Monday, August 8, 2022

Transdigm Aspires to PEU Returns

by Matt Stoller reported on the state of the U.S. defense industry.  He wrote:

Transdigm is a company that bought up sole source providers of spare parts and raised prices; in one case they overcharged DoD as much as 4,451% on certain items. Indeed, according to the Pentagon’s inspector general, current regulations “enable sole-source providers and manufacturers of spare parts to avoid providing uncertified cost data, (which, if you want to get technical, is a much weaker and less reliable version of the certified cost data that contractors were routinely required to submit prior to the Clinton Administration’s embrace of defense contractors). Numerous government reports have repeatedly shown that the Pentagon pays too much for spare parts. For example, IGs found that companies charged DoD $71 for a pin that should have cost less than a nickel and $80 for a drainpipe segment that should have cost $1.41.
The company shared its goal to make private equity like returns in April 2017.   Grossly overcharging the Defense Department is akin to surprise medical billing.  Greed is as greed does.  

Private equity underwriters (PEU) got to keep their preferred "carried interest taxation" and PEU affiliates will not be subject to the minimum 15% corporate tax on income   Senator Kyrsten Sinema (Blue Team - Arizona) delivered for donors KKR and The Carlyle Group.  Her rewards on this earth for serving the billionaire class will be grand.

A retired accountant from Arizona said:

"No, they're just going to go after the little guy. They really will. And they're never going to go after the rich people. Never. Or else they would have done it already because they're not paying their fair share of taxes right now," he said.

"Little guys like me — you know, I'm retired, and I hate to see that. I really do. I was an accountant all my life, and I don't want to see that. And I hope they don't. They're going to hunt the little guy, people who make less money, and make them pay. Because they have to pay for this bill.

Politicians Red and Blue love PEU and increasing, more are one.