“$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.”
— Rep.-elect Alexandria Ocasio-Cortez (D-N.Y.), in a tweet, Dec. 2, 2018
The Defense Department is awash with money. So much money that neither the staff nor 1,200 auditors could make sense of where it all went. (The Pentagon recently failed its first big audit in history.)
Enter Ocasio-Cortez. She supports expanding Medicare to people under 65, what’s known as single-payer or Medicare-for-all. But the big question is how to pay for all that health care. According to an estimate from the Urban Institute, the price tag on Sen. Bernie Sanders’s Medicare-for-all proposal would be $32 trillion over 10 years.
Maybe the Pentagon has a few trillion dollars lying around somewhere, as Ocasio-Cortez implied? Let’s find out.
Ocasio-Cortez claimed on Twitter that $21 trillion in “Pentagon accounting errors” could have paid for 66 percent of the Medicare-for-all proposal. Her tweet references an article in the Nation, a left-leaning magazine. The specific line about the missing $21 trillion comes from research by Mark Skidmore, an economics professor at Michigan State University.
Skidmore has been tracking opaque federal budget moves for years. He tallied $21 trillion in unsupported accounting adjustments at the Pentagon from 1998 to 2015. The department’s comptroller says these are budgetary moves that “lack supporting documentation ... or are not tied to specific accounting transactions.”
In 2001, for example, then-Defense Secretary Donald H. Rumsfeld testified to Congress that “we cannot track $2.3 trillion in transactions.” For 2015, the Pentagon reported $6.5 trillion in “unsupported journal voucher adjustments.”
Skidmore contends that the Pentagon has competent personnel and is no more complex than a large multinational corporation, which makes the trillion-dollar accounting gaps all the more puzzling.
“The ongoing and repeated nature of the unsupported journal voucher adjustments coupled with the seemingly enormous size of the adjustments warrants the attention of both citizens and elected officials,” Skidmore wrote in a 2017 paper, adding later, “It should be feasible to track revenues flowing in and expenditures flowing out, and share this information in a format that can be understood by literate people.”
Regardless, in the situation Skidmore is describing, the $21 trillion is not one big pot of dormant money collecting dust somewhere. It’s the sum of all transactions — both inflows and outflows — for which the Defense Department did not have adequate documentation. “The same dollar could be accounted for many times,” as Philip Klein wrote in the Washington Examiner.
Skidmore’s paper clearly talks about Pentagon “assets” and “liabilities.” This key distinction was duly noted in the Nation article that Ocasio-Cortez referenced on Twitter.
To be clear, Skidmore, in a report coauthored with Catherine Austin Fitts, a former assistant secretary of the Department of Housing and Urban Development who complained about similar plugs in HUD financial statements, does not contend that all of this $21 trillion was secret or misused funding. And indeed, the plugs are found on both the positive and the negative sides of the ledger, thus potentially netting each other out. But the Pentagon’s bookkeeping is so obtuse, Skidmore and Fitts added, that it is impossible to trace the actual sources and destinations of the $21 trillion.
But it did not appear in her tweet, which clearly implied that the $21 trillion could have been used to pay for 66 percent of the $32 trillion in estimated Medicare-for-All costs.
“To clarify, this is to say that we only demand fiscal details [with health and education], rarely elsewhere,” Ocasio-Cortez said in a follow-up tweet.
“The point, I think, was more about how we care so little about the ‘how do you pay for it’ when we are talking about war and military spending,” her spokesman wrote in an email. “It’s only when we are talking about investing in the physical and economic well-being of our citizenry that we become concerned with the price tags.”
That’s not the argument coming through in her original tweet, which has been retweeted by nearly 25,000 users. Most people reading the tweet are likely to take its flawed comparison at face value.
It’s also worth pointing out that Skidmore’s total covers 17 years (1998 to 2015), whereas the Urban Institute’s $32 trillion estimate for Sanders’s Medicare plan covers 10 years. So the two numbers are not apples-to-apples to begin with.
After this fact check was published, Pentagon spokesman Christopher Sherwood said “DoD hasn’t received $21 trillion in (nominal) appropriated funding across the entirety of American history.”
“Money Congress appropriates for DoD stays at the Department of the Treasury until they make a payment on behalf of DoD,” he said. “Any funds that remain unspent at the end of the period of availability will remain at the Department of the Treasury and are no longer available to DoD at that point.”
The Pentagon is working to fix the accounting gaps, Sherwood added, "by reducing the labor needed to manually enter the Journal Vouchers and reducing the time it takes to perform research” for account reconciliation.
Let’s put $21 trillion in context. The entire national debt is $21.8 trillion. According to the Congressional Budget Office, total defense spending from 1998 to 2015 was nearly $9 trillion. The CBO estimates $7 trillion in defense spending from 2019 to 2028.
In other words, completely defunding the military for the next decade would yield only one-fifth of $32 trillion. That’s a much better way of illustrating the cost of Medicare-for-All.
The Pinocchio Test
Swing and a miss!
Ocasio-Cortez is not the first Twitter user to mangle information from a news report. But it’s unconvincing to try to pass this off as a rhetorical point being misread. She cited the $21 trillion figure and said “66% of Medicare for All could have been funded already by the Pentagon.”
That’s a direct comparison. It’s badly flawed. The same article she referenced on Twitter would have set her straight. The tweet is still up, probably causing confusion. So we will award Four Pinocchios to Ocasio-Cortez.
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