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

The concept of this whole article FROSTS THE HELL OUT OF ME!! THIS IS B.S. pure and simple. A great way to sound fiscally concerned .... and attack our military and undercut it.

With that said, I am NOT against eliminating, waste fraud and abuse. And I think a lot can be done to make the military accountable for the money spent.

But .. . add up the dollars that has funded the military. Do you know that almost 80% of the money goes to salaries .. ..the active and reserve military, plus the Dept. of Defense Civil Servants, plus the “operating costs” of operating the military. That’s beans, bullets and fuel. That means 80% of our military budget is spent on personnel. And if you think these guys are over-paid … you’re just plain SICK. Try to work the long hours these people do, and for a side-benefit, the chance to get killed in the line of duty, plus long hours/days/months separate from the family on deployment, overseas, etc.

The remaining 20% … that pays for ships, planes, tanks, ordnance (bombs, missiles, things that go bang in the night.) (And of that 20%, maybe 20% of that goes for R&D to come up with new weapons/ships/warfighting technology - about 4% of the total defense budget.) Stroll down to the waterfront near a Navy Station. Here at Bremerton, WA, I can go near the Bangor Sub Base and see 3 or 4 of the 8 Tridents stationed there. That’s about $3 Billion per ship, plus another $2 Billion per ship worth of missiles and nuclear war heads. Go to Puget Sound Naval Shipyard …. The USS Carl Vinson (CVN 70) just got back, plus the Sacramento, plus other ships there. Another 20 – 30 Billion perhaps. And for you auditing bean counters, I would like to point out that the mothball fleet down the way just a bit, with 2 Carriers, several Military Sea Lift Ships, Fast Frigates, etc., all assets that are still carried on the books, worth BILLIONS. And when ordnance is retired ... how well are the books adjusted when old torpedoes are scrapped. (2000 old torpedoes that cost $200K each, after scrapping ... $400 Million of inventory - needs to be accounted for in the books, but often isn't properly accounted for. And look at all the old hardware that was legitimately purchased, then later on retired/scrapped.)

Thing is. .. the ACCOUNTING SYSTEM, AND THE ACCOUNTING REQUIREMENTS SUCK. You can see the products that the remaining 20% have bought. And look on the news at night …. The victory in Afghanistan was using the military weapon systems that the money purchased. I think that better accounting would be nice, but for anyone to suggest that there are trillions of dollars stolen or wasted is just plain dumb wrong!!!!!!

There is fraud in the system, but a lot of the fraud is the sort of stuff that Congress or a corrupt administration (like Slick Willie) MANDATES on the Military. The military sometimes tries to do things more cost effective, but then they run afoul of various Congressional mandates. The military is occasionally directed to purchase weapon systems different than what they want (or need.) The military is often forced to deal with incompetent vendors because of “Small Business Set-Asides” mandated by Congress.

Years ago, the Dept. of Defense had a program that encouraged finding ways to save money. Many useful things were happening .. .. At Edwards AFB in So. Calif., someone noticed that they re-striped the runway every 6 months, but the CA Highway Dept. only did it every two years .. so they researched, and changed paints and processes, resulting in significant savings. Other examples abounded …. But Congress found out, and put one of those little line items in the budget, “No appropriated funds may be used for such and such program…” resulting in the closing of that program. Seems that too much independent thinking might result in the inability of corrupt politicians to steer money away from the competent contractor to the incompetent contractor.

BUT LET US TAKE A DIFFERENT TACK. You have to admit that most of the money ever spent by the Dept. of Defense can be accounted for when you acknowledge salaries, fuel, etc. operating costs. You can account for the majority of the big ticket expenses by counting tanks, ships and planes. The problem might come in when you try to account for 50 years of out-dated hardware still on the books, some in mothballs, some lost, etc. But all in all, the military has done a good job with what it has, and we are all seeing the results now.]

NOW … lets look at the Dept. of Education. The department can’t account for billions of dollars spent in the last few years. Money disappeared into black holes. 25% to 35% per year of the budget can’t be accounted for. And for the money that can be accounted for …. .look at the wonderful results. Look at how much better educated our children are. How many people can truly claim to see ANY benefit for even a single dollar spent by the Dept. of Education.

And in comparison, the Defense Dept. problems are probably much less than 5% of its total budget … and before everyone claims that the Defense Dept. needs to change, lets remember that first the Congress must change the way it MANDATES the Dept. of Defense do business. Then there might be some REAL savings, some real efficiencies ….but until then, don’t blame the Military.

This is a real Hot-Button Issue with ME, in case you haven’t figured that out yet. Our military is for the most part, great, and for the most part, everyone wants to give an honest effort, and an honest value for the tax-payer dollars. Sure, there are anecdotal incidents of fraud and corruption, but it is not a big part of the military, unlike the “social programs” in the U.S. Government.

Mike, USNR, former submariner, and drilling reservist.

"You have to remember that the IRS is likewise unable to audit its books."

Investor's Business Daily
Senator William Roth
April 14, 1999

The following are some quotes from an article in Investor’s Business Daily, page A-24, April 14, 1999, "Fighting The Power To Destroy," by Sen. William Roth. The article was not posted on IBD’s web page, but I thought it important enough to present a portion of it here:

". . . the IRS is shrouded beneath a cloak of secrecy that puts even the Central Intelligence Agency to shame. Section 6103 of the tax code, originally intended to protect sensitive taxpayer information, has been strengthened and stretched to the point that it can be used by IRS employees to cover their activities and mistakes. Historically, Congress and oversight agencies have not been able to get adequate information to monitor and investigate abuses within the system.

"Using section 6103, agency managers – 15% in one survey – admit to having observed instances of lying, deception or deliberate concealment of information from government audit agencies, while 3 out of 4 IRS managers responded that they believe they are entitled to deceive or lie while testifying before Congress.

"Only the chairman of the Senate Finance Committee and the House Ways and Means Committee have the authority under section 6103 to penetrate the veil of secrecy and investigate the agency. But until 1997, this authority had never been used.

. . . "Almost every examiner we interviewed told us that they were taught to assume that taxpayers were hiding something and that ‘all entrepreneurs, especially small businessmen and -women, are tax cheats.’

"One examiner said, ‘We were taught to assume beforehand that all returns had something wrong with them'..."

Senator William Roth, R-DE, is Chairman of the Senate Finance Committee and co-author of "Power to Destroy" (Atlantic Monthly Press, 1999).

IRS Taxpayer Abuse: Views From The Inside

IRS Agent: Some Evidence Falsified

IRS Flunks Audit
Widespread Problems at Tax-Collecting Agency

ABC News
ABCNEWS Correspondent Jackie Judd
March 1, 1999

W A S H I N G T O N, March 1 - Just as millions of Americans struggle to meet the strict reporting standards set by the Internal Revenue Service, the tax-collecting agency itself has failed a federal audit.

The General Accounting Office today slammed the IRS for poor bookkeeping, paying out fraudulent refunds and leaving holes in computer security that may let outsiders ``access, alter or abuse'' taxpayer information.

Most significantly, the amount of money the IRS has failed to collect has reached a whopping $222 billion dollars - the same amount of money we spend every year on Medicare.

Most of it will never be collected, because it is owed by either bankrupt companies, failed savings and loans, individuals who are missing, or dead - or just plain deadbeats.

Congressman Blasts IRS

The litany of IRS failures was aired at a hearing today on Capitol Hill, drawing sharp criticism from lawmakers.

"I think the stockholders, the taxpayers, have every reason to demand a dramatic and immediate change and that includes debt collection," said Rep. Steve Horn, R-Calif., chairman of the government management subcommittee.

Debt collection was not the only problem found by the GAO. The IRS essentially failed the same sort of audit it forces upon taxpayers.

"Think of this as not balancing your monthly checkbook to the monthly bank statement," said GAO auditor Gregory Kutz, "and at the same time having a record-keeping system that was prone to error."

Shoddy Filing System

In some cases, the GAO said, the IRS had no record-keeping system at all. The IRS could not provide a list of what it owed outside vendors - such as utility companies that supply power to field offices.

Also, the IRS lost track of its own property. While some items may have been lost to theft, others simply could not be accounted for.

"We noted a missing Chevy Blazer, laptop computer and $300,000 printer," Kutz told lawmakers. "At one IRS field office, 19 of 130 computer assets over $50,000 each could not be located."

The IRS blamed antiquated computer systems for many of the snafus and asked for the same thing that many anxious taxpayers want: more time to fix the problem.

Making Government Immune From Law

NewsMax
By Paul Craig Roberts
January 14, 1999

If President Bill Clinton were being tried by the U.S. 10th Circuit Court of Appeals, he would be home free.

In a horrendous ruling devastating for justice, fair play and the rule of law, the 10th Circuit has ruled (9-to-3) that the laws of the United States do not apply to officers and agents of the government unless Congress specifically designates that the law applies to the government.

"Statutes of general purport do not apply to the United States unless Congress makes the application clear and indisputable," says the court, citing a 1873 case that "it is a familiar principle that the King is not bound by any act of Parliament unless he be named therein by special and particular words."

At dispute in the case, Singleton v. U.S., is the federal statute that specifies punishment for "whoever" promises anything of value to a witness in exchange for testimony for or against another person. Under the normal reading of the statute, prosecutors who promise defendants reduced sentences in exchange for testimony against others are violating the prohibition.

According to the majority opinion, federal prosecutors are not bound by the law against bribing witnesses, because they serve as alter ego for the government and "the word 'whoever' connotes a being," whereas "the U.S. is an inanimate entity, not a being. The word 'whatever' is used commonly to refer to an inanimate object. Therefore, construing 'whoever' to include the government is semantically anomalous."

In other words, "whoever" doesn't mean "whoever" if the "whoever" is an officer of the government. This Clintonesque word-play is necessary because, as the court acknowledges, "no practice is more ingrained in our criminal justice system" than convicting people with purchased testimony. Faced with an emptying of the prisons, the court ruled that the U.S. government is not a government accountable to law, but a "sovereign" above the law.

Prosecutors have found that it is far easier to purchase with leniency the testimony of accomplices against their confederates than to build a case against the confederates. When this practice began it was aimed at known criminals against whom evidence was lacking. But once the practice began, it has taken on a life of its own.

Today many innocents are ensnared by untrue accusations from criminal defendants seeking reduced charges by producing more fodder for prosecutors. Less and less does the criminal justice system work by police investigating a known crime and building a case. All too often, the first knowledge of the "crime" occurs when a defendant seeking reduced charges accuses others. In these cases, the accusation is the sole "evidence" of the crime, and prosecutors, who serve career instead of justice, are increasingly destroying innocents with purchased testimony.

A recent example is Khem Batra of Burke, Va. Mr. Batra, married with two children, came to the U.S. in 1974 from New Delhi, India. He has been a U.S. citizen since 1981 and was successfully operating his own travel agency. His troubles began when the husband of one of his employees approached him for loans to enable him to purchase distressed properties at auction. Soon Mr. Batra found himself in partnership, pooling money to bid on properties.

Unbeknownst to Mr. Batra, his sometime partner was illegally obtaining multiple mortgages on the same property. When the partner was apprehended, instead of being indicted, he was wired and promised leniency in exchange for implicating others. The partner managed to implicate some mortgage companies in technical infractions and apparently made an unsuccessful attempt to implicate the Burke and Herbert Bank in Alexandria, Va.

Mr. Batra was never implicated in the illegal financing schemes, but his partner, desperate to earn his leniency, testified that his money-pooling partnership with Mr. Batra was a conspiracy to under-bid the properties. On the basis of his partner's plea-bargained testimony, Mr. Batra was convicted in federal court of one count of violating the Sherman Anti-trust Act.

It is a definite sign of prosecutorial abuse when the Sherman Anti-trust Act, designed to bust up large monopolies, is applied to a small-time local partnership speculating in distressed properties sold at auctions where Mr. Batra and his partner comprised one of many bidders.

Such a dubious interpretation of the anti-trust statute shows an extraordinary determination to convict. But justice is forfeited when, in addition, the conviction is obtained solely through the purchased testimony of a defendant who committed a real crime and is seeking to reduce his charges.

Until the Glorious Revolution when Parliament established the supremacy of law over the sovereign, kings dealt with enemies by bribing or compelling witnesses to testify against them. Once law and not the king's government was supreme, Matthew Hale established the maxim that testimony purchased with reward has no standing in court.

It is an abomination that the 10th Circuit has enabled unscrupulous prosecutors to resurrect the ancient practice of convicting defendants with paid testimony.

7 YEARS OF HELL AT HANDS OF IRS

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