This is a post that I put up three years ago, and I repeat it now:
What if the shoe were on the other foot?
Let’s imagine that the government signs a contract with Boeing, where
the company will provide 500 military aircraft over a ten year period.
The contract is structured so that Boeing gets $10 million for each
unit, payable on delivery, and another $5 billion at the end of the 10
year contract, as a bonus for completing all aircraft on time, bringing
the total of the contract to $10 billion.
Nine years into the project, 450 aircraft have been delivered, and the
company is well positioned to deliver the remaining aircraft before the
expiration of the contract and collect the bonus. The Air Force decides
that they cannot afford to pay the bonus, and unilaterally alters the
contract to eliminate the bonus, and decides that the original price of
$10 million per copy is sufficient. The military also announces that
while other contracts with defense contractors are unaffected by this
contract change, budgetary constraints may cause them to alter other
contracts in the future.
Boeing protests, saying that each aircraft costs the company more than
$10 million to build, and the company stands to lose money on this
contract if the previously promised bonus is not paid. Boeing further
states that had the bonus not been a part of the contract, they would
have signed other, more lucrative deals with other parties, and that the
bonus was the reason the deal was agreed to in the first place. Boeing
petitions their congressman to reinstate the original conditions of the
contract. Instead, the Democrat-controlled congress threatens to pass a
law preventing corporations who receive money from military contracts
from negotiating the terms of those contracts.
1. At this point, is Boeing justified in refusing to deliver any more aircraft?
2. Should the government be able to force them to deliver them anyway?
3. Is the law preventing defense contractors from contacting their representatives constitutional or fair?
Most would say that the Air Force and Congress are out of line. Sure,
$20 million per aircraft seems steep, but the Air Force still made the
deal, and should have considered that prior to having the work done.
How is this any different from what is being done to those who provide
labor as their product? The employees have delivered the product (their
labor), and now that the work is done 25 years later, there are attempts to alter the
agreement by eliminating the pension that they were promised. The very pension that caused them to stay when there were more lucrative jobs available.
If the state thinks that the pension is unaffordable, they should cut other projects, instead of screwing over the people that already performed their part of the bargain. For example, in the state of Florida, the entire public pension system costs about 3% of the state’s budget. Medicaid represents nearly 30% of the state budget. The people who are on Medicaid did nothing to earn that money, besides have children that they cannot afford. Why not cut that?
The answer is simple: Vote pandering.