Tighten Pentagon's Purse Strings Until It Passes an Audit

December 2000

Comment: #399

Discussion Thread: #s 391, 386, 381, 364, 169

Attached References:

[1] James Schlesinger and Harold Brown, "What About Defense?" Washington Post, December 20, 2000. 

In the Los Angeles Times op-ed below, VADM John J. Shanahan (USN Ret.) and I provide a very different perspective on "What to Do About Defense" than that proposed by former defense secretaries James Schlesinger and Harold Brown in the Washington Post last December 20, 2000 (see Ref 1 below).

Tighten Pentagon's Purse Strings Until It Passes an Audit

Los Angeles Times
December 29, 2000

If the turmoil in Florida has offered us a civics class, the central lesson is this: Respect our Constitution.

The same lesson needs to be taught to the Pentagon. For four consecutive years, the Defense Department, which accounts for half of the nation's discretionary spending, has been unable to pass a financial audit, flouting both constitutional requirements and a 1990 act of Congress. In the wake of the Florida fiasco, will the Pentagon pledge to stop violating the Constitution?

At stake are both the rule of law and our national security. The Pentagon's books are in such utter disarray that no one knows what America's military actually owns or spends. We also can't estimate the cost of new weapons or how much would be saved by cutting wasteful military programs.

The picture becomes even more horrifying when the Pentagon's financial transactions are examined. The Defense Department's inspector general recently identified $6.9 trillion in accounting entries, but $2.3 trillion was not supported by adequate audit trails or sufficient evidence to determine its validity.

Another $2 trillion worth of entries were not examined because of time constraints, and therefore, the inspector general was able to audit only $2.6 trillion of accounting entries in a $6.9-trillion pot.

Without sound financial data, the president, Congress and military leaders simply cannot make the kind of policy decisions and budgetary commitments that must be made to ensure our nation's security.

Curiously, even without the foggiest notion of how defense dollars are being spent, analysts of all political stripes continue to estimate future defense budget requirements. The Congressional Budget Office reports that the Pentagon will need an extra $30 billion per year just to maintain current force levels. The presidential candidates proposed adding tens of billions over the next 10 years. The Joint Chiefs of Staff see a need for $180 billion more over the next six years. Not surprisingly, Defense Department critics argue that the military budget could be trimmed by about the same amount as the hikes proposed by advocates of greater spending.

The proposals on both sides have one thing in common: None mentions the Pentagon's bookkeeping shambles.

The reality is that, given the inability of the Pentagon to account for public funds previously allotted, no one can predict the level of funding required in the future.

In effect, through its accounting obfuscations, the Pentagon has usurped Congress' power of the purse by spending what it gets without congressional oversight.

This is no small matter. According to constitutional scholar Edward S. Corwin, the construction of the appropriations and accountability clauses makes the power of the purse the foremost control on the president's power in the entire edifice of checks and balances.

Like much of the language of the Constitution, the original intent of the framers resides in a mix of absolutely clear requirements tempered by the studied ambiguity of 18th century prose. In 1990, with the concurrence of the president, Congress removed most of the remaining ambiguity by enacting laws that require the inspector general of each federal agency or department to prepare an annual financial audit that specifically links all money spent to appropriations authorized.

This is not a particularly demanding requirement. Nevertheless, the Pentagon has now failed to account for its expenses for several years; in effect, it has declared itself the constitutional equivalent of a rogue elephant--out of control and above the law.

Here is a simple way out of this mess: With no realistic threat to our national security on the horizon for the next 15 to 20 years and with America spending 18 times as much as all the adversaries identified by the Pentagon, we should call a time out. Congress and the president should fund the Defense Department through a continuing resolution at 5% to 10% below current levels until the Pentagon passes a financial audit.

It is ironic that one of the nation's most trusted institutions, the Pentagon, flouts the Constitution year after year with the blessing of our political leaders. The new Congress and president must find the courage to rectify this embarrassing situation. The taxpayers and soldiers at the pointy end of the spear deserve no less.

Retired Navy Vice Admiral Jack Shanahan Heads the Military Advisory Panel of Business Leaders for Sensible Priorities. Franklin C. Spinney Works in the Office of the Secretary of Defense. the Views Expressed Are Theirs Alone

Now turn your attention to Reference 1 below. James Schlesinger and Harold Brown lay out their reasons for increasing the defense budget by one-half of a one percent of GDP. Like others proposing GDP-based defense budgets (see Comments #s 381 & 386), Drs Schlesinger and Brown do not tell the reader how much their budget would cost over the long term. Attached herewith to assist you in understanding their proposal is a budget chart (with the effects of inflation removed) showing how a six year budget plan (also adjusted for inflation) based on their proposal would compare to past budgets over time. The calculations based on the July estimate (adjusted for inflation) of future GDPs produced by the Congressional Budget Office.

Drs Schlesinger and Brown are proposing future budgets that would be higher in constant dollars than the median budgets of the Cold War. In fact, the only comparable periods would be Korea, Vietnam, and the Reagan spend-up. Bear in mind that today's combat forces are only 40% to 50% the size of those fielded in the mid 1980s, and are smaller by far larger percentages than those fielded during the 1950s. Given the current level of full employment in the general economy, the employment constraints and brain drain in the technologically moribund defense industry, and the fact that the Pentagon can not account for or effectively control the money it is currently spending (as explained above), there can be no guarantee that a substantial portion of such a large infusion of spending over such a short time will not be converted into more cost growth and waste, as happened during the rapid spend-up in the first half of the 1980s.

Throwing money at cold-war legacy systems and doctrines won't help the United States deal with the changing nature of conflict in the 21st Century. Besides, voracity increases the appetite of the monster, and 2010 is not very far away; it would be wiser to reign in the Pentagon's appetite before the baby boomers hit the old folks' homes.

Chuck Spinney

[Disclaimer: In accordance with 17 U.S.C. 107, this material is distributed without profit or payment to those who have expressed a prior interest in receiving this information for non-profit research and educational purposes only.]

Reference #1

Washington Post December 20, 2000

What About Defense?

By James Schlesinger and Harold Brown


... over the next decade, the nation will need to spend significantly more - certainly hundreds of billions of dollars - on defense and foreign assistance if we are to maintain a military force capable of doing the things that both candidates seemed to feel it would have to do.

The U.S. military that President-elect Bush inherits, while far superior to any other, is not what it needs to be. Over the past decade, it has been asked to triple its overseas deployments and operations - with substantially fewer resources. America's armed forces are now 40 percent smaller than they were during the Cold War, and they are severely stretched. Problems with maintaining the readiness of today's military include a need for parts for planes, ships and tanks, as well as the fact that many troops are not getting their full quota of realistic training. Morale is declining, as evidenced by the difficulty in recruiting and retaining skilled personnel in the face of competing opportunities in the private sector.

... A few weeks ago the Congressional Budget Office released a study concluding that we need to spend at least $50 billion more each year just to keep our armed forces at the present level of combat capability. According to CBO, $75 billion or more is needed to perform the sort of wholesale recapitalization of the U.S. military that has been made necessary by a decade of underfunding.

A thorough and independent assessment by Daniel Goure and Jeffrey Ranney indicates that it would cost roughly $100 billion more a year to ensure that the armed forces have the kind and quantity of equipment, realistic training and quality-of-life conditions that the Clinton administration has said will be required in the years ahead. The bulk of this amount (roughly 80 percent) would go toward replacement of obsolescent aircraft, ships and tanks.

During the campaign, both major presidential candidates largely ignored this issue, pledging to increase defense spending between $45 billion (Gov. Bush) and $100 billion (Vice President Gore) over the next l0 years. Moreover, the campaigns indicated that these sums would largely be allocated to meet deficiencies in pay, housing and other quality-of-life areas.


Others have suggested that instead of modernizing the force with the next generation of equipment, we can save money by buying more of the kinds of ships, aircraft and armored vehicles we have today - thereby recapitalizing the force rather than modernizing it. But it is precisely such attempts to skip a generation of procurement between the late 1980s and today that have left the U.S. military with the problem of an obsolescent force.

Some money can be saved by not moving forward with new-generation systems, and indeed a careful review of programs now in early stages of development should be made by the new administration, with a view toward reducing their number. But in many instances, these new capabilities are required to meet new tasks.

This is a problem that cannot be solved without more money. The alternative, a substantial reduction in force structure, must be resisted. Recent events in the Middle East should underscore that we are living in unpredictable and even dangerous times. A strong military is a bulwark against threats to U.S. vital interests and to our homeland.

While the additional sums required to restore our military are large in absolute terms, it must be remembered that the United States today spends slightly less than 3 percent of its gross domestic product on defense, the lowest level since before Pearl Harbor.

Even with all the efficiencies and management improvements that are politically feasible, to make up the current shortfall will require a phased increase in defense spending to a level about 20 percent higher than the present one. An additional one-half percent out of the national economic dollar to be allocated to national security is well within the capability of the US. economy. A small portion of this increase should be devoted to foreign assistance and to the overseas operations of the State Department; starving diplomatic efforts also impairs national security.


James Schlesinger was secretary of defense from 1973 to 1975. Harold Brown held the post from 1977 to 1981.