How DC think tanks cash in on the ever increasing Pentagon budget

Last week, both the House and Senate passed their versions of the National Defense Authorization Act for fiscal year 2021. Both bills would authorize the Pentagon to spend nearly $700 billion, a figure that is near historical highs and nearly 100 times more than the Centers for Disease Control and Prevention is receiving in the midst of a global pandemic.

Yet, these bills sailed through both chambers of Congress and were applauded by a number of think tanks. Why? At least one explanation is that the very same people cheering on exorbitant Pentagon spending are also those directly benefiting from it, in a cycle that fills congressional campaign coffers and funds many of DC’s think tanks, which in turn champion higher levels of Pentagon spending.

As the Costs of War project at Brown University recently reported, more than half of the Pentagon’s budget goes to defense contractors. And, the defense industry, in turn, uses part of their profits to influence members of Congress.

In the 2018 election cycle, for example, the defense industry contributed nearly $25 million to congressional campaigns and is on pace to contribute even more in the 2020 cycle, according to the Center for Responsive Politics. If the recent votes on the NDAA are any indication, members of Congress receiving significant contributions from defense contractors are much more likely to vote for increased Pentagon spending. Indeed, Sludge reported that Democrats voting against an NDAA amendment that would have reduced Pentagon spending by 10 percent received more than three times as much in campaign contributions from defense contractors than did their Democratic colleagues who voted for the spending cut. 

What hasn’t been reported yet is that lobbying and contributing to members of Congress is just one way defense contractors influence the defense budget process. Outside the halls of Congress, contractors are able to significantly influence debates about the defense budget process through the sizeable contributions they make to many of Washington’s top think tanks.

In fact, as we have discovered while conducting research for a forthcoming report on defense contractor funding of think tanks, the arms industry has given hundreds of millions of dollars to the nation’s top think tanks in recent years. In many cases these are the very same think tanks that have been clamoring for more Pentagon spending. 

For example, the Center for New American Security published a report entitled, “Investing in Great Power Competitions, Analysis of the Fiscal Year 2021 Defense Budget Request” in early July, just before key votes on the NDAA. The report mentions that “DoD continues to underinvest in some critical enablers” and claims that resilient infrastructure and logistics are “chronic areas of underinvestment.”

Apart from this, CNAS has launched a new commentary series on the next defense strategy, one of which argues the US “is losing its military technological advantage vis-à-vis great power competitors such as China” and calls for “increased investment in the development of new concepts and capabilities.” Furthermore, the commentary mentions “the current Department of Defense (DoD) program and budget may well be insufficient to deter or defeat Chinese aggression in the future” followed by a dramatic warning about the “catastrophic consequences” if that was to happen. 

What isn’t mentioned in any of these reports and articles is the fact that CNAS is heavily funded by defense contractors. As the analysis for our forthcoming report revealed, CNAS has received at least $6.6 million in donations in the last 5 years from leading defense contractors, who clearly benefit from a large defense budget. Moreover, CNAS has received huge amounts of funding directly from DoD, $500,000 in 2016 for example. CNAS thus has rather strong incentives to applaud huge defense budgets.

When asked to comment on these findings, a CNAS spokesperson said the organization “does not take institutional positions and rigorously adheres to and publicly emphasizes its Intellectual Independence Policy on all research.”

Another Washington think tank, the conservative Heritage Foundation, published a report titled “How the 2021 National Defense Authorization Act and the Defense Appropriations Act Can Prepare the U.S. for Great Power Competition” earlier this year, which states that “[e]ven if the United States were to dedicate all federal taxpayer dollars to the defense of the nation, the DOD would still have to make hard decisions about which capabilities are necessary and which should be developed.” Never mind that this would more than quadruple the Pentagon’s budget.

The report then falsely claims that the “defense budget is at a historic low.” In fact, the defense budget is now actually one of the largest in history, including at any point during the Cold War, as chronicled in depth in the Sustainable Defense Task Force’s report. The U.S. also spends more on defense than the next ten highest spending countries combined. In short, the Pentagon isn’t short on cash.

So why the doomsday language from the Heritage Foundation? As you might guess, it is perhaps not coincidental that it would call for increased defense spending given that defense contractors have generously donated to Heritage. In fact, Heritage has even received donations from foreign defense contractors. Specifically, Responsible Statecraft recently reported how Heritage received large donations, $1 million in 2014 for example, from Hanwha Group, a South Korean conglomerate that sells arms, and has been publishing op-eds and reports that were particularly beneficial to Hanwha’s interests. 

The Heritage Foundation did not respond to a request for comment. [After publication of this article, a Heritage spokesperson responded: "Heritage research products all go through a rigorous, multi-layer review process prior to publication to ensure the highest research quality and integrity of our work. Not once in our nearly 50-year existence has a corporate donor directed the views or activities of Heritage."]

CNAS and Heritage, certainly aren’t alone. In fact, we’ve identified more than a dozen other think tanks that have received sizable donations ($100,000 or more) from defense contractors in recent years, while rarely reporting this fact in their published work related to the defense industry. 

What can be done to fix this problem? One simple solution would be for the IRS to require that all think tanks publicly disclose their donors (many that we analyzed didn’t report any donors or appeared to significantly underreport information about their funders).

Another important reform would be for think tanks to publicly report any conflicts of interest withinresearch papers. This would at least give readers the opportunity be aware of any potential biases in the work they are reading.

In an era of declining trust in government, the media, and many other institutions, it’s important for think tanks to lead the way and not just talk about transparency in the abstract, but to put their money where their mouth is when it comes to where they get their money.