Photo: AP Photo

A new report shows the Department of Defense "plugs" accounting holes with made up numbers and fails to track its $700 billion annual budget.

This story originally appeared in The Lowdown, ABP’s weekly roundup of news, culture, holy-shit awesomeness, event updates & exclusive offers delivered straight to your inbox. Click here to subscribe.


The Pentagon houses 26,000 employees inside its five walls, but not a single one is keeping track of the books or could tell you where the agency’s $717 billion(!) defense budget is going exactly.

Plug it in, plug it in: A recent report from the Office of the Inspector General shows the Department of Defense, which receives more than half of all Congressional appropriations (pulled from our tax dollars) each year, routinely uses “plugs,” made up figures, to balance its books and fill seemingly routine gaps in accounting.  

After the Department of Defense dragged its feet on internal audits for years, Congress forced them into an independent review, but the contracted company threw its hands up in despair and quit in November after seeing the disorganized, incomplete state of the Pentagon’s records. Pentagon leadership, for their part, gave themselves a nice pat on the back for simply attempting the audit.

“We failed the audit, but we never expected to pass it.” Deputy Secretary of Defense Patrick Shanahan said afterward. “It was an audit on a $2.7 trillion organization, so the fact that we did the audit is substantial.”

Can I get an itemized receipt? The truth is the DOD has no clue where all the money goes. At the end of the year, they fudge their annual report, inserting numbers to make the calculations work, often holding on to unspent appropriations, then going back to Congress asking for more.

When the Pentagon keeps funds that were meant to be spent in that fiscal year or returned to U.S. coffers, it is violating federal law and perhaps committing fraud. Oops.

An Inspector General report found the Pentagon made $2.8 trillion in wrongful adjustments in one quarter alone in 2015. In all, an analysis from Mark Skidmore, a professor of economics at Michigan State University, found the DOD had $21 trillion in concocted transactions. To be clear, that doesn’t mean the Pentagon chiefs are backstroking through trillions in a vault somewhere. When a figure is adjusted in one place, figures have to be edited elsewhere so everything adds up at the bottom of the ledger. So, many duplicate figures are represented in that total.

Cash or credit? When politicians oppose something, they often ask their colleagues how they plan to pay for a proposed bill or program. The Pentagon never gets that scrutiny though, spending (and hoarding) the lion’s share of taxpayer dollars with few controls. Meanwhile, we ask how we can possibly afford to cut the costs of college, health care and community development while the national debt and federal deficit are soaring.

“We don’t know how the Pentagon’s money is being spent,” a congressional staffer with experience working on Pentagon budgets told The Nation. “If this kind of stuff were happening in the private sector, people would be fired and prosecuted.”