How to Disappear Money, Pentagon-Style

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Now you see it, now you don’t. Think of it as the Department of Defense’s version of the street con game, three-card monte, or maybe simply as the Pentagon shuffle.  In any case, the Pentagon’s budget is as close to a work of art as you’re likely to find in the U.S. government — if, that is, by work of art you mean scam.  

The United States is on track to spend more than $600 billion on the military this year — more, that is, than was spent at the height of President Ronald Reagan’s Cold War military buildup, and more than the military budgets of at least the next seven nations in the world combined.  And keep in mind that that’s just a partial total.  As an analysis by the Straus Military Reform Project has shown, if we count related activities like homeland security, veterans’ affairs, nuclear warhead production at the Department of Energy, military aid to other countries, and interest on the military-related national debt, that figure reaches a cool $1 trillion.

The more that’s spent on “defense,” however, the less the Pentagon wants us to know about how those mountains of money are actually being used.  As the only major federal agency that can’t pass an audit, the Department of Defense (DoD) is the poster child for irresponsible budgeting. 

It’s not just that its books don’t add up, however.  The DoD is taking active measures to disguise how it is spending the hundreds of billions of taxpayer dollars it receives every year — from using the separate “war budget” as a slush fund to pay for pet projects that have nothing to do with fighting wars to keeping the cost of its new nuclear bomber a secret.  Add in dozens of other secret projects hidden in the department’s budget and the Pentagon’s poorly documented military aid programs, and it’s clear that the DoD believes it has something to hide.

Don’t for a moment imagine that the Pentagon’s growing list of secret programs and evasive budgetary maneuvers is accidental or simply a matter of sloppy bookkeeping.  Much of it is remarkably purposeful.  By keeping us in the dark about how it spends our money, the Pentagon has made it virtually impossible for anyone to hold it accountable for just about anything.  An entrenched bureaucracy is determined not to provide information that might be used to bring its sprawling budget — and so the institution itself — under control. That’s why budgetary deception has become such a standard operating procedure at the Department of Defense. 

The audit problem is a case in point.  The Pentagon along with all other major federal agencies was first required to make its books auditable in the Chief Financial Officers Act of 1990.  More than 25 years later, there is no evidence to suggest that the Pentagon will ever be able to pass an audit.  In fact, the one limited instance in which success seemed to be within reach — an audit of a portion of the books of a single service, the Marine Corps — turned out, upon closer inspection, to be a case study in bureaucratic resistance.

In April 2014, when it appeared that the Corps had come back with a clean audit, Secretary of Defense Chuck Hagel was so elated that he held a special ceremony in the “Hall of Heroes” at the Pentagon. “It might seem a bit unusual to be in the Hall of Heroes to honor a bookkeeping accomplishment,” he acknowledged, “but damn, this is an accomplishment.”  

In March 2015, however, that “accomplishment” vanished into thin air.  The Pentagon’s Office of Inspector General (OIG), which had overseen the work of Grant Thornton, the private firm that conducted the audit, denied that it had been successful (allegedly in response to “new information”).  In fact, in late 2013, as Reuters reported, auditors at the OIG had argued for months against green-lighting Grant Thornton’s work, believing that it was full of obvious holes.  They were, however, overruled by the deputy inspector general for auditing, who had what Reuters described as a “longstanding professional relationship” with the Grant Thornton executive supervising the audit. 

The Pentagon and the firm deny that there was any conflict of interest, but the bottom line is clear enough: there was far more interest in promoting the idea that the Marine Corps could pass an audit than in seeing it actually do so, even if inconvenient facts had to be swept under the rug. This sort of behavior is hardly surprising once you consider all the benefits from an undisturbed status quo that accrue to Pentagon bureaucrats and cash-hungry contractors. 

Without a reliable paper trail, there is no systematic way to track waste, fraud, and abuse in Pentagon contracting, or even to figure out how many contractors the Pentagon employs, though a conservative estimate puts the number at well over 600,000.  The result is easy money with minimal accountability.

How to Arm the Planet

In recent years, keeping tabs on how the Pentagon spends its money has grown even more difficult thanks to the “war budget” — known in Pentagonese as the Overseas Contingency Operations (OCO) account — which has become a nearly bottomless pit for items that have nothing to do with fighting wars.  The use of the OCO as a slush fund began in earnest in the early years of the Bush administration’s war in Iraq and has continued ever since.  It’s hard to put a precise number on how much money has been slipped into that budget or taken out of it to pay for pet projects of every sort in the last decade-plus, but the total is certainly more than $100 billion and counting.