Pen­tagon ac­count­ing slam is ‘spe­cious’

Milwaukee Journal Sentinel - - Politifact - Louis Jacobson

Rep.-elect Alexan­dria Oca­sio-Cortez, D-New York, is one of Congress’ most ar­dent sup­port­ers of Medi­care for All, the Demo­cratic pro­posal to ex­pand Medi­care to all ages in order to cre­ate a gov­ern­ment-funded health in­sur­ance sys­tem for all Amer­i­cans.

In a tweet, Oca­sio-Cortez com­pared the scale of Pen­tagon waste to the price tag for Medi­care for All, which a study by the free-mar­ket Mer­ca­tus In­sti­tute said would cost $32 tril­lion over 10 years. This fact check will fo­cus on her point about Pen­tagon spend­ing. It is im­por­tant to note that the $32 tril­lion Medi­care fig­ure she cited is based on one group’s es­ti­mate us­ing as­sump­tions about how the pro­posal would af­fect cur­rent rates of spend­ing; it is not an of­fi­cial cost fig­ure.

On Dec. 2, Oca­sio-Cortez tweeted a screen­shot from an ar­ti­cle in the Na­tion, a left-lean­ing mag­a­zine, along with the fol­low­ing com­ment: “$21 TRIL­LION of Pen­tagon fi­nan­cial trans­ac­tions ‘could not be traced, doc­u­mented, or ex­plained.’ $21T in Pen­tagon ac­count­ing er­rors. Medi­care for All costs ~$32T. That means 66% of Medi­care for All could have been funded al­ready by the Pen­tagon. And that’s be­fore our pre­mi­ums.”

Ob­servers quickly pounced on the tweet, say­ing that Oca­sio-Cortez was mis­read­ing the Na­tion ar­ti­cle. So we took a closer look.

Mis­read­ing the source ma­te­rial

The Nov. 27 Na­tion ar­ti­cle ad­dressed a his­tor­i­cal pat­tern of ac­count­ing dis­crep­an­cies at the Pen­tagon.

The por­tion that Oca­sio-Cortez high­lighted in her tweet ref­er­enced re­search by Mark Skid­more, a pro­fes­sor of eco­nomics at Michi­gan State Univer­sity. Cit­ing Skid­more’s re­search, the story said “in all, at least a mind-bog­gling $21 tril­lion of Pen­tagon fi­nan­cial trans­ac­tions be­tween 1998 and 2015 could not be traced, doc­u­mented, or ex­plained.”

The prob­lem with what Oca­sio-Cortez said: The $21 tril­lion fig­ure refers to a cu­mu­la­tive amount of in­di­vid­ual trans­ac­tions — in­clud­ing some dou­ble- and triple-count­ing — not a sin­gle pot of money that was mis­spent.

One tip-off is the amount of Oca­sioCortez’s “ac­count­ing er­rors” is far big­ger than the ac­tual Pen­tagon spend­ing from 1998 to 2015, which was $8.5 tril­lion. In fact, it’s also far big­ger than the amount the gov­ern­ment has spent on na­tional se­cu­rity since 1940 and, in all like­li­hood, in the na­tion’s his­tory.

Oca­sio-Cortez’s $21 tril­lion es­ti­mate ex­ceeds the en­tirety of na­tional-se­cu­rity spend­ing since 1940, which checks in around $17.8 tril­lion. And while full data back to 1776 doesn’t ex­ist, pro­rat­ing back­ward for an­other 164 years would al­most cer­tainly not add enough to make the to­tal $21 tril­lion.

Oca­sio-Cortez’s mis­take

So what did Oca­sio-Cortez get wrong?

The $21 tril­lion fig­ure tal­lies up in­ter­nal fi­nan­cial trans­fers that would not pass muster in an au­dit; the same dol­lar can be in­cluded in mul­ti­ple trans­ac­tions, which is why Oca­sio-Cortez’s fig­ure ex­ceeds all Pen­tagon spend­ing.

This misun­der­stand­ing ren­ders the Medi­care for All com­par­i­son in­ac­cu­rate, ex­perts said.

Although he’s a long-stand­ing critic of Pen­tagon waste, Steve El­lis, the vice pres­i­dent of Tax­pay­ers for Com­mon Sense, said Oca­sio-Cortez had dra­mat­i­cally in­flated the scale of the prob­lem.

“One dol­lar in­volved in 10 trans­ac­tions is not 10 dol­lars,” El­lis said. “There is a lot to cut and a lot of waste at the Pen­tagon, and I have un­apolo­get­i­cally said so. But sim­ple math demon­strates that the Pen­tagon did not get any­where near that amount of cash, av­er­ag­ing more than $1 tril­lion per year, much less lost track of any­where near that amount of money.”

Todd Har­ri­son, a de­fense bud­get ex­pert at the Cen­ter for Strate­gic and In­ter­na­tional Stud­ies, agreed.

The $21 tril­lion fig­ure “dou­ble- and triple-counts fund­ing that was trans­ferred in­ter­nally within the De­fense Depart­ment,” Har­ri­son said. “And just be­cause a trans­ac­tion can­not be fully traced and doc­u­mented does not mean it was fraud­u­lent or wasted. It just means the Pen­tagon has not been able to pass an au­dit, which we al­ready knew.”

Just to be sure, we checked with the au­thor of the Na­tion ar­ti­cle, Dave Lin­dorff.

“She’s wrong,” he said. Lin­dorff said his find­ings sug­gest large-scale slop­pi­ness in ac­count­ing and po­ten­tially de­lib­er­ate ob­fus­ca­tion to de­ter con­gres­sional over­sight — but not a fixed bud­getary amount that could have the­o­ret­i­cally been ap­plied to other uses.

While some of the $21 tril­lion may be real ex­pen­di­tures, Lin­dorff said, “clearly most of it is sim­ply fic­ti­tious num­bers de­signed to ob­fus­cate the ac­count­ing and keep the Pen­tagon ac­count­ing from be­ing se­ri­ously mon­i­tored. It would be wrong to sug­gest that that is real money that could have been used to fund some­thing else more use­ful to so­ci­ety.”

It’s also worth not­ing that the Na­tion ar­ti­cle and the Mer­ca­tus study re­fer to dif­fer­ent time pe­ri­ods, said Ben Tom­chik, deputy chief of staff at the Com­mit­tee for a Re­spon­si­ble Fed­eral Bud­get. The Na­tion’s fig­ure refers to 18 years — twice as long as the Mer­ca­tus study’s 10year pe­riod.

Oca­sio-Cortez’s of­fice did not re­spond to an in­quiry. As of pub­li­ca­tion, the tweet re­mained up, ap­pended only with a quote from the Na­tion ar­ti­cle: “DoD has lit­er­ally been mak­ing up num­bers in its re­ports to Congress— know­ing that Congress would rely on those re­ports when de­cid­ing how much to give the fol­low­ing year.”

Our rul­ing

Oca­sio-Cortez tweeted, “$21T in Pen­tagon ac­count­ing er­rors. Medi­care for All costs ~$32T. That means 66% of Medi­care for All could have been funded al­ready by the Pen­tagon.”

The com­par­i­son is spe­cious. In fact, the data sug­gests that the Pen­tagon hasn’t spent $21 tril­lion in the en­tire his­tory of the United States.

Rather, the $21 tril­lion fig­ure refers to a col­lec­tion of trans­ac­tions in which the same dol­lar could have been trans­ferred be­tween in­ter­nal ac­counts mul­ti­ple times. As such, it’s com­par­ing ap­ples and or­anges to say that “Pen­tagon ac­count­ing er­rors” would have been equiv­a­lent to two-thirds of Medi­care for All’s pro­jected 10-year costs.

We rate the state­ment False.

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