"We've Reached Never, Never Land" - Missing $21 Trillion - Part 2

Submitted by gulfgal98 on Tue, 10/30/2018 - 2:35pm

In Part 1 of this series, we learned that the joint efforts of Catherine Austin Fitts and Dr. Mark Skidmore have identified a total of $21 Trillion worth undocumentable adjustments between 1998 and 2015 in the budgets of the Department of Defense and Housing and Urban Development. A copy of the summary of their report is available here. This is in a pdf file.

These undocumentable adjustments were identified from publicly available documents for both the DoD and HUD. Supporting documentation is available here. Since the time that the inventory was done, the United States government has removed those documents from public websites and what documents that are currently available to the public are so heavily redacted that they are worthless.

Representatives of the DoD and HUD have attributed these large amounts of undocumentable adjustments to problems with their accounting systems. If so, let's look at this statement from 2001 by Donald Rumsfeld, Secretary of the DoD.

According to some estimates, we cannot track $2.3 trillion in transactions. We cannot share information from floor to floor in this building because it's stored on dozens of technological systems that are inaccessible or incompatible."
-‐Remarks as Delivered by Secretary of Defense Donald H. Rumsfeld,
The Pentagon, Monday, September 10, 2001

In light of that statement, the following is from the Inspector General's report for the DoD in July 2000.

Turning to the 2001 Rumsfeld comment, consider the document “Statement of Robert J. Lieberman Assistant Inspector General Department of Defense before the Task Force on Defense and International Relations House Budget Committee on Department of Defense Financial Management” which was delivered in July 2000 (http://www.dodig.mil/audit/reports/fy00/00-‐167.pdf). This may have been the document Mr. Rumsfeld was referring to when he indicated that the DOD could not account for $2.3 trillion. On page 9 of this report, we see that $2.3 trillion in transactions were “unsupported by reliable explanatory information”. There is little explanation of the nature of these adjustments except that they are evidence of “how poor the existing systems are”. The explanation in the document is that existing systems are inadequate given the complexity of DOD operations and contracts.

Please note the dates of of both the OIG Report of 2000 and Rumsfeld's statement of 2001 above. Both the DoD and the OIG for the DoD knew of the problems with their financial tracking systems at least as early as 2000.

Then in 2017 at the Congressional hearing on the nomination of David Norquist as Comptroller for the Department of Defense, this quote and information was presented to Congress.

“The first challenge is there are a large number of accounting systems at the Department of Defense,” Norquist said. “It’s not essential to get down to one, but getting down to a small number would be a step in the right direction.”

This was also one of the main priorities for Robert Daigle, the nominee for director of the Office of Cost Assessment and Program Evaluation at DoD. He said there are too many legacy systems that simply don’t talk to one another, and that these disparate data structures mean someone has to manually collect and translate the data when moving from one system to another. Consolidating these systems into a single, enterprisewide system would allow the department a centralized view of the accounting.

So what happened between 2000 and 2016 to improve the computer systems used in tracking the finances of the Department of Defense? Apparently nothing has been done to upgrade and better integrate their financial tracking systems in all the intervening years. And yet the DoD has a massive budget. The Department of Defense has never been audited and even though one was ordered, it still has not been done as of September 2018.

Early this year the Pentagon announced that it was conducting its first ever independent audit. However, several months after beginning the audit, the government accepted the recommendations of the Federal Accounting Standards Board: https://fas.org/sgp/news/2018/07/fasab-review.pdf (see page 3 for a summary). The statement allows government officials to misstate and move funds around to hide expenditures if it is deemed necessary for national security purposes, and the rule applies to all agencies, not just the black budget.

In the course of his testimony to Congress, David Norquist proffered the following explanation for the massive undocumentable adjustments.

To summarize, Norquist says that unsupported adjustments are the result of changes in the “property book” that can amount to hundreds of billions of dollars. According to Norquist, since the system that tracks the property book is not integrated with the system that tracks the general fund ledger, large unsupported adjustments are required for reconciliation. Though it is not entirely clear from his testimony, it seems Mr. Norquist is suggesting that changes in the valuation of property and equipment due to depreciation, base closures, equipment becoming obsolete, etc. are leading to enormous undocumentable adjustments.

In an article published in Forbes in July 2017, co authors Lawrence Kotlikoff and Mark Skidmore ask the following question.

During this time period, authorized general fund Army spending was about $2 trillion. We know from other sources that about 40 percent of the Army’s budget is allocated to personnel costs, and thus was not used for purchasing property, equipment, and the like. For purposes of this exercise, assume that the remaining amount (60 percent of the $2 trillion, or $1.2 trillion) is used to purchase property, equipment, etc., and suppose all of this spending is fully written off at 100 percent. For how many years could the Army write off all non-personnel spending and then call it an unsupported adjustment? Between 1998 and 2015, the Army’s average annual budget was about $118 billion, of which about $71 billion annually was for non-personnel spending. Dividing $11.5 trillion by $71 billion shows that the Army could have fully written off all non-personnel spending for the past 163 years (assuming a stable budget allocation in real terms), and then called it an unsupported adjustment. From this evaluation, it seems that Mr. Norquist’s explanation does not pass the sniff test.

So is this loss of $21 Trillion simply an accounting issue or is it something else? Poor accounting practices open the door wide to nefarious activities. Apparently Dr. Mark Skidmore, of Michigan State University, who oversaw the inventory of the public documents for the DoD and HUD believes that this is more than just an accounting issue.

Finally below is this interview of Dr. Mark Skidmore, Michigan State University. Dr. Skidmore elaborates as to why he believes that this is not just an accounting issue. In particular, he cites the $800 Billion transfer from the Treasury to the Army. This transfer was equal to seven and a half times the Army's budget for the year in which it occurred.

[video:https://www.youtube.com/watch?time_continue=1819&v=7CwpjIwwI9o]

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$21 Trillion missing

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Comments

Submitted by arendt on Tue, 10/30/2018 - 3:45pm

Thanks for this...

for me, this is one (rather large) "thin mint". (Monty Python reference.)

How can we even pretend any longer that this country is a democracy, when monies of this magnitude have been and continue to be stolen in broad daylight?

As the authors note, this amount of money could pay for (fill in the blank major planet-level social welfare program).

This story, the official reaction to it, and the complete lack of interest by the corporate media (yeah, Forbes published it, but are they going to risk their company to publicize it?), our two bought and paid for political duopoly, and the so-called patriots (and profiteers) in our MIC demonstrates what (the pre-lobotomized) Bernie said: the business model of America is fraud.

You know that this massive theft came out of social spending. It tells you what TPTB think about our country: its theirs to loot, and all you whining losers can just fuck off and die.

So depressing. Never any good news anymore. (Still can't bring myself to digest the fascist takeover in Brazil (heavily abetted by US psyops, Cambidge Analtica, evangelical fanatics, and the Chicago Boys.)

Submitted by divineorder on Tue, 10/30/2018 - 4:43pm

What should we call our 'form of government', our economy?

@arendt Military Dictatorship doesn't sound right. But what?

War Profiteers vs. The People of the United States
Opening Statement
By David DeGraw
Global Research, April 25, 2018
Changemaker Media

has an excellent overview and discussion of how we got here.

Snippet:

Under the guise of National Security, Global War Profiteers have looted trillions of taxpayer dollars from the U.S. Treasury and have destabilized much of the world by increasing terrorism 6500% since the “War on Terror” began, while paying off politicians and erecting an unprecedented global surveillance network.

Due to the National Security State’s control of mainstream media companies and their systematic suppression of whistleblowers, independent journalists and alternative media outlets, the overwhelming majority of the American population is unaware of how dangerously corrupt our government has become.

While civilian angst among most demographics has been dramatically rising, the American People are tragically misinformed.

We are trapped in a vicious cycle; increased military spending, with inadequate oversight, leads to billions of our annual taxpayer dollars being given directly to the people who profit off of war, terrorism and societal destabilization in general – as evidence clearly demonstrates.

The negative feedback loop then spirals; as terrorism and societal destabilization become more widespread, corrupt and/or shortsighted politicians then appropriate even more tax dollars for the military, with even less oversight, which leads to more funding, weapons and harmful technologies falling into the hands of terrorists, oppressive governments and predatory global corporations, as repressive technology and lethal weapons exponentially proliferate worldwide.

The astounding lack of oversight concerning military spending is an open invitation for every criminal element.

As a consequence to all of this military spending, Global Private Military Companies have now become more powerful than the nation-state governments that fund them.

In the United States, Global Private Military Companies dominate both political parties and most of the government agencies that were created to protect the American People against predatory Global Interests.

The Unaccountable System of Global War Profiteers

How is it possible that the lion’s share of our tax money has gone into this unaccountable system of Global War Profiteers?

Worth the read imo.

—

A truth of the nuclear age/climate change: we can no longer have endless war and survive on this planet. Oh sh*t.

Submitted by gulfgal98 on Tue, 10/30/2018 - 4:58pm

Outstanding read!

@divineorder I wish I had found this when I started this series. I think I will have at least one more essay in this series, possibly two. Thank you for this great link!

Other than the corruptly implemented Legalized Bribery schemes, after an extensive analysis, it is evident that the National Security Act, and corresponding agencies and laws derived therefrom – with the power of secrecy that it provides – has been the primary enabler of the greatest theft of taxpayer wealth in history.

#1 Military Dictatorship doesn't sound right. But what? War Profiteers vs. The People of the United States Opening Statement By David DeGraw Global Research, April 25, 2018 Changemaker Media has an excellent overview and discussion of how we got here. Snippet: Under the guise of National Security, Global War Profiteers have looted trillions of taxpayer dollars from the U.S. Treasury and have destabilized much of the world by increasing terrorism 6500% since the “War on Terror” began, while paying off politicians and erecting an unprecedented global surveillance network. Due to the National Security State’s control of mainstream media companies and their systematic suppression of whistleblowers, independent journalists and alternative media outlets, the overwhelming majority of the American population is unaware of how dangerously corrupt our government has become. While civilian angst among most demographics has been dramatically rising, the American People are tragically misinformed. We are trapped in a vicious cycle; increased military spending, with inadequate oversight, leads to billions of our annual taxpayer dollars being given directly to the people who profit off of war, terrorism and societal destabilization in general – as evidence clearly demonstrates. The negative feedback loop then spirals; as terrorism and societal destabilization become more widespread, corrupt and/or shortsighted politicians then appropriate even more tax dollars for the military, with even less oversight, which leads to more funding, weapons and harmful technologies falling into the hands of terrorists, oppressive governments and predatory global corporations, as repressive technology and lethal weapons exponentially proliferate worldwide. The astounding lack of oversight concerning military spending is an open invitation for every criminal element. As a consequence to all of this military spending, Global Private Military Companies have now become more powerful than the nation-state governments that fund them. In the United States, Global Private Military Companies dominate both political parties and most of the government agencies that were created to protect the American People against predatory Global Interests. The Unaccountable System of Global War Profiteers How is it possible that the lion’s share of our tax money has gone into this unaccountable system of Global War Profiteers? Worth the read imo.

—

Do I hear the sound of guillotines being constructed?

“Those who make peaceful revolution impossible will make violent revolution inevitable." ~ President John F. Kennedy

Submitted by divineorder on Tue, 10/30/2018 - 5:04pm

This is a much appreciated series, hope you do find the

@gulfgal98 time to keep it going!

—

A truth of the nuclear age/climate change: we can no longer have endless war and survive on this planet. Oh sh*t.

Submitted by dkmich on Wed, 10/31/2018 - 9:15am

Ditto - outstanding work gg

@gulfgal98

Theft on a grand scale - bad accounting is way too convenient for words. If they can't account for the expenditures, the least they can do is account for what they can't account for. Ever hear of Excel?

—

"Religion is what keeps the poor from murdering the rich."--Napoleon

Submitted by snoopydawg on Tue, 10/30/2018 - 5:49pm

Well worth the read

@divineorder

Thanks, DO!

This country has voided the constitution and I have no idea why people swear an oath to it when taking office. They know damn well what they are lying to us. And themselves.

Beyond the outright disregard for the rule of law and lack of consequences for ignoring the annual audit legal requirement, the Pentagon is also flagrantly in violation of the U.S. Constitution.

People who aren't concerned about the missing money are the ones who rail against people who are on social programs. This and that they worship the military that is stealing their money. And their future.

Hasn't the government been doing just that?

Under this theory, the government could potentially violate the law and Constitution as it sees fit, and—just by stamping ‘STATE SECRET’ on the top of their actions—those injured by their actions would be denied justice.

Ever since congress passed the patriot and military commissions acts the constitution has been Just a gawd damn piece of paper! Then add in the FISA bill and the other legislation that nullified the constitution and you get a banana republic where the government is corrupt beyond all imagination.

Good essay, gulfgal!

#1 Military Dictatorship doesn't sound right. But what? War Profiteers vs. The People of the United States Opening Statement By David DeGraw Global Research, April 25, 2018 Changemaker Media has an excellent overview and discussion of how we got here. Snippet: Under the guise of National Security, Global War Profiteers have looted trillions of taxpayer dollars from the U.S. Treasury and have destabilized much of the world by increasing terrorism 6500% since the “War on Terror” began, while paying off politicians and erecting an unprecedented global surveillance network. Due to the National Security State’s control of mainstream media companies and their systematic suppression of whistleblowers, independent journalists and alternative media outlets, the overwhelming majority of the American population is unaware of how dangerously corrupt our government has become. While civilian angst among most demographics has been dramatically rising, the American People are tragically misinformed. We are trapped in a vicious cycle; increased military spending, with inadequate oversight, leads to billions of our annual taxpayer dollars being given directly to the people who profit off of war, terrorism and societal destabilization in general – as evidence clearly demonstrates. The negative feedback loop then spirals; as terrorism and societal destabilization become more widespread, corrupt and/or shortsighted politicians then appropriate even more tax dollars for the military, with even less oversight, which leads to more funding, weapons and harmful technologies falling into the hands of terrorists, oppressive governments and predatory global corporations, as repressive technology and lethal weapons exponentially proliferate worldwide. The astounding lack of oversight concerning military spending is an open invitation for every criminal element. As a consequence to all of this military spending, Global Private Military Companies have now become more powerful than the nation-state governments that fund them. In the United States, Global Private Military Companies dominate both political parties and most of the government agencies that were created to protect the American People against predatory Global Interests. The Unaccountable System of Global War Profiteers How is it possible that the lion’s share of our tax money has gone into this unaccountable system of Global War Profiteers? Worth the read imo.

—

Scientists are concerned that conspiracy theories may die out if they keep coming true at the current alarming rate.

Submitted by gulfgal98 on Tue, 10/30/2018 - 6:54pm

Thanks Snoopy

@snoopydawg These two essays have been the most difficult I have ever written due to a lack of information on these adjustments. War and defense (war) spending is extremely profitable. We the people have every right to know how our tax dollars are being spent. I am sick of us being cut out of the information loop due to "national security reasons."

Great comment, as always!

—

Do I hear the sound of guillotines being constructed?

“Those who make peaceful revolution impossible will make violent revolution inevitable." ~ President John F. Kennedy

Submitted by Linda Wood on Tue, 10/30/2018 - 10:53pm

This part

@divineorder

says so much:

The astounding lack of oversight concerning military spending is an open invitation for every criminal element.

As a consequence to all of this military spending, Global Private Military Companies have now become more powerful than the nation-state governments that fund them.

#1 Military Dictatorship doesn't sound right. But what? War Profiteers vs. The People of the United States Opening Statement By David DeGraw Global Research, April 25, 2018 Changemaker Media has an excellent overview and discussion of how we got here. Snippet: Under the guise of National Security, Global War Profiteers have looted trillions of taxpayer dollars from the U.S. Treasury and have destabilized much of the world by increasing terrorism 6500% since the “War on Terror” began, while paying off politicians and erecting an unprecedented global surveillance network. Due to the National Security State’s control of mainstream media companies and their systematic suppression of whistleblowers, independent journalists and alternative media outlets, the overwhelming majority of the American population is unaware of how dangerously corrupt our government has become. While civilian angst among most demographics has been dramatically rising, the American People are tragically misinformed. We are trapped in a vicious cycle; increased military spending, with inadequate oversight, leads to billions of our annual taxpayer dollars being given directly to the people who profit off of war, terrorism and societal destabilization in general – as evidence clearly demonstrates. The negative feedback loop then spirals; as terrorism and societal destabilization become more widespread, corrupt and/or shortsighted politicians then appropriate even more tax dollars for the military, with even less oversight, which leads to more funding, weapons and harmful technologies falling into the hands of terrorists, oppressive governments and predatory global corporations, as repressive technology and lethal weapons exponentially proliferate worldwide. The astounding lack of oversight concerning military spending is an open invitation for every criminal element. As a consequence to all of this military spending, Global Private Military Companies have now become more powerful than the nation-state governments that fund them. In the United States, Global Private Military Companies dominate both political parties and most of the government agencies that were created to protect the American People against predatory Global Interests. The Unaccountable System of Global War Profiteers How is it possible that the lion’s share of our tax money has gone into this unaccountable system of Global War Profiteers? Worth the read imo.

Submitted by gulfgal98 on Tue, 10/30/2018 - 6:56pm

Thank you arendt!

@arendt Your comment gets to the heart of all this.

How can we even pretend any longer that this country is a democracy, when monies of this magnitude have been and continue to be stolen in broad daylight?

—

Do I hear the sound of guillotines being constructed?

“Those who make peaceful revolution impossible will make violent revolution inevitable." ~ President John F. Kennedy

Submitted by Wink on Tue, 10/30/2018 - 9:44pm

bing!

It's been pretty obvious
@arendt
since that pallet of $100 bills
(totaling $1 Billion, at least) went missing, during the first few days of Dubya's Iraq invasion, and the White House reaction - ooops - that sorta indicated Washington isn't all that concerned about money - except when the 99% wants to spend some. Then, of course, "we're broke."

And if that wasn't enough of a clue, then maybe O'bummer's $20 Trillion plus (some say $29 Trillion, but what's another $Trillion or two??) giveaway to Jamie Dimon and his Wall Street Bankster buddies (to bail out Wall Street and the banks for Dubya's 2008 Economic Collapse) should have been one.
Becuz nobody blinked when that happened, least of all the WSJ or CNBC. Hell, Rachel didn't even bat an eyelash. Nor The Fed. Where that $20 Trillion came from, apparently. Becuz it sure as fuck didn't come out of taxpayers pockets.

So... so, if Congress can fork over $700 Billion to the Military without so much as anyone batting an eye, and give $20 Trillion to Jamie Dimon of all fucks... then... then, all this whining about our $1 Trillion "Deficit" and $21 Trillion "Debt" is what exactly?? What?? Becuz, if the sky was going to fall it would have fallen long before this! And why am I still waiting on a pony?? Where's my Med4All??

—

the little things you can do are more valuable than the giant things you can't! - @thanatokephaloides. On Twitter @wink1radio. (-2.1) All about building progressive media.

Submitted by divineorder on Tue, 10/30/2018 - 4:04pm

gulfgal98 what courage it took for them to get this info out!

FWIW I decided to conduct a search to see who else might have published something related to this. Not much, but did see this article from yesterday about a new Pentagon balance sheet that looked interesting.

A Balance Sheet for the Pentagon
http://www.thefiscaltimes.com/2018/10/29/Balance-Sheet-Pentagon

By The Fiscal Times Staff
October 29, 2018

The Department of Defense initiated its first financial statement audit last December – “the largest and most complex financial audit ever,” according to a recent DoD report on military spending in 2018. Audit results are scheduled to be released on November 15.

The chart below, drawn from the DoD report, highlights one component of the audit, providing a summary of the Pentagon’s roughly $2.6 trillion balance sheet.

The missing trillions?

—

A truth of the nuclear age/climate change: we can no longer have endless war and survive on this planet. Oh sh*t.

Submitted by gulfgal98 on Tue, 10/30/2018 - 5:20pm

This caught my eye from your link

@divineorder

According to the chart, the Pentagon owns $761 billion worth of property and equipment, including 512 “active installations” around the world, more than 14,000 aircraft, and 279 “battle force ships.”

Put this into the context of the testimony of David Norquist who said that

To summarize, Norquist says that unsupported adjustments are the result of changes in the “property book” that can amount to hundreds of billions of dollars. According to Norquist, since the system that tracks the property book is not integrated with the system that tracks the general fund ledger, large unsupported adjustments are required for reconciliation.

Okay the Pentagon has $761 Billion worth of property and equipment on the books, but in 2015, the Army had $6.5 Trillion in undocumentable adjustments which means that those undocumentable adjustments were nearly seven times the value of the entire Pentagon inventory of property and equipment. This stretches the imagination beyond never, never land.

—

Do I hear the sound of guillotines being constructed?

“Those who make peaceful revolution impossible will make violent revolution inevitable." ~ President John F. Kennedy

Submitted by gulfgal98 on Tue, 10/30/2018 - 4:22pm

I honestly do not know

what I believe about this story as to how this could happen.

We do know that the DoD (and probably other departments) has a black budget. It seems inconceivable that all this money is a result of a black budget. If so, we the people should have a right to know just how big this black budget is.

I truly believe that this massive amount of undocumentable adjustments cannot be attributed to the property book or accounting glitches. It is extremely disturbing to me as a taxpayer to think that vast amounts of money are not being tracked while politicians keep telling us that we the people must embrace the suck and tighten our belts while they proceed to cut social programs.

What is most disturbing to me is the sheer amount of money is not being accounted for. This is our money, and under the Constitution, we should have a right to know where it is being spent. Secrecy of this massive amount is how the deep state operates. and it needs to be flushed out into the light of day.

—

Do I hear the sound of guillotines being constructed?

“Those who make peaceful revolution impossible will make violent revolution inevitable." ~ President John F. Kennedy

Submitted by divineorder on Tue, 10/30/2018 - 5:10pm

Senator Sanders last spring:

Press Release

Sanders to Mattis: Crack Down on Pentagon Waste, Outrageous Contractor Pay
Wednesday, March 14, 2018

WASHINGTON, March 14 – Sen. Bernie Sanders (I-Vt.), ranking member of the Senate Budget Committee, sent a letter to Secretary of Defense James N. Mattis Wednesday asking him to address the excessive compensation of defense contractors, the widespread misconduct and fraud in the defense contracting industry and massive cost overruns in the acquisition budget.

Last year, the CEOs of Lockheed Martin and Raytheon – two of the top four U.S. defense contractors – were each paid more than $20 million in total compensation. More than 90 percent of those companies' revenue came from defense spending.

"What kind of message does it send when a defense contractor is paid 100 times more than the secretary of defense?" Sanders wrote in the letter. "Corporate interests should never take precedence over the interests of taxpayers or our national security. But paying exorbitant salaries to defense contractor CEOs makes that outcome more likely, and that is simply unacceptable."

Sanders asked for “a list of recommendations on reducing excessive defense contractor compensation, and what steps, if any, DoD is taking to address this issue.”

Sanders also asked Mattis to provide a strategy to prevent future fraud by defense contractors. About half of the Pentagon's $700 billion annual budget goes directly to private contractors, yet virtually every major defense contractor in the United States has paid millions of dollars in fines and settlements for misconduct and fraud in the past 20 years.

In 2011, Sanders requested a report from the Pentagon on defense contractor fraud, which showed that hundreds of defense contractors and their parent corporations that had defrauded the U.S. military—or settled allegations of fraud—received more than $1.1 trillion in Pentagon contracts over the previous decade.

Finally, Sanders called on Mattis to hold defense contractors accountable for the significant cost overruns that American taxpayers have been forced to pay, and to work to prevent future overruns. Out of a $1.46 trillion Department of Defense acquisition portfolio, approximately $484 billion is due to cost growth above the original cost estimates, according to the Government Accountability Office.

At a Senate Budget Committee hearing last week, Sanders questioned Pentagon officials over the outrageous salaries of CEOs at major defense contractors and demanded that the Pentagon end its waste and abuse of taxpayer funds.

"I would hope that nobody here believes that just because this is the Department of Defense, we will defend an enormous amount of bureaucratic waste," Sanders said at the hearing.

To read Sanders' letter, click here.

—

A truth of the nuclear age/climate change: we can no longer have endless war and survive on this planet. Oh sh*t.

Submitted by Big Al on Tue, 10/30/2018 - 5:18pm

"We must take the profit out of war" Smedley Butler

@divineorder I think we could expand that to include imperialism or all militarism. It's like health care, it should not be a capitalist, profit first enterprise.

Press Release Sanders to Mattis: Crack Down on Pentagon Waste, Outrageous Contractor Pay Wednesday, March 14, 2018 WASHINGTON, March 14 – Sen. Bernie Sanders (I-Vt.), ranking member of the Senate Budget Committee, sent a letter to Secretary of Defense James N. Mattis Wednesday asking him to address the excessive compensation of defense contractors, the widespread misconduct and fraud in the defense contracting industry and massive cost overruns in the acquisition budget. Last year, the CEOs of Lockheed Martin and Raytheon – two of the top four U.S. defense contractors – were each paid more than $20 million in total compensation. More than 90 percent of those companies' revenue came from defense spending. "What kind of message does it send when a defense contractor is paid 100 times more than the secretary of defense?" Sanders wrote in the letter. "Corporate interests should never take precedence over the interests of taxpayers or our national security. But paying exorbitant salaries to defense contractor CEOs makes that outcome more likely, and that is simply unacceptable." Sanders asked for “a list of recommendations on reducing excessive defense contractor compensation, and what steps, if any, DoD is taking to address this issue.” Sanders also asked Mattis to provide a strategy to prevent future fraud by defense contractors. About half of the Pentagon's $700 billion annual budget goes directly to private contractors, yet virtually every major defense contractor in the United States has paid millions of dollars in fines and settlements for misconduct and fraud in the past 20 years. In 2011, Sanders requested a report from the Pentagon on defense contractor fraud, which showed that hundreds of defense contractors and their parent corporations that had defrauded the U.S. military—or settled allegations of fraud—received more than $1.1 trillion in Pentagon contracts over the previous decade. Finally, Sanders called on Mattis to hold defense contractors accountable for the significant cost overruns that American taxpayers have been forced to pay, and to work to prevent future overruns. Out of a $1.46 trillion Department of Defense acquisition portfolio, approximately $484 billion is due to cost growth above the original cost estimates, according to the Government Accountability Office. At a Senate Budget Committee hearing last week, Sanders questioned Pentagon officials over the outrageous salaries of CEOs at major defense contractors and demanded that the Pentagon end its waste and abuse of taxpayer funds. "I would hope that nobody here believes that just because this is the Department of Defense, we will defend an enormous amount of bureaucratic waste," Sanders said at the hearing. To read Sanders' letter, click here.

Submitted by snoopydawg on Tue, 10/30/2018 - 6:00pm

Another great article

@divineorder

Thanks again. The defense contractors that commit fraud are not held accountable for it. They just pay a small fine that doesn't touch their profits and then they get another contract. This didn't stop when Barack was elected like he said it would. Nor did he stop that revolving door between congress, lobbyists and corporations. How long has this been going on? Back to the robber barons days? Yup!

In 2011, Sanders requested a report from the Pentagon on defense contractor fraud, which showed that hundreds of defense contractors and their parent corporations that had defrauded the U.S. military—or settled allegations of fraud—received more than $1.1 trillion in Pentagon contracts over the previous decade.

Why is Bernie the only one doing these things? I haven't heard Warren saying anything about this. Just her scolding the banks, but not doing anything about them either. Follow through, Liz.

Press Release Sanders to Mattis: Crack Down on Pentagon Waste, Outrageous Contractor Pay Wednesday, March 14, 2018 WASHINGTON, March 14 – Sen. Bernie Sanders (I-Vt.), ranking member of the Senate Budget Committee, sent a letter to Secretary of Defense James N. Mattis Wednesday asking him to address the excessive compensation of defense contractors, the widespread misconduct and fraud in the defense contracting industry and massive cost overruns in the acquisition budget. Last year, the CEOs of Lockheed Martin and Raytheon – two of the top four U.S. defense contractors – were each paid more than $20 million in total compensation. More than 90 percent of those companies' revenue came from defense spending. "What kind of message does it send when a defense contractor is paid 100 times more than the secretary of defense?" Sanders wrote in the letter. "Corporate interests should never take precedence over the interests of taxpayers or our national security. But paying exorbitant salaries to defense contractor CEOs makes that outcome more likely, and that is simply unacceptable." Sanders asked for “a list of recommendations on reducing excessive defense contractor compensation, and what steps, if any, DoD is taking to address this issue.” Sanders also asked Mattis to provide a strategy to prevent future fraud by defense contractors. About half of the Pentagon's $700 billion annual budget goes directly to private contractors, yet virtually every major defense contractor in the United States has paid millions of dollars in fines and settlements for misconduct and fraud in the past 20 years. In 2011, Sanders requested a report from the Pentagon on defense contractor fraud, which showed that hundreds of defense contractors and their parent corporations that had defrauded the U.S. military—or settled allegations of fraud—received more than $1.1 trillion in Pentagon contracts over the previous decade. Finally, Sanders called on Mattis to hold defense contractors accountable for the significant cost overruns that American taxpayers have been forced to pay, and to work to prevent future overruns. Out of a $1.46 trillion Department of Defense acquisition portfolio, approximately $484 billion is due to cost growth above the original cost estimates, according to the Government Accountability Office. At a Senate Budget Committee hearing last week, Sanders questioned Pentagon officials over the outrageous salaries of CEOs at major defense contractors and demanded that the Pentagon end its waste and abuse of taxpayer funds. "I would hope that nobody here believes that just because this is the Department of Defense, we will defend an enormous amount of bureaucratic waste," Sanders said at the hearing. To read Sanders' letter, click here.

—

Scientists are concerned that conspiracy theories may die out if they keep coming true at the current alarming rate.

Submitted by dkmich on Wed, 10/31/2018 - 9:20am

Didn't you get the memo?

@snoopydawg

Fraud is perfectly acceptable when it happens at the top. We can now add defense contractors to bankers, war criminals, and the rest of the "folk" on the list of untouchables. Steal $300 in PTA funds get sent up for 3 years.

—

"Religion is what keeps the poor from murdering the rich."--Napoleon

Submitted by Big Al on Tue, 10/30/2018 - 5:15pm

That's a pretty big fuck up if it's just accounting problems.

But then again, I worked for the fed govt for 30 years, 10 of it for DOD, so ya, I know. Remember the good old days of the $100 hammers?

What I'm not seeing is anything solid indicating it was other than a fucked up accounting system. Why would they move money around like that if it was illegal, black budget type money in the first place? Maybe they used the existing budget to support purchases and programs that they actually paid for under the table?
I don't know if Fitts and the others provided any insights to that.

Submitted by gulfgal98 on Wed, 10/31/2018 - 5:26am

Well

@Big Al @Big Al So if it is just a "f*ed up accounting system," then it is STILL an issue. Not just a technical issue, but a big issue of accountability.

Anyone who wants to blow it off as a "f*ed up accounting system" is, in a way, saying that there is nothing to see here. I am saying that there might be something to see here and we should be trying to find out if it is only just a "f*ed up accounting system" or something bigger. Using a "f*ed up accounting system" as an excuse opens the door for corruption. I refuse to accept that as a tax payer.

In my very humble opinion, it is up to our government to prove to us that they are on the up and up, not for us to prove that it is just a "f*ed up accounting" system.

BTW, I put the words in quotes because I do not normally post like that. Edited to reflect my distaste for using the "f" word. Not my style.

—

Do I hear the sound of guillotines being constructed?

“Those who make peaceful revolution impossible will make violent revolution inevitable." ~ President John F. Kennedy

Submitted by Big Al on Tue, 10/30/2018 - 7:02pm

Good job on the essays.

@gulfgal98 Just talking.

Submitted by Linda Wood on Tue, 10/30/2018 - 10:52pm

For all we know

@gulfgal98

the invisible, unaccountable, unimaginable amount is going to our enemies just to keep the endless protection racket going. The most important statement in Eisenhower's Farewell Address is that,

http://mcadams.posc.mu.edu/ike.htm

… In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted.

We should take nothing for granted. The assumption that people who would kill hundreds of thousands of children in the Middle East would never steal from us is absurd. These are craven, cold-blooded killers.

Submitted by gulfgal98 on Wed, 10/31/2018 - 3:23am

Wow! What a powerful comment!

@Linda Wood Thank you!

—

Do I hear the sound of guillotines being constructed?

“Those who make peaceful revolution impossible will make violent revolution inevitable." ~ President John F. Kennedy

Submitted by Snode on Wed, 10/31/2018 - 6:19am

Thanks for your hard work

The sheer size of what you are reporting on is almost incomprehensible. How can you fix something you can barely see in its entirety? Then there is the "Shhhh, we can't tell you it's secret" component.

As to how we got here, I can tell you,..wait!....Trump just said something .....OMG!!!!..... now, what were we talking about??

Submitted by eyo on Wed, 10/31/2018 - 6:41am

"enormous undocumentable adjustments" WT

What the ... is an "undocumentable adjustment"? Even my speller doesn't know. Adjusted where now? Oh that's undocumented. lol Is it something people can use on personal tax returns? Like, sorry IRS that massive upward income adjustment was undocumentable, nothing to see here go away. Heh.

Great series, thank you for writing about it. What about HUD? How many undocumentable adjustments were from Housing and Urban Development? I am blanking on who the current Secretary is, too awful to remember at the moment. Lots of people homeless in California, and everywhere. Housing and Urban Dismemberment. meh The D-Uniparty just crowed in the headlines here about getting a few million dollars of "vouchers" from Congress. People got useless housing vouchers after waiting years on a rotten list. That's the system.

peace

Submitted by gulfgal98 on Wed, 10/31/2018 - 12:32pm

Undocumentable adjustments

@eyo I think I am going to do another essay that will explain things such as this term and also try to put a perspective on the enormity of the numbers.

When a discrepancy occurs in an account that cannot be traced, it is usual to make what is called an undocumentable adjustment, or journal voucher. This is similar to when your balance is off by ten dollars when you reconcile your checkbook, so you add or subtract that amount to make everything balance with the bank.

—

Do I hear the sound of guillotines being constructed?

“Those who make peaceful revolution impossible will make violent revolution inevitable." ~ President John F. Kennedy

Submitted by lizzyh7 on Wed, 10/31/2018 - 12:44pm

In accounting parlance

@gulfgal98 a plug entry. While I have worked with old legacy systems that do not talk to each other and did have to make "blob" entries that really did not show the full detail of the in and out entries but only a net total, even I cannot fathom a $6.5T "adjustment" on a $720B property book. Does not pass the smell test to me.

I am quite sure the whole government has many fucked up accounting systems but that doesn't mean it is ever acceptable to make blob entries that not only cannot be explained - at all - but the sheer size of these adjustments makes them even more suspicious. And really, at the end of the day it really does show, to me, how little our "government" cares at all about the blatant waste of taxpayer funds. Not surprising but it should not be acceptable. It would most assuredly not be acceptable on a defense contractor's balance sheet.

—

Only a fool lets someone else tell him who his enemy is. Assata Shakur

Submitted by gulfgal98 on Wed, 10/31/2018 - 3:36pm

Thank you for clarifying

@lizzyh7 the meaning of undocumentable adjustments, or blob entries.

As I pointed out in this essay, the DoD knew of the problem at least as early as 2000 and made no effort to correct the issue of disparate accounting programs.

If you cannot track it, it is a red flag. For me, it is a huge red flag with numbers this large.

—

Do I hear the sound of guillotines being constructed?

“Those who make peaceful revolution impossible will make violent revolution inevitable." ~ President John F. Kennedy

Submitted by eyo on Wed, 10/31/2018 - 8:52am

HUD $119.1 billion "inappropriate rounding adjustments"

After listening to the video I went to the site to look up the documents government had scrubbed:
https://missingmoney.solari.com/dod-and-hud-missing-money-supporting-doc...
e.g. HUD 2015 PDF, Page 4:

We found that well over half of the financial statement notes contained errors with an approximate absolute value totaling $278.5 billion. Of the $278.5 billion in errors, $159.4 billion was due primarily to (1) incorrect data entry, (2) omission of restated balances, or (3) incorrect data provided by HUD’s component entities (FHA and Ginnie Mae). The remaining $119.1 billion were due to inappropriate rounding adjustments. We found several instances in which rounding was performed to the nearest billion and hundred billion instead of the nearest million as required. This practice caused amounts to not agree with supporting files or underlying FHA and Ginnie Mae information. Some of the errors identified flowed through to other note line items or note columns and caused errors in the totals presented. The absolute value of these additional errors was not included in our total.

Transition to a Federal Shared Services Provider for Financial Management Services and a Policy and Procedure Framework
The errors with financial audit reports described above occurred because of an inability to design and implement an adequate system of internal controls over financial reporting necessary to mitigate the challenges and risks in its complex financial reporting process. These challenges and risks were exacerbated with the transition of HUD’s legacy general ledger application to a shared service provider. As discussed below in my testimony, this move replaced known processes with undefined or untested processes. The transition also increased the workload on HUD’s financial reporting division, and in an attempt to remedy the issue, HUD’s management outsourced some of its roles to staff and contractors who were unfamiliar with HUD’s financial reporting processes and did not receive adequate training. Rushed implementation in order to meet transition deadlines set by management and inadequate monitoring contributed to the problems despite warnings that processes were not proceeding well.

tax dollars at work
thanks obama