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Did McCain Cost Boeing $40 Billion Tanker Deal?

March 1, 2008

In a stunning announcement Friday, the Pentagon skipped over Boeing and awarded a massive $40 billion contract for a new fleet of refueling tankers to a Northrop Grumman and European Aeronautics Defense and Space (EADS). While Air Force officials claimed the choice of the KC-45 tankers jointly developed by Grumman and Airbus' parent company was based on its superior design, politicians in both parties are howling about the devastating economic impact on U.S.-based Boeing. And they might just have John McCain to thank for it.
Back in 2004, McCain launched a one-man to crusade to undo the scandal ridden lease for Boeing aerial refueling tankers based on the 767 design. Subsequent congressional investigations showed a systematic failure of the Air Force's procurement process in opting for a lease of the Boeing aircraft that would be more expensive that purchasing the tankers outright. While Air Force officials blamed one Pentagon official about to start a her new career at Boeing as responsible for swinging the deal to hr new employer, Senator McCain was having none of it. As the Washington Post reported in November 2004:

Sen. John McCain (R-Ariz.), who has conducted an equally vigorous campaign against the lease, said in releasing the internal Pentagon communications in a speech on the Senate floor that the missives reflect a "systemic Air Force failure in procurement oversight, willful blindness or rank corruption."
McCain said top Air Force officials have recently been trying to "delude the American people" into believing that a single person is responsible for misconduct in the $30 billion leasing plan -- namely, Darleen A. Druyun, the Air Force contracting official who pleaded guilty two months ago to overpricing the tankers as a "parting gift" to Boeing before she became one of the firm's executives.
"I simply cannot believe that one person, acting alone, can rip off taxpayers out of billions of dollars," said McCain, who said he will keep pursuing internal Defense Department and Bush administration communications until "all the stewards of taxpayers' funds who committed wrongdoing are held accountable."

In the fallout from the reversal of the Boeing lease, Air Force Secretary James G. Roche and Marvin R. Sambur, the Air Force's top acquisitions manager, resigned several days before McCain's speech. (As the Post noted, emails revealed that "Roche asked a lobbyist for Boeing Co. to use the company's Washington contacts to 'quash' a deputy undersecretary of defense and make him "pay an appropriate price.")
For his part, John McCain has made his role in unearthing the Boeing scandal and billions of dollars the lease would have wasted a centerpiece of his campaign for the White House. In October 2007, the McCain web site proclaimed that "in one successful effort, John McCain eliminated up to $2 billion in wasteful and corrupt spending in the Boeing tanker deal" and boasted of his being named a "Taxpayer Hero" by Citizens Against Government Waste. During the November 28, 2007 CNN/YouTube GOP presidential debate, McCain championed his efforts to scuttle the Boeing deal:

"I have the record of fighting against wasteful spending. I have a clear record of winning. I saved the taxpayers $2-billion on a bogus Air Force Boeing tanker deal where people went to jail."

None of which is to suggest that McCain's actions were improper. Far from it, the original Boeing lease deal was shockingly corrupt. It is with good reason that Keith Ashdown of Taxpayers for Common Sense concluded, "It was probably the best example of oversight in the 108th Congress."
More importantly, it appears that on the merit, the jointly developed Grumman-EADS tanker is the better choice to replace the aging American fleet of 600 refueling planes. As the Post reported:

Gen. Arthur J. Lichte, commander of the Air Mobility Command, said the Northrop-EADS plane was chosen because it could carry "more passengers, more cargo, more medical patients, could offload more fuel and had more flexibility, more dependability and more availability."

But while Boeing spokesman William A. Barksdale acknowledged "obviously we are very disappointed with this outcome," Congressmen from districts home to Boeing assembly plants are furious with the decision to award the tanker deal to a consortium including the company's European rival.

Republican Todd Tiarht (R-KS), whose Wichita district would have performed much of the Boeing tanker work, complained, "We should have an American tanker built by an American company with American workers." Democratic Senator Patty Murray (D-WA), whose state boasts Boeing largest plant, echoed Tiarht;

"We are outraged that this decision taps European Airbus and its foreign workers to provide a tanker to our American military. This is a blow to the American aerospace industry, American workers and America's men and women in uniform."

In addition to Murray and other Washington representatives, Boeing's chief supporters in Congress included none other than Dennis Hastert, the top Republican on the House Armed Services Committee and former Speaker of the House. (Boeing had previously announced that Chicago would be its new corporate headquarters.) It's no wonder why the Everett Washington Herald wrote just before the state's February 5th GOP caucus:

"U.S. Sen. John McCain is no stranger to Washington, and some might argue he's no ally of The Boeing Co."

Of course, not everyone is upset with John McCain. Some Republicans who normally find themselves in the "Bash France Caucus" are only too happy to see the Pentagon award billions to Airbus. Alabama Republican Senators Jeff Sessions and Richard Shelby were the winners in the tanker derby:

The EADS/Northrop Grumman team plans to perform its final assembly work in Mobile, Ala., although the underlying plane would mostly be built in Europe. And it would use General Electric engines built in North Carolina and Ohio. Northrop Grumman, which is based in Los Angeles, estimates a Northrop/EADS win would produce 2,000 new jobs in Mobile and support 25,000 jobs at suppliers nationwide.
"I've never seen anything excite the people of Mobile like this competition," Sen. Jeff Sessions, R-Ala., said. "We're talking about billions of dollars over many years so this is just a huge announcement."

Shelby simply called the Pentagon's decision, "great news for Alabama."
The announcement stunned analysts and Boeing backers alike. As the New York Times reported:

A Boeing victory was considered so certain that many Wall Street analysts had already factored the contract into their economic forecasts for the company. One senator, Kay Bailey Hutchison, Republican of Texas, sent out a press release prematurely praising Boeing for its victory.
"This isn't an upset," said Loren B. Thompson, a military analyst at the Lexington Institute, a Washington-area research group. "It's an earthquake."

An earthquake, indeed, and one which may have resulted in part by John McCain's crusade against corruption and government waste. But coming as it does during wartime and a looming recession, the Pentagon's decision to send billions of dollars - and thousands of jobs - to Europe won't be well-received by voters here at home.
As John McCain may be about to learn, no good deed goes unpunished.

12 comments on “Did McCain Cost Boeing $40 Billion Tanker Deal?”

  1. I am shocked that the Government awarded the contract to a French company. I am not suprised that McCain caused it. There is now way in hell that I will vote for McCain in the general election. I am not voting for a Democrat either, I will just write in Huckabee's name on the ballot. I really hope the backlash of McCain's hatred for an American company ruins his political career. He sure is hurting my career as a contractor for the United States Military.
    McCain should be ashamed of himself!!

  2. I ask everyone reading this comment to write their Representatives to reverse this decision. Boycott the USAF recruiting stations, prevent USAF recruiters from visiting our high schools and colleges, and request that the names of your children be removed from the high school lists that are provided free from our school districts to the recruiters. Also, write your Representatives to reduce the USAF's portion of the defense budget. This decision is as STUPID as when the USAF wasted MILLIONS of Dollars buying blue tiger stripe camouflage uniforms for their personnel deploying to Iraq. This is a sad day for America when we allow the USAF to sell our country out to a foreign company. I wonder how much money the Secretary of the USAF and his generals made from this decision? I wonder how many of the generals involved in this decision have already coordinated a job with EADS after they retire!

  3. The awarding of this tanker deal to AIRBUS/EADS/FRANCE rests at the feet of John McCain. BILLIONs of dollars will be sent overseas to EUROPE and many thousands of good AMERICAN jobs are lost forever becuase of this decision. I will be sending a check to Airizona's John McKenne... (ahem) McKain in the amount of .02 (2 cents) detailing why I will NEVER vote for him. He has never been a conservative(!) and this Tanker award to a European company is the straw that has broken the proverbial Camels back! I urge every one to send a check for two (.02) cents with a note admonishing McCain for his tanker meddeling. Has he REALLY saved the taxpayers of this nation any money? Me thinks he (McCain) has cost the United States taxpayers far more (in jobs, salarys and benifits)than he has saved by his foolish one man anti Boeing crusade. Do like I am doing and send Mr.McKain your two cent check and a nastygram! JeffreyS

  4. Ten years from now, when current demographic trends lead to Paris as the capital of the Islamic Republic of France, what a situation we'll find ourselves in with regard to the EADS tanker. Thank you so much, Senator McCain. Hope your conscience over helping Charles Keating sink the multibillion-dollar savings-and-loan industry has finally been salved.
    In addition to the suggestions above, regarding USAF recruiters, be sure to send a beret to the Chief of the U.S. Air Force. Ooh la la!

  5. Unreal. Somebody nees to kick McCain out of the country and try him for TREASON. It's time for every American taxpayer to go to D.C. and take our country back.

  6. yea we all bash boeing and some of there bad deals but what about the bad dealings with northrup {Deep water} 42 billion, and our shores are in just as bad shape as they were before 911 kick mc Cain out of the country

  7. NO one but the MORONS at BOEING are responsible for their loss. They got greedy, arrogant, and stupid. They tried to pull a fast one on the taxpayers, rather than playing by the rules. Blaming John McCain is like blaming the police for a bank robbery because they arrested the robbers. The folks at BOEING are big boys and girls and they knew exactly what they were doing and the risks.

  8. I hate the idea of McCain as president (And want Obama)....other than his view on the war he has made some strong points and is far more liberal than conservative. He was involved in exposing corruption at Boeing in 2004 and now a major contract is going overseas. Yet people are trying to point a finger at him for exposing the corruption in 2004. They seem to feel this has carried over to this decision to award this contract to Europe. I see the Democratic party jumping on this and trying to attack him on it. I hope they don't go there. If you read this story you will get the entire picture and he did the right thing. When people do the right thing you should give them credit even if you don't always agree with them.

  9. I can recall when even small countries had more than one major aircraft manufacturer. I can remember when there were American companies competing with Boeing.
    Now Boeing seems to be so big that nobody in the USA can compete without outside help.
    Boeing used to win contracts because they built the best plane for the job. Is being an American company really enough to justify second-best?

  10. I would love to say in the end the American taxpayer will get more value from the Northrup/Airbus bid. The truth is the taxpayer will be stuck with a huge bill for converting all the power islands and hangars over to higher capacity for the larger plane and the extra fuel for takeoff on the larger weight will all total billions more to the US taxpayer. Where is the saint John McCain to save us now??!!

  11. OK. The government is trillions of dollars in debt. We don't even have enough money to provide health care for our citizens.
    So where are the deficit hawks when you need them?
    a 35 billion dollar glorified "gas station in the sky" isn't going to do a thing help us defeat Al Quida or the Taliban.
    And it isn't going to do a thing for our aging bridges and roads.
    Come on Conservatives. Let's get on the bandwagon and condemn wasted federal taxpayer dollars.


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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