Matt HealeyThursday,21 March 2013

The Snap

A while ago I wrote a post that mentioned government waste. In that post I mentioned I would be highlighting some programs that should be canceled be cause they were wasteful and not needed. This is the first of those posts and it highlights the Medium Extended Air Defense System — MEADS. This is a missile defense system that is meant to replace the Patriot anti-missile system.

The Download

I have not yet seen any news article or report that thinks the way the sequester was done was the most efficient way to cut spending. Everyone bemoans the fact that these are not targeted cuts, but horizontal cuts. The argument is that there is no way to cut wasteful programs and leave productive programs untouched. The problem with that statement is there is little agreement on what constitues a useful, productive program. Let’s take a look at the MEADS program. This was a weapons system that went into development in 2004. The intent was to develop the system with Germany and Italy.

There are multiple problems with the system. The first is a question about the necessity of the system. Is an anti-missile system really required in the current threat environment? I suspect that it is not because the military has announced that even if the system is developed, it will never be deployed. Additionally, the Army has indicated that they do not want the system. So, I suspect that it is not a needed system. Obviously, Lockheed Martin, the general contractor for the system, disagrees and believes the system is needed. I also suspect that Lockheed’s belief is colored by the hundreds of millions of dollars they receive every year for the program. The next question is cost overruns. The estimates of the cost overruns range from $0, from Lockheed, to over a billion, from Citizens Against Government Waste, who reference a GAO report. I suspect the overrun is not $0. So by my read we have an expensive program overrunning its budget that will not be deployed even if development is completed.

But since there is always someone who thinks the program is not wasteful, in the interest of fairness, we should investigate their position for keeping the funding. The first argument is jobs. Eliminating the program will cut jobs. As I have said before, all government spending create jobs. The question is in addition to creating jobs, does the program create other benefits? In this case, I believe the answer is no. The second argument that I have seen is canceling the program will strain our relationship with Germany and Italy and we need to maintain these alliances. While I agree that maintaining strong ties with allies is positive, I am not sure reckless spending is the way to do it. Further, I seem to remember that Germany is one of the driving forces behind the imposition of austerity in the EU, and Germany has announced that they will not purchase the system once it is developed. Based on that I suspect that despite what they say, they will understand. Finally there is the argument that canceling the program will cost more in termination costs than continuing it. In 2013 that may be true, it may not be depending on who you listen to, but when the cost savings from 2014 and beyond are factored in it is no contest. This is the quintessential “kicking the can down the road.” Over the long tern, killing the program will save money. Yet despite all of this, and one Senator’s push to kill the program, Congress can not seem to defund it.

Hat Tips

Army Doesn’t need MEADS, MEADS Cost estimate, MEADS cost overrun, Citizens Against Government Waste PDF report, Syracuse Jobs from MEADS, Senator Kelly tries to kill MEADS, Germany not to purchase MEADS, Germany and Italy On Cancellation , MEADS funding cuts, Government spending creates jobs, Image Credit: Wikimedia Commons

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