More money for defense and less money for taxpayers—that’s what Republicans want. Hillary Clinton’s emails a horrible and deliberate defense disaster—that’s what Republicans want to prove. The Pentagon missing $8.5 trillion? No mention and probably no problem. This expenditure is more than China’s economic output last year. The Defense Department’s budget was $567 billion, but no one knows how much of that money is spent as intended. The Pentagon is the only federal agency that has failed to comply with a two-decade-old law requiring audits of all government departments.
An extensive investigation by Scot Paltrow reveals the way that the U.S. military failed to submit to an audit, flouted federal law, and concealed the loss of billions of dollars through waste and fraud. Employees for the U.S. Department of Defense were told to put input fake data, called “plugs,” to reconcile military books with those of the U.S. Treasury. Now the records are filled with missing, unidentified, and wrong numbers. The same thing happened at the operational level.
The Pentagon consistently ignores warnings about its accounting practices from oversight agencies. It fails “to keep track of its money—how much it has, how much it pays out, and how much is wasted or stolen,” according to Paltrow. “Widespread pay errors inflict financial hardship on soldiers and sap morale, [but] pay errors are only a small part of the sums that annually disappear into the vast bureaucracy that manages more than half of all annual government outlays approved by Congress.” Accounting errors lead to loss of soldiers’ wages from unfounded accusations that soldiers have been overpaid. Without their salary, soldiers are forced to get food from charity pantries.
The Pentagon continues to spend money of supplies it doesn’t need and stores other items that it doesn’t need because it doesn’t keep track of weapons, ammunition, etc. It has a backlog of more than $500 billion in unaudited contracts with outside vendors, but it doesn’t know how much of that money has been paid for real goods and services. The Navy can’t account for ships, submarines, and other physical assets even after the $1 billion it spent to upgrade record-keeping.
Most of the Pentagon’s incompatible accounting and business-management systems—maybe 2,200 or 5,000, depending on who’s counting—were built in the 1970s and use obsolete computer languages on old mainframes. Even if someone could search for data, much of it is corrupted and just plain wrong. The tens of billions of dollars used to upgrade technology failed, adding to the waste. In the meantime, military knowingly signs off on entries that it knows to be false. Corporate managers certifying false financial reports suffer criminal penalties; the Pentagon’s officials have none.
Every year, the Pentagon buys more of what it already has in excess, defined as a three-year supply. In 2008, for example, it had 15,000 parts in stock for the “vehicular control arm” of the Humvees, equal to a 14-year supply. From 2010 through 2012, it bought another 7,437 of them at considerably higher prices as demand dropped by almost half. Nobody knows if these have been stored in the right bins, which makes inventory impossible. Nothing has been done to track employee theft. The Pentagon ordered the Defense Department to have a labeling system, a directive that the DOD ignored.
Obsolete supplies aren’t monitored although the Army is trying to detonate some C4 plastic explosives made in 1979. Nothing has been done with runway flares from the 1940s and warheads for Sparrow missiles not fielded since the 1990s. Rocket-launch systems retired in the 1980s take up space. “Keeping all those useless bullets, explosives, missiles, rifles, rocket launchers and other munitions costs tens of millions of dollars a year,” Paltrow reported.
Despite all these issues, Secretary of Defense Chuck Hagel said that a cut of $52 billion in 2014 was “too deep, too steep, and too abrupt.” His claim that “this is an irresponsible way to govern” sounds like the way that the Pentagon manages its finances. Hagel had no idea how much money the Pentagon had. In one office (Columbus, Ohio), duplicate entries across multiple ledgers led to mistakes for the Air Force in 2009, totally $1.59 trillion which included $538 billion for plugs—roughly eight times what the Air Force was allotted for that year.
Efforts to fix the problem have consistently failed. Deputy Secretary of Defense Gordon England established the Business Transformation Agency in 2006 to upgrade business operations and prepare the department for auditing. By 2009, the department had spent over $10 billion a year, but it didn’t stop business as usual. Defense Secretary Gates shut down the project in 2011.
How much of the $3 trillion spent on contracts for goods and services during the past ten years has been wasted in overpayments or never spent is not known. Bills are easily padded because detailed invoices are not required. The tremendous backlog to audit fulfillment of contracts came to 24,722 contracts worth $573.3 billion by the end of 2011. The Army’s backlog was 450,000 contracts in 2012. The Navy and Air Force don’t know what their backlogs are. To take care of the problem, the value at which a contract is automatically audited rose from $15 million to $250 million.
GOP presidential candidate Carly Fiorina is campaigning on making the U.S. Department of Education a “whole lot smaller.” As president, she would make the department “justify every single dollar every single year.” Nobody says that about the military. Fiorina also said that she doesn’t know what the Department of Education does. She could easily find the department’s reports and charts about its goals, the sources of its expenditures, and comparisons to previous year. It’s right here.
The Department of Education provides grants, including Pell grant funding; makes sure that states spend federal money as they should; keeps schools from gender discrimination per Title IX; and collects national education data. Without federal oversight, states won’t spend the Title I money as intended to effect education equality. The Department also checks on the for-profit college industry, i.e., fining Corinthian Colleges because it misrepresented job placement data.
Fiorina decried “complicated accreditation” for these for-profit colleges that she found to be “expensive.” These colleges, however, have higher student loan debt and poor completion rates because their accreditation rules are already too loose. HuffPo reported that accrediting boards frequently have executives from for-profit colleges, perhaps the reason that none of the five major companies had the accreditation revoked in the past ten years and fraudulent job placement data was ignored.
The budget for the Department of Education for this year is $68.8 billion, and the agency knows where its money goes because it’s the law. The Department of Defense’s budget is $567 billion—about 12 percent of the budget for the Department of Education—and the DOD has no idea where it goes because it flouts the law. Below is what $8.5 trillion dollars looks like in $100 bills. That’s what the Pentagon has been allotted during the past 20 years with no accountability.
Food stamp fraud may account for about $500 million (less than one cent per each dollar of the $82 billion), but the Pentagon has lost $8.5 trillion. That amount has cost each household approximately $70,000. In 2013, about 45.3 million people, including 14.7 million children, lived in poverty in the United States—14.5 percent of the population and the largest number in the 54 years that statistics have been kept. Almost one in five children live in poverty.
Lack of government support has driven tuition for higher education sky-high. The student debt is now at $1.2 trillion in the United States, and the costs will cripple the future for both young people and the economy. People will have to pay down this debt instead of buying houses and cars, shoring up the GDP.
Conservatives caused this inequality, but they are determined to deny help to any of these people. Yet they are willing to distribute over one-half trillion dollars every year to an agency that has no idea how the taxpayer money is spent. For conservatives, a steak or shellfish or shredded cheese is outrageously out-of-bounds for food stamp recipients, but 22,437 extra Humvee front ends are just fine. Billions of taxpayer dollars for failed business systems or excessive purchases of supplies or unfulfilled government contracts or unpaid soldiers or lack of audits that break the law are acceptable. Conservatives need to look at their priorities.