Filed under: American politics, economics, Uncategorized | Tags: economics, US Government
I saw this last night and decided it was too big, literally, to ignore.
The US Army currently reported that in FY 2015 it had $6,500,000,000,000 (that’s $6.5 trillion) in spending on an annual budget of $122,000,000,000 ($122 billion), or spending 54 times more than its budget. Worse, between 1998 and 2015, the Army and Housing and Urban Development (HUD) somehow racked up $21,000,000,000,000 in spendings. Here’s a link to the press release about Michigan State Professor (Mark Skidmore), who broke the news (although it had been mentioned by the government), here’s the article on it in Forbes. Here’s the documents. As noted in both articles, when Prof. Skidmore started probing these expenditures, documents on them, which had been publicly posted at the Office of Inspector General at the DoD, for some reason all the links started disappearing. It’s a good thing Skidmore had already copied the documents and is now posting them online. Oh, and this might potentially be why the DoD is undergoing its first agency-wide independent financial audit ever (press release). I haven’t looked at what HUD is doing, if anything.
Notice that we’re not talking about the current administration. This is about the financial misdoings (which may be ongoing) under Obama, Bush II, and Clinton. That may be one reason why the DoD is so eager to get the audit done now, because it will look good to cast aspersions on the Obama era under the current regime. It’s also equally likely that there are some honorable people in the DoD (for some value of honor) and they want to either find out what’s going on and/or get it cleaned up and/or give the appearance of getting it cleaned up.
It’s also possible that we just tripped over the US Black Budget, and it turns out that it’s over 25% as big as known GDP (which is on the order of $18 trillion). I somehow doubt that this is just the black budget, though, because the international arms trade is on the order of tens of billions and I can’t see the value of trillion-dollar secret and so-far unused weapons. Rather, I suspect it’s one reason why huge companies like Halliburton and Koch Industries (and Lockheed Martin, and the ISPs, and so forth) are so very very eager to control the US government budget. They knew, at least partially, that government spending was massively out of control, and they wanted to fatten themselves on it. This is, very probably, the military-industrial complex that Eisenhower warned about, spun completely out of control. I don’t know the story on HUD, but considering the BS I see flowing out of developers, I have some suspicions about that government-industry partnership as well.
Where did the money go? Not a clue, and I doubt we’ll ever see more than a few, well-pilloried examples. Some of it undoubtedly explains why the US is able to keep up military missions in well over 100 countries when the cost of flying a jet fighter is on order of $5000/hour. A lot of it is probably pork, too. Since Congress can no longer give each other water projects for their districts as a form of political capital (see Cadillac Desert for how that worked out), perhaps military budgets have taken their place. If so, we’re as bankrupt on military spending as we were on dams (and the idiots still want dams. And more military spending).
If you want a science fictional take on this mess, I could point out that five trillion vanished dollars would fund a decent sized colony on another planet. Anybody you know gone missing lately? It’s a silly thought, but a far less silly thought is what we could have done about global warming if we’d known there it was possible to blow $20 trillion on solving without the US government officially noticing. Sadly, that’s no longer an option.
Now, if the US Army was a corporation, it would be declared a ponzi scheme, the generals in charge would be facing charges in federal court, and people would be squabbling about the remaining assets and trying to fill the huge vacuum. Unfortunately, instead this is the biggest military power in the world announcing that it’s basically bankrupt. I can but hope that every other huge military in the world is similarly bankrupt. Otherwise, we might be in trouble. Is the US military too big to fail? Whether it is or is not, what happens next?
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Putting the life back in science fiction 
Military overspending was one of the key reasons for the collapse of the USSR according to some wags. Wars are massively stupid: first the literal complete waste of own and enemy resources during the ‘fighting’, followed by excess consumption of even more resources in order to return things back to pre-war. Being the ‘first/best’ at war means outspending everyone else, i.e., out-competing them in resource suicide.
Can’t think of an apt analogy maybe because no other animal or situation is as stupid/wasteful.
Comment by SFreader December 17, 2017 @ 6:19 pmStag’s antlers show up here, sort of. They’re the fastest growing bone in the world. Stags spend a year growing them at enormous cost, fight with them for a few weeks, possibly have a bit of sex, then lose, spend the last few weeks of the fall desperately trying to prepare for winter so they don’t starve, then lose their antlers over the winter and start the whole thing over again.
You’re fundamentally correct, though, that such huge expenditures are unsustainable unless you’re bent on conquering the world. To me, the biggest parallel in US government spending was the huge amount of money poured into building dams and waterworks between the 1920s and 1980s. It enabled the west to be settled, but at tremendous cost (probably not recouped in water fees) and only for as long as those waterworks can be maintained. Looking at the near-catastrophe with the Oroville Dam, it doesn’t take much neglect to cause serious problems. In that case, apparently the whole mess was started by bad design, but the near disaster was triggered by a tree growing through the hard face of the spillway and down into the earth below. The problem was pointed out for years, but the tree was never properly removed. Finally floodwater found the hole that the tree had made, and the rest was, erm, spectacular.
Comment by Heteromeles December 17, 2017 @ 7:32 pmIf you want a science fictional take on this mess, I could point out that five trillion vanished dollars would fund a decent sized colony on another planet. Anybody you know gone missing lately?
David Brin wrote a short story on that premise. It is a spoiler, though.
In his collection The River Of Time the story “Senses Three and Six” is about a survivor from a covert colonization fleet that ran a covert alien quarantine of Earth.
The covert fleet was financed and equipped with money and equipment siphoned off from the economic crises of the 1970s. Indeed this diversion caused them..
Comment by cptbutton December 17, 2017 @ 9:21 pmThat was the first story I thought of. Then I thought about Stross’ “A Colder War,” and realized that the whole Stargate TV series would look a bit like this, if it was the Air Force running the debt, not the Army. It’s still a good premise though.
Comment by Heteromeles December 17, 2017 @ 10:12 pmI haven’t tooked at the documents, but isn’t this partially the result of fighting wars in Afghanistan and Iraq? I must admit that if this was for 1 year, it would be equivalent to the total expected cost of the wars, so I suspect that such a big hole cannot be the case as it would show up in the current account deficit as a massive increase. My guess it is the for the accumulated spend going forward to maintain the war
Comment by Alex Tolley December 17, 2017 @ 9:30 pmWe’ll see what comes out in the audit, to the extent it gets summarized for the public. I’ve heard for awhile now that the DoD was “too big to audit,” and that they had no idea how much money they were spending. If it is over 50 times their annual budget, that’s a serious problem, especially since, as the article points out, that means they are breaking a Constitutional rule in the process.
Comment by Heteromeles December 17, 2017 @ 10:13 pmI wouldn’t get to wild about this just yet. Computers and the military or the government in general have a long history of not working as advertised and consultants pile on till everyone has a new sailboat – before the problem is corrected. The OIG identified a problem with importing records from a general ledger. It’s possible that the numbers are greatly exaggerated by software bugs. It’s also possible and probable that those general ledger entries and related transfers are highly suspect. We have been at war my entire adult life and I don’t doubt that huge sums are sent to contractors with little or no oversight or assigned responsibility.
Comment by Roger Aiken December 17, 2017 @ 10:23 pmIt should be noted that this action is preparation for a mandated audit and it is typical of an OIG to play ball in helping them straighten out the mess before the real audit begins.
I worked in this area for a government department for about ten years when they were making major changes to computer and accounting networks. Amazing how a few zero’s here and there can get misplaced. All the contracting corrective action has to happen at the top, where you often have managers outgunned by consultants who run away with prizes for every incremental step they make. Add in a staggeringly obedient workforce trained with blinders and you can easily imagine multiple disasters.
This Wikipedia page shows the military budget is nearly $0.75tn. https://en.wikipedia.org/wiki/Military_budget_of_the_United_States
Comment by alexandertolley December 17, 2017 @ 10:45 pmSo the US army spending of $6.5tn would be nearly 10 years of total military spending. Money doesn’t come from nowhere, so it must come from somewhere. $6.5tn is about 1/3rd the total size of the US economy or US debt. It is just not possible for spending of this size to be hidden. I would conclude that this figure is either a budget looking forward for N years, or it is just plain wrong. To think this could be hidden is to suppose a conspiracy, and we know just how hard it is to keep a secret. The reward for a whistleblower would be ginormous and worth the risk.
Hopefully it is just a huge math blunder. The problem with this explanation is that it means that the Office of Inspector General has no idea what’s going on with the DoD budget within a factor of 50, and they are supposed to be the independent auditors. That’s kind of begging for the office to be abolished or massively remade, at least in the current political climate. Why did they publish this?
If you’re looking at potential sources of multi-trillion dollar debts, Reuters published an estimate back in 2013 that the Iraq War had already cost $2 trillion and would eventually cost $6 trillion by 2040 when all the debts are payed. That still doesn’t explain where the total of $20 trillion from 1998-2015 came from. It also doesn’t really explain the debt, since the costs of war aren’t borne solely by the Army, and the estimate came from the Costs of War Project at Brown University. These costs include things like caring for veterans.
Comment by Heteromeles December 18, 2017 @ 12:37 amHere’s the take from War Is Boring. The tl;dr of this story is that the Army’s accounting practices are screwed up, and a computer program trying to put the Army’s books in order automatically created most of the journal entries that added up to $6.5 trillion. This was aided and abetted by the apparent fact that, not only do the different branches of the military have different record-keeping practices that aren’t compatible with each other, but within the Army, the different branches of the Army each have their own accounting practices that aren’t compatible with each other. So the Army created General Fund Enterprise Business System, a web-based accounting system that was designed to save them a lot of money by automatically creating the journal entries for all these multifarious records. Apparently, when they fed the (over 1 million) records in, (minus over 16,000 records that the system decided to delete), out popped the $6.5 trillion in unaccounted-for expenditures. When they pulled 190 journal vouchers at random, 174 had no documentation inside them.
Anyway, you can read about all the fun in the link above.
Comment by Heteromeles January 5, 2018 @ 11:17 pmFor some reason Smedley Butler’s short book springs to mind. (Or the Buffy St. Marie song. Either will do.)
Comment by Robert January 14, 2018 @ 9:58 pm