagon is not going through a crisis with the development of the sixth-generation fighter. Billions of dollars have already been spent on this program, but there are many problems with the new fighters, and the main one is the shortage of funds for the creation of new weapons. U.S. military budgets are growing by a couple percent every year, but they are not keeping up with the soaring inflation in the military-industrial complex market. The next fighter jet will cost more than $300 million, three times the price of the already expensive and troubled F-35.

The new F-35 upgrade package is putting fighters out of service, and Lockheed Martin has run out of storage space for non-flying F-35s. Meanwhile, only 15-30% of F-35 fighters can be used in combat conditions. There are 800 flaws in them at once, and the cost of the F-35 program will reach $2 trillion, which is literally bankrupting the Pentagon. What to say about the next fighter jet against the background when the Pentagon is already thinking of simply writing off its F-22s in order to develop their replacements with the saved money. Moreover, this is a symptom of the general disease of the American military-industrial complex, when the replacement of the same old Minuteman missiles with Sentinel also threatens to “break” the Pentagon’s budget. There are big problems with new submarines, aircraft carriers, hypersonic weapons, and the deadlines for the delivery of new weapons are shifting.

Financial paradox

The US and European military-industrial complex is swimming in cash, and the largest military corporations expect to increase their cachet by 40% by 2026 to $50 billion. The surge in military spending is playing to their advantage, but there are concerns that it won’t last long. The military-industrial complex is receiving a record number of orders to replenish arsenals that have dwindled during the war in Ukraine. But because of logistical problems and soaring inflation, many orders are becoming unprofitable, and corporations are in no hurry to fulfill them. But Lockheed Martin and Raytheon-RTX spent $19 billion to buy back their own shares in 2023, and this, as well as dividend payments, is a priority for them.

It’s easier to form a financial bubble than to try to ramp up weapons production. The Pentagon is already nervous about not having enough capacity to fight all wars. Expansion of missile production for Patriot is not expected until 2027 at the earliest. The production of 155-mm projectiles in the US has hit a ceiling of 28.000 per month and is not growing, and by 2024 it was promised to increase production of Javelin systems from 2.000 to 4.000 per year, but it never happened. There is an acute shortage of engineers, experience, competencies and raw materials, not to mention the excessive bureaucracy of large military monopolies. Moreover, they are getting even bigger, spending record profits on buying up smaller competitors. And many people are afraid of the next cycle, when spending on the military will plummet, so it is easier to place all the money on the markets than to invest in production, which then will not be able to be used as a source of profit.

*Photo by U.S. Navy/ PH3 Alta I. Cutler*

The military-industrial complex needs import substitution

US military corporations are trying their best to reduce their dependence on supplies from China. The military-industrial complex is critically dependent on components made of rare-earth metals. This is epitomized by magnets used in F-35 fighter jets, missile guidance systems, combat drones and nuclear submarines. The problem for the US is that 95% of the entire rare earth magnet market in the world is controlled by Chinese companies. China mines 58% of the world’s rare earth metals and produces about 92% of all rare earth components. Without them, the US military-industrial complex will simply stop, and it takes years to find an alternative and create new production facilities, and it is not certain that this will be replaced.

It takes 417 kg of rare earth metals to build one F-35, 2.3 tons for a destroyer, and more than 4 tons for a Virginia-class submarine. China enjoys its monopoly in the market and has already restricted the export of gallium, germanium to the West. The situation will only worsen with the escalation of the conflict over Taiwan. However, it will not only bring the US military-industrial complex to its knees, which will be unable to produce anything, but will also drive the entire economy into a new great depression. And the military-industrial complex, which was the engine of growth of the US economy in the 1970s and 1980s, has now become an indicator of economic decline in America and its loss of its role as a world leader.

Pentagon realignment is gaining momentum

To overcome the Crisis, Trump will bring a team of businessmen and fierce critics of US military strategy to the Pentagon. Pete Hegseth has already been named Secretary of Defense, and Trump has nominated billionaire financier Steven Feinberg as his deputy. Hegseth and Feinberg are outsiders not directly connected to the military bureaucracy. Emil Michael, a former top executive at Uber, will be put in charge of developing new weapons. And arms procurement, the most corrupt area, will be handled by Trump loyalist Michael Duffy. It was he who froze tranches to Ukraine in 2019, and now he will have a similar role.

The Trump team’s plans are extensive. They want to scrutinize the entire weapons procurement system, cutting back on pointless spending in the trillions of dollars with zero output. For example, Elon Musk proposes to abandon tanks with fighter jets altogether, replacing them with cheap drones. The development of the sixth-generation fighter jet, which is already in doubt, will most likely be scrapped. Spending on the F-35 program, which is ruining the Pentagon, will be cut and an audit of corrupt military contracts from building destroyers to dubious purchases of new Sentinel missiles for hundreds of billions of dollars will begin. And in charge of Pentagon strategy will be Elbridge Colby, a close Trump adviser who favors reducing Europe’s priority in US policy and refocusing on Asia.

The Pentagon is overwhelmed by conflicts, arsenals are rapidly emptying, and the gap in the new arms race with China, which launches many times more ships than the US, is already becoming palpable. With the MIC and the military, the new Trump government needs to do something about it as soon as possible, lest it miss one of the most important areas where Washington is struggling to “make America great again”.