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Money-shuffling got military $1 billion to end furloughs

NORFOLK, Va. — Hey look, the Pentagon just found a billion bucks. Yes, one billion dollars.

After weeks of furloughs that cost some 650,000 civil servants six days of pay, Defense Secretary Chuck Hagel announced this week that money had been located to end the shrunken paychecks.

That's a big windfall for a department that told Congress national defense was at risk from imposed cuts known as sequestration. So how did defense officials find the money?

They moved funds around. By transferring money from acquisition accounts to day-to-day operations, Hagel said, the Pentagon found a billion dollars to end the furloughs, and about $500 million to restore cut programs.

Defense officials said the dollars came from delaying contracts, prioritizing spending and taking funds from the war chest — particularly, money set aside to bring back equipment from Afghanistan.

It's a lot of money for employees whose livelihoods were affected, but critics note it's just a tiny fraction of the $600 billion that the Department of Defense is spending this year.

"In the grand scheme of things, that's just one day of DOD contracting," said Ben Freeman, a national security policy adviser for the moderate Democratic think tank Third Way. "It's a drop in the bucket of the DOD budget."

Freeman and others say the nation's defense branches are bloated and overstaffed, spending has gotten way out of control, and forced cuts are the only way to starve the unyielding beast.

Other analysts say while there is some overspending, the fiscal crunch of sequestration is real.

"There's been an unfair accusation that the sequester was some kind of gimmick," said retired Vice Adm. Peter Daly, head of the U.S. Naval Institute. "If they could figure it out once, it doesn't mean 'Aha, they always had that money and it's just sitting there lying around.' "

Most analysts say precise monitoring of Pentagon spending is nearly impossible. But there are plenty of examples of defense misspending.

The Pentagon's contract auditing agency examined 6,700 defense contracts in 2012 — a portion of the total — and identified $12.4 billion in potential overspending.

That helped prevent some waste and highlighted how even a trickle of misspending in such a massive budget can add up to billions.

"The numbers are staggering," Freeman said.

He acknowledged, though, that cutting waste isn't enough. This year, sequestration forced the Pentagon to reduce its spending by $37 billion. Starting in October, if Congress doesn't intervene, it will have to trim an additional $52 billion.

In addition to civilian employees, the cuts are hitting contractors and small companies who do business with the government.

Mark Klett, CEO of Klett Consulting Group, a Virginia Beach systems engineering company that contracts with the government, testified recently before the Senate budget committee. He said big defense companies can ride out tougher times more easily, but companies like his are getting hit hard.

It takes a lot of manpower to submit a government bid, he said, and it can take a year or more to process a government contract. With sequestration, some proposals are being canceled, and the resulting wasted time and money are especially painful for smaller companies.

Sequestration's across-the-board budget cuts were brought on by the inability of a divided Congress to agree on how the government should cut spending. In the fight over big government and big dollars, some say lawmakers seem to have lost sight of those caught in the middle.

One former military official said that for all the screaming and yelling in Washington, ordinary people are taking the real shot in the gut.

The furloughs are borne by those least able to stand it, he said.

"It's a very intense political game going on, with the stakes very high, and in those types of games, little people get crushed," he said.
 

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