Here’s the first round of shocking quotes. I will keep adding quotes to this post as I go through my previous reports. To be notified of updates, please join my email list.

Defense Secretaries Sound the Alarm

This first quote was an important admission from Robert Gates, as Defense Secretary during the second-term of the Bush Administration and first-term of the Obama Administration, it was his responsibility to sign off on Pentagon spending. This is also why Gates’ Secretary of Defense predecessor Donald Rumsfeld, in his now infamous speech at the Pentagon on September 10, 2001, said it was time to “declare war” on Pentagon waste for not being able to account for $2.3 trillion.

Here’s a little-known speech on Pentagon accounting that Robert Gates gave on May 2011 at the American Enterprise Institute:

“My staff and I learned that it was nearly impossible to get accurate information and answers to questions such as ‘how much money did you spend’ and ‘how many people do you have?’….

The efficiencies project also showed that the current apparatus for managing people and money across the DoD enterprise is woefully inadequate.

The agencies, field activities, joint headquarters, and support staff functions of the department operate as a semi-feudal system – an amalgam of fiefdoms without centralized mechanisms to allocate resources, track expenditures, and measure results relative to the department’s overall priorities.”

Reuters was one of a handful of news outlets to report on Gates’ shocking comments. They also got additional mind-blowing quotes from former Deputy Secretary of Defense Gordon England. He spoke about the financing and accounting operations throughout the Pentagon that lack oversight:

“No one can even agree on how many of these accounting and business systems are in use. The Pentagon itself puts the number at 2,200 spread throughout the military services and other defense agencies.”

“A January 2012 report by a task force of the Defense Business Board, an advisory group of business leaders appointed by the secretary of defense, put the number at around 5,000.”

“There are thousands and thousands of systems,” former Deputy Secretary of Defense Gordon England said in an interview. “I’m not sure anybody knows how many systems there are.”

Given what we know now, Donald Rumsfeld’s September 10, 2001 speech at the Pentagon is of historical significance. Here are excerpts from that speech:

“The topic today is an adversary that poses a threat, a serious threat, to the security of the United States of America.

This adversary is one of the world’s last bastions of central planning. It governs by dictating five-year plans. From a single capital, it attempts to impose its demands across time zones, continents, oceans and beyond.

With brutal consistency, it stifles free thought and crushes new ideas. It disrupts the defense of the United States and places the lives of men and women in uniform at risk.

Perhaps this adversary sounds like the former Soviet Union, but that enemy is gone: our foes are more subtle and implacable today. You may think I’m describing one of the last decrepit dictators of the world. But their day, too, is almost past, and they cannot match the strength and size of this adversary.

The adversary is closer to home. It’s the Pentagon bureaucracy.

In this building… money disappears into duplicative duties and bloated bureaucracy…. An average American family works an entire year to generate $6,000 in income taxes. Here we spill many times that amount every hour by duplication and by inattention.

That’s wrong. It’s wrong because national defense depends on public trust, and trust, in turn, hinges on respect for the hardworking people of America and the tax dollars they earn….

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

We cannot share information from floor to floor in this building because it’s stored on dozens of technological systems that are inaccessible or incompatible…

Why is DOD one of the last organizations around that still cuts its own checks? …

There’s a myth, sort of a legend, that money enters this building and disappears, like a bright light into a black hole, never to be seen again.

In truth, there is a real person at the other end of every dollar, a real person who’s in charge of every domain, and that means that there will be real consequences from, and real resistance to, fundamental change….

And let there be no mistake, it is a matter of life and death. Our job is defending America, and if we cannot change the way we do business, then we cannot do our job well, and we must.

So today we declare war on bureaucracy….

I’ve read that there are those who will oppose our every effort to save taxpayers’ money…. Well, fine, if there’s to be a struggle, so be it….

It’s about respect for taxpayers’ dollars. A cab driver in New York City ought to be able to feel confident that we care about those dollars.

It’s about professionalism, and it’s also about our respect for ourselves, about how we feel about seeing GAO reports describing waste and mismanagement and money down a rat hole.”

Of course, the day after that speech was 9/11. In a very interesting coincidence, the part of the Pentagon that got hit was where accounting offices were. 34 Pentagon accountants were killed that day. Here’s how it was summed up in the “Official U.S. Government Historical Office” report:

“Of the Managerial Accounting Division’s 12 members present, only 3 survived. For these three the fireball and partial collapse of a wall almost proved their undoing; not one escaped without injury. All told, 34 of the 40 members of the Program and Budget and Managerial Accounting Divisions present that morning perished.”

The only report in the mainstream media that I could find, which followed up on Rumsfeld’s September 10th speech, was from CBS News. This brief report featured shocking quotes from three Pentagon insiders who were in a position to know what was happening.

The War On Waste

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.

He said money wasted by the military poses a serious threat. “In fact, it could be said it’s a matter of life and death,” 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. [Chuck] 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.”

Here’s the TV version of this report:

Department of Defense Military Spending Analyst Chuck Spinney

Chuck Spinney was a former Air Force Lieutenant and longtime military analyst for the Pentagon who specialized in military spending. Spinney has given legendary reports on military spending to Congress. He was called “the conscience of the Pentagon” by current Senate Judiciary Committee Chairman Chuck Grassley (R-IA).

If you want a solid introduction to this mind-blowing issue, watch this video report from PBS with Bill Moyers. It is from 2003, and the issue has become significantly worse since then, but it gives an excellent overview.

I also featured this short excerpt from the above interview:

Senate Judiciary Committee Chairman Chuck Grassley

Senator Chuck Grassley (R-IA) has many shocking quotes about Pentagon accounting. Here are a few:

“Unfortunately, when it comes to accountability and fiscal responsibility, the DoD has continually dropped the ball. The agency also makes congressional oversight efforts difficult.”

“Oversight of the DoD requires a dogged agency Inspector General to get to the bottom of problems and properly detail them for congressional review. Time and again, DoD investigators have been unable to conduct aggressive, hard-hitting audits and investigations, making oversight efforts arduous and change nearly impossible.

“Despite these challenges and with no consideration to the political party in the White House, I’ve detailed the egregious misuse of taxpayer dollars at the DoD, sought answers from leadership at the Pentagon and investigated the ongoing failures of the Department’s accounting systems.”

“Every year, Americans pay their federal taxes. The United States government collects trillions of dollars for the purpose of funding essential functions, including national security efforts. When unelected bureaucrats misuse, mismanage and misallocate taxpayer funds, it not only takes resources away from vital government functions, it continually weakens citizens’ faith and trust in their government.”

“As representatives of the people, members of Congress need to double down on their oversight efforts to give American citizens confidence that their government either plays by the rules or is held accountable. To succeed as a nation, we need to get back to a government by and for the people, rather than a government by the bureaucrats and for the connected insiders.”

“I’ll continue pushing for answers at the DoD and any federal agency that must be held accountable for waste, fraud and abuse. As long as I serve as a senator from Iowa, I will conduct robust and conscientious oversight to weed out government misconduct and help restore Americans’ faith in our Republic.”

“American humorist Mark Twain once wrote ‘truth is stranger than fiction.’ Unfortunately, the bookkeeping mess at the Department of Defense (DoD) is no laughing matter.”

“Why is the Pentagon able to acquire the most advanced military systems in the world, but fails to install a world class accounting system that’s able to win a war on wasteful spending?”

“The broken data collection system prevents the Pentagon from being audit-ready. And yet, tens of millions of dollars are squandered for incomplete audits and tens of billions of dollars are spent every year to fix the accounting system.”

“I’m working with other lawmakers on the Senate Budget Committee to have the Government Accountability Office investigate why billions and billions have been spent to modernize DoD accounting systems in the last quarter century with nothing to show for it.”

“Flushing out wasteful spending reveals systemic fiscal mismanagement that flushes precious tax dollars down the drain. The ability to plunge waste from the Pentagon’s spending pipeline is clogged up by antiquated accounting systems and disrespect for taxpayer money”

“30 years after the overpriced toilet seat took flight, I’ve discovered that sticker shock for toilet parts in the sky has gained higher altitude. Instead of spending $640 for a toilet seat, the Air Force recently listed $10,000 for a toilet seat lid.”

“Through 6 presidencies and a dozen Secretaries of Defense, wasteful spending runs rampant at the Pentagon. Every defense dollar lost to waste, fraud and abuse weakens military readiness.”

“As an outspoken supporter for whistleblowers, I’ve also worked to empower the brave souls who come forward to report wrongdoing so that they understand their rights.”

“Congress also requires each Inspector General to have a ‘whistleblower ombudsman’ who works on their behalf to make sure they understand laws that protect them from retaliation for reporting waste, fraud and abuse.”

“Congress wrote and passed a new law to say we meant what we said the first time: Inspector Generals are entitled to ‘all records’ to conduct their work.”

Defense Finance and Accounting Service (DFAS) Whistleblowers

The Defense Finance and Accounting Service (DFAS) — referenced in EXHIBIT A: Inspector General Report #1 — is the Pentagon’s main accounting agency. It is the world’s largest finance and accounting operation.


United States Department of Defense – Defense Finance and Accounting Service Special Agent Badge

Other than the high-profile case from DFAS employee Jim Minnery featured above, Reuters published incredible statements from two longtime DFAS workers. As the Reuters Investigation revealed, Linda Woodford, while working at DFAS, “spent the last 15 years of her career inserting phony numbers in the U.S. Department of Defense’s accounts.”

“Numbers were missing. Numbers were clearly wrong. Numbers came with no explanation of how the money had been spent or which congressional appropriation it came from. Woodford says, ‘We didn’t have the detail… for a lot of it.’”

“Woodford and her colleagues were told by superiors to take ‘unsubstantiated change actions’ – in other words, enter false numbers, commonly called ‘plugs,’ to make the totals match the Treasury’s.”

“Jeff Yokel, who spent 17 years in senior positions in DFAS’s Cleveland office before retiring, says supervisors were required to approve every ‘plug’ – thousands a month.

DoD Standard Operating Procedure: Accounting Fraud, Reuters Report:

“At the DFAS offices that handle accounting for the Army, Navy, Air Force and other defense agencies, fudging the accounts with false entries is standard operating procedure, Reuters has found.

And plugging isn’t confined to DFAS. Former military service officials say record-keeping at the operational level throughout the services is rife with made-up numbers to cover lost or missing information.

A review of multiple reports from oversight agencies in recent years shows that the Pentagon also has systematically ignored warnings about its accounting practices.

‘These types of adjustments, made without supporting documentation… mask much larger problems in the original accounting data,’ the Government Accountability Office, the investigative arm of Congress, said.

Plugs also are symptomatic of one very large problem: the Pentagon’s chronic failure to keep track of its money – how much it has, how much it pays out and how much is wasted or stolen.”

Congressional Statements on Accounting Crisis at the Pentagon

These quotes were featured in my recent post: Pentagon Audit: Evidence Proving $21 Trillion Unaccounted For – Opening Statement

As Judiciary Committee Chairman Senator Chuck Grassley (R-IA) said in a recent speech on the United States Senate floor:

A monster is lurking in the weeds. And nobody wants to talk about it…. They are red flag accounting issues listed in DoD reports for years…. 26-years of hard-core foot-dragging shows that internal resistance to auditing the books runs deep.”

Former Senator Tom Coburn (R-OK), who sponsored the Audit the Pentagon Act of 2012, one of many failed and/or ignored attempts to bring accountability, summed up the situation by saying:

“The Pentagon can’t manage what it can’t measure, and Congress can’t effectively perform its Constitutional oversight role if it doesn’t know how the Pentagon is spending taxpayer dollars.

Until the Pentagon produces a viable financial audit, it won’t be able to effectively prioritize its spending, and it will continue to violate the Constitution and put our National Security at risk.”

Senator Ron Wyden (D-OR), who is on the Senate Intelligence Committee and a sponsor of the most recent Audit the Pentagon Act of 2015, recently stated:

“The Senate voted to increase military spending…. I was one of only eight members of the Senate who voted ‘No’ on this bill. Why? One of the reasons was because we don’t know where this money goes since the Pentagon has never had an audit.”

Congresswoman Barbara Lee (D-CA) didn’t pull any punches either:

“It is disgraceful that Congress has poured trillions upon trillions of taxpayer dollars into an agency that refuses even the most basic measure of accountability.”

Subcommittee Chairman on Federal Spending Oversight Senator Rand Paul (R-KY) recently expressed his frustration with the Pentagon’s accounting crisis by saying:

“The department charged with carrying out our greatest constitutional responsibility has set the lowest possible standard for accountability.”

* There are many more quotes that I still have to pull into this post. Please join my email list below to be notified of updates. Most of these quotes were featured in my investigative series: Global War Profiteers Vs. The People of the United States. You can get that full report here:

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David DeGraw

The more you look into military spending, the crazier it gets.

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