The Republicans Don't Like the Look on Geithner's Face

Representative Jason Chaffetz, a Republican from Utah, wasn't too impressed with Treasury Secretary Timothy Geithner. "You can smile and laugh about it all you want," he said before adding that he was sick of the "silly little smirk" on Geithner's face. Why was Geithner smiling? Well, it might be because he doesn't take the Republican House Representatives too seriously. To be sure, his comments were full of contempt. During the hearing, he said that Tim Huelskamp (Republican representative of Kansas) had an "adolescent perspective" on the economy, and at another point he said that the Republicans aren't ready to discuss a change to the U.S. tax code. "Your side walked away from the table three separate times," Geithner said, hinting that the Republicans remained unready to compromise. "You guys were not ready." Geithner came close to echoing the sounds of the Occupy Wall Street movement when he was challenged by another Republican representative--Dave Camp of Michigan. Camp soured on the new budget by saying it is "replete with proposals that will take more money away from employers, investors and savers." Geithner responded by saying that the rich could afford it. "Focusing these revenue proposals on the top 2 percent, those who have fared the best in the last decade of financial excess, is far better for the economy and more fair for the American people," Geithner responded. The proposed budget will be followed closely by the market, but subcontractors are especially antsy, as military cuts will impact their bottom lines directly. The budget cut billions of dollars from Lockheed Martin LMT, Boeing BA, and Northrop Grumman NOC as part of a $487 billion cut in military spending. The losses did not immediately impact the companies' stock, and Boeing is up slightly thanks to growth in demand for non-military aircraft, thanks to continued demand for new jets from global airliners. Lockheed Martin is down and may go down further if the budget is passed, since it will see its military aircraft orders from the Pentagon fall. Lockheed Martin is also not well positioned to benefit from greater demand for drone aircraft, since the loss of a drone in Iran has meant that it will need to scrap or reconfigure much of its technology--and then convince the Pentagon that its tech is secure. Likewise, $2.3 billion of the near $5 billion in lost revenue to Northrop is thanks to smaller orders for the company's Global Hawk Drones. There is much more involved in the new budget than military cuts, and other features of the proposed budget will impact different sectors. Still, many of those proposals will impact companies indirectly while military subcontractors are directly dependent on government spending for their revenue. With large and growing pension bases, those companies are more dependent than ever on government spending to stay afloat. Unlike Geithner, execs at Lockheed Martin and Northrop probably aren't smiling.