Republican Corporate Welfare Handouts Continue

Dear President Bush,

It appears Mississippi wants to outdo Texas’ corporate giveaway largesse in one fell swoop using the wallet of the U.S. Treasury. The Mississippi delegation snuck in some $200 million of corporate welfare in an emergency appropriations bill for military operations in Iraq and Afghanistan and hurricane relief. The Senate voted to keep funds for Northrop Grumman in the bill to pay for hurricane losses their insurers are unwilling to pick up.

It appears two of your closest friends, Texas Gov. Rick Perry and Mississippi Sen. Trent Lott, love giving the taxpayer's money to big politically connected corporations. It just happens both are in the defense industry. Texas funds military aircraft manufacturing while Mississippi subsidizes shipbuilding.

Gov. Perry may feel upstaged by this budget proposal. Texas only mobilized $140 million in support for Vought Aerospace Industries between state and federal funds. The state had to pony up $100 million in two different packages to buy Vought’s goodwill and promises of job growth. As you are well aware, Vought is owned by The Carlyle Group, the famously politically connected investment house just down the street from the White House. During the Texas subsidy negotiation period Carlyle returned over $2 billion to its investors citing “stellar investment performance”. Did your father do any work for The Carlyle Group during this time?

How needy is Northrop Grumman currently? For a smaller state to beat Texas in corporate subsidy, the company must be truly hurting. However, research reveals otherwise. In 2005 the company had a gross profit of $5.1 billion and a net income of $1.4 billion. It had positive cash flow the last two years of over $1.3 billion. Capital expenditures the last 3 years ranged from $635 million to $824 million.

The balance sheet shows something quirky. Cash on hand dropped precipitously the last quarter. They used some of the money to pay down some short/current long term debt and to reduce their accounts payable. However the majority of what previously was cash turned into higher inventories and accounts receivable. As the federal government is one of their big payers, what role did it play in the almost $500 million growth in AR? Is somebody playing games here, trying to make the company look cash strapped?

Would the check signers hold up payment per requests from U.S. Senators or White House staffers? Would federal buyers hold up orders to the company for the same reason? Has someone engineered the appearance of need to make the Mississippi Senators sales job easier? Northrop Grumman’s financial performance for the last two years reveals a company easily capable of handling a $200 million hit courtesy of their insurers. Yet, something changed the first 3 months of the year to make them appear more vulnerable. Is it real or engineered? Write me back, I want to know.