President-elect Donald Trump just named retired Marine Gen. John Kelly to run the Department of Homeland Security in his new administration. This makes the third retired military office Trump has named to a post in his administration.
Earlier he asked retired Marine Gen. James Mattis to be his defense secretary and retired Army Lt. Gen. Mike Flynn to be his national security adviser.
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More To Come
Trump is also considered retired senior officers for at least two other top jobs including Army Gen. David Petraeus or retired Adm. James Stavridis as Secretary of State and Adm. Michael Rogers to become director of national intelligence.
Reaction so far has been mixed but predictable. Critics show concern about what is supposed to civilian oversight of government. Trump supporters counter with the impressive record of knowledge and experience held by the nominees.
On the other hand, as Stephen Miles, director of the anti-war Win Without War coalitions observed, “As the saying goes, if all you have is hammers, everything looks like a nail.”
Defense Contractors To Watch
The Pentagon already spends hundreds of billions of dollars every year in lucrative defense contracts. The top five, Lockheed Martin Corp. (NYSE:LMTD), The Boeing Co. (NYSE:BAD), Raytheon Co. (NYSE:RTNC), General Dynamics Corp. (NYSE:GDC) and Northrop Grumman Corp. (NYSE:NOCC), combined shared a pot of almost $78 billion in 2015.
That amount constituted 25% of Defense Department funds last year. Naturally these same five companies would be expected to be among the big winners assuming Congress, President Trump and his cadre of former military officers make good on pre-election promises to spend more money on the military.
The Trump Tweet Factor
One top tier contractor, Boeing, has already set off the president-elect’s Twitter alarm when he said, “Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!”
As others have noted, the facts that the projection is for two aircraft (not one) and Boeing’s current contract is for $170 million to work up plans for the interior of the aircraft, don’t fit neatly into a 140 character tweet.
Some have suggested the real reason for the Twitter storm against Boeing was a negative reaction to Trump’s trade positions by Boeing’s CEO. Supporters, on the other hand, say this is Trump’s way of saying he is watching out for the American taxpayer’s dollar.
The Overall Impact
Factors to watch include the fact Trump’s proposed increase in defense spending flies in the face of his stated foreign policy views. Trump has said he wants to recall U.S. troops back home and ask allies to share a bigger portion of the burden of world peace.
This may make it difficult to justify spending even more on the military. Trump is said to be likely to raise military spending by nearly $60 billion every year. This would include enlarging the size of both the army and marines and also call for increased spending on arms and supplies.
If Trump convinces Congress his plan makes sense, defense contractors could be in good stead for at least the next four years. If not, things could take a turn for the worse.