One thing we can assume about Ashton Carter, the nuclear physicist who Obama just nominated as secretary of defense, is that he’s good at math. That’s a good thing, since he’ll have the fight of his life wrestling with a $600 billion-a-year budget that Fareed Zakaria reminds us is more than the entire GDP of Poland.
Zakaria opened his Sunday GPS show on CNN with an indictment of the Pentagon’s inability to manage, audit, and account for the money it spends and wastes every year. The lax oversight is so bad that officials literally “cook the books” to make the numbers jibe with the U.S. Treasury’s. Last November, an investigation by Reuters caught them red-handed:
“Linda Woodford spent the last 15 years of her career inserting phony numbers in the U.S. Department of Defense's accounts. Every month until she retired in 2011, she says, the day came when the Navy would start dumping numbers on the Cleveland, Ohio, office of the Defense Finance and Accounting Service, the Pentagon's main accounting agency. Using the data they received, Woodford and her fellow DFAS accountants there set about preparing monthly reports to square the Navy's books with the U.S. Treasury's - a balancing-the-checkbook maneuver required of all the military services and other Pentagon agencies.”
Auditing the Pentagon simply hasn’t worked. The Department of Defense spends $573 million a year to audit DOD contracts. But that internal group is a failure, with a backlog of $574 billion in unaudited contracts and potentially billions in overpayments.
The now infamous F-35 fighter jet is a perfect example of a contract gone wild. The $1.5 trillion commitment over the 55-year life of the program was called “too big to fail” by the Pentagon in 2010. After 14 years, and billions of dollars, the plane still had 719 new problems to fix as of October 2013. (Why anyone would expect any technology to last 55 years is, of course, another problem.)
To be fair, the Air Force isn’t the only branch of service with contract snafus. We reported last October about the Navy’s Littoral Combat Ship program, which has been plagued by cost overruns and functional problems. The problems are so bad that the Navy is thinking of scrapping the program altogether and eating the nearly billion-dollar loss.
Of course, it’s not just neglect and abuse by the Pentagon that’s causing all this waste. Congress is a co-conspirator. Take the Abrams tank, for instance. It’s a vehicle meant to fight a “boots on the ground” land war that the military says it can’t use. But Rep. Jim Jordan (R-OH) doesn’t want to lose jobs in his district, so he lards it through Congress to the tune of $436 million. When Robert Gates was Defense Secretary in 2009, he told Congress the defense bill included $6.9 billion for things he did not need.
Zakaria says, “The Pentagon resembles nothing so much as some kind of gigantic socialist enterprise, run according to its own principles, shielded from market discipline and accountable to no one. How does it continue to function and perform? The way socialist bureaucracies usually do. If you throw enough money and talented, energetic and determined people at it, things can work, until the money runs out.”
If anyone can stop the bleeding, Zakaria thinks Carter can. And he has a powerful ally in John McCain, the Arizona Republican who will chair the Senate Armed Services Committee next year. Together, they’ll need to find new revenue to fight ISIS. As we reported earlier, the estimated $30 billion to $40 billion of new spending would come on top of the Pentagon’s $496 billion fiscal 2015 operating budget for personnel and contractors and the roughly $58.6 billion in an “Overseas Contingency Operation” fund that is used to finance U.S. war operations in the Middle East.
McCain delivered a speech in 2011 marking the 50th anniversary of President Eisenhower’s military-industrial complex speech. McCain indicted both the Pentagon and Congress for complicity in pumping up the military budget without regard to need, function or cost.
He said, “We have been left with a defense procurement system that has actually incentivized over-promising and underperformance. In the face of the military-industrial-congressional complex, the taxpayer and the warfighter have not stood a chance.”
This is the year to turn that around.
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