Wasted Riches

0 Comments | Insight on the News, Oct 22, 2001 | by Kelly Patricia O'Meara

New Senate committee report reveals government departments routinely waste billions upon billions of dollars each year through financial mismanagement.

The horrific events of Sept. 11 temporarily sidelined the bitterly partisan haggling about the federal budget. But a growing number of insiders on Capitol Hill are becoming convinced that the debate about how the nation's financial resources are used may be as important as any debate concerning the "first war of the 21st century," and very well may determine the success of future actions in that war.

With the dust still settling from the attacks on the World Trade Center and the Pentagon, unity has been the order of the day, with little time or inclination for finger-pointing about the breakdown of intelligence, home defense and readiness. The time for this will come soon enough. There are for the moment few willing to go on record about how outrageously financial resources have been squandered during the last eight years. But the fact is that trillions of dollars have been appropriated by Congress without accountability and with no systematic means of determining whether the level of appropriation is enough or even if the money was spent for its appropriated purpose. It is almost as though the profligate "Boss Tweed" of New York's Tammany Hall had been resurrected on the federal level (see Tweed on cover).

Already there is talk about renewed deficit spending among both Democrats and Republicans to fund the war on terrorism and to accommodate new economic-stimulus packages, including another round of tax cuts. But critics quietly are asking how future spending needs even can be approximated without reliable accountability.

Financial fudging in the Cabinet departments long has been a sore point for the inspectors general (IGs) and the General Accounting Office (GAO), charged with keeping an eye on waste and abuse. Now President George W. Bush has entered the fray. He is well aware that to win a war -- whether it be a war on drugs, crime, hunger or terrorism -- every resource is precious. He made that clear in his 2002 Management Agenda, where he said: "Without accountability, how can we ever expect results? Under my administration, we will bring this cycle of failure to an abrupt end. As president, I will hold affected agencies accountable for passing their audits not later than 2002. I will say to those in place, `Get your audits right.'"

What is the "cycle of failure" to which the president is referring? While there are numerous examples of godawful financial mismanagement among federal agencies and departments, nowhere is it worse than in the area of national security. Last year (and every year since audits have been required) the Department of Defense (DOD) not only could not produce a clean audit but was unable to account for at least $1.1 trillion (see "Rumsfeld Inherits Financial Mess," Sept. 3).

Little wonder the president ordered a complete reorganization of the DOD. To understand the importance of fiduciary responsibility even in a time of crisis, consider that if Defense Secretary Donald Rumsfeld and the Bush team at the Pentagon had that $1.1 trillion today, it could buy 244 Nimitz-class aircraft carriers at a cost of $4.5 billion each, 19,298 F/A18-E/F Super Hornet Fighters at a cost of $57 million each or 343,750 Bradley fighting vehicles at a total cost of $3.2 billion. Furthermore, using a reasonable estimate of $3 billion, the $1.1 trillion that is unaccounted for could pay for the construction of 367 brand-new Pentagon buildings, or seven Pentagons per state.

Insight offers these hypotheticals to help focus on accountability and spending priorities at a time when the popular impulse may be to damn the torpedoes and speed the spending. The consensus of national-security specialists is that funding levels hardly can be blamed for the Clinton-era intelligence and policy failures that made possible the Sept. 11 attacks.

In any case, Congress has oversight of all appropriated funds and shortly will determine how much is needed per department and agency to run the federal government for fiscal 2002. Congress for years has been concerned about how wastefully tax money is spent and is taking corrective actions to rein in the problem at all levels. In June, Sen. Fred Thompson (R-Tenn.), ranking minority member on the Senate Governmental Affairs Committee, issued the two-volume report Government on the Brink, the first in years seriously to address waste, fraud and abuse within the federal government.

According to the Thompson report, "Because of its size and scope, and the terrible way it is managed, the federal government wastes billions and billions of your tax dollars every year. The waste, fraud and abuse reported to the Governmental Affairs Committee each year is staggering. Of course no one knows exactly how much fraud, waste and mismanagement cost the taxpayers because the federal government makes no effort to keep track of it."

Using data provided by a variety of official sources, including the IGs of each federal agency and the GAO, Thompson's Government on the Brink provides a comprehensive guide to each agency's strengths and weaknesses. What is most revealing, however, is the number of departments that simply cannot account for billions of dollars. Consider the following from the Thompson report: