Disgusting Corporate Welfare: Northrop Grumnan

The weasels in Congress are trying to sneak through a $500 million handout to Northrop Grumnan for "business disruption" from Katrina.

Um, I think there is an insurance policy a company can get to handle this "business disruption" or which we speak. What was it called again? Oh year, "business disruption insurance."

I'm not real clear why the American taxpayer is transferring half a billion to a company which - see here - is very profitable and doing just fine without it. Besides the whole "congress is a bunch of whores" thing. (Sorry about the language. I generally like to keep this a family friendly blog. And that simile is grossly unfair to whores.).

Update: This story is in today's Wall Street Journal as well ($ required. Page A4). The Mississippi delegation and Republican Senate Appropriations Committee Chairman Thad Cochran are the ones trying to push this. Refreshingly, the White House opposes it. Northrop tried to get this through in December and failed. Northrop the aid will end up amounting to "only" $140 million to $200 million. A Northrop spokesman is quoted in the story:

"Most of the damages inflicted in Northrop Gruman's operations is adjudicated through insurance claims and legal processes, but these are slow and cumbersome - and this resolution will take years...... Without near term and timely supplemental funding, the recovery of the shipyards will be significantly delayed and further increase the already delayed delivery schedules and cost of Navy ships."

Now I understand. The government can avoid paying more for ships if they give Northrop a couple hundred million dollars. Sounds like a bargain.

Of course, Northrop's argument is ridiculous. When bad things happen to companies, it should be paid for by the companies and their insurance, not tax payers. They had over $2 billion in cash flow from operating activities last year. They have plenty of cash for recovery just from normal operations.

It's hard to argue that you desperately need a handout of between $140 million and and $500 million when, since you last tried to make this argument, you have spent $879 million on dividends and stock repurchases.

I'm also unclear why - even if the problem was having the cash on hand for repairs (which is obviously not) Northrop wouldn't just ask for a loan. Let alone go to financial markets awash with capital - financial markets which have already given Northrop almost $5 billion in loans.

The answer, of course, if corporate welfare. Northrop thinks if they throw out a couple million in lobbyine with "Katrina" and "national defense" that they will be able to cash in.