Senators Threaten to Penalize Pentagon for Wasteful Spending

By Yuval Rosenberg

A New Proposal to Force the Pentagon to Clean Up Its
Act

The Department of Defense has famously never passed a financial
audit, with the first one coming only in 2017 following decades of
avoidance of the issue. The Pentagon failed that first audit, and
each one thereafter, much to the chagrin of those hoping to bring
an end to the legendarily wasteful spending – and inordinately
complex bookkeeping – that has long been a hallmark of military
procurement. On Wednesday, a bipartisan group of lawmakers proposed
a new way to put more pressure on the Pentagon to get its financial
act together.

The Audit the Pentagon Act of 2021 would penalize any part of
the Pentagon that fails its audit by forcing it to pay 1% of its
budget back to the U.S. Treasury, with the funds being used to
reduce the federal deficit.

The bill is co-sponsored by Sens. Bernie Sanders (I-VT) and
Chuck Grassley (R-IA), along with Sens. Ron Wyden (D-OR) and Mike
Lee (R-UT).

“The Pentagon and the military industrial complex have been
plagued by a massive amount of waste, fraud and financial
mismanagement for decades. That is absolutely unacceptable,”
Sanders said in a
statement. “If we are serious about spending
taxpayer dollars wisely and effectively, we have got to end the
absurdity of the Pentagon being the only agency in the federal
government that has not passed an independent audit. The time is
long overdue for Congress to hold the Defense Department to the
same level of accountability as the rest of the government. That is
the very least we can do.” 

Along with many other critics, the lawmakers believe that the
lack of good accounting is a big part of the reason that spending
at the Pentagon involves so much waste. “We've seen example after
example of excessive and inefficient spending by the Pentagon, and
every dollar squandered is a dollar not being used to support our
men and women in uniform," Grassley said. "After 30 years to get
ready, this bill pushes the Defense Department to finally achieve a
clean annual audit – a requirement that every other federal agency
is held to.”

Pentagon officials say they are trying their best to get a
handle on the military’s outsized spending, which is the largest
discretionary part of the federal budget, totaling $740 billion
this year alone. Both the department and the audit process are
extremely complex, requiring more than 20 individual examinations,
and results are improving each year. But Pentagon leaders can’t say
when they think they’ll finally get a clean result.

The bottom line: The senators hope to provide some
inspiration to Pentagon leaders as they struggle to get a handle on
hundreds of billions in spending. It’s not clear if the bill will
be able to progress, but it could end up being considered as part
of the next National Defense Authorization Act this fall.

Quote of the Day

“A number of participants suggested that if the economy
continued to make rapid progress toward the Committee's goals, it
might be appropriate at some point in upcoming meetings to begin
discussing a plan for adjusting the pace of asset
purchases.”

– From the
minutes of the April 27-28 meeting of the Federal
Open Market Committee, released Wednesday. That one line in
particular briefly accelerated a stock market selloff as it
suggested that the Federal Reserve might be edging toward
discussion of tapering the current $120 billion a month in bond
purchases, a first step in scaling back support for the economy.
“The discussion revealed in the minutes is the first time that
central bankers have indicated that a reduction in purchases could
happen ahead, though there was no timetable,” CNBC’s Jeff Cox

says.

Fed Chair Jerome Powell said after the April meeting that the
economy had yet to show the “substantial further progress” that
central bankers have said would be necessary before they change
direction. And the meeting minutes also said that “various
participants” anticipated that it will “likely be some time” until
economic progress reached their goals for tightening policy.

“Confusing, and at times conflicting, data released since
the April 27-28 gathering could make the Fed’s assessment of when
to dial back support — or even to start talking about doing so in
earnest — difficult,”
notes Jeanna Smialek of The New York
Times.

Capito Sees Good Chance of Making a Deal With
Biden on Infrastructure

Sen. Shelley Moore Capito (R-WV), the lead Republican negotiator
on an infrastructure package, said Wednesday that she sees a
greater than 50-50 chance of striking a deal with President Joe
Biden, though she acknowledged that the two sides continue to have
substantial differences.

“I’m a little bit too much of an optimist at times, but I’m
putting it over 50-50,” Capito said in a television
interview with Bloomberg's David Westin. “I do
think we have gaps here, but we do have the will to want to do
this.”

Capito added, however, that a deal will have to come together
quickly given that Biden doesn’t want talks to drag on. “I think
the next two weeks will probably be the critical time,” she
said.

Capito was among six Republican senators who met with Biden
administration officials on Tuesday to discuss an infrastructure
deal. She indicated that Wednesday that Republicans had upped their
initial $568 billion counteroffer, which included existing spending
plans, to Biden’s nearly $2.3 trillion proposals, but declined to
provide a new figure.

“We’re moving, and obviously we would be moving up because that
would be moving towards the president’s numbers, but I don’t want
to negotiate in public,” she said.

Capito added that Republicans were willing to look at electric
vehicle infrastructure, a priority for Biden, who has proposed $174
billion in spending to boost that market in the U.S., arguing that
such investment is necessary to compete with China.

The White House is slated to respond to the latest GOP proposal
by the end of the week.

House Speaker Nancy Pelosi has targeted July 4 as an ambitious
deadline for House passage, but Capito said she doubted the package
could be done by then.

The bottom line: The talks may be progressing but they
remain far from agreement. “And they still can’t define
infrastructure,” Politico
reports, noting that Capito said the
administration’s definition “is still a lot broader than ours."

The two sides have yet to reach a consensus on a topline
spending total, what should be included in any package or how to
pay for it.

The White House, meanwhile, faces
increased pressure from progressives to end the
bipartisan talks and have Democrats try to press ahead
on a broader package without GOP support. “At what point do they
seriously come to the table?” Rep. Mark Pocan (D-WI) said,
according to Politico. “If they don’t come to the table, it doesn’t
mean we don’t serve the meal.”

House Republicans Release Transportation
Bill

Republicans in the House of Representatives introduced a $400
billion transportation bill Wednesday, adding another reference
point in the ongoing talks between the Biden administration and
lawmakers over infrastructure spending.

Assembled by GOP members on the House Transportation and
Infrastructure Committee, the legislation would increase current
spending levels by $100 billion over five years, with most of the
new funding going toward road construction. The bill would put
limits on federal regulations governing infrastructure projects,
reducing the time allowed for environmental reviews, and transfer
more power over projects to state governments. And it would create
a new office focused on rural infrastructure investment, among
other things.

The bill does not include any revenue sources, which are the
responsibility of the tax-writing committee, The Wall Street
Journal
reports. And it focuses only on surface
transportation, leaving other issues such as air and water
transportation to other committees.

Another talking point: The measure, which would be the
largest transportation bill in history, has no chance of passing in
its current form given the Republican minority, but it could serve
as a basis for negotiations over President Biden’s proposed $2.3
trillion infrastructure bill.

“As the process for considering legislation on infrastructure
moves forward, I am eager to see these proposals become part of a
robust bipartisan effort — just as the president continues to call
for,” Rep. Sam Graves of Missouri, the top Republican on the
transportation committee, said.

Still, the bill is a reminder of how far apart the two parties
are when it comes to dealing with infrastructure. Democrats are
pushing to include an array of different issues in their proposed
legislation, from road and rail transportation to green energy and
elder care. Republicans, on the other hand, are sticking to more
basic issues, with a heavy emphasis on roads, while showing few
signs of interest in taking a more expansive approach on the
topic.

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