"Analyst: Obama Would Be A Nightmare For Defense Programs, Firms"

Goodbye to your favorite weapon programs. The money will go to liberal
social welfare programs....


Analyst: Obama Would Be A Nightmare For Defense Programs, Firms

Defense Daily

If Sen. Barak Obama of Illinois wins the Democratic presidential
nomination and then goes on to be elected to the White House, the
defense industry better brace for tough times, according to Heidi
Wood, Morgan Stanley defense analyst.

While Sen. John McCain of Arizona, the presumptive Republican
presidential nominee, might be better, with his military and prisoner-
of-war background, his past crusades against contractors also could
mean a McCain presidency might be bad news for Pentagon programs and
the companies involved in them, Wood predicted.

She spoke before a Missile Defense Agency-American Institute of
Aeronautics and Astronautics conference in Washington, D.C., last
week.

Sen. Hillary Rodham Clinton of New York, another contender for the
Democratic presidential nomination, might not be that bad for defense,
Wood said. Both Clinton and McCain sit on the Senate Armed Services
Committee, where McCain is the ranking Republican.

"Obama looks to be a growing concern for [Department of Defense]
spending," Wood said. "McCain and Clinton are probably better for
overall defense spending. Obama is an uncertainty."

However, Wood said, McCain "going after defense contractors worries
investors," while Clinton gives investors "less of a worry."

For example, McCain blasted an Air Force tanker plane leasing contract
for costing more than buying planes outright. He also helped to
unearth the fact that Darleen Druyun, an Air Force procurement
official, negotiated with Boeing [BA] to lease 100 new aerial
refueling tanker aircraft at the same time she negotiated with Boeing
to get a $250,000 a year job there.

Boeing helped to discover the deal; fired Druyun and Mike Sears, the
CFO who hired her; and cooperated with authorities who later put
Druyun and Sears behind bars. But Boeing lost the contract, and then
the Air Force gave it to a Northrop Grumman [NOC] and European
Aeronautic Defence and Space Co. team to supply Airbus tanker planes.

Clinton's home state, New York, includes some contractors, such as
Lockheed Martin [LMT], which is outfitting the US101 helicopters based
on an AgustaWestland Italian-U.K. design that are to become the future
Marine One helicopters transporting presidents from the White House
South Lawn.

Wood also said that defense contractor stocks have performed
brilliantly in the past year, with aerospace stocks and defense
company stocks jumping by 19 percent in price, versus a gain of only 4
percent for the Standard & Poor's 500 index.