At least 50 members of Congress or other members of their households hold stock in defense contractors, companies that receive hundreds of billions of dollars annually from congressionally-crafted Pentagon appropriations legislation.
The total value of the federal lawmakers’ defense contractors stock holdings could be as much as $10.9 million, according to a Sludge analysis of 2023 financial disclosures and stock trades disclosed in subsequent periodic transaction reports.
The most widely held defense contractor stock among senators and representatives is Honeywell, an American company that makes sensors and guiding devices that are being used by the Israeli military in its airstrikes in Gaza. The second most commonly held defense stock by Congress is RTX, formerly known as Raytheon, the company that makes missiles for Israel’s Iron Dome, among other weapons systems.
Defense stocks are defined in this analysis as those of the top 100 defense companies identified by Defense News. They include so-called “pure play” defense contractors like Lockheed Martin and General Dynamics, as well as companies like Boeing and General Electric that have large defense contracts but also engage substantially in other areas of business. The stocks are owned by the members of Congress, their spouses, jointly with their spouses, by their dependent children, or in a few cases, by a qualified blind trust. The latest annual financial disclosures, covering 2023, were due on Aug. 15.
“It is an obvious conflict of interest when a member of Congress owns significant stock investments in a company and then votes to award the same company lucrative federal contracts.” – Craig Holman, Public Citizen
National defense funding, which is authorized annually by Congress, has grown steadily each year during the Biden administration. For fiscal year 2024, the national defense topline was at least $145 billion larger than it was in 2021, an increase of nearly 20% from the last defense budget of the Trump administration. More than half of the Pentagon budget goes to private contractors, defense policy analyst Stephen Semler found in a Sludge analysis.
In fiscal year 2024, Congress approved a record high of $953 billion in defense funding: in December 2023, it approved $886 billion through the National Defense Authorization Act (NDAA), then in April it passed a supplemental security appropriations bill with an additional $67 billion for the Pentagon. The supplemental included tens of billions of dollars in military aid for Israel, Ukraine, Taiwan, and funding to replenish U.S. weapons supplies.
In the Senate, several lawmakers with investments in defense contractors sit on committees that set and approve defense spending: three are on the Committee on Armed Services (SASC), and five are members of the Committee on Appropriations, including two who sit on the key Defense Appropriations subcommittee. This body has jurisdiction over drafting legislation to allocate funds to government agencies including the Department of Defense, as well as supplemental spending bills.
On the House side, at least five lawmakers with household stakes in defense contractors sit on the House Armed Services Committee (HASC), which has jurisdiction over defense policy, headlined by the mammoth annual NDAA. Three of the representatives sit on the Defense Appropriations subcommittee.
“Every American should take a long, hard look at these holdings to conceptualize the scope of Congress’ entanglement with defense contractors,” said Savannah Wooten, People Over Pentagon Advocate with the nonprofit Public Citizen.
“It’s abjectly terrifying that the personal benefit of any member of Congress is factored into decisions about how to wield and fund the largest military in the world,” Wooten said. “Requiring elected officials to divest from the military-industrial complex before stepping into public service would create a safer and more secure world from the outset.”
In the current 118th Congress, a new bipartisan bill, titled the Ending Trading and Holdings in Congressional Stocks (ETHICS) Act (S. 1171), aims to overhaul the rules around congressional stock trading. The measure, whose lead sponsor is Sen. Jeff Merkley (D-Ore.), was negotiated with lawmakers including Sen. Gary Peters (D-Mich.) and Sen. Josh Hawley (R-Mo.), and is supported by many good government groups, including Public Citizen, Citizens for Responsibility and Ethics in Washington (CREW), and Campaign Legal Center (CLC). The bill would ban members of Congress, their spouses, and their dependents from buying and selling stocks almost immediately, and would bar them from holding covered investments starting in 2027, requiring divestment, among other rules.
On July 24, the ETHICS Act earned the distinction of being the first bill banning stock trading by federal lawmakers to be passed by a congressional committee, when the Senate Homeland Security and Governmental Affairs Committee voted 8-4 to advance the measure. Its prospects of receiving a vote in the full Senate, or of being advanced in the Republican-controlled House, this year are uncertain. In July, a bipartisan group of 20 House members sent a letter to Speaker Mike Johnson (R-La.) and Minority Leader Hakeem Jeffries (D-N.Y.) asking for a vote on “legislation that would prohibit members of Congress from owning and trading individual stocks.”
Craig Holman, government affairs lobbyist with Public Citizen, told Sludge, “It is an obvious conflict of interest when a member of Congress owns significant stock investments in a company and then votes to award the same company lucrative federal contracts. Whether or not the official action is taken for actual self-enrichment purposes is beside the point. There is at least an appearance of self-enrichment and that appearance is just as damaging to the integrity of Congress.
“This type of conflict of interest is already banned for executive branch officials and so should be for Congress as well,” said Holman. “The ETHICS Act would justly avoid that conflict of interest by prohibiting members of Congress and their spouses from owning stock investments altogether.”
Rising Defense Spending, Booming Stock Prices
More than three dozen members of Congress own stocks in the “Big Five” defense contractors: Lockheed Martin, RTX, Northrop Grumman, General Dynamics, and Boeing.
Three of these companies—Lockheed, Northrop, and General Dynamics—bring in at least 80% of their revenue from federal defense contracts. A fourth, RTX, brings in 59% of its revenue from defense contracts, according to figures from Defense News. The Big Five defense giants were projected to be paid $140 billion altogether in fiscal year 2024.
In 2021, the first year of the Biden administration and new Democratic control of both chambers of Congress, lawmakers authorized national defense topline funding of $778 billion for fiscal year 2022 (or FY22, for short). The sum was a 5% increase over the $741 billion authorized during the last year of the Trump administration. After Russia invaded Ukraine in February 2022, Congress approved a national defense funding topline that jumped to $858 billion for FY23. With Republicans retaking control of the House in the midterms, the national defense topline rose further the following year, to $886 billion for FY24, before counting the package of emergency appropriations signed in April.
Defense company stocks have done well during the Biden administration, generally outperforming the S&P 500’s increase of approximately 45% during the period. Since President Biden was sworn in, the stock price of Lockheed Martin, the largest weapons manufacturer in the world, has risen by 63%. In April, after Congress approved and Biden signed the $95 billion supplemental aid package for Israel, Ukraine, and Taiwan, Lockheed’s CEO Jim Taiclet told investors on a quarterly earnings call that “presidential budget requests and additive supplemental funding will provide a strong underpinning for future growth over the next several years for our company.” Lockheed is the prime contractor behind the F-35 program of fighter jets, the Department of Defense’s most expensive weapons system, running $183 billion over budget and a decade behind schedule, according to a Government Accountability Office report last year on how the troubled project could curb spiraling costs.
The stock price of RTX has increased by 71% with Biden in the White House, with the company’s revenue similarly boosted by the April supplemental aid bill. In an October earnings call, the company’s then-CEO Greg Hayes, now its chairperson, said that with the Department of Defense stepping up orders for Israel and Ukraine, RTX would “see a benefit of this restocking.” Northrop Grumman has also seen a 71% increase in its share price under Biden, and in July the company raised earnings and profit forecasts, driven by supplemental weapons funding for the wars in Ukraine and Gaza. General Dynamics, whose share price has risen more than 91% under the Biden administration, has seen its revenue swell as demand for weapons increases.
Senate Defense Stock Holders
All 13 senators whose households disclosed defense stock holdings voted in favor of the most recent NDAA for FY24, which passed the Senate on Dec. 13, 2023 in a vote of 87-13.
Of the 13 senators invested in defense contractors, 11 voted in favor of the April military aid supplemental, which passed the Senate by a vote of 79-18, with three senators not voting. The bill ricocheted back to the Senate on April 23 after contentious debate, and months-delayed votes, in the Republican-led U.S. House.
The spouse of Sen. Susan Collins (R-Maine), the ranking member of the Defense Appropriations subcommittee, holds between $15,000 and $50,000 worth of shares in each of Boeing and RTX, as well as holdings in two other defense manufacturers. Sen. Jerry Moran (R-Kans.), another Defense Appropriations subcommittee member, holds up to $50,000 in the stock of Boeing, which received nearly $33 billion in defense contracts last year. On the Democratic side of the aisle, Sen. John Hickenlooper (Colo.) holds up to a quarter of a million dollars’ worth of stock in RTX.
