Congress Approved Deal Without Researching It
In a Sept. 2 “Letter to the Editor” Christopher Hellman writes to the Seattle Post-Intelligencer that Congress’s initial approval of a plan to lease refueling tanker aircraft overlooked some critical information.
In the Aug. 29 story, “McCain to release data unfavorable to Boeing air tanker deal,” you report “there has been broad support in Congress” for the proposed lease agreement. While this is true, recent developments reveal that this support is severely misguided.
You state correctly that “three of the four congressional committees that reviewed the … deal have endorsed it.” Yet surprisingly, they did so without seeing a final version of the actual agreement, which is not yet available.
Last week the Congressional Budget Office reported that total costs of a lease would be $5.7 billion higher over the life of the program than buying the aircraft outright.
During congressional hearings in July, the General Accounting Office testified that Boeing’s profit on commercial 767s is roughly 6 percent. Based on a recent Air Force report, the current lease plan allows Boeing to make up to 15 percent profit on the tankers. While it is understandable that modifying the aircraft to meet the military’s standards makes each plane more expensive, this doesn’t explain why the profit margin is so much higher.
Sen. John McCain, R-Ariz., has released a 2001 letter from Boeing offering to sell 767 tankers to the Air Force for $125 million per aircraft, 22 percent less than the cost to lease and purchase the aircraft under the proposed agreement. This is particularly surprising given that the 2001 price was for 36 aircraft, while the lease covers 100 aircraft. Normally, when you buy more of an item, the cost per item goes down, not up.
Events in Afghanistan and Iraq demonstrate that the U.S. tanker fleet contributes greatly to our ability to dominate the modern battlefield. But that does not change the fact that the proposed lease agreement is no deal for the American taxpayer.
The original article appeared here: