What Was Said
$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. https://t.co/soT6GSmDSG
— Alexandria Ocasio-Cortez (@Ocasio2018) December 2, 2018
This is misleading.
Representative-elect Alexandria Ocasio-Cortez, the New York Democrat who has become a darling of the progressive left, was quoting from an article in The Nation about “massive accounting fraud” committed by the Pentagon from 1998 to 2015. But her suggestion that the $21 trillion in military transactions could have “already” paid two-thirds the cost of a “Medicare for all” health care system goes beyond what the article reported — and is misleading.
For starters, the combined Pentagon budget from 1998 to 2015 was $9.2 trillion. One study by a libertarian economic think tank found that “Medicare for all” legislation by Senator Bernie Sanders, independent of Vermont, would cost the federal government $32.6 trillion over 10 years.
So where did the $21 trillion figure originate?
It comes from an analysis of the Pentagon’s “unsupported journal voucher adjustments,” by Mark Skidmore, an economist at Michigan State University. The term refers to improperly documented accounting adjustments that are made when different financial ledgers do not match.
In other words, $21 trillion is the total value of adjustments made to the Pentagon’s financial records over those years that could not be traced.
That is not the same thing as $21 trillion in spending.
David Norquist, the Pentagon’s comptroller, explained in testimony to Congress in January that the adjustments occur after money is spent because “we have systems that do not automatically pass data from one to the other.”
For example, Mr. Norquist said, the Army’s general ledger may initially estimate the cost of property and equipment. That estimate is later updated with a more specific cost, based on the actual value of property.
In the 2015 fiscal year, the Army general fund reported making about $1 trillion worth of adjustments to its assets, according to the Defense Department’s inspector general. It also made about $1 trillion in adjustment to its liabilities.
Together, that accounted for $2 trillion in adjustments — even though the actual dollar amounts potentially offset each other.
“I wouldn’t want the taxpayer to confuse that with not — with the loss of something like a trillion dollars. It’s not. That wouldn’t be accurate,” Mr. Norquist said. “But it’s an accounting problem that does need to be solved, because it can help hide other underlying issues.”
In an interview, Professor Skidmore faulted the Pentagon for its lack of transparency and expressed skepticism that mismatches in property evaluations could account for all $21 trillion. He noted that large state governments like New York and California will make similar adjustments, but equivalent to small percentages of their budgets — not magnitudes larger.
The Pentagon’s adjustments could well be “accounting gimmicks to reconcile accounts, fine — or something else, I don’t know,” Professor Skidmore said. “I’m just absolutely perplexed. Why not have the underlying information?”
The same article from The Nation that Ms. Ocasio-Cortez quoted also noted that Professor Skidmore’s analysis “does not contend that all of this $21 trillion was secret or misused funding” and that the transfers “are found on both the positive and the negative sides of the ledger, thus potentially netting each other out.”
Todd Harrison, the director of defense budget analysis at the Center for Strategic and International Studies, said the $21 trillion figure “double and triple counts funding that is transferred internally.”
“And just because a transaction cannot be fully traced and documented does not mean it was fraudulent or wasted,” Mr. Harrison said. Instead, it means the Defense Department “has not been able to pass an audit,” he said.
The Pentagon did indeed fail an audit in November.
Sources: The Nation, Office of Management and Budget Historical Table 5.2, Mercatus Center, Pentagon comptroller report, Pentagon inspector general report, Todd Harrison, Mark Skidmore, C-Span