Top Pentagon Auditor Tells What The Problems Are

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Bill Moyers Interviews Chuck Spinney
Reported on the Bill Moyers' TV News Show “NOW” 8/1/03

MOYERS: So every Congressman could know what part of the pork was coming into his district?

SPINNEY: Right. Let's say I'm the program manager for the F-16 in the Pentagon. I get a call from one of my wholly owned subsidiaries over on the Hill on the armed services committee. "We got it funded for you guys, but those guys in the House are gonna screw us." So you know, "You got to do something." The contractors then start calling up the subcontractors. They unleash the fax attacks. They unleash the emails. And then of course they start calling the lobbyists, the Gucci shoe crowd on K Street, and say, "Hey, you got to start beating the pavement in the halls of Congress. We need some newspaper op-eds." The whole process takes care of itself. One phone call turns it on.

MOYERS: Who gets the money?

SPINNEY:The contractors get it. The Congressmen get it. But I think the biggest benefit to them is power and the stability of their job. And remember the people in the Pentagon that are promoting this thing are creating a situation where they can make the big bucks. All you have to do is look at the number of retired generals working for defense contractors.

MOYERS: The revolving door?

SPINNEY: Yeah, yeah. The revolving door the military industrial Congressional complex is a political economy with a big P and a little E. It's very political in nature. Economic decisions, which should prevail in a normal market system don't prevail in the Pentagon, or in the military industrial complex. So what we have is a system that essentially rewards its senior players. We basically take care of ourselves.

MOYERS: Where is the money going?

SPINNEY: Well, it goes into cost growth.

MOYERS: Are you saying that costs went up because the…

SPINNEY: The money went in. I have data showing that when we reduce the budget the contractors cut their costs. In some cases they come in under cost estimates when the money dries up. Producing the same product. It makes no economic sense in any kind of commercial context. It makes perfect political sense.

MOYERS: Because someone could say that war is not a commercial venture. That it's not driven by markets. The markets don't exist in a military economy.

SPINNEY: I agree. And that's why we ought to make the defense industry a public sector service. If we did that you wouldn't see these gross disparities in salaries creeping in. the problem is that we have an accounting system that isn’t auditable even by the generous auditing requirements of the federal government. The inspector general has to produce an audit each year verifying that the money was spent on what Congress appropriated it for. Now that's not a management accounting audit. It's basically a checks and balances audit. It enforces the accountability clause of the Constitution which states that you can't spend money unless Congress specifically appropriates it. Well, the Pentagon has never passed an audit. They have 13 or 15 major accounting categories. The only one of those categories that's ever been passed is the retirement account.

Every year they do an audit and the inspector general issues a report saying we have to waive the audit requirements, because we can't balance the books. We can't tell you how the money got spent. What they do is try to track transactions and in one of the last audits they reviewed $7 trillion in transactions. They couldn't account for about four trillion dollars of those transactions, two trillion were unaccounted for and two trillion they didn't do. They could only account for two of the 7 trillion dollars. They don't know where the money's going.

They couldn't account for about four trillion dollars of those transactions, two trillion were unaccounted for and two trillion they didn't do.

Well, guess what the Senate Armed Services and the House Armed Services agreed to do in their infinite wisdom? They decided to waive the Pentagon's requirement for these annual audits in their authorization bills. So the Pentagon no longer has to do it. The rationale was that we all know that this is a problem so we don't need to be told every year. Of course the one good thing about these audits was it would generate a small burst of news stories every April or May when the audits were due saying the Pentagon can't follow it's money. You know, there's a trillion dollars unaccounted for.

MOYERS: What does this do to the national ethos?

SPINNEY: I think it corrupts it. Essentially you have all the pretensions of a democracy. We're really a democratic republic where you have representatives of the people in the government, and the representatives are under certain strictures to behave in a certain way. And in fact they're not behaving that way.

MOYERS: Yeah, you've said it's a moral sewer there on the Potomac.

SPINNEY: That's correct.

MOYERS: What do you mean moral sewer?

SPINNEY: Well, fundamentally we take an oath of office to preserve the Constitution and we are in fact… in effect undermining the Constitution because we won't address this issue of accountability.

MOYERS: And don't you think most people, most ordinary citizens say, "Well, if we have to endure some waste and some superfluous and some corruption just to be safe, we'll do so"?

SPINNEY: Oh, absolutely. Absolutely. It gets really out of control when you have a political system that caters to fear which is what I think is going on now.

MOYERS: But the fear is legitimate today, given 9/11 and the war on terror?

SPINNEY: Absolutely. I don't want to diminish the terrorist threat in people's minds. The problem is that if you start thinking about how you deal with these kinds of threats, you don't need B-2's. You don't need ballistic missile defense. You don't need Comanche helicopters. Basically what you need are really highly trained individuals that understand economics, anthropology, as well as fighting, particularly in close quarters combat which is the most difficult form of fighting.

SPINNEY: My point here is that those kinds of solutions don't generate big budgets.

MOYERS: So we keep spending big money on those old systems even…

SPINNEY: For the wrong threat. It isn't gonna fix our problems. It's certainly unnecessary. This budget is being put into place, and it's gonna generate an enormous tail in the out years because we're politically engineering all these programs and building up all this support in the Congressional districts. It's gonna be very difficult to turn this spending off.

MOYERS: This strikes me as somewhat mad.

SPINNEY: It is. We're in Versailles on the Potomac. We basically exist for ourselves. And we live in a hall of mirrors. It's a good metaphor.

MOYERS: Like Versailles.

SPINNEY: Like Versailles. And you have to remember, our decisions basically are to spend other people's money, and ultimately to spill other people's blood. We don't pay the price for these decisions. There's an asymmetric burden of risk. Well, those risks don't really have much of an impact on decision-makers who are more interested in the preservation of their program.

MOYERS: Chuck Spinney, thank you very much.

SPINNEY: Thank you.

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