Throwback Thursday: Sept. 10, 2001 And The Pentagon’s Missing $2.3 Trillion

pentagon trillions 9/11
Robert D. Ward, Public domain, via Wikimedia Commons

By Adam Andrzejewski for RealClearInvestigations

Topline: On Sept. 10, 2001, then-Defense Secretary Donald H. Rumsfeld promised to end what he called “a matter of life and death” — billions of dollars of wasteful spending at the Pentagon, and an unaccounted for $2.3 trillion.

Rumsfeld’s battle was short-lived. By the next day, on 9/11, the Department of Defense had bigger things to worry about than wasteful spending.

So, what became of Rumsfeld’s declaration of financial war?

Key facts: In a press conference on Sept. 10, Rumsfeld admitted that because of outdated technology and flawed bookkeeping, Pentagon accountants had lost track of $2.3 trillion in taxpayer money. That was almost a quarter of the United States’ GDP at the time.

The funds had been spent, but no one could figure out what they had been used for. This would have been a huge national story, if not for the events of the next day.

Rumsfeld likened Pentagon bureaucratic processes to the Soviet Union in terms of the threat they posed to the U.S. He also noted that the DoD employed more workers than necessary and spent millions of dollars to train staffers who would only stick around for a few years.

Rumsfeld vowed to revolutionize Pentagon accounting, work with Congress to draft new legislation, and created the Defense Business Board to advise the DoD on financial matters.

Background: Jim Minnery of the Defense Finance and Accounting Service told CBS News in 2002 that few Pentagon employees seemed to care about multi-million dollar transactions missing from internal balance sheets. Officials would simply doctor statements to erase the missing money, according to Minnery.

“They have to cover it up,” Minnery said. “That’s where the corruption comes in. They have to cover up the fact that they can’t do the job.

Even the Pentagon’s attempts to fix its accounting ended up wasting money. Rolling Stone reported in 2019 that two different Pentagon accounting initiatives had been scrapped. Each cost over $1 billion and took over seven years to prepare, yet were never even implemented.

In 2023, the Pentagon’s accounting systems failed an internal audit for the sixth year in a row. That prompted Sens. Chuck Grassley (R-Iowa) and Bernie Sanders (I-Vt.) to introduce the Audit the Pentagon Act of 2023, which would force the DoD to forfeit part of its budget if it could not pass another audit.

Auditors at OpenTheBooks.com found that the Pentagon spent more than $56 billion on payroll in 2022. There were 24 employees who took home salaries of at least $300,000.

Critical quote: “From buying $14,000 toilet seats to losing track of warehouses full of spare parts, the Department of Defense has been plagued by wasteful spending for decades. Every dollar the Pentagon squanders is a dollar not used to support service members, bolster national security or strengthen military readiness,”Grassley said. “The Department of Defense should have to meet the same annual auditing standards as every other agency.” 

Summary: The DoD has had a known finance issue for decades despite being one of the government’s most expensive departments. The worries Rumsfeld brought up in 2001 have yet to be eliminated.

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com.

Reprinted with permission from RealClearWire.

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