US Missing $6.5 Trillion and About to Lose More

Military can’t account for $6.5 trillion in spending, so Trump wants to give Pentagon even more money

By Gary Symons, Equedia

There’s an old joke that the term ‘Military Intelligence’ is an oxymoron. I personally think the term ‘Military Budget’ makes even less sense.

That’s why politicians and financial analysts alike are so worried about US President Donald Trump’s plan to pour hundreds of billions of dollars in new spending into the Pentagon over the next four years.

“I want a balanced budget eventually,” Trump told Fox News. “But I want to have a strong military. To me, that’s more important than anything.”

The problem for fiscally conservative Republicans is that military spending has run literally out of control for decades.

Politicians on both sides of the House and the Senate are worried Americans will be throwing even more money into a bottomless black hole, with absolutely no accountability … and they have good reason to think so.

Inspector General of the Department of Defence stunned Americans last summer when it revealed the Pentagon could not account for $6.5 trillion in spending.

How much is that?

Well, in simple terms, four times more than ObamaCare would cost for the next decade. Enough to build the wall at the Mexican border 260 times over. Enough to pay off roughly one-third of the United States’ $19.9 trillion debt.

One would think when that much money is involved, someone might want to keep track.

As well, the Inspector General discovered the Pentagon removed at least 16,513 financial records during the 2015 fiscal year, and haven’t really given a good reason as to why. (Source: Inspector General Report, July 26, 2016)

So, it’s not wild eyed conspiracy theorists or Democrat politicians saying military spending is out of control; it’s the Inspector General of the military saying it.

This is also not a new problem.

In fact, the military has failed miserably to provide any accurate accounting of its spending since 1996; the year all government agencies were mandated by US law to conduct regular financial audits.

In the 20 years since that law was passed the Pentagon has failed to complete an audit every single year.

Congress responded by demanding the military achieve ‘Audit Readiness’ by September of this year … but there are signs already the Pentagon will not be able to meet its legal obligation to provide an accurate audit of its spending.

So, all of that is shocking enough, but consider also the results of the investigative news report by Reuters reporter Scot Paltrow in 2013, titled simply ‘Unaccountable’.

Paltrow found the Pentagon’s internal accounting systems are unable to keep track of its stores of weapons, ammunition and various other supplies, so it spends outrageous sums of money on new supplies it doesn’t actually need.

As well, Paltrow reports the military often falls prey to internal theft and fraud, because it literally can’t keep track of its own supplies and it’s own money.

In short, a lot of money, literally billions, is being wasted. For example, the Inspector General found in 2012 that the US Army lost track of $5.8 billion worth of supplies between 2003 and 2011 as they were shuttled back and forth from reserve units to regular army units.

The next year, Navy Vice Admiral Mark Harnitchek confessed at an aviation industry meeting that the Navy had “…about $14 billion of inventory for lots of reasons, and about half of that is excess to what we need.”

In this swamp of financial mismanagement and gross overspending, the military budget has soared since 1996, topping $600 billion a year from 2009 through 2012.

Alarmed by America’s spiralling debt, Congress capped military spending at $610 billion by passing the Budget Control Act in 2011. If those caps are lifted … and they will be if Trump’s plan to increase spending is approved … the US national debt will soar.

All of that might make sense if one could show the Pentagon was using its $610 billion budget efficiently and prudently, but it’s not. Every review of military spending, including by the military’s own Inspector General, has shown shocking waste of taxpayer dollars and a complete lack of any accounting standards.

It is into this morass that Trump and his Cabinet would like to throw in billions more taxpayer dollars, while also eliminating the current cap on military spending.

So, how much money are we talking about?

It’s impossible to say with any certainty or accuracy at this early stage, but the words coming from the President himself would seem to indicate increased spending in the hundreds of billions, perhaps even trillions, over the next four to six years.

“We’re developing a plan for new planes, new ships, new resources, and new tools for our men and women in uniform,” Trump said. His first order to the military was to perform a 30-day readiness review of the armed forces, which will be conducted, of course by the Pentagon.

The same Pentagon that kinda lost thousands of financial records and hasn’t been able to account for its own spending for 20 years.

Trump’s basic concept already includes:

Increasing the number of ships in the Navy from 274 ships to more than 310 ships, an increase of 27 per cent, and that number might go higher to 350;

Increasing the number of soldiers in the Army (and in fact, legislation was already passed to increase the number of soldiers to 476,000, an increase of 16,000 from last year);

Modernizing nuclear weapons, including the construction and deployment of more nuclear missiles;

Boosting missile defence systems;

Increasing funding for Cyber Defence systems.

The irony is that Trump is calling for massive increases to the military budget at a time when evidence is mounting that a sizeable percentage of the military budget is being wasted.

There may indeed be a case to increase the effectiveness of the US military, but simply throwing more money at the problem is surely not the answer.

If the new President really wants to do something positive for the military, for taxpayers, and for the United States, he’ll launch a thorough investigation of military spending and put in military leaders who will finally fix this long-standing problem that is crippling military morale and ability.

When the Pentagon shows it can manage taxpayer funds responsibly, that’s the time to look at investing more in military spending, but not before.

The Equedia Letter is Canada’s fastest growing and largest investment newsletter dedicated to revealing the truths about the stock market.