budget

Posted on Oct.09, 2018 in accountability, budget, classification by

Accounting Board Okays Deceptive Budget Practices

Government agencies may remove or omit budget information from their public financial statements and may present expenditures that are associated with one budget line item as if they were associated with another line item in order to protect classified information, the Federal Accounting Standards Advisory Board concluded last week.

Under the newly approved standard, government agencies may “modify information required by other [financial] standards” in their public financial statements, omit otherwise required information, and misrepresent the actual spending amounts associated with specific line items so that classified information will not be disclosed. (Accurate and complete accounts are to be maintained separately so that they may be audited in a classified environment.)

See Classified Activities, Statement of Federal Financial Accounting Standards (SFFAS) 56, Federal Accounting Standards Advisory Board, October 2018.

The new policy was favored by national security agencies as a prudent security measure, but it was opposed by some government overseers and accountants.

Allowing unacknowledged modifications to public financial statements “jeopardizes the financial statements’ usefulness and provides financial managers with an arbitrary method of reporting accounting information,” according to comments provided to the Board by the Department of Defense Office of Inspector General.

Properly classified information should be redacted, not misrepresented, said the accounting firm Kearney & Company. “Generally Accepted Accounting Principles (GAAP) should not be modified to limit reporting of classified activities. Rather, GAAP reporting should remain the same as other Federal entities and redacted for public release or remain classified.”

The new policy, which extends deceptive budgeting practices that have long been employed in intelligence budgets, means that public budget documents must be viewed critically and with a new degree of skepticism.

A classified signals intelligence program dubbed “Vesper Lillet” that recently became the subject of a fraud indictment was ostensibly sponsored by the Department of Health and Human Services, but in reality it involved a joint effort of the National Reconnaissance Office and the National Security Agency.

See “Feds allege contracting fraud within secret Colorado spy warehouse” by Tom Roeder, The Gazette (Colorado Springs), October 5, 2018.

Posted on Aug.29, 2018 in budget, Dept of Defense by

Post-9/11 Costs of War Exceed $1.5 Trillion

“Since September 11, 2001, the Department of Defense (DoD) has obligated $1,500.8 billion for war-related costs.”

That’s the headline from the latest report to Congress on the post-9/11 costs of war, according to the Pentagon’s own reckoning. See Cost of War Update as of March 31, 2018 (FY 2018, Quarter 2).

Independent estimates of military spending that use a broader definition of the term yield a considerably higher total.

The new DoD report provides a detailed retrospective account of post-9/11 military spending, broken down by theater (Afghanistan, Iraq, Syria), by fiscal year, and by military service. A copy was obtained by Secrecy News.

The fraction of war-related funds that were appropriated to DoD in the post-9/11 period for classified purposes totaled $88 billion, the report said.

The 76-page DoD report itself exemplifies a certain financial profligacy, with a price tag that is orders of magnitude higher than one might have supposed. “The cost to the Department of Defense to prepare and assemble this report is approximately $209,000 for FY 2018,” the document states.

Posted on Jul.26, 2018 in budget, classification, Intelligence by

Bid to Rectify the “Black Budget” Fails

The so-called “black” budget — which refers to classified government spending on military procurement, operations, and intelligence — is not merely secret. It is actually deceptive and misleading, since it produces a distortion in the amount and the presentation of the published budget.

The amount of money that is purportedly appropriated for the US Air Force, for example, does not all go to the Air Force, the Senate Armed Services Committee recently observed.

“Each year, a significant portion of the Air Force budget contains funds that are passed on to, and managed by, other organizations within the Department of Defense. This portion of the budget, called ‘pass-through,’ cannot be altered or managed by the Air Force. It resides within the Air Force budget for the purposes of the President’s budget request and apportionment, but is then transferred out of the Service’s control,” according to a Senate report on the 2019 defense bill (S.Rept. 115-262).

Although the report does not say so, the Air Force budget may also include pass-through funding for the Central Intelligence Agency, which of course is not even part of the Department of Defense, as well as for other non-Air Force intelligence functions.

“In fiscal year 2018, the Air Force pass-through budget amounted to approximately $22.0 billion, or just less than half of the total Air Force procurement budget. The committee believes that the current Air Force pass-through budgeting process provides a misleading picture of the Air Force’s actual investment budget.”

The Senate therefore recommended that such “pass-through” funds be removed from the Air Force budget and included in Defense-wide appropriations.

But in the House-Senate conference on the FY2019 defense bill, this move was blocked and so the deceptive status quo will continue to prevail.

Earlier this month, the Director of National Intelligence and the Pentagon Comptroller wrote to Congress to present their views on the Senate provision. A copy of their letter, which presumably objected to the proposed move, has been requested but not yet released.

The logic of the Senate proposal was explained by Mackenzie Eaglen of the American Enterprise Institute in “Time to Get the Black Out of the Blue,” Real Clear Defense, June 13.

Posted on Aug.01, 2017 in budget, CRS, Trump Administration by

Trump Budget Would Reduce Most Federal R&D

The Trump Administration budget request would cut federal spending on research and development in every major agency except for the Department of Defense and Veterans Affairs, the Congressional Research Service said yesterday in a new report.

“Nearly every federal agency would see its R&D funding decrease under the President’s FY2018 request compared to their FY2016 levels,” the CRS report said.

“The largest declines (as measured in dollars) would occur in the budgets of HHS (down $6.099 billion, 18.9%), DOE (down $1.809 billion, 11.9%), USDA (down $666 million, 25.1%), NSF (down $639 million, 10.6%), and the EPA (down $239 million, 46.3%).”

Federal R&D is generally understood to provide support for scientific, medical, military and other research of economic, social, security or other value that would not normally be undertaken by the private sector. Reducing R&D therefore means foregoing the benefits that might otherwise accrue from such investment.

CRS noted that the Trump budget request is “largely silent” on funding for existing multiagency R&D initiatives such as the National Nanotechnology Initiative, Networking and Information Technology Research and Development program, U.S. Global Change Research Program, Brain Research through Advancing Innovative Neurotechnologies (BRAIN) initiative, Precision Medicine Initiative, Cancer Moonshot, Materials Genome Initiative, National Robotics Initiative, and National Network for Manufacturing Innovation. The future of these programs, some of which have a statutory basis, is left uncertain in the Administration budget request.

However, the budget request is the first word, not the last word, in the budgeting process.

“Congress may opt to agree with none, part, or all of the request, and it may express different priorities through the appropriations process,” CRS said. “In particular, Congress will play a central role in determining the allocation of the federal R&D investment in a period of intense pressure on discretionary spending.”

See Federal Research and Development Funding: FY2018, July 31, 2017.

Other new or updated reports from the Congressional Research Service include the following.

Bail: An Overview of Federal Criminal Law, updated July 31, 2017

The Federal Communications Commission: Current Structure and Its Role in the Changing Telecommunications Landscape, updated July 28, 2017

Ongoing Section 232 Steel and Aluminum Investigations, CRS Insight, July 28, 2017

In Brief: Highlights of FY2018 Defense Appropriations Actions, July 31, 2017

NAFTA and Motor Vehicle Trade, July 28, 2017

Rwanda’s August 4 Presidential Election, CRS Insight, July 31, 2017

Honduras: Background and U.S. Relations, updated July 28, 2017

U.S. Petroleum Trade with Venezuela: Financial and Economic Considerations Associated with Possible Sanctions, CRS Insight, July 27, 2017

Afghanistan: Post-Taliban Governance, Security, and U.S. Policy, updated July 24, 2017

Posted on Jun.19, 2017 in budget, Declassification, Intelligence by

Intelligence Budget Requests for FY2018 Published

The Trump Administration requested $57.7 billion for the National Intelligence Program in Fiscal Year 2018, up from a requested $54.9 billion in FY 2017.

The Administration requested $20.7 billion dollars for the Military Intelligence Program in FY 2018, up from a requested $18.5 billion in FY 2017. (The amounts actually appropriated in FY 2017 have not yet been disclosed.)

The intelligence budget request figures were published last week by the Office of the Director of National Intelligence and by the Department of Defense.

The annual disclosure of the requested amount for the National Intelligence Program was mandated by Congress in the Intelligence Authorization Act for FY 2010. So disclosure is required regardless of the preferences of the current Administration. “As directed by statute,” wrote DNI Dan Coats this year in advance of his confirmation hearing, “I will ensure that the public release of figures representing aggregate funds requested by and appropriated for the IC is completed annually.”

Interestingly, however, there is no corresponding statutory requirement for disclosure of the requested amount for the Military Intelligence Program. The practice of voluntarily disclosing the MIP budget request was initiated by Gen. James R. Clapper when he was Under Secretary of Defense (Intelligence).

“I did that,” said then-DNI Clapper in December 2015. “I thought the public had a right to know.”

Posted on Apr.03, 2017 in budget, CRS by

The Trump Defense Budget Proposals, and More from CRS

Would the Trump Administration’s defense budget proposals comply with the current Budget Control Act limits on defense spending?

“No,” answered the Congressional Research Service CRS in a new report, which was authored by CRS specialist Pat Towell and analyst Lynn M. Williams. See The Trump Administration’s March 2017 Defense Budget Proposals: Frequently Asked Questions, April 3, 2017.

Other new and updated reports from the Congressional Research Service include the following.

The War Powers Resolution: Concepts and Practice, updated March 28, 2017

FY2017 Defense Appropriations Fact Sheet: Selected Highlights of H.R. 5293, S. 3000, and H.R. 1301, updated March 28, 2017

The Committee on Foreign Investment in the United States (CFIUS), updated March 31, 2017

The Army’s Sustainable Readiness Model (SRM), CRS Insight, March 31, 2017

Votes on Measures to Adjust the Statutory Debt Limit, 1978 to Present, updated March 30, 2017

Keystone XL Pipeline: Development Issues, CRS Insight, March 30, 2017

Expiring Funds for Primary Care, CRS Insight, March 30, 2017

Overview of CEQ Guidance on Greenhouse Gases and Climate Change, CRS Insight, updated March 30, 2017

The Civil Service Reform Act: Due Process and Misconduct-Related Adverse Actions, March 29, 2017

A Brief Overview of Rulemaking and Judicial Review, updated March 27, 2017

Major Disaster Assistance from the Disaster Relief Fund: State Profiles, updated March 29, 2017

Sub-Saharan Africa: Key Issues, Challenges, and U.S. Responses, March 21, 2017

Libya: Transition and U.S. Policy, updated March 29, 2017

Afghanistan: Post-Taliban Governance, Security, and U.S. Policy, updated March 28, 2017

Burma’s Political Prisoners and U.S. Policy: In Brief, March 30, 2017

Iran Sanctions, updated March 31, 2017

China Naval Modernization: Implications for U.S. Navy Capabilities — Background and Issues for Congress, updated March 29, 2017

Posted on Mar.21, 2017 in budget, CRS by

Talking About the Defense Budget, and More from CRS

The U.S. defense budget is comprised of several distinct components, including “base” and supplemental spending, nuclear weapons expenses, veterans benefits, and other defense-related costs.

When discussing “the defense budget,” it is therefore important to specify what is being described. Depending on what is included or excluded, “total” U.S. defense spending each year can vary by hundreds of millions of dollars.

This definitional question is neatly illustrated in a new graphic from the Congressional Research Service. See How People Talk About the FY2017 National Defense Budget.

Other new and updated publications from the Congressional Research Service include the following.

Defense Primer: The National Defense Budget Function (050), CRS In Focus, March 17, 2017

Defense Primer: DOD Contractors, CRS In Focus, February 10, 2017

Defense Primer: Procurement, CRS In Focus, February 10, 2017

Military Transition Assistance Program (TAP): An Overview, CRS In Focus, March 15, 2017

Supreme Court Appointment Process: Consideration by the Senate Judiciary Committee, updated March 17, 2017

Turkey: Background and U.S. Relations in Brief, updated March 17, 2017

Sanctuary Jurisdictions and Select Federal Grant Funding Issues: In Brief, March 16, 2017

The Decennial Census: Issues for 2020, March 16, 2017

A Survey of House and Senate Committee Rules on Subpoenas, updated March 16, 2017

Medicare Primer, updated March 16, 2017

Pending ACA Legal Challenges Face Uncertain Future, CRS Legal Sidebar, March 16, 2017

Statutory, Average, and Effective Marginal Tax Rates in the Federal Individual Income Tax: Background and Analysis, March 16, 2017

Should the U.S. Trade Deficit be Redefined?, CRS Insight, March 17, 2017

Moving On: TPP Signatories Meet in Chile, CRS Insight, March 16, 2017

Navy Lasers, Railgun, and Hypervelocity Projectile: Background and Issues for Congress, updated March 17, 2017

Navy Aegis Ballistic Missile Defense (BMD) Program: Background and Issues for Congress, updated March 17, 2017

Navy John Lewis (TAO-205) Class Oiler Shipbuilding Program: Background and Issues for Congress, updated March 17, 2017

Navy Ford (CVN-78) Class Aircraft Carrier Program: Background and Issues for Congress, updated March 16, 2017

Posted on Feb.02, 2017 in budget, classification, Intelligence by

Spy Satellite Agency: Winter is Here

The National Reconnaissance Office (NRO) has modified its classification policies in favor of heightened secrecy, withholding budget records that were previously considered releasable and redesignating certain unclassified budget information as classified.

NRO is the U.S. intelligence agency that builds and operates the nation’s intelligence satellites.

Since 2006, and for most of the past decade, the NRO has released unclassified portions of its budget justification documents in response to requests under the Freedom of Information Act.

But in a January 23, 2017 letter, the NRO said it would no longer release that unclassified budget information, which it now deems classified.

“The NRO has determined that a series of unclassified items in the [FY 2016 budget justification] document in the aggregate reveals associations or relationships not otherwise revealed in the unclassified items individually; thus, in the aggregate, this information meets the standard for classification under E.O. 13526 Section 1.7(e),” wrote Patricia B. Cameresi, NRO FOIA Public Liaison, in her FOIA denial letter.

As a purely technical matter, the latter claim is probably a misreading of the Executive Order, which states in Section 1.7(e):

“Compilations of items of information that are individually unclassified may be classified if the compiled information reveals an additional association or relationship that:  (1) meets the standards for classification under this order; and (2) is not otherwise revealed in the individual items of information.”

Properly understood, the fact that various unclassified items reveal additional information in the aggregate does not mean that those items meet the standard for classification. That requires a separate determination which, in any case, is discretionary. Classifying compilations of unclassified budget information is a threshold which was never crossed in the past and which has not been explicitly justified by NRO here.

The NRO also invoked a statutory exemption in 10 USC 424, which says that NRO (along with DIA and NGA) cannot be compelled to disclose “any function” at all.

The upshot is that the NRO is abandoning the budget disclosure practices of the past decade, and is positioning itself to withhold anything and everything that it prefers not to release.

An administrative appeal of the NRO FOIA denial was filed yesterday.

Posted on Dec.19, 2016 in budget, CRS by

Structure of the DoD Research Budget, & More from CRS

Nearly half of all federal research and development dollars go to the Department of Defense, a new report from the Congressional Research Service observes. The Pentagon research budget is more than twice that of the next largest recipient, the Department of Health and Human Services.

The structure of the DoD research budget, which has “its own unique taxonomy,” is described in the new CRS report. See Department of Defense Research, Development, Test, and Evaluation (RDT&E): Appropriations Structure, December 13, 2016.

Other new and updated reports from the Congressional Research Service include the following.

Military Construction: Process and Outcomes, December 14, 2016

Women in Combat: Issues for Congress, updated December 13, 2016

Agency Final Rules Submitted on or After June 13, 2016, May Be Subject to Disapproval by the 115th Congress, CRS Insight, updated December 15, 2016

Renewable Energy and Energy Efficiency Incentives: A Summary of Federal Programs, updated December 14, 2016

Renewable Identification Numbers (RINs) and Renewable Fuel Standard (RFS) Compliance, CRS Insight, December 14, 2016

The Renewable Fuel Standard (RFS): In Brief, updated December 14, 2016

NASA: FY2017 Budget and Appropriations, updated December 13, 2016

Noncitizen Eligibility for Federal Public Assistance: Policy Overview, updated December 12, 2016

The First Day of a New Congress: A Guide to Proceedings on the House Floor, updated December 13, 2016

The First Day of a New Congress: A Guide to Proceedings on the Senate Floor, updated December 13, 2016

Department of Education’s Withdrawal of Its Recognition of ACICS as an Accrediting Agency, CRS Insight, December 14, 2016

Cyprus: Reunification Proving Elusive, updated December 15, 2016

Latin America: Terrorism Issues, updated December 15, 2016

U.S. International Broadcasting: Background and Issues for Reform, updated December 15, 2016

Posted on Oct.31, 2016 in budget, Intelligence by

Intelligence Spending Increased in 2016

The amount of money appropriated for U.S. intelligence increased in 2016 by about 5 percent to a total of $70.7 billion, up from $66.8 billion the year before.

The total includes FY 2016 appropriations for both the National Intelligence Program (NIP) and the Military Intelligence Program (MIP), which were officially disclosed on October 28, as they have been each year since 2007.

Opponents of intelligence budget disclosure had argued for decades that release of the total budget figures would lead inexorably to further uncontrolled disclosures.

In 1976, former Director of Central Intelligence James Schlesinger told the Church Committee that “One of the problems here is the camel’s nose under the edge of the tent, and I think that that is the fundamental problem in the area. There are very few people who can articulately argue that the publication of those [budget] figures in and of themselves, if it stopped there, would be harmful. The argument is that then the pressure would build up to do something else, that once you have published for example the… budget, that the pressures would build up to reveal the kinds of systems that are being bought for that money, and it is regarded as the first step down a slippery slope for those who worry about those kinds of things.”

But that concern about a “slippery slope” appears to have been refuted in practice, and — aside from unauthorized disclosures — additional budget secrets have been effectively preserved.