The $6 Trillion Issue You Won’t Be Hearing About at Tonight’s Debate

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The Pentagon is seen from the air over Washington, D.C., on August 25, 2013. Photo: SAUL LOEB/AFP/Getty Images

Defense and military haven’t gotten a lot of nuanced attention during the first two presidential debates. As Daniel Larison wrote, “If anyone wanted to know about something other than the candidates’ views on Iran and Russia, [the] debate[s] wouldn’t have provided many answers.” There weren’t any really substantive exchanges about major issues like the South China Sea or Libya. And forget about tougher, more nuts-and-bolts questions touching on Pentagon structure, budget issues, and appropriations.

They are vitally important issues, but don’t expect anything different at tonight’s third and final forum. Donald Trump almost certainly won’t be asked about his recent dramatic flip-flop on defense spending. After advocating for modest cuts to the Pentagon budget throughout the primary season, last month he called for 50,000 new soldiers in the Army, 70 new Navy ships, 100 more planes for the Air Force, and 13 new Marine battalions. If that wish list comes off like a random grab bag of military goodies, untethered to any coherent argument of why we might need these specific things, that’s because it is. But his brash pronouncements about things like the size of the Army and amount of Naval ships underscore a weird irony of election years: Sometimes the more we listen to the candidates, the less we understand the true state of the Pentagon. Because the fact of the matter is that how the Department of Defense spends its money is a bit of a mystery, and the Pentagon’s budget issues go far deeper than Trump realizes.

Trump’s new defense demands don’t help us understand headlines like the one from mid-August that said the Defense Department’s inspector general found more than $6.5 trillion “wrongful adjustments to accounting entries” in the Army’s general fund in 2015 alone. It’s a number that’s difficult to wrap your head around. First of all, it’s much larger than the entire annual federal budget. But that sum represents not only current spending, but a lot of money from previous years that can’t be accounted for either. The sheer scope of the malfeasance is so staggering that the question that comes to mind isn’t “Why?” but “How?” Defense journalist Matthew Gault took a shot at answering that when he wrote at War Is Boring: “How could the Army misplace, fudge, misappropriate or otherwise lose $6.5 trillion? It’s simple. Years of no oversight, bad accounting practices and crappy computer systems created this problem. Add to that the fact that in accounting, a dollar can get lost multiple times, creating a cascade, or snowball, effect. And keep in mind, this is just the Army and just its general fund.” Gault’s not being hyperbolic about the lack of oversight. In the 20 years since it’s been a legal requirement that the Pentagon undergo an annual audit, they haven’t ever complied. Not once.

There are basically two competing narratives about the DOD’s budget. In one, cutbacks have hamstrung the Pentagon to the point of crises. Congress, unable to reach a consensus on a budget, passed the 2011 Budget Control Act. This basically said that if they couldn’t pass a budget by 2013, across-the-board cuts would take place across all levels of federal government until 2021. The threat of cuts was supposed to act as an incentive to pass a real budget. They were meant to be avoided by actually striking a deal. But, of course, that never happened. And so budget cuts to every federal program (except veterans’ benefits, Medicaid, and Social Security) were implemented. In part because of this sequestration process, as it’s called, the defense budget has dropped 25 percent since 2011, and leaders from every branch of service have engaged in public hand-wringing about how those cuts could affect future combat capabilities. According to this line of thinking, the automatic across-the-board budget cuts, paired with a decade of wars in the Middle East, have turned our military into a paper tiger. Senator John McCain wrote in an op-ed for Task & Purpose, “ … [T]hese arbitrary, across-the-board budget cuts under sequestration are crippling force modernization, undercutting training and putting the lives of American service members at greater risk. This is all happening as the threats around the world — and to the homeland — are growing.”

In the counter-narrative, the Pentagon has too much money. America’s defense budget isn’t just as large as those of the next seven countries combined; it’s also averaged higher under President Obama than under Bush, and outstrips World War II and Cold War levels of spending, even when adjusted for inflation. Some experts, such as Pentagon comptroller Bob Hale, say that, if anything, the 2013 sequestration brings some much-needed discipline to the defense budgetary process.

Each side has, generally speaking, patriotic motivations, but both arguments completely ignore the elephant in the room: Without a thorough audit of the Pentagon, we have absolutely no idea where exactly our money is going, whether it’s being used efficiently and appropriately, or even how much more would be needed to bolster gaps in military performance. As long as the Pentagon is a financial black hole, both arguments on its spending are rendered moot.

Take, for example, a few of the recent intergovernmental dust-ups over money spent on the “reconstruction” of Afghanistan. According to the special inspector general for Afghanistan reconstruction, the Department of Defense spent more than $43 million building a single compressed natural gas station in Afghanistan, a facility that SIGAR says should have only cost something closer to $500,000. But in January of last year, baroquely titled Principal Deputy Secretary of Defense for Policy Brian McKeon testified before the Senate that the gas station actually cost something closer to $10 million. If the second number is accurate, it would still be scandalously high. But instead of being able to confront either scenario head-on, we’re left peeling away seemingly endless layers of bureaucratic uncertainty.

An audit of the Pentagon, and accurate accounting of DOD spending more generally, would give us an objective baseline necessary to actually have arguments about how the money is spent. That’s the pragmatic argument for auditing the Defense Department. But the legal argument is just as compelling.

Director of the Straus Military Reform Project at the Project on Government Oversight Mandy Smithberger writes, “In 1990 Congress passed the Chief Financial Officers Act, which required every federal agency to be auditable. Since then, every agency has complied—except for the Department of Defense. Instead, there’s been a saga of audit readiness plans and billions spent to upgrade out-of-date financial systems—plans and upgrades the Government Accountability Office estimated in 2010 wasted nearly $6 billion.” So not only has the Department of Defense never met its legal obligation to comply with an audit, but it’s actually wasted billions of dollars in the process of failing to comply.

It’s difficult to imagine any other federal agency being able to get away with something like this. Try to imagine the Department of Education wasting billions of dollars not complying with federal oversight laws. It’s almost easier to imagine the entire department being scrapped altogether. But that just points to a fundamental difference between the Department of Defense and the rest of the federal agencies. One of the reasons why it’s so difficult to audit the Pentagon is because it’s so vast, and it conducts course corrections with an inelegance and bureaucratic inertia all its own.

The Pentagon is so large it’s difficult to know exactly the best way to convey its size. Since, as we’ve seen, the numbers tend to get a little weird, just consider how much physical property falls under the domain of the Defense Department. According to War Is Boring, the Pentagon “owns more than half a million properties worth in excess of $800 billion dollars. The military’s real estate holdings span the globe and, all together, span over 30 million acres.” Does it really come as a surprise that, according to a GAO report from 2014, the DOD doesn’t even really know which of these facilities it needs or currently uses? This nearly trillion-dollar question mark is representative of the Pentagon’s entire collective byzantine financial disorder. The Pentagon is almost too big to audit.

Almost. But not quite. Bad bookkeeping might be partially explained by the sheer scope of the DOD, but it’s also a convenient excuse for an organization that doesn’t necessarily have an incentive to be held accountable. Mike McCord, the Pentagon’s CFO, claims that the DOD’s primary job isn’t to prepare for an audit, but “to defend the nation, fight and win wars.” Which is true, but deceptively simplistic. Preventing the redundancies and waste that have contributed to the accounting chaos seems like an integral part of keeping the Pentagon operating most efficiently. “We’re too big to just sort of blow up all of our systems and go buy one new, gargantuan IT system that runs the entire Department,” McCord explained. But it’s kind of strange that the two things are presented as being at odds. Wouldn’t better financial management, no matter how difficult it might be to implement, actually serve to help the Pentagon defend the nation?

A slightly more cynical (or realistic, depending on your preference) explanation for that recalcitrant attitude exemplified by the person who should be most concerned about the state of the DOD’s ledger is that the military’s budget is hard to rein in because so many people benefit from the waste. Start reforming one project and the next thing you know entire cash cows are getting slaughtered and budgets are getting slashed as things streamline. As William Hartung wrote, “An accurate head count of the hundreds of thousands of private contractors employed by the Pentagon would reveal that a large proportion of them are doing work that is either duplicative or unnecessary. In other words, an effective audit of the Pentagon or any form of serious oversight of its wasteful way of life would pose a financial threat to a sector that is doing just fine under current arrangements.”

Both the Republican and Democratic party platforms mention auditing the Pentagon, receiving a short paragraph in each. As Mandy Smithberger of POGO told me over email, “Both major-party platforms pay lip service to auditable financial statements, but until the president or Congress withholds funding for failing to meet this deadline progress is going to continue to be incremental.” But just knowing how much of our money is going where is only the tip of the iceberg. Our inability to force even the most basic accounting standards on our nation’s largest federal agency is a symbol of our inability to address a much deeper ailment: The Pentagon would have to be radically altered, almost taken apart and then reassembled, in order to be fixed. But the only people who have the power to do that don’t have the incentive to.

The $6 Trillion Issue You Won’t Hear About at the Debate