General Electric Gets Billions in Defense Contracts While Reps Hold Its Stock | Fintech Zoom
General Electric’s stock price has tumbled drastically since its all-time peak in August 2000, and in 2018 the stock was dropped from the blue-chip index. Still, never underestimate a multinational conglomerate: G.E.’s revenue beats that of State Farm Insurance, Pepsi, and FedEx, according to the Fintech Zoom 500 list.
One slice of G.E.’s income comes from a special purchaser: Congress’ appropriations for defense contracts. The industrial conglomerate brought in nearly $4.4 billion in defense revenue last year, according to Defense News, making up about 6% of its revenue. The figure includes sales to the U.S. departments of Defense and Homeland Security, the U.S. intelligence community, and defense sales to international customers.
That sum, which makes G.E. the 27th-largest defense company by revenue in the world, places it ahead of France’s Naval Group and Sweden’s Saab. When people think of defense contractors, they might think of Lockheed Martin’s jet fighters or Raytheon’s cruise missiles, but G.E.’s website promotes its “advanced materials, the design of complex turbomachinery and advanced cyber protections” for its defense partners.
As G.E. receives billions of dollars in defense contracts, at least five U.S. senators and at least two dozen U.S. representatives held its stock as of the most recent annual disclosures for 2020, including members of Congress on committees that oversee the defense budget and energy policy. The securities are held by the members of Congress, their spouses, or jointly, and are only reported in broad ranges, not as exact amounts or as machine-readable data.
The largest Senate stockholder in G.E. as of the end of 2020 was likely to be Nevada Democrat Jacky Rosen, a member of both the Armed Services Committee and Homeland Security Committee, with shares worth between $19,000 and $110,000 across five investments held by herself, her spouse, and in joint trusts. Sen. Tommy Tuberville (R-Ala.), another member of the Armed Services Committee, which authorizes the Pentagon’s funding levels annually, also owned G.E. shares, reported as being between $15,000 and $50,000 worth.
The conglomerate’s website advertises its “100 years of coal-fired power service expertise,” and its power plants, oilfield services subsidiary, and gas turbines business have led to G.E. being ranked the seventh-largest toxic air polluter in a 2020 study by the Political Economy Research Institute (PERI) at UMass Amherst. The PERI index measures “chronic human health risk from air pollutants directly released or transferred to incinerators (and not destroyed) from large facilities in the US in 2018.” Sen. Sheldon Whitehouse (D-R.I.), a member of the Environment Subcommittee on Clean Air and Climate, holds between $15,000 and $50,000 in G.E stock.
The spouse of Senator Tom Carper (D-Del.), chair of the Committee on the Environment and Public Works and a member of the Homeland Security Committee, held up to $15,000 worth of G.E. going back to at least 2015. Senator Tim Scott (R-S.C.) and retiring Sen. Pat Toomey (R-Penn.) each reported holding between $1,000 and $15,000 worth of G.E. stock.
In the House, by far the largest G.E. shareholder as of the end of last year was Rep. Michael McCaul (R-Tex.), with between $1.5 million and $6 million held as he sits on the Armed Services Committee and the Homeland Security Committee, which he previously chaired. The spouse of Rep. Ro Khanna (D-Calif.) held between $50,000 and $100,000 in G.E. among her fortune in assets while the congressman sits on the House Armed Services Committee. Earlier this year, Ritu Khanna had pledged to divest from weapons companies, though she still holds stock in defense contractors Honeywell and Leidos. She has recently divested from much of her military contractor and fossil fuel stock holdings.
Other House members with stakes worth up to $50,000 in G.E. as of the end of 2020 include the following:
- Austin Scott (R-Ga.) and Patrick Fallon (R-Tex.), on the Armed Services Committee
- Warren Davidson (R-Ohio)
- David Joyce (R-Ohio), on the Appropriations Committee
- Jim Cooper (D-Tenn.), who sits on a trifecta of the Armed Services, Oversight, and Budget Committees. Cooper, a member of the conservative House Blue Dog Coalition, faces a progresssive primary challenger this year in community organizer Odessa Kelly, who has highlighted his backing by the corporate PACs of weapons manufacturers.
Other reps on the Energy and Commerce Committee who held G.E. shares as of Dec. 31, 2020 include Michael Burgess (R-Tex.), Lori Trahan (D-Mass.), Peter Welch (D-Vt.), Gus Bilirakis (R-Fla.), and Billy Long (R-La.). A recent report from the International Energy Agency warned urgently that polluting emissions from power plants in advanced economies must be zeroed out as soon as 2035.
Two Democrats on the House Appropriations Committee owned a stake in G.E.: Ed Case of Hawaii, co-chair for Policy and Legislative Strategy of the Blue Dogs, up to $15,000 worth; and Grace Meng of New York, up to $1,000, while she also sits on the Homeland Security Committee. Rep. Matt Cartwright of Pennsylvania, co-chair of the Democratic Policy and Communications Committee, held up to $15,000 in G.E. shares.
General Electric spent nearly $6.3 million lobbying last year, according to OpenSecrets, putting it comfortably in the top 100 spenders. General Electric is promoted on the website of the nonprofit foundation arm of the U.S. Chamber of Commerce, one of the two largest lobbying groups in D.C., which has opposed corporate tax hikes proposed in the Democratic budget resolution to pay for infrastructure spending and emissions reductions.
This review did not examine periodic transaction reports for 2021, which could include sales of G.E. shares that were held at the end of 2020 or additional purchases by the elected officials mentioned here or other members of Congress this year. The U.S. Congress could release its members’ financial disclosure reports as standardized data if it were to take up the STOCK Act 2.0., a bill introduced in the House and the Senate, that would restore the original provisions of the 2012 STOCK Act—later repealed—that would make financial information searchable in an online database.
In addition, at least three bills have been introduced that would ban individual stock ownership by members of Congress, requiring divestment of assets to either broad mutual funds or blind trusts. In March, a full House vote on the amendments to be part of the H.R. 1 ethics reform package was blocked by the Rules Committee, a body controlled by Speaker Pelosi.
Recently, Sludge found that four dozen members of Congress own stock in major Defense contractors like Lockheed Martin and Raytheon as the companies’ revenues from defense have leapt over the past 20 years.
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