The Pentagon is at war with the Congressional Research service about the cost of the Iraq war so far and how much we will have spent by next year. The Congressional Research Service (CRS) says that the total cost of the war so far is $319 billion but the DOD says it is $210 billion. It is comparing apples and oranges because the CRS is counting all the money that has been spent and the money that has been appropriated and the DOD is counting just money that has been spent.

 

CRS estimates that the cost of the wars in Iraq and Afghanistan will top $500 billion next year and that Congress has increased their appropriations 72% since 2004. They can't explain the large jumps in costs in operations and maintenance costs because the amount of troops have stayed the same. The debate goes on and on about the overall and rising costs.

 

The question may be moot. For years the DOD has flunked every commercial style audit and the DOD Inspector General often tells people who call about fraud on the hotline that they cannot investigate many charges because the financial paper trail is in such disarray. The DOD public affairs office has told several reporters and members of Congress that they cannot give a definitive number of private contractors in Iraq or how much has been spent on the KBR LOGCAP private contract or how much they have spent on supplies to the traditional logistics centers. Rumors abound that the KBR contract may be running as high as $17 billion.

 

Recently, a good source of mine who worked for the Defense Finance and Accounting Service retired out of disgust. He was a CPA who tried to balance the books at the top levels and relied on information sent to DFAS by the services. When he could not get the books to balance, his bosses would tell him to just write off hundreds of million of dollars as lost...budget dust as it is known in the business. He would instead try to track down the paper trail only to find that the services accounting was in total disarray with very little backup or paper trail. He said that it was a farce that his agency was trying to pass an audit because it was "garbage in, garbage out" and had little to do with reality.

 

The DOD has promised to do better and has spent billions of dollars for new systems. But my source says that these systems also can't talk between services and the information sent to DFAS is still unreal. Meanwhile, this war, which has been using more private contractors than any other in  history, has money pouring out with little oversight. The Special Inspector General for Iraq Reconstruction only looks at reconstruction money and is not allowed, by law, to look at the private contractors who are supplying the war. If the DOD Inspector General cannot investigate many standard fraud cases in the DOD because of the financial disarray, they must be having even more problems with the war's chaotic spending. All attempts in the Congress to put in a special oversight commission or committee have been killed.

 

So while the debate continues on the war and the troops are wondering how we can be spending up to $9 billion a month but they are still hurting for vital supplies, the DOD will continue to run the meter on this war. The trail may be hard to follow, but once the truth of the fraud and waste in this war surfaces through sources and whistleblowers, the amount of fraud and waste promises to be breathtaking.

There were two new disturbing developments this week that dashes expectations that there will be any meaningful oversight of the DOD budget in general and the money spent for our troops. In a Washington Post article, reporter Jeffrey Smith cites a transcript of DOD Secretary Donald Rumfeld, taken by the DOD Inspector General's office on the notorious Boeing tanker scandal, where an Air Force procurement officer and a Boeing executive went to jail for fraud and collusion. Rumfeld is disinterested and vague about the events that lead to this scandal, even though he admits that the decisions came through his office. Based on his quotes in this transcript, Rumsfeld is projecting to the rest of the DOD that procurement fraud and undue influence is something that he cannot be bothered with.

 

The other dumbfounding defeat for oversight is a moderate proposal put out by Senator Dorgan for a "Truman style" panel to oversee the war spending, much like the one where Harry Truman made his name by catching war profiteers. It was defeated 52-44 along party lines except for Republican Lincoln Chafee of Rhode Island who broke ranks and voted for the measure. In defeating the measure,  Senator John Warner, chair of the Armed Services Committee, said that there was enough oversight by the congressional committees and the Executive Branch. The few scandals that have been discovered show that these traditional oversight methods aren't working. For more on this story, click here.

 

With the US spending almost $9 billion a month in Iraq and KBR averaging about half a billion dollars a month, I shutter to think that we have fooled ourselves that there is adequate oversight over this money, especially given the cavallier lack of concern by Secretary Rumsfeld.

     During the past few weeks, there have been internal Executive and Congressional arguments on spending priorities in the defense budget in general and the Iraq war in particular. Money was taken from Army and Marine budgets that were suppose to replace war worn equipment was transferred to support the National Guard on the Mexican border. (Read article here. Registration required)There are attempts to move money from war items such as night vision goggles to cover the ill fated V-22 Osprey under the notion that the risky transport would be deployed to Iraq. (Click here for more information)

 

     The services are complaining that they are moving around budget items because the Congress did not pass the supplemental bill before they went on recess. They threatened to cut vital logistic services for the war in Iraq. In a department that has one of the highest war costs per soldier of any other war; the DOD is playing a game to keep the money coming. It is an old Washington budget game known as the Washington Monument game inside the Beltway. If you are forced to cut any of your budget, first cut things that the public will notice, such as shutting down the Washington Monument. The bureaucracy knows that that type of cut will cause the tourists to howl and the funds will be restored.

 

     What is missing from this big debate is that very few are talking about how the money is being spent. With the DOD admitting that it can’t pass a clean audit and the DOD’s own Inspector General admitting that it cannot investigate many fraud issues because it cannot trace a paper trail, how do we know what the DOD needs for the regular defense budget and for the Iraq war? The Special IG for Iraq Reconstruction is only looking at the $18 plus billion dollars for Iraq reconstruction and cannot look at the almost half a billion dollars that is going to KBR each month and the nearly $9 billion a month going for the Afghanistan and Iraq wars. The General Accountability Office (GAO) has issued report after report on the fraud and waste problem but they are ignored. (To see GAO reports on Iraq, click here for a list from our website.)

 

     Until there is real oversight from the DOD Inspector General, the Justice Department and the Congress, this overspending will result in more waste and fraud and less real help for our troops. The bill for this war is getting enormous and is now almost as big, in current dollars, to our efforts in Vietnam…a lot longer war with many more troops. (see chart at the bottom of this webpage) The private military contractors know that there is a lack of oversight and are running up huge bills so that their follow-on contracts, based on historic costs, will be even larger,. Meanwhile, we continue to get letters from troops who are frustrated that they can’t get what they need to fight in this war. Washington will continue to rearrange the deck chairs on the Titanic War budget until the media, the Congress, and the citizens force it to stop.