Economy

Why Donald Trump's Complaint About This Controversial Program Is Misleading

December 12th 2016

By:
Mike Rothschild

President-Elect Donald Trump's tweets taking aim at certain companies or programs have become a regular ritual since the election.

On Monday, he turned his eye to the hugely expensive F-35 Joint Strike Fighter program, criticizing it for its costs, and hinting that as president, he'd curtail or kill the plane's development.

This isn't the first time Trump has taken aim at the F-35's costs. In 2015, he said of the F-35: "I’m hearing that our existing planes are better. And one of the pilots came out of the plane, one of the test pilots, and said this isn’t as good as what we already have."

It's true that the F-35 has massively overrun its initial costs. Since the contract for the F-35 was awarded to Lockheed in 2001, the costs of designing, testing, and eventually building over 2,000 planes has ballooned to $400 billion, with some estimates claiming the program will cost as much as $1.5 trillion over the course of its career. Lockheed is working to reduce the costs of building each individual plane from over $200 million per unit to around $85 million by 2019.

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However, Trump can't legally cancel the F-35.

Sen. John McCain, who supports Trump's critiques of the costly jet fighter, told Reuters the program couldn't be canceled, because the money's already been spent.

Trump could reduce the number of F-35 planes the military orders, but this will only increase the per-unit cost, given that most of the money spent on the plane has already gone into its development

Beyond that, the F-35 is a massive job-creator, with its construction spread out to hundreds of companies in 46 states and employing over 32,000 people. Reducing the number of planes will put people out of work, and damage Trump's reputation has a job creator.

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Maybe the biggest reason that Trump won't be able to do much about the F-35 is that the US has no other alternative. Most of the existing US fighter planes are decades old, and Trump himself has savaged the "existing planes" of the military, complaining that they fly with parts salvaged from disposal yards.

The other modern US fighter plane was the F-22, but in 2009, cost overruns and delays prompted the Senate to reduce the number planes it was ordering, with just 187 coming off the line. Restarting its construction would take years and a huge investment.

The president-elect hasn't said exactly what he plans to do to reduce costs that Lockheed isn't already doing. But it's clear that his putting the company in the spotlight had consequences; his tweet immediately sent Lockheed's stock tumbling.

Eight other defense contractors saw their stocks take massive hits early in the day before recovering, another demonstration of the effect the president-elect's Twitter musings can have on the US economy.