Inflation doesn’t hurt DOD readiness

Inflation is an issue, to be sure, but when it comes to the Department of Defense it must be put in context. The Pentagon has received massive increases in the past few years, to the point that its budget is now substantially higher than at the peaks of the Korean or Vietnam wars or the height of the Cold War. And unfortunately, much of this money is being wasted due to price gouging on basic items, cost overruns on major weapons systems, and a failure to keep track of expenditures that is an invitation to waste, fraud and abuse.

Cases in point include the Transdigm Group, which has overcharged by as much as 3,800 percent for spare parts, to the tune of $20.8 million in overcharges on just a small sampling of its business dealings with DoD: $13 billion aircraft carriers, and the notorious F-35, which is the most expensive program in the history of the Pentagon and may never be ready for prime time, as documented in a series of analyses by the Project on Government Oversight; and the fact that the Pentagon is the only major federal agency that has never passed an audit.

As an analysis by the Brown University Costs of War Project has pointed out, Pentagon spending has never tracked precisely with inflation. Some years spending exceeds inflation, and some years it lags behind. Furthermore, the items most subject to inflation, like fuel, are a minuscule part of the DoD’s overall budget. The Brown study rightly suggests that higher fuel prices should spur more efficient use of energy, not substantial spending increases. Last but not least, military spending is a unique category that doesn’t mirror the Consumer Price Index. Inflation adjustments for Pentagon programs should be done on a case-by-case basis, not through across-the-board increases. And they should be made in the context of more effective procurement processes that curb price gouging and cost overruns, like recent reforms proposed by Senator Elizabeth Warren (D-MA).