The 2.3 Trillion Dollar Mistake


On September 10th, 2001, the new Secretary of Defense Donald Rumsfeld gave a press conference where he described with frustration that the antiquated administrative systems and practices of the U.S. military were so bad that they “cannot track 2.3 trillion dollars in transactions.” The next day the United States was brutally attacked in a tragedy and an outrage that would define a generation. A million conspiracy theories were born that day. Among them: that the attack on the Pentagon was an “inside job” in order to hide the “missing” $2.3 million. The trouble is that $2.3 trillion wasn’t “missing” it was spent, however, the transactions couldn’t be tracked so as usual, the military was spending money at a break-neck pace, making a classic accounting mistake and couldn’t reliably tell Congress why or specifically on what or by whom.

Secretary Rumsfeld told the press that day,

“Business enterprises die if they fail to adapt. And the fact that they can fail and die is what provides the incentive to survive. But governments can’t die so we need to find other incentives for bureaucracy to adapt and improve. The technology revolution has transformed organizations across the private sector but not ours. Not fully, not yet. We are as they say “tangled in our anchor chain”.

Our financial systems are decades old. According to some estimates, we cannot track 2.3 trillion dollars in transactions.

We cannot share information from floor to floor in this building because it’s stored on dozens of different technological systems that are inaccessible or incompatible.”

Interestingly if you look at the damage path created through the outer ring of the Pentagon by the impact of Flight 77, Secretary Rumsfeld’s office took a significant hit.

The Mistake Never Went Away, Not Completely

As much as the theory of a missile strike on the Pentagon has been sensationalized over the years, it really did a fantastic job of obfuscating what every American really should find a bit concerning still today twenty years later…. They never actually solved the problem that Rumsfeld pointed out!

They failed an audit in 2018 according to the New York Times, and in 2019 Rolling Stone ran their piece “The Pentagon’s Bottomless Money Pit“, noting that the US Airforce managed to “lose” $10 trillion through an accounting error.

“Nobody lost money. It was just a paper error, one that was caught. “Even the Air Force notices a trillion-dollar error,” Andy says with a laugh. “Now, if it had been a billion, it might have gone through.”

In November 2020, The Pentagon failed its third-ever audit. Thomas Harker, the acting DoD comptroller at the time said,

“We have been clear that this is a journey that will require a sustained effort over several years,” Harker said, pointing to the fact it took the Department of Homeland Security — the last government agency to complete a first-time audit — a decade to receive the all-clear.”

Harker said that based on that timeline, a real, actually passed audit for the entire DoD might not happen until around 2027. Yikes.


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