About $8.5 Trillion Unaccounted for in Military Budget 

Nukewatch Quarterly Fall 2015

By Global Research News

Yahoo Moneys’ The Daily Ticker quotes a Reuters investigation* that reveals that $8.5 trillion—that’s trillion with a “T,” give or take a few hundred million—in taxpayer money doled out by Congress to the Pentagon since 1996 has never been accounted for.

You read that right. While Republican politicians rush to slash food stamps for some 47 million Americans living in poverty—the highest amount in nearly 20 years—former US Secretary of Defense Chuck Hagel had the audacity to complain that $20 billion dollars in automatic sequester cuts to the $565.8 billion 2012 military budget are “too steep, too deep, and too abrupt,” all while the Pentagon is overseeing billions of dollars in fraud, waste, and abuse.

[For some context, the War Resisters League reports that the Pentagon’s fiscal 2016 budget of $586.8 billion—plus the $196 billion military portion from other departments—is more than the annual military budgets of the ten next largest military spenders combined, including Russia and China.]

In an interview, Linda Woodford, an employee at the Defense Finance and Accounting Service (DFAS)—the Pentagon’s main accounting agency—revealed to Reuters that she spent the last 15 years of her career simply “plugging in” false numbers every month to balance the books: “A lot of times there were issues of numbers being inaccurate. We didn’t have the detail … for a lot of it.”

In the real world, that would be called massive fraud.

Woodford’s involvement in the fraud doesn’t even begin to scratch the surface. The report also reveals that “a single DFAS office in Columbus, Ohio, made at least $1.59 trillion—yes, trillion—in errors, including $538 billion in plugs, in financial reports for the Air Force in 2009.”

“Yahoo Finance” lists additional findings, including: 

• The Pentagon has amassed a backlog of more than $500 billion in unaudited contracts with outside vendors. How much of that money paid for actual goods and services delivered isn’t known.
• Over the past ten years, the Pentagon has signed contracts for provisions of more than $3 trillion in goods and services. How much of that money is wasted in overpayments to contractors, or was never spent and never remitted to the Treasury, is a mystery.
• The Pentagon uses a standard operating procedure to enter false numbers, or “plugs,” to cover lost or missing information in their accounting in order to submit a balanced budget to the Treasury. In 2012, the Pentagon reported $9.22 billion in these reconciling amounts. That was up from $7.41 billion the year before.

—Global Research News, Center for Research on Globalization, June 5, 2015

*Lauren Lyster, “Want to Cut Government Waste? Find the $8.5 Trillion the Pentagon Can’t Account For,” The Daily Ticker, Nov. 25, 2013; Scot J. Paltrow, “Faking It: Behind the Pentagon’s Doctored Ledgers, A Running Tally of Epic Waste,” Reuters, Nov. 18, 2013

Pentagon Accounting Fraud Balloons from 2001’s Missing to $2.3 Trillion

Today’s $8.5 trillion in lost military spending is 3.6 times the $2.3 trillion said to be unaccounted for in 2001 by former Defense Secretary Donald Rumsfeld. In a speech given September 10 that year at the Pentagon, Rumsfeld said, “According to some estimates, we cannot track $2.3 trillion dollars in transactions.” According to the Congressional Record Nov. 8, 2005, Rumsfeld declared that the accounting mess was “monumental” and “terrifying,” and that it would take “a period of years to sort it all out.”

• About $900 million in corporate welfare went to Navy ship building contractors. The Government Accountability Office (GAO) released a scathing review of newly built ships that together cost nearly $900 million more than originally estimated, according to a report released last March by Jacqueline Leo and Brianna Ehley of The Fiscal Times.
• Nearly $1 billion was fraudulently billed by federal contractors doing routine maintenance work on Customs and Border Patrol (CBP) airplanes. “Workers” evidently faked time cards and overcharged the government hundreds of millions of dollars—and CBP officials didn’t notice any of it, Leo and Ehley reported.
• Last October 22, Senator Tom Coburn, a Republican from Oklahoma, released his fifth annual “Wastebook” report tearing into outrageous government spending. Spotlighting items totaling $25 billion in “waste”—Ehley reported for The Fiscal Times—Coburn skewered the Pentagon’s $1 billion program to destroy $16 billion worth of unneeded ammunition. Evidently, according to a Government Accountability Office investigation, much of the expensive ammo became “obsolete, unusable or their use is banned by international treaty.” The GAO also found that the Pentagon’s record keeping for the ammo was so poor it couldn’t determine which ammo it could still use, and now has no choice but to destroy it.

About today’s vastly increased accounting and contractor fraud, a more recent Sec. of Defense, Chuck Hagel, has said the Pentagon’s inability to be audited “is unacceptable.” However, Hagel’s attempts to enforce “audit-readiness” deadlines repeatedly failed.

Rumsfeld’s Sept. 10, 2001 warning was lost in the next day’s 9/11 events, but in 2002, CBS News interviewed retired Vice Admiral Jack Shanahan, who commanded the Navy’s 2nd Fleet in 1976. In Adm. Shanahan’s opinion, “With good financial oversight we could find $48 billion in loose change in that building, without having to hit the taxpayers.” —JL