MILLER: For a lifetime of hard work and unyielding integrity, we're proud to present you with POGO's Good Government Award.
MOYERS: Earlier this summer Chuck was recognized for his work by POGO, Project On Government Oversight.
MILLER: Hard not to be impressed with a guy like Chuck who can accuse the Department of Defense of cooking the books on national television and then return to his office without the locks being changed.
MOYERS: They never did change the locks. Though at times they may have wanted to...
MOYERS: Why did you do it? Why did you spend all this time a voice in the wilderness, and things kept getting worse? Why didn't you quit?
SPINNEY: Well, that's a really good question. I don't know.
It hasn't been a negative experience in any sense of the term. It's been a very, very positive experience. And I have to be honest, I love a good bureaucratic fight. You know? So I don't feel abused or anything like that. And I would hate for anybody to think that, you know, I'm one of these guys who thinks he's a martyr or anything. I don't feel that way at all.
MOYERS: Show me your scars. I mean, pull…
SPINNEY: Yeah. No, I've got the battle scars, but battle scars are a sign of honor. I'm proud of 'em.
MOYERS: How did your superiors treat you after you appeared on the cover of Time?
SPINNEY: Well, depends on which superior you're talking about. My immediate superiors and his supervisor were basically supporters of mine. They knew I was… they agreed with what I was doing. They might wished I hadn't done it 'cause it made their life a little more difficult. But they basically agreed with what I was saying and they thought it should be said. They sort of wished they weren't in the line of fire, I expect.
Above them, there was a political appointee who was an assistant secretary of defense and he basically tried to put pressure on my two intermediate superiors to reduce my performance rating.
Now, they couldn't fire me because it would just create too overt a thing. So the idea was to put… the way I surmised it, the idea was to put into place a plan to gradually reduce my performance rating. Build a track record of non-cooperative and bad behavior. And then fire me three or four years down the stream. That's the way you do things in the government.
And anyway, I decided to nip it in the bud. We… I had several of my friends go in and talk to these guys. They all… the two guys admitted that they were being pressured to reduce my performance rating, it was unfair. So essentially we had a case for a conspiracy to do an illegal act because it's illegal to take retribution to a person who just appeared before Congress, who had testified to Congress.
MOYERS: And you told the truth?
SPINNEY: And I to… oh, sure, and no one could rebut. No one could rebut it. In fact, if you look at my big studies, there's never been a rebuttal that has taken.
MOYERS: You've always been vindicated?
SPINNEY: Yeah. Right. And so…
MOYERS: Your studies.
SPINNEY: Right. So anyway, what happened was we created a stink and they backed off.
And actually, they actually increased my performance rating after it was all over.
MOYERS: Let me come back to your first concern. I mean, why aren't these military budgets not watched as carefully by the Defense Department as a corporation? Why isn't the Department of Defense being held accountable?
SPINNEY: Well, you raise a very good point. The President is holding education people accountable for standards. He says, "I want to have measures, performance measures for accountability." He also has tried to do the same for foreign aid if you recall.
Over in the Pentagon, we're not holding people accountable.
I think basically here is you have in Congress the oversight committees for defense, which are essentially the armed services committee. And the defense appropriations subcommittees in both houses are so tied in to the Pentagon and the defense contractor base that essentially oversight has been displaced by what some of us call overlook. They're basically watching the money flow out the door and encouraging it to go.
And basically it's in members of the Senate Armed Services Committee's best interest to keep the money flowing. It's in the Pentagon's best interest to keep the money flowing.
SPINNEY: It's in the defense contractors' best interest to keep the money flowing. Because it's the military industrial Congressional complex and this is their way of life. They live on the money flow.
MOYERS: The military industrial Congressional complex?
SPINNEY: Right. Which I believe was a term that Eisenhower considered using in his speech, but he dropped the reference to Congress.
MOYERS: He talked about the military industrial complex. But you say Congress is the driving force here?
SPINNEY: I don't think there's any simple villain that you can point to and say, "If we fix this, everything's gonna change. In my opinion it's the product of a long-term evolution that occurred in the 40 years of Cold War. If you think about it those 40 years were a very unique period in our nation's history. Now what happened was during that period the different players in the military industrial Congressional complex basically fine-tuned their bureaucratic behavior to exist in that environment. It was almost like this self-contained environment in which a peculiar evolution took place.
A lot like the Galapagos Islands and how the beaks on finches changed from island to island. And we developed certain practices in order to generate budgets that were more inwardly focused toward distributing defense pork to our allies around the country.
And one of the most pernicious effects of this trend was the gradual build up of what an anthropologist might call habitual modes of conduct. Sort of almost like an innate response of threat inflation. We literally exaggerated a threat to jack up the budgets.
MOYERS: The threat from abroad, from the Soviet Union.
SPINNEY: The threat from the Soviet Union.
SPINNEY: Well, those habits became so ingrained in our system the Soviet Union evaporates and you still have this acculturated response going on.
MOYERS: Help me to und…
SPINNEY: And that's what makes it scary.
SPINNEY: Yeah, because you can't control it.
MOYERS: The people who are supposed to control it benefit from it?
MOYERS: Tell me how members of Congress benefit from increasing costs like this, driving weapons systems that the country doesn't need, spending money that puts us deeper and deeper in deficit. How does Congress gain?
SPINNEY: They gain because they get money flowing to their Congressional districts. It's in the way Congress gains from controlling the federal budget. They get money flowing to the districts, that helps build your power bases.
MOYERS: Give me an example.
SPINNEY: Back in 1990, and this may sound like ancient history but I was there. The Senate Armed Services and the House Armed Services Committee took opposing views on the F-16 fighter. One committee said, "We're gonna terminate production."
The other committee said, "Let's fully fund the Pentagon's request." And of course they were just setting the stage for a part… for reducing the Pentagon's request but keeping the program alive. That's the way Washington works.
But as soon as those two positions came out, the Lockheed lobbyists… at that time it was General Dynamics… The General Dynamics lobbyists hit the streets. And I found out about this through a very personal way. I had a very good friend who was a Congressional staffer working for Andy Ireland who was a member from a small citrus growing district in Florida. Had almost no defense business in his district.
And they received a letter. And the letter basically had about three or four pages. The first page was a text which said, "The F-16 is absolutely vital for national security." And that was the first paragraph. And then it basically extolled the economic benefits of the F-16 for the remainder of the letter.
Attached to that letter were two maps. The first map was the spending for government financed equipment across the United States. So you saw the dollars in each state scattered around there. It sort of looked like a bombing chart for the strategic bombing campaign of identifying the critical targets in Russia back in the old days of nuclear war.
And then the second page was tailored for the particular person who received the letter. In this case, Andy Ireland was from Florida so it had a map of Florida and it had each Congressional district in there with the money going by Congressional district.
Well, my friend was just outraged by this. He says, "This is just blatant influence peddling, you know. And they're just trying to, you know, put the pressure on us." And he was cursing and rant… he was literally ranting and raving. And I for one of the few times in my life actually tried to calm someone down. I said, "Wait a minute." I said, "If they sent one to you, they sent it to everybody. What you ought to do is call 'em up and say, 'This is really a great display. We can really use it. Could you send us the whole atlas?'"
And he said, "Yeah, you're right." He understood immediately. And he goes, "Yeah, that's what to do." And so he does it. And within an hour, he had the whole atlas, which then I had in about two or three hours. It was about this thick. It was for I think 45… 43, 45 states. And it had each state with all this thing down… all the money listed by Congressional district, plus of course the national map. And it was down to the dollar. And like in California, I mean the list was… they had to print small because there was so much money going to so many Congress… there was just table after table down to the dollar.
Now this is, you know, in the Pentagon we can't account for any of our money. Meanwhile, the contractors know exactly where it's going, or at least they say they do.
MOYERS: So every Congressman could know what part of the pork was coming into his district?
SPINNEY: Right. Let's say I'm the program manager for the F-16 in the Pentagon. I get a call from one of my wholly owned subsidiaries over on the Hill on the armed services committee. "We got it funded for you guys, but those guys in the House are gonna screw us." So you know, "You got to do something."
So all I have to do is I call up the program manager at the prime contractor, who I know because I work with him on a daily basis. And say, "Hey, we got a problem.
"The House is gonna kill our program. The Senate's on board. Turn on the pressure." Well, at that point, I don't have to do anything in the government. The rest of it takes care of itself because the people whose future it…are at hand are gonna work overtime to solve that.
The contractors then start calling up the subcontractors. They unleash the fax attacks. They unleash the emails. And then of course they start calling the lobbyists, the Gucci shoe crowd on K Street, and say, "Hey, you got to start beating the… beating the pavement in the halls of Congress. We need some newspaper op-eds." The whole process takes care of itself. One phone call turns it on.
MOYERS: Who gets the money?
SPINNEY: The contractors get it. The Congressmen get it, you know through… they get the power because they keep getting voted back in office. They may also get some Congressional contributions. But I think the bigger benefit is the power, the stability of their job.
And remember the people in the Pentagon that are promoting this thing are basically… they're also creating a situation where they can roll over and get into that sector and make the big bucks. All you have to do is look at the number of retired generals working for defense contractors.
MOYERS: The revolving door?
SPINNEY: Yeah, yeah. The revolving door.
MOYERS: Have you seen these figures that CEO pay at Lockheed Martin went up from $5.8 million in 2000 to $25.3 million in 2002. I mean, that's five times increase in less than three years. CEO pay went up at General Dynamics from $5.7 million in 2001 to $15.2 million in 2002. It went up at Honeywell from $12.9 million in 2000 to $45 million in 2002. It went up from Northrop Grumman from $7.3 million in 2000 to $9.2 million in 2002. What do those figures say to you?
SPINNEY: Well, that's Versailles on the Potomac in action. It doesn't surprise me. The Defense Department if you think about how we really operate we essentially operate according to an internal political economy. It's this closed cell that I mentioned earlier. In this bubble that developed during the Cold War. And all economies are political economies.
The military industrial Congressional complex is a political economy with a big P and a little E. It's very political in nature. Economic decisions, which should prevail in a normal market system don't prevail in the Pentagon, or in the military industrial complex.
So what we have is a system that essentially rewards its senior players. It's a self… what we call it, we call it, we have a term for it, it's a self-licking ice cream cone. We basically take care of ourselves. And that's also why we have this metaphor it's Versailles on the Potomac. It basically is internally self-referencing.
MOYERS: But is…
SPINNEY: So when I see those salaries that you mentioned it's perfectly predictable that money goes into the defense budget and it gets reflected in these things. While the people doing the fighting are basically… they're getting more money then they used to get but they're not participating in this.
MOYERS: Where… and your specialty is the defense budget. Where is the money going?
SPINNEY: Well, it goes into cost growth.
MOYERS: Cost growth.
SPINNEY: Cost growth. We basically if you want to understand how the Pentagon operates like everything else in Washington you follow the money.
MOYERS: I don't understand the term cost growth.
SPINNEY: Basically the cost of weapons increases faster than the budget. And this has been going on for 40 years. And when the budget increases, that basically creates an incentive structure to jack up the cost even further.
Now we saw this in the 1980's. You can think of the 1980's as the mother of all experiments. And when Ronald Reagan poured money into the defense budget the cost went through the roof.
MOYERS: Are you saying that costs went up because the…
SPINNEY: The money went in.
MOYERS: The money went in.
SPINNEY: I have data showing that when we reduce the budget the contractors cut their costs. In some cases they come in under cost estimates when the money dries up. Producing the same product. It makes no economic sense in any kind of commercial context. It makes perfect political sense.
MOYERS: Because someone could say that war is not a commercial venture. That it's the… it's not driven by markets. The markets don't exist in a military economy.
SPINNEY: I agree. And that's why we ought to treat the defense industry as a public sector. And that would be… and if we did that then you wouldn't see these gross disparities in salaries creeping in. But essentially if you try to understand what's going on in the Pentagon and this is the most important aspect, and it gets at the heart of our democracy. Is that we have an accounting system that is unauditable. Even by the generous auditing requirements of the federal government.
Now what you have to understand is the kind of audits I'm talking about these are not what a private corporation would do with a rigorous accounting system. Essentially the audits we are required to do are mandated under the Chief Financial Officers Act of 1990, and a few amendments thereafter. But it's the CFO Act of 1990 that's the driver.
And it basically was passed by Congress that required the inspector generals of each government department, not just the Pentagon, but NASA, health, education, welfare, all the other departments, interior department where the inspector general has to produce an audit each year. Saying, basically verifying that the money was spent on what Congress appropriated it for. Now that's not a management accounting audit. It's basically a checks and balances audit.
MOYERS: But in laymen terms explain that.
SPINNEY: It's to enforce the accountability clause of the Constitution. Which means that you can't spend money unless Congress specifically appropriates it. Well, the Pentagon has never passed an audit. They have 13 or 15, I forget the exact number, of major accounting categories. That each one has it's own audit. The only one of those categories that's ever been passed is the retirement account.
Now under the CFO Act of 1990 they have to do this audit annually. Well, every year they do an audit and the inspector general would issue a report saying we have to waive the audit requirements, because we can't balance the books. We can't tell you how the money got spent.
Now what they do is try to track transactions. And in one of the last audits that was done the transactions were like… there were like $7 trillion in transactions. And they couldn't account for about four trillion of those transactions. Two trillion were unaccountable and two trillion they didn't do, and they accounted for two trillion.
MOYERS: So, you mean, they're…
SPINNEY: They don't know where the money's going.
Well, guess what the Senate Armed Services and the House Armed Services agree to do in their infinite wisdom? They decided to waive the Pentagon's requirement for these annual audits in their authorization bills. So the Pentagon no longer has to do it.
Now the rationale was that we all know that this is a problem, we don't need to be told every year. Of course the one good thing about these audits was it would generate a small burst of news stories every April or May when the audits were due saying the Pentagon can't follow it's money. You know, there's a trillion dollars unaccounted for.
MOYERS: What does this do to the national ethos?
SPINNEY: Oh, I think it corrupts it. I think it corrupts it. Essentially you have all the pretensions of a democracy, we're really a democratic republic where you have representatives of the people in the government, and you have the representatives are under certain strictures to behave in a certain way. And in fact they're not behaving that way.
MOYERS: Your own…
SPINNEY: It's a fundamental moral issue.
MOYERS: Yeah, you've said it's a moral sewer there on the Potomac.
SPINNEY: That's correct.
MOYERS: What do you mean moral sewer?
SPINNEY: Well, fundamentally we take an oath of office to preserve the Constitution and we are in fact… in effect undermining the Constitution because we won't address this issue of accountability.
A lot of the people that are involved in this don't realize the moral implications of what they're doing. They regard what they're doing as being for the most patriotic of motives.
You know, "We've got to get the money out of Congress. And if we have to lie to get it, we'll do it. If we have to cook the books in order to sell a program, we'll do it because we're trying to save the country from the hoards," the Communist hoards or whatever…
MOYERS: And don't you think most people, most ordinary citizens say, "Well, if we have to endure some waste and some superfluous and some corruption just to be safe, we'll do so"?
SPINNEY: Oh, absolutely. Absolutely. And particularly when you have a political system. It gets really out of control when you have a political system that caters to fear which is what I think is going on now.
MOYERS: But the fear is legitimate today, given 9/11 and the war on terror?
SPINNEY: Absolutely. I don't want to diminish the terrorist threat in people's minds.
The problem is that if you start thinking about how you deal with these kinds of threats, you don't need B-2's. You don't need ballistic missile defense. You don't need Comanche helicopters. Basically what you need are really highly trained individuals that are basically understand economics, anthropology, and… as well as fighting, particularly in close quarters combat which is the most difficult form of fighting.
And basically that these guys can insert themselves and infiltrate these nodes at lower levels of distinction. Not this
nation v. nation conflict.
MOYERS: But wouldn't you con…
MOYERS: Go ahead.
SPINNEY: …and my point here is those kind of solutions don't generate big budgets. And that's the problem.
MOYERS: So we keep spending big money on those old systems even…
SPINNEY: For the wrong threat.
MOYERS: But America has just won a war against Iraq. I mean, some people would say, look, somebody must be doing something right.
SPINNEY: Well, the first thing I would say is Iraq has been under sanctions for ten years or so. They have a defense budget of 1.8 billion. Most of their equipment is vintage Soviet equipment. They're untrained. We spend $460 billion when you count the supplemental for fighting the war to take out Iraq in a month. If you can't do that for $460 billion what can you do?
MOYERS: Is this $400 billion Congressionally approved budget a scandal in your mind?
SPINNEY: Yes. It isn't gonna fix our problems. It's certainly unnecessary. And you can't look at this budget in isolation. This budget is being put into place, and it's gonna generate an enormous tail in the out years because we're politically engineering all these programs and building up all this support in the Congressional districts. It's gonna be very difficult to turn this spending off.
MOYERS: This strikes me as somewhat mad.
SPINNEY: It is. We're in Versailles on the Potomac. It's Ver… we basically exist for ourselves. And we live in a hall of mirrors. It's a good metaphor.
MOYERS: Like Versailles.
SPINNEY: Like Versailles. And you have to remember, our decisions basically are to spend other people's money, and ultimately to spill other people's blood. We don't pay the price for these decisions. There's an asymmetric burden of risk.
The risk that the promoters of something like Star Wars or an F-22 or you name it, whatever kind of weapon bears is a risk that the program might be canceled. But if you look at the other risk, the other risk, the taxpayer bears the economic risk. Not the program manager. And the soldier who may have to use this piece of equipment in a serious war. You know, his life is on the line.
Well, those risks don't really have much of an impact on decision-makers who are more interested in the preservation of their program.
MOYERS: Chuck Spinney, thank you very much.
SPINNEY: Thank you.