Friday, March 07, 2008

Blame McCain

Last time we checked, Senator John McCain had barely secured enough delegates to win the GOP presidential nomination. The convention is still months away, as is the general election. And, if he manages to beat his Democratic opponent, McCain won't be sworn-in as Commander-in-Chief until January of next year.

Still, it's never too early to blame a presidential contender for a problem or issue, particularly if might reverberate with the electorate. Consider this headline from today's Financial Times:

Pelosi points finger at McCain on Boeing.

In other words, the House Speaker is blaming Mr. McCain for a recent Air Force decision on a new tanker contract. That decision, announced last Friday, awarded the $40 billion contract to a U.S.-European consortium, led by Northrop-Grumman. That ended a 50-year relationship between the service and Boeing, which has provided the bulk of the USAF tanker fleet since the early 1950s.

To be fair, Ms. Pelosi has a point. Largely through the efforts of Senator McCain, an Air Force plan to lease 767 tankers from Boeing was scuttled almost five years ago. McCain was an early critic of the deal, claiming that the lease would be more expensive than buying new refueling aircraft.

His criticism of the lease plan intensified after it was discovered that Boeing offered jobs to the Air Force's senior procurement official and two of her family members. That official--Darlene Druyun--eventually went to jail on corruption charges, as did Boeing's former Chief Financial Officer.

Revelations of wrong-doing forced the Air Force to cancel the lease deal, and re-open the tanker contract for new bids. The decision announced last week represented the culmination of that process, with the USAF opting for the Northrop-Grumman entrant, which is based on the Airbus A330 airliner.

In other words, John McCain opposed the tanker lease more than five years ago, and in hindsight, his efforts to block the deal were well-founded.

But, because his opposition blocked the contract for Boeing, McCain becomes a convenient target for "outsourcing" American jobs. Along with Nancy Pelosi, other politicians are weighing in, setting their sights squarely on Senator McCain. As the AP reports:

"I hope the voters of this state remember what John McCain has done to them and their jobs," said Rep. Norm Dicks, D-Wash., whose state would have been home to the tanker program and gained about 9,000 jobs.

Having made sure that Iraq gets new schools, roads, bridges and dams that we deny America, now we are making sure that France gets the jobs that Americans used to have," said Rep. Rahm Emanuel, D-Ill. "We are sending the jobs overseas, all because John McCain demanded it."

Boeing's Republican supporters have been equally vocal in denouncing McCain:

"John McCain will be the nominee and I will support him, but if John McCain believes that Airbus or EADS is the company for our Air Force tanker program he's flat-out wrong - and I'll tell him that to his face," said Rep. Dave Reichert, R-Wash.

Rep. Todd Tiahrt, a Kansas Republican whose district includes a Boeing plant that could have gained hundreds of new jobs from the tanker program, said McCain's role in killing the earlier deal is likely to become an election issue. Both of the leading Democratic candidates for president, Barack Obama and Hillary Clinton, have criticized the Air Force decision.

"I think we absolutely will hear more about it," Tiahrt said. "We'll hear it mostly from the Democrats and they have every right to be concerned."

And, speaking of Mrs. Clinton, she offered similar thoughts on the campaign trail last week. Over to you, Senator Obama.

But the Boeing issue may prove to be a double-edged sword, assuming the McCain campaign is willing to exploit it. By siding with Boeing, Pelosi, Emanuel, Dicks (and other politicians) are aligning themselves with a corrupt deal and corrupt officials. It wouldn't be very hard to create a campaign ad, juxtaposing video of Darlene Druyun in prison garb, and shots of Boeing's Democratic friends. Close with the reminder that McCain's actions (purportedly) saved the taxpayer $6 billion, by taking on "special interests." Sounds like a winner to us.

Obviously, McCain's record in defense matters is far from perfect. Still, given the tanker deal's sordid history, the Arizona Senator clearly occupies the political and moral high ground. His actions may not win friends in Boeing's executive suite, or votes in the Puget Sound region. But with a little effective counter-punching, McCain can put the Democrats (and other members of the Boeing lobby) on the defensive.

Someone ought to ask Ms. Pelosi why she supports a company that paid a record, $600-million fine for the corrupt tanker deal--and why the same firm should have the inside track for the "replacement" contract.


mannaka said...

I’m still curious, as I asked in a comment to the McCain’s Political "Courage" post, whether “…there might be a connection between Boeing losing the tanker contract to EADS … and McCain's attack on Boeing & Speedy a few years ago?” I know it sounds far fetched, but if the Boeing and EADS proposals were both adequate, I wouldn’t put it past the AQ community to purposely choose EADS’ just to cause problems for McCain (as well as Congress & the GAO). As long as there wouldn’t be any significant mission impact, I could easily imagine them seeing it as a way to stir things up a bit.

As for McCain’s responses so far to the critisism from the left, I’m not sure if he’s really capitalizing on the high ground very well. At times, he sounds fair and unbiased, coming across as someone who's just looking out for the little guy. At other times, however, he seems to gloat a bit too much and boast about how he saved the taxpayers $6 billion. From where I sit, he really ought to stick to the more modest approach. The whole $6 billion line, to me, is a load of BS. I spent about 15 years auditing the AF, and I can tell you that my agency was always running around tooting its own horn about how much it was “saving” the AF (something we called potential monetary benefit, or PMB). The problem is, audits (like the one performed on the previous tanker contract by GAO), never really identify “true” savings. What they do is string a series of worst case assumptions together (conveniently slanted in favor of negative findings) and compare them to an ideal world outcome that really isn’t practical. They then declare the difference to be “savings.” Since the government doesn’t operate in a profit motivated environment, meat cleaver approaches like this are rarely challenged by management. Believe me, though, when I tell you that any close scrutiny of McCain’s $6 billion “savings” would probably shoot it full of holes. As a result, if I were advising Mr McCain, I’d suggest that he not shine too much light on the issue.

Unknown said...

Mannaka--I can't discount the potential impact of McCain's past criticism of Boeing and the tanker lease deal on the Air Force's recent tanker decision.

Obviously, Northrop-Grumman/EADS offered a better jet, but the specter of Congressional opposition (specifically) from Senator McCain had to be a factor in the decision-making process. Let's be blunt; Boeing's chicanery in the tanker lease made them radioactive in getting future, big-ticket contracts. Look at CSAR-X. Boeing was a late entrant--but offered an (arguably) better chopper in the MH-47, but the deal was scuttled and open for re-bids. No one will admit it, but the tanker controversy played a role in that decision, too.

As for McCain, I agree with your comments on taking the high road--and the "cost savings" game. All of us have played it; expenditures are minimized, while savings are grossly inflated, for the sake of budgets--and careers.

Unknown said...

If I may, I think you've taken one step too far. By Pelosi, Dicks, etc siding with Boeing, they are siding with jobs. As you said we're now five years removed from the scandal, Boeing's management has changed and current the competition was incredibly transparent. If there was any wrongdoing it was in the last minute changes to the RFP that may have given an advantage to the heavier KC-30 over the KC-767, despite the fact that it was publicized that this tanker was supposed to be medium tanker not a heavy tanker.

mannaka said...

According to an 11 Mar 08 article in Business week titled Boeing's Trouble with Tankers,

“As a hungry newcomer, EADS was more willing to make concessions to win customers. For example, in Britain it agreed to assume much of the financial risk in building the planes, and then lease them to the government. Boeing, accustomed to traditional procurement contracts, never offered such an arrangement.”

The competition the article is talking about occurred in 2004, about three years after Boeing was raked over the coals for offering to lease 20 767s to the USAF with a follow-on sale of 80 more. So let me get this straight, in 2004 EADS was "making concessions" by offering a lease option, while Boeing was too stuck in its ways to contemplate such a revolutionary idea? On top of that, in 2001, Boeing was trying to pull a fast one on the poor American taxpayer by sticking them with a crapy lease rather than a more desireable purchase? I’m more curious than ever to find out exactly how GAO came up with its $6 billion “savings.”