GE finds itself on wrong side of Obama's defense agenda
Tuesday, July 27, 2010
For more than a year, General Electric has been notable among U.S. corporations for enjoying generally friendly relations with the White House. The company was broadly supportive of President Obama's stimulus efforts, and its chairman, Jeffrey Immelt, sits on a White House economic advisory board.
But now the White House and GE are clashing publicly over a fighter-jet engine -- built by the company and its British partner, Rolls-Royce -- that has been on the Pentagon's chopping block for years, only to be rescued repeatedly by Congress. The issue is poised to come to a head Tuesday during a House subcommittee markup for the annual defense appropriations bill, which Obama has threatened to veto if it has the $485 million for the engine.
GE -- whose financing arm received billions of dollars in federal bailout funds -- has launched a furious lobbying and media effort in recent months aimed at securing funding for the engine, which would serve as an alternate for Lockheed Martin's F-35 Joint Strike Fighter. Pratt & Whitney, the Pentagon's choice for developing an F-35 engine, has fired back with a lobbying and advertising campaign of its own.
The dispute underscores the latest effort by Obama and his defense secretary, Robert M. Gates, to target costly defense projects in the face of avid support on Capitol Hill. The battle not only threatens the fate of the Pentagon's budget, it could also interfere with the Obama administration's plans to move ahead with a repeal of the military's "don't ask, don't tell" policy on gay men and lesbians, which is included in the legislation.
"The signals have been pretty clear that this is a very serious veto threat," said Thomas A. Schatz, president of Citizens Against Government Waste, which has been sharply critical of the GE project. "It's very unusual to see such a unified front on this kind of project."
The next-generation F-35, slated to replace several types of U.S. military fighter aircraft, has been dogged by budget overruns and technical problems. GE and its supporters argue that proceeding with a second engine will force prices down through competition, pointing to estimates from the Government Accountability Office indicating that such an approach is likely to pay off in the long run.
Gates and other administration officials strongly disagree, calculating that pushing ahead with the GE project will waste nearly $3 billion of taxpayer money. Administration officials declined to comment for this article.
GE has reported spending more than $15 million on lobbying through June, a 30 percent increase over 2009. Its roster of registered lobbyists includes former House majority leader Richard A. Gephardt (D-Mo.) and former senators John Breaux (D-La.), Trent Lott (R-Miss.) and Don Nickles (R-Okla.), records show.
United Technologies, the parent of Pratt & Whitney, has nearly doubled its lobbying so far this year, to $5.5 million, though it has a smaller and more defense-focused agenda than GE. All told, 75 lobbyists work for the firms involved in the fight for the second engine, and most are former legislative or executive branch officials, according to the nonprofit Center for Public Integrity.
"It's been vicious," said Rick Kennedy, media relations manager at GE Aviation.
Dave Manke, Pratt & Whitney's vice president of aerospace defense policy, said the company has been outgunned on lobbying but has the advantage of Pentagon support. "That's a good position to be in," he said.
Kennedy and other GE backers, however, play down the extent of the company's conflict with the administration and say they are hopeful Congress will decide the issue in GE's favor. The House already included the second engine in a defense authorization bill.
"There are some sectors where we're completely in line with the administration and some lawmakers, and others where we're not," Kennedy said. "We're so large and so diverse, it's understood that we're not going to be aligned with them on everything."
Staff writer Michael D. Shear contributed to this report.