Despite a near-consensus on Capitol Hill on the need to cut spending, about a fifth of the federal budget has been placed entirely off limits: the Defense Department, which is so awash in cash that even its auditors have a tough time telling where all the money is going.
For lawmakers brave enough to broach the topic, the Pentagon, whose spending has gone from $300 billion in 2000 to more than $663 billion in 2010, is an obvious target. The defense budget is the single largest spending item over which Congress has direct annual control, and the department has never complied with federal rules requiring annual audits.
Some fiscal hawks say it is time for a change.
“At a minimum, we need to freeze defense spending until the Pentagon can audit its books,” said Sen. Tom Coburn, Oklahoma Republican. “Our military leaders have said our debt is our greatest national security threat. In order to defeat that threat, we have to put everything on the table, including defense spending that, in some cases, does nothing to defend our nation.”
Still, proposals to slice the department’s spending have been few and far between, and the ones that lawmakers have put forward have gained little traction.
In the debate over cutting 2011 spending levels, military spending has basically been AWOL, while the competing 2012 budget blueprints rolled out by President Obama and House Budget Committee Chairman Paul Ryan, Wisconsin Republican, include billions of additional dollars for defense, though at a reduced rate of growth. Lawmakers, meanwhile, are proposing deep cuts to the other federal agencies, which, unlike the Pentagon, conform to the audit guidelines.
Lawmakers and fiscal conservatives say auditors can’t get a clear picture of the Defense Department’s books because it operates on outdated networks and systems that make it impossible to track where the money is going.
“Congress does not know how the Pentagon spends money, and the Pentagon does not know how the Pentagon spends its money,” said Winslow T. Wheeler, a military analyst at the Center for Defense Information who worked on national security issues for 31 years for members of the U.S. Senate. “It is not that DOD annually flunks audits, it is the fact that it can’t be audited.”
He added, “If you flunk an audit, you can track the money and find that it was not spent as intended. If you can’t be audited, you can’t track the money. In other words, it is literally true that it would be a vast improvement if DOD were to flunk an audit.”
In testimony before Congress this year, Defense Secretary Robert M. Gates said his department understands the need to comply with federal standards and is working hard to get its accounting systems up to snuff. Until then, he said, the department will rely on long-held systems “that give me confidence that we know where the money is going.”
“The reality is we do have systems in place to deal with fraud, to deal with other issues and that provide us with the tools do to financial management and budgeting,” he said.
Mr. Gates also has won praise from both major parties for finding $100 billion in savings and $78 billion in cuts to projected spending increases over the next five years.
Despite the proposed savings, however, questions over how the Pentagon spends its money have added a layer of uncertainty to the spending debate.
Last week, lawmakers appeared perplexed after Mr. Gates assured them that the department could absorb the initial $550 million tab from the recent military strikes on Libya and the estimated $40-million-a-month bill from ongoing operations - but he couldn’t tell them where he had found the additional money.
Rep. J. Randy Forbes, Virginia Republican who sits on the House Armed Services Committee, said he was left scratching his head about the source of the funds.
“Many of the members are looking now and saying, ‘How can we determine how much we can spend for defense until we know where the money is going?’ ” he said.
Sen. John McCain, Arizona Republican, said Congress has been asking for an audit of the Defense Department since he was first elected to office in 1987.
He said he was “incredibly frustrated and angry” about the department’s poor procurement procedures, which he said have wasted billions of taxpayer dollars each year.
Mr. McCain stopped short of embracing Mr. Coburn’s proposal to freeze Pentagon spending until it comes clean about its books.
“I agree with Sen. Coburn in principle, but in practice, our first priority in defense spending has to be to assess threats to our national security and spending has to be guided by that,” he said. “We better be careful because we are in a very unsettled world today.”
Some argue that the Pentagon itself would be the biggest beneficiary of an audit.
“At the end of the day, the Department of Defense will make better informed decisions if they have more accurate data to work with, and they don’t currently have those kinds of systems in place,” said Rep. K. Michael Conaway, Texas Republican. “Business large and small use internal controls and accounting systems to find them the kind of day-in-and-day-out information they need to run their business, and the Department of Defense isn’t getting that.”