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President Eisenhower, a much decorated World War II general and hero, in his last speech as President of the United States, warned the public to "beware of the military-industrial complex." This refers to a three-way financial arrangement. Members of Congress, usually using earmarks added on to bills, create or fund military bases in their districts to curry votes. Often the "price" of support for military funding by members of the powerful Armed Services committees in Congress is placing facilities in the districts of the Congressmen on the committees. Both Congress and the military have links with powerful defense contractors. The contractors contribute to political campaigns and essentially buy support in Congress. Members of the military who serve as contract officers, when they retire from the military get high-paid jobs as "consultants" to the corporations whose military contracts they supervised. Knowing that holding corporations to strict performance standards would limit offers of consultancies in the future, many contractor officers are complicit with poor performance and cost overruns.
The impact of the iron triangle on defense spending is that the spending inevitably increases. First, much government spending is meant to be decided on the basis of an impartial bidding process, with bidders all being subject to the same terms and conditions and bids being awarded to the lowest bidder, all other things being equal. To the degree that the bidding process is circumvented by the iron triangle, there is a higher cost for taxpayers. Second, because the stakeholders often promote new and unproven technology, weaponry, and other defense materiel to benefit companies who support Congressmen and concomitantly, to benefit Congressmen who can then bring home the "pork" to their districts or states and secure their political futures, decisions are made on the basis of those motives, rather than based upon any real defense need. Thus there are many purchases made and projects funded that are unnecessary, misguided, or downright foolish, thus costing the taxpayers needlessly.
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