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The Hidden Cost of War Citizens Never Hear About

By Terry | American Decline

Pentagon - Aerial View

While we are made to almost feel guilty for questioning our perpetual engagement in war, massive profits are being generated at the expense of the average working stiff.

A recent audit by Ernst & Young and other private firms of the Pentagon’s budget was unable to be completed. The auditor’s concluded that the DoD’s financial records were so filled with bookkeeping issues, irregularities and errors that a reliable audit would be impossible.

Deputy Secretary of Defense Patrick Shanahan dismissed the results by telling the press:

“We failed the audit, but we never expected to pass it.” Shanahan suggested that the DoD should get credit for attempting an audit, saying, “It was an audit on a $2.7 trillion organization, so the fact that we did the audit is substantial.”

If this happened in a private sector Corporation, heads would roll. Not in the Federal bureaucracy though.

Since legislation was passed in 1990, Chief Financial Officers Act, requiring all departments and agencies of the federal government to develop auditable accounting systems and annual audits, every department and agency has come into compliance- except the Pentagon.

Perhaps, the reason for the foot dragging has been recently uncovered by an investigation by Dave Lindorff of The Nation magazine:

A Nation investigation has uncovered an explanation for the Pentagon’s foot-dragging: For decades, the DoD’s leaders and accountants have been perpetrating a gigantic, unconstitutional accounting fraud, deliberately cooking the books to mislead the Congress and drive the DoD’s budgets ever higher, regardless of military necessity.

DoD has literally been making up numbers in its annual financial reports to Congress—representing trillions of dollars’ worth of seemingly nonexistent transactions—knowing that Congress would rely on those misleading reports when deciding how much money to give the DoD the following year, according to government records and interviews with current and former DoD officials, congressional sources, and independent experts.

As General Smedley Butler put it, war is a racket. This recent audit, going largely unnoticed, points to the truth in that statement. Yet, we are continuously indoctrinated to venerate our War is a Racket military to the point of shame should you question it’s necessity for endless wars and ongoing debt production for which we all pay in one form (taxes) or another (inflation).

Plugs and Nippering

The Pentagon receives .54 out of every dollar in federal appropriation making them the government’s largest discretionary cost center. Yet there is more spent through this center than we are made aware of which is likely why they resisted the required audit for over 25 years.

Two techniques are used regularly to hide much of their spending. One is called “plugs”.

Using the plug, the Pentagon routinely takes “one-year money”, which is funding that must be used in one fiscal year or be returned to the U.S. Treasury,  and moves it to a “five-year money” pool that does not have to be returned during the 5 year allocation period. This is referred inside the Pentagon as a “plug” as in plugging a hole.

Plugs can be massive. For example, in 2015 Congress appropriated $122 billion for the U.S. Army. Yet, the DoD financial records for the Army’s 2015 budget included a whopping $6.5 trillion in “plugs”.

Most of these plugs “lack[ed] supporting documentation,” in the bland phrasing of the department’s internal watchdog, the Office of Inspector General. In other words, there were no ledger entries or receipts to back up how that $6.5 trillion supposedly was spent. Indeed, more than 16,000 records that might reveal either the source or the destination of some of that $6.5 trillion had been “removed,” the inspector general’s office reported.

Who knows where it went?- except those who profit from it of course. The American public though ends up with the debt while being encouraged to cheer on our endless wars.

“Nippering” is another technique used to keep budgeted money from being followed. In this technique, the cash is moved from one authorized purpose to another. The money involved here can be moved so often that “the funds become virtually untraceable,” according to a veteran Pentagon lobbyist quoted anonymously by The Nation’s – David Lindorff.

It all adds up, according to Michigan State economics professor Mark Skidmore who led a research team specializing government finance, into DoD financial statement reviews. Skidmore’s team discovered that a massive $21 Trillion of the Pentagon’s financial transactions between 1998 and 2015 could not be traced, documented or explained.

No small amount, that is 5 times larger than the entire bloated federal government spends in a year and larger than our GNP- the world’s largest. That only included the plugs revealed in the IG’s report which does not review all of the Pentagon’s spending.

A 911 Connection?

During the Bush-Cheney administration, micromanaging Donald Rumsfeld called a press conference to announce that:

According to some estimates we cannot track $2.3 trillion in transactions.

Shocking news since the Pentagon’s budget in 2001 was only $313 Billion. It dominated the national news cycle for 24 hours especially since Rumsfeld said the enemy was not China or Russia but one closer to home- the Pentagon bureaucracy.

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Rumsfeld’s exposé died quickly however. The following morning on September 11, four hijacked commercial jet planes plowed full speed into the two World Trade Center towers, the Pentagon, and a field in Pennsylvania.

Since that time, there was no follow-up nor any effort to find the missing money. In fact, the Pentagon’s budget has continued to grow through all of the Presidential administrations to it’s current massive level.

Who Profits?

In addition to the perpetuating bureaucracy which has helped to make the Washington, D.C. area a booming area. The U.S. Census Bureau reported that in December 2017 the five highest earning counties in the nation were in the D.C. suburbs.

However, an almost never recognized benefactor in all of this is the financial elites who issue all the money to make this possible. In a system built on debt, it is important to keep the debt flowing. War is a very effective way of doing just that. Since Rumsfeld’s disclosure, war is all we have had.

Just keep this in mind the next time you hear that inevitable commercial to support our troops before every sporting event. Having been one of the troops myself and knowing what I know about what is behind these wars, I think it is about time we stop defending the sovereignty of other nation’s.

We need to pay more attention to our own citizenry which includes not sacrificing lives, resources and economic livelihood for the benefit of a minority of profiteers who pull the strings to fund all of this by creating money out of nothing- the private cartel of the Federal Reserve.

For more on the inner workings of the Fed and financiers who have divided us into those who are debtors (most of us) and creditors (the privileged financiers) see the resources below.