America's Black Budget

Introduction

The United States government has operated a secret budgeting and spending program for decades outside the framework of the American Constitution. The institutional and political roots of this system of clandestine finance reach back at least a century. The turn of the 19th and 20th centuries saw the consolidation of American industry and banking under the control of a restrictive cartel that for all practical purposes assumed control of the economy. The great magnates of American industry and finance in the late nineteenth century were superb practitioners of covert operations. Witness to this fact are the institutions set up during the twentieth century through which their descendants maintain control.This paper is a summary of the structure of the American political economy which fits the facts better than the official model. Officially, American capitalism is characterised by democracy, opportunity, self-improvement, open and free markets, and constructive regulation for the public good, in short, happiness.

Under this construct America has never fought a war of aggression and harbours no designs to do so. Its leaders have the nation's interests at heart, and its politicians listen to their constituencies. The truth is different. Why the United States is so widely misunderstood is due in part to a controlled educational system and media. As the system evolved over the decades, time lent it legitimacy spanning the political spectrum. Gustavus Meyers, author of the seminal work History of the Great American Fortunes and no panegyrist, believed - following Marx as did many on the left - that the consolidation of American industry was inevitable and that the men who accomplished it were acting their part in a predetermined historical evolution. Once monopoly control had been achieved, the proletariat would rise and its dictatorship would begin. We shy away from such determinism; nothing happens but as a consequence of what men do and choose to do. If Meyers were alive today, he would still be waiting.

***********Black Budget? What Black Budget?

At the time of the attack on the World Trade Center and the Pentagon in September 2001 according to the Government Accounting Office (GAO), the Pentagon had incurred $3.4 trillion of "undocumentable transactions," that is to say that there were $3.4 trillion worth of financial transactions for which there was no discernible purpose. The day before the attack, Secretary of Defense Donald Rumsfeld warned that the lack of control over its budget was a greater danger to the national security of the United States than terrorism. After the attacks, the government stopped publicly disclosing information about "undocumentable transactions".

Blame the Bookkeeper

The problem is not restricted to the Pentagon but affects the entire spectrum of government agencies and departments from the Bureau of Indian Affairs to the Defense Department. For a number of years the GAO has compiled a parallel set of books for the Federal Government called the Financial Report of the United States. This report attempts to impose "Generally Accepted Accounting Principles" to the government's financial reporting process in order to give a clearer picture of the government's actual assets and liabilities and thereby enable better planning. Neither the Pentagon nor the Department of Housing and Urban Development (HUD), to name just two, have ever been able to pass a GAO audit on this basis.

Significantly, the government does not employ double entry bookkeeping in the preparation of its accounts. This has been standard accounting practice since the seventeenth century, which classifies and tracks sources and uses of funds to create an accurate picture of a business (or public) enterprise. Today the Pentagon utilises no accountable means of tracking money authorised by Congress from its initial authorisation to its use, say in developing a fighter plane. Running a 21st century military machine using antique accounting methods is an anomalous situation with interesting implications, not least of which is that government agencies cannot, or will not, explain what they are doing with the money that is appropriated for their operations by Congress.

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