In a startling revelation that has somehow mysteriously avoided coverage on the mainstream media as well as partisan mouthpieces at Fox News, MSNBC or talk radio, late last year Yahoo finance reported the results of a Reuters investigation finding gross mismanagement at the Pentagon amounting to a whopping $8.5 trillion in funds that are unaccounted for...just since 1996. Not only are the funds MIA but the books have been and continue to be adjusted to conceal the discrepancies as a matter of course.
As a matter of reference, that figure is equivalent to half of our total national debt, and if broken down by year, would amount to more than double what we annually pay in interest on the debt, which already constitutes over 6% of our annual budget now.
In addition, not only can the Pentagon not manage money, they apparently can’t keep track of supplies and weapons either, so they continue to order more at higher prices while never finding out where the original orders go. As an illustration of how bad that process manifests itself, we are continuing to pay to store weapons from as far back as World War II and that's just the beginning.
The implications are more than serious and go far beyond simply waste as a result of ineptitude: the results often lead to neglect and endangerment.
It's unimaginable that these revelations and the others that follow were welcomed by a deafening silence from any other media outlets including the blogosphere after Scot Paltrow and Kelly Carr of Reuter’s published a series of extensive reports beginning in July of last year. They added more information in November just one day after Defense Secretary Chuck Hagel complained that a proposed cut of roughly 10% of the Pentagon’s budget, amounting to $52 billion in 2014, would be too draconian, saying "This is an irresponsible way to govern and it forces the department into a very bad set of choices."
Hagel's statement came not long after Marine Corps Commandant Gen. James F. Amos told a House panel in September the “abruptness and inflexibility of sequestration…could erode our readiness to dangerous levels.”
The military has a base budget of over $500 billion but counting international security, benefits for veterans and various other expenditures, the U.S. spends well above $700 billion annually on defense. This amounts to more than the next 13 countries combined, including about 6 times larger than #2 China.
China’s expenditures have been steadily increasing for many years but remain flat as a percentage of their GDP since the 1980’s. The United States had also been spending less during that time but the percentage increased sharply again after 9/11.
The numbers are only reflective of what has been unaccounted for since 1996 and one can only imagine how much disappeared prior to that. The Pentagon has been able to operate this way for years with impunity; 1996 was the first year that the Pentagon should have been audited under a law requiring audits of all government departments yet is the only federal agency that has not complied with the law, the Government Management and Reform Act passed in 1994. Since then, the 2009 National Defense Authorization Act requires the Defense Department to be audit-ready by 2017 but stipulates no penalties if it misses the deadline.
The consequences aren't only financial: the causes likely run the gamut from gross incompetence and fraud and the effects range from mistreatment of veterans to endangerment of our troops. In the midst of all the spending, outmoded systems have the most devastating potential effects on our soldiers, including problems ranging from unjustifiably withholding pay to interfering with proper deployment that puts lives at risk.
How does this happen? Quite simply, it's a huge mess. Estimates of how many accounting and business systems are in use by the Dept. of Defense range between 2200 and 5000.
Paltrow spoke to individuals involved in military accounting including Linda Woodford, one example of many who were required to literally make things up. She spent the last 15 years of her career in the office of the Defense Finance and Accounting Service (DFAS), the Pentagon's main accounting agency, "inserting phony numbers in the U.S. Department of Defense's accounts," a practice that has apparently become part of the culture throughout the military. Paltrow wrote:
“At the DFAS offices that handle accounting for the Army, Navy, Air Force and other defense agencies, fudging the accounts with false entries is standard operating procedure, Reuters has found. And plugging isn't confined to DFAS (pronounced DEE-fass). Former military service officials say record-keeping at the operational level throughout the services is rife with made-up numbers to cover lost or missing information.”
Bad bookkeeping is more than a taxpayer issue. Reuters also revealed the report of the Pentagon Inspector General in September 2012 which stated:
"In one example of many, the Army lost track of $5.8 billion of supplies between 2003 and 2011 as it shuffled equipment between reserve and regular units. Affected units ‘may experience equipment shortages that could hinder their ability to train soldiers and respond to emergencies.’ "
Hagel decried the cuts to the defense budget after sending a video to the entire DOD in August of 2013 saying, "The Department of Defense is the only federal agency that has not produced audit-ready financial statements, which are required by law. That's unacceptable." Both he and DFAS Director Teresa McKay refused to speak to Reuters about the issue.
But the problems are even more extensive, as one might expect from any private company or agency without proper controls in place and repeated attempts at fixes have all gone unfulfilled.
For years, and more than ever during the Obama administration, many Democrats have advocated that our fiscal issues are primarily based on insufficient taxes on the wealthy and business, along with corporate welfare and other advantages ostensibly part of a system that favors the privileged. The Bush tax cuts and the ongoing wars are also frequently a supposed cause of the problems. Meanwhile, Republicans have advocated for cutting means-tested entitlements and social programs such as SNAP and disputing the constitutionality of virtually everything Barack Obama does, including the admittedly problematic Patient Protection and Affordable Care Act.
"Moo" says the sacred cow.
No doubt this is largely because somehow, despite this longstanding ineptitude and cover-up, we still hadn’t managed to dramatically increase our national debt until congressional spending significantly increased during the Bush administration and then exploded under Obama. With deficits increasing so dramatically, is anyone finally paying substantive attention to this issue? You’d never know it from the response of the media...or lack thereof.
Senator Tom Coburn (R-OK), one of Congress’ more vocal critics of fraud and waste, along with Senator Joe Manchin (D-WV) have finally introduced legislation that would penalize the Pentagon if it isn't audit-ready by 2017.
"Under the proposed Audit the Pentagon Act of 2013, failure to meet the deadline will result in restrictions on funding for new acquisition programs, prohibit purchases of any information-technology systems that would take more than three years to install, and transfer all DFAS functions to the Treasury.
‘The Pentagon can't manage what it can't measure, and Congress can't effectively perform its constitutional oversight role if it doesn't know how the Pentagon is spending taxpayer dollars,’ Coburn said in an email response to questions. ‘Until the Pentagon produces a viable financial audit, it won't be able to effectively prioritize its spending, and it will continue to violate the Constitution and put our national security at risk.’ "
While many on the left criticize military policy and call for defense cuts, they seemingly fail to understand why putting so much faith in government often entails such a lack of accountability not possible in the private sector, which admittedly appears to be worse at the DOD than any other agency we are aware of. No business could possibly survive operating in this way because no company has unlimited resources to simply ask for more money and can operate without having to answer to shareholders. Meanwhile, others on the right seems to be unable to acknowledge that the military appears to be the single biggest failure of the very big government they always complain about, and with potentially the most dire consequences.
This epic failure, which only now seems to have a serious attempt at fixing from the outside by Senators Coburn and Manchin, is an example of an endemic problem in Washington and the failure of the media to report on what should be at the top of our priority list is inexplicable. What happens now may very well reveal how much our leaders care about real solutions vs. rhetoric.