McDonnell Douglas Bailout: No Chrysler : Corporate-welfare requests must get public scrutiny
Corporate welfare is not against the law. Just as the nation may decide, after due deliberation, to provide aid to dependent children, so it may decide to provide aid to dependent corporations, corporations that cannot make it on their own. Washington bailed out Lockheed in 1971 and Chrysler in 1979. The wisdom of those bailouts has been debated ever since, but the necessary political support was clearly in place at the time, and the legality of the bailouts has never been questioned.
In late 1990, according to an audit by the Defense Department’s inspector general, the Pentagon bailed out McDonnell Douglas Corp. by making two payments--one for $148 million and another for $72 million. In the report, released last month, sections dealing with the bailout were deleted, but The Times obtained them and reported on them Monday.
Was this a legal bailout? The audit does not address this question. Does it deserve to be called a bailout at all? Senior defense officials who decline to be identified say it does not.
One wonders, then, why they decline to be identified. One wonders also why the report of the payments had to be deleted from the audit. If the Defense Department has nothing to hide, why is it acting as if it does?
Perhaps because it knows that the public debate which will now begin about these payments should have begun at the time the payments were first under consideration. In October, 1990, according to a firsthand report, McDonnell Douglas Chairman John McDonnell threatened to stop the C-17 cargo jet program if he was not provided with about $500 million in special payments. His breathtaking demand may have been justified, but it surely deserved no less in the way of public scrutiny than Lee Iacocca’s requests for Chrysler received.
In a democracy, nothing, not even defense, ought to be withheld from the people for their decision. As external threats to the security of the United States shrink, the public consensus for massive defense expenditures is also shrinking, and the temptation to bypass the public is growing for those whose fortunes are tied to the defense Establishment as we have known it. The moment calls for a certain vigilance.
Last month, a 48-page Pentagon planning memo prepared under the supervision of Under Secretary Paul Wolfowitz was leaked to the press by an insider apparently shocked at what it called for: a budget outlay of $1.2 trillion over the next five years, armed forces of 1.6 million people, the deliberate frustration of collective security arrangements in Europe or the Far East and the deterrence of any power that might aspire “to a larger regional or global role.”
While denying, in so many words, that the United States can or should be the world’s policeman, the report offered a world vision in which we would be just that--and, by design, alone in the blue uniform. Quite apart from the merits of this vision, its staggering price tag all but guarantees that public support for it will be difficult to rally. And that, in turn, all but guarantees that attempts will be made to dispense with the inconvenience of public support altogether--at least the kind of public support that arises from public debate.
Next month’s congressional hearings on the bailout should ask two questions: First, how much more corporate welfare can we afford? Second, how much more public disenfranchisement can we risk?
