How did the Pentagon lose over $6.5 TRILLION in taxpayer dollars?
08/18/2016 / By JD Heyes / Comments
How did the Pentagon lose over $6.5 TRILLION in taxpayer dollars?

The Defense Department is always asking for more money, and given the responsibility the Pentagon has in keeping the world’s premier beacon of freedom and democracy secure, that’s understandable. It’s a big task.

But before lawmakers appropriate another dime to the DoD, it must first get some answers about how it is possible for the Pentagon to essentially lose more than $6.5 trillion in taxpayer funds.

As noted at, a recent Pentagon inspector general report found that the U.S. Army – the Defense Department’s largest branch – cannot account for that amount of money and as such, cannot pass an audit.

The IG’s report went further, warning that unless or until the Army and the Defense Finance Accounting Service (DFAS) were able to gain control over their accounting issues, “there is considerable risk that [Army General Fund] financial statements will be materially misstated and the Army will not achieve audit readiness by the congressionally mandated deadline of September 30, 2017.”

Nothing in the IG’s report suggested that any of the missing $6.5 trillion was lost or stolen. But it isn’t accounted for, either, and that’s a huge problem because the last thing the country needs, as our elected representatives figure out how to reign in a growing $20 trillion debt, is for the largest line item in the federal budget to become a financial black hole.

And that seems to be the issue. The IG’s report outlines what is a decades-long problem with military accounting practices that make tracking how and why the DoD spends precious taxpayer funds so hard. Mandy Smithberger, director of the Straus Military Reform Project at the Center for Defense Information, said in an interview with AMI Newswire, that military accounting difficulties are “enduring.” And that’s because they are so complex.


She told the newswire service that information regarding Army expenditures is so decentralized by offices with differing quality of documentation that DFAS accountants have to scramble last minute just to document what they can find, thus allowing the remaining “mystery” figures to stay a mystery just to be able to meet deadlines.

“As far as the quantity goes,” Smithberger added, “it is gobsmacking.”

Benjamin Friedman, a research fellow in defense and homeland security studies at the Cato Institute, also told the newswire service that though the eye-popping amounts of money are staggering, that’s not the real problem.

He says that “being audit-ready” is mostly “symbolic” for anyone concerned about wasteful spending and tracking at the Pentagon.

“But there are more important and pressing issues with the Defense budget than having audit-ready financial statements we have to address” he noted, adding that the primary issue is a wonton and persistent lack of fiscal discipline and budgetary honesty, not only with Congress – which appropriates the money – but within the DoD, which of course spends the money, and then doesn’t adequately account for it.

That lack of accountability, were it a regular business in the private sector, would result in charges of criminality. It’s likely that federal agencies would go after the business.

But that’s not what happens in Washington, D.C. It used to be that he who has the gold makes the rules; today, it is he who prints the money makes the rules.

Or breaks them.


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