THE WAR ON WASTE - Rumsfeld Says 2.3 Trillion Dollars Missing

On Sept. 10, Secretary of Defense Donald Rumsfeld declared war. Not on foreign terrorists, "the adversary's closer to home. It's the Pentagon bureaucracy," he said.

Rumsfeld promised change but the next day – Sept. 11-- the world changed and in the rush to fund the war on terrorism, the war on waste seems to have been forgotten.

Just last week President Bush announced, "my 2003 budget calls for more than $48 billion in new defense spending."

More money for the Pentagon, CBS News Correspondent Vince Gonzales reports, while its own auditors admit the military cannot account for 25 percent of what it spends.

"According to some estimates we cannot track $2.3 trillion in transactions," Rumsfeld admitted.

$2.3 trillion — that's $8,000 for every man, woman and child in America. To understand how the Pentagon can lose track of trillions, consider the case of one military accountant who tried to find out what happened to a mere $300 million.

"We know it's gone. But we don't know what they spent it on," said Jim Minnery, Defense Finance and Accounting Service.

Minnery, a former Marine turned whistle-blower, is risking his job by speaking out for the first time about the millions he noticed were missing from one defense agency's balance sheets. Minnery tried to follow the money trail, even crisscrossing the country looking for records.

"The director looked at me and said 'Why do you care about this stuff?' It took me aback, you know? My supervisor asking me why I care about doing a good job," said Minnery.

He was reassigned and says officials then covered up the problem by just writing it off.

"They have to cover it up," he said. "That's where the corruption comes in. They have to cover up the fact that they can't do the job."

The Pentagon's Inspector General "partially substantiated" several of Minnery's allegations but could not prove officials tried "to manipulate the financial statements."

Twenty years ago, Department of Defense Analyst Franklin C. Spinney made headlines exposing what he calls the "accounting games." He's still there, and although he does not speak for the Pentagon, he believes the problem has gotten worse.

"Those numbers are pie in the sky. The books are cooked routinely year after year," he said.

Another critic of Pentagon waste, Retired Vice Admiral Jack Shanahan, commanded the Navy's 2nd Fleet the first time Donald Rumsfeld served as Defense Secretary, in 1976.

In his opinion, "With good financial oversight we could find $48 billion in loose change in that building, without having to hit the taxpayers."

"How do we know we need $48 billion since we don't know what we're spending and what we're buying?"
Retired Vice Admiral Jack Shanahan

Is Congress blindfolded on the Economy?

TownHall.com
By Mark Tapscott
January 25, 2002

Would you cross a minefield wearing a blindfold? Congress does every time it makes decisions about the economy, yet most senators and representatives don’t even know it.

If that sounds hard to believe, come with me now to the inner sanctum of government decision making and let me show you one of Uncle Sam’s dirty little secrets. Officially, it’s called “scoring” but it would be more truthful to refer to it as “fortune telling.” They do it behind closed doors on Capitol Hill and in the federal bureaucracy.

Whenever Congress considers a tax bill, federal law requires that the proposal first be considered by the Joint Committee on Taxation, which includes members of the Senate and House. Though little known outside the Beltway, the JCT is one of the most influential committees of Congress.

Before the JCT votes, its staff analyzes tax proposals to determine their likely impact on federal revenues. This process can be done using either of two rather arcane methods known as "static" and “dynamic” scoring. Many state and local governments, as well as the private sector, use dynamic scoring to estimate things like how much future pensions will cost. Most economists prefer dynamic scoring because it measures economic trends over time in response to changes in the incentive structure created by government tax and spending policies. Policymakers thus get a more accurate body of facts on which to make vital decisions like how much you and I should pay in taxes.

Now, here’s the dirty little secret – the JCT insists on using the static scoring method, even though there is growing professional, corporate, academic and political support for using dynamic scoring instead. In fact, all of the federal government’s tax scoring groups, including the Congressional Budget Office and the U.S. Treasury’s Office of Tax Analysis, doggedly stick with static scoring.

Why? Because static scoring is a key tool Washington politicians use to keep taxes high and government spending growing. Tax cut proposals are especially hard-hit because static scoring always shows the government will “lose” revenue if your taxes are cut. How government can lose money it never owned is beyond me, but that’s a topic for another day.

The Washington politicians also love static scoring because it tells them little or nothing about how many new jobs would be created by a tax cut proposal, how much individual incomes would increase or whether welfare costs would go down. With static scoring, the only issue that counts is how much revenue would the government lose?

Remember the proposal last year to eliminate the estate tax? Most Americans support killing the “death tax” but the proposal died after the JCT said it would cost the government more than $660 billion in tax revenues over the next decade. That’s roughly twice as much revenue as the estate tax generated in the first place! What made this episode even more galling is that JCT refused to make public its methodology, saying only that its estimate “included significant revenue effects that result from a variety of income tax avoidance opportunities made possible with the repeal of the estate and gift tax.” Since only the JCT staff knew how it did its work, nothing like the “peer review” routinely allowed by academic and corporate economists could be done.

Put another way, every time somebody in Congress or the White House proposes a tax cut, the JCT goes to work and out come those blindfolds. And more often than not, there goes any chance that you and I will get to keep more of our money to spend on what we need instead of Congress spending it the way the politicians want.

The solution here, as it is in so much of government, is to rip off those blindfolds and let the light shine on this dark secret. Let the public see how the system works. Let the experts outside of government do peer review studies on those inside government. That’s part of what “government of the people, by the people and for the people” is all about.

By the way, when was the last time your local newspaper wrote about this egregious example of the public’s business being done behind closed doors?

Audit Reveals Congressional Criminality, Gross Waste, Fraud, and Mismanagement

Vast Criminal Conspiracy - The Congress
"The 535 men and women who make up the House and Senate of the United States include, at best, a collection of rogues, con artists, scofflaws and bad check artists. At worst, they comprise, as Twain once observed, a distinct criminal class."

Pentagon Credit Cards Abused; 700 Cited

Daily News.com
By Bill Hillburg
Washington Bureau
March 14, 2002

WASHINGTON -- More than 700 military officials have walked away from debts on their government-issued credit cards, including expenses for luxury leather goods, Christmas presents and even breast implants, Congress was told Wednesday.

Wednesday's hearing focused on $12,000 worth of unauthorized credit card purchases by military and civilian workers at the Space and Naval Warfare Systems Command Systems Center and the Navy Public Works Center, both in San Diego. But critics warned that the entire Pentagon card system is poorly supervised and that unauthorized purchases likely run into the millions of dollars.

"It's not their money. It's we the taxpayers' money," said an outraged Rep. Stephen Horn, R-Lakewood, whose Subcommittee on Government Efficiency, Financial Management and Intergovernmental Relations took testimony on numerous and ongoing abuses of the Defense Department's purchase card system.

Defense Department employees are authorized to buy needed goods worth up to $2,500 -- known in Pentagon jargon as "micropurchases" -- with government MasterCards issued by Citibank. The program was designed to streamline cumbersome Pentagon procurement procedures, including competitive bidding, and to better track the military's spending.

Horn and other critics also warned that the situation will only get worse if Congress approves a bill, backed by Pentagon officials and many defense suppliers, that would raise the "micropurchase" limit to $25,000.

Among the abuses outlined at Wednesday's hearing were:

A NPWC employee who used her card to buy $11,551 worth of personal items and Christmas presents. The woman, who was not prosecuted, was later given a promotion and a pay raise. She now works in an Army finance office at the Pentagon.

A Defense Department employee in Jacksonville, Fla., who used his card to pay for a $4,000 breast implant operation for his girlfriend, who was a waitress at a local Hooters restaurant.

Low-ranking NPWC employees who used cards 34 times to rent luxury automobiles, including Lincoln Town Cars, which are to be reserved only for four-star admirals.

SPAWAR employees who used cards to buy more than $33,000 worth of Louis Vuitton calendar holders, at $225 each, along with designer leather briefcases and other accessories.

A SPAWAR employee who used his card to buy four Lego Mindstorm robot kits at $200 each as learning tools for employees, but kept the items for himself.

None of the employees reimbursed the government for the unauthorized purchases highlighted during the hearing, officials said.

The abuses were uncovered by the General Accounting Office, the government's in-house investigative agency, and by the Project on Government Oversight, a private watchdog group based in the nation's capital.

Deidre Lee, the Pentagon's director of defense procurement, said the agency is moving to stop credit card abuses and recently suspended all purchase cards held by SPAWAR employees, pending a full review.

Recently appointed commanding officers of the two targeted Navy installations also said they have launched reforms by limiting the number of card holders and carefully reviewing all credit card purchases.

Sen. Charles Grassley, R-Iowa, who also testified before the subcommittee, declared that the entire Pentagon credit card system, including 205,500 purchase cards and 1.4 million cards used by employees in a separate program for official travel, was out of control.

"The potential for abuse and fraud is unlimited," he said.

Grassley noted that the travel card program has racked up $62 million in bad debts by 46,572 employees, despite a Pentagon program to garnish wages for unpaid bills. Bank of America, which administers the travel card operation, has threatened to cancel it March 25 unless abuses and losses are brought under control.

Both Grassley and Horn also decried lax efforts to prosecute credit card cheats. Grassley produced a list of 713 deadbeat military officers that he plans to turn over to Defense Secretary Donald Rumsfeld.

"A person who holds up a liquor store and gets $500 cash can go to jail for 15 years," said Grassley. "If you use DOD plastic to steal $12,000, you get a promotion."

Told by the GAO and other officials that the Justice and Defense departments have been reluctant to indict or court martial accused credit-card thieves, Horn said, "What do they have to do, steal at least $2 million?"
[end of transcript]

PENTAGON PORN CHARGED TO TAXPAYERS

Thieving Pentagon Employee Promoted
Note: Tanya Mays

Key Lawmaker Warns DOD Headed For Financial Disaster In Five Years

Let's Roll Em'

My impression is that by the time one figures out that something isn't right, the same people discovering or clued in about it, lack the authority to do anything about it, when they consider who to report the situation to, they then realize they are the only ones who possibly give a damn. The problem is happening 2-5 tiers above their heads and migrates throughout the beast like a contagion, somewhat checked.

A significant factor is loss or doubt of credibility of all senior personnel leading the system. Too many situations are arising where if nobody is getting kickbacks or bribes, it's probably only a couple of years away before the entire system collapses.

The guilty parties know what they're doing. Another batch of parties orchestrate systems of bureaucracy to cover their empires under the guise of improving efficiency.

Another group implements the policies and directs the funds in consort with partnering and TQM/TQL and improving business practice parlance.

Another group follows their lead and generaly are unwitting dolts just doing their duty without any cognition of ramifications. (Same class of folk who amazingly can walk down a sidewalk without killing themselves in the process.)

Convolute this with contracting out all the processes and you've got an incredible mess. Checks and balances are corrupted thanks to the Clinton legacy. In a nutshell, Corruption.

When I use the term corruption, this isn't the sae as impropriety or theft or graft or illegal activity. It simply means the system is no longer truthfully rendering it's intended function at the appropriate cost. The system has been corrupted. Corruption.

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