talks about his new book on the future of the progressive movement, followed by a conversation with former president barack obama and former secretary of state james baker, talking about their time in public service and the role of u.s. leadership abroad. on c-span3, the senate armed services committee hosts a hearing review and recommendations from the committee on national defense strategy. in the afternoon, a senate commerce subcommittee meeting with the commissioners of the federal trade commission. >> c-span, where history unfolds daily. in 1979, c-span was created as a public service by america's cable-television companies. today we continue to bring you unfiltered coverage of congress, the white house, the supreme court, and public policy events .c. and around d

the country. c-span is brought to you by your cable or satellite provider. each week in this segment, we like to look at how your money is at work in a different federal program. this week, we are >> we are joined by todd harrison to talk about the long-awaited audit of the department of defense, an audit butdod technically failed, they said they expected to fail it. why? guest: this is something the d.o.d. has been working on for more than a decade, trying to get ready for an audit. believe it or not, this is progress that they failed because that means they got through the process of doing the audit in order to find all of the deficiencies. now, as expected, i think i was on the show in march talking about how they will almost certainly fail the audit.

now, they have a list of corrective actions they need to take. they will go back and clean up the accounting processes and inventories and have a go at it again next year. host: as i understand it, all other federal agencies are subject to audits. why has it taken so long for the pentagon? guest: because the pentagon is a massive organization in the federal government. $716 billion a year flows through the pentagon. that is more than any other government agency. it employs more people than any other part of government. it has more property around the world. it has more than $1 trillion of real property, assets, in buildings and land around the world. it was not built on the accounting systems -- the deity accounting systems -- the d.o.d. accounting systems were not built to meet auditing systems. they have had to retrofit with modern-day accounting systems. host: how did they do this?

how many people were needed to conduct the audit? how many sites did they visit to do this? guest: hundreds of people. we don't have the full list of where they went to visit. in a standard audit, you don't check every line item. you just spot check. we know it cost over $900 million to do the audit and work with the corrective activities just in fiscal year 2018. over $9 million. that will continue in 2019, 2020, and going forward. of $1l be spending short billion a year trying to get the d.o.d. up to the standards where it can pass an audit. as we go through the process, inviting your phone calls. todd harrison with us until the top of the hour. republicans, independents.

a special line for active and retired military. we would especially like to hear from you this morning. as folks are calling in, the good, the bad, the ugly. what was the good found? guest: i think the good is they made it far enough through the process that they could complete an audit. i think that is the biggest win out of this for the pentagon. there were a number of items they found. we don't have all the details yet where they need to take corrective action. there is still a lot of work to be done. d.o.d.re pockets within i believe the national carson's office which is highly , so weied what they do don't know the details of what they do, but they are able to pass a clean audit. host: this cost $900 million to do. are we reaping rewards in terms of money saved down the road? guest: there are pockets where

-- like the defense logistics agency, they were overestimating what things were going to cost. when they did the audit, they realized they could lower sim internal cost estimates so they don't have to charge much overhead to other agencies. the purpose of an audit is not to generate cost savings. the purposes accountability. no one should expect the audit itself is going to save a lot of money. they feel we say this audit, what his failure and what does it take to get to passing? failing is when you do not meet the general accounting standards for passing an audit. you are not able to show possibility from appropriation to win it is spent at the lowest level and be able to track how the money was spent over time at the most detailed level.

if you cannot do that, you will not pass an audit. host: how long did this take? guest: they spent a year working on it. host: is the next one want to take as long? guest: i believe it will. host: the next one coming amid a new budgeting season. here is a story from the "wall street journal" about it. president trump has proposed by percent cuts for agency budgets. this came as the d.o.d. was preparing its budget for next year. i understand $733 billion was the estimated budget of the d.o.d. before the cut. including that cut, they would have to find $33 billion worth of savings. how will the pentagon do that? will they do that? guest: it remains to be seen. all we are talking about is what the trump administration will request for the budget for 2020. will it be $733 or will they have to cut it back to $700?

ultimately, congress will decide . you will not cut $33 billion by finding savings. you will have to reduce the size of the force or cut back on training, maintenance, or weapons procurement. host: if they have to go to the $700 billion number, what do they go to? guest: i think they spread across all of these. i think the cuts will is proportionally fall on modernization programs. host: which ones in particular? guest: i imagine they will buyad the pain around and fewer fighter jets, maybe delay the start of programs or stretch out the schedule. this administration has made it a priority to rebuild readiness, so i don't think they want to cut back on training. part of readiness is maintenance

of equipment. i think they will not do that much to cut back on maintenance if they can avoid it. the administration has proposed growing the size of the military so i don't think they will cut back on the size of the force. i expect modernization programs to take the brunt of the reduction. this is far from a than deal -- done deal. it is not clear that is what the administration will request or what congress will appropriate. host: todd harrison is our guest today to talk about the pentagon failing the audit. john is first on the line for retired military, from louisiana, republican, go ahead. caller: i was a tactical flying squadron commander here at

barksdale air force base in the late 1980's. we had an audit one-time. the audit was about travel. 155 people in the military that are aircrew members travel a lot. they said here is how much money was spent. we want you to account for it. the paperwork is monumental. we fill out a travel voucher. when it comes back, that reconciles it. but there is no requirement for anybody to keep these things. we did not keep them in our squadron. somewere kept at godforsaken vault in washington. yet i was supposed to come up with the answer of where did all the money go. i happened to be one of those people that keeps those things so i brought out the stack of things and handed them to the auditor. after about two days, he came back and said we can't do this. this is the auditor, individual sent to do the audit on a small

slice of the squadron, me, realized in three days what he was trying to do was impossible. so i cannot imagine how they ,ould apply these techniques these auditing techniques, it was very enlightening for me because i did not understand what an auditor did in the first place. it was mind-boggling. how they can do that, no wonder they flunked that. i would be interested to take a poll of every one of those auditors. host: thanks for sharing your story. guest: that highlights the difficulty of auditing organization like the pentagon. modern systems that businesses use, you keep a lot of records electronically so it is easier

to sort through them and find what you are looking for. keep in mind these basic auditing standards like being able to go down and verify where all the travel money was spent, was it spent appropriately, that is what businesses do all the time. if they can pass audits like this, d.o.d. should be able to pass an audit. they say graftr, is an integral part of the system and an audit lets them spend more money. did they find fraud and abuse in the system? guest: i am not aware of any fraud the audit uncovered. that is not to say there is not. scandals come out from time to time for fraud, waste, and abuse. that is a crime. it is investigated and prosecuted to the full extent of

the law. scandals plenty of like the one in the navy where there was a contractor known as fat leonard who was basically bribing senior officials in the navy to steer business to his company. that was found. people have gone to jail, including fat leonard himself, and a lot of people have been fired from the military because of it. those kinds of investigations will continue. it is possible and audit will find something like that and that becomes a criminal case. the purpose of the audit is the traceability to make sure money is being spent how it is supposed to be spent. host: who is in charge of the audit? the joint chiefs? guest: i believe this is headed by the d.o.d. chief management officer. i believe that position is now changing out so i am not sure who the head is now. host: michigan, mark is an independent. good morning.

hoping theas government would take whatever amount of money the government gives to defend the nation, divide that by five, whatever that base pay is, plus 10%, plus a cost-of-living increase, the theref the institutions, would be four of them, they would divide, they would get 1/5 more than they normally get. they could rotate this. then they can work with the budget that would set a budget tone towards how much money they are trying not to spend or save. host: so i am clear on your math, you want to move some of the pentagon's budgeted money to nonmilitary spending, the other agencies, is that correct? caller: no.

the concept is you have five institutions. muchivide five into how money the system is offering the institution. you divide that by five. you get a number. one of the institutions, the get base pay plus 10%. the rest of the institutions would divide whatever is left over, they would get more than they would normally have gotten. host: i think we got your point, mark. guest: if you look at the d.o.d. budget today, about one third is used for military compensation related costs. about one third is used for operations and maintenance, for training and the upkeep of equipment. another third is used for weapons, for research and development and procurement of weapons systems and other support systems. that is kind of a basic breakdown of it.

in terms of dividing it between the military services. there are five services today. but the coast guard does not fall under duty for the budget. it falls -- under the d.o.d. for the budget. it falls under homeland security. the money is not evenly divided. the navy gets a little more. in recent years has gotten more money because deployments in iraq and afghanistan have fallen on the army. the marine corps is part of the department of the navy budget. there is part of it specifically for the marine corps activities. budget, a large part of that budget is classified pass through money so it does not state in the air force -- stay in the air force. it goes to other classified activities. for: your latest briefing

csis is about the cost of the space force. what are the estimates? guest: i looked at a bottom-up estimate of if you create a space force what it will involve. the vast majority of the funding would be transferred out of already existing today in other services' budgets. most will come from the air force because the air force does most of the space activities today. you would move all of that into a new budget. that is neutral. it does not add overall to the budget. but then you have to add a new headquarters with staff on top for a new service and create a new secretariat staff as well. my estimates were, depending on how large you built the space force, the additional force -- cost is going to be anywhere from $330 million to $550 million. interestingly, that is less than

the cost of the audit. host: if you want to read more on the cost of the space force, csis.org. froms waiting on the phone kentucky on the line for retired military. caller: i am retired united states coast guard. you alluded to the fact we are under the department of homeland security. in regards to the spending of money for budgets, we operate similar to d.o.d. end of fiscalthe years, units were pretty good about spending their money and having accountability for it. but there was a mentality that you had to spend everything you got or you would not get additional money next year or the same amount of funding next year. what we see things,

called fallout, and that was money from higher commands thatrsed to lower commands more or less just needed to be spent. they did not care what it was spent on. it just needed to be spent so they didn't have any money left over at the end of the year. i think they need to look at this mentality. it should not be a bad thing to have money left over at the end of the year. there's nothing wrong with giving it back. guest: you are exactly right. i have observed that myself when i was in the military. that is something congress has been working on quite a bit. the reason this happens is because the way congress appropriates money, it puts time limits on how long you have to spend it. at the end of each year, d.o.d. has money expiring.

if it does not use that money, congress will take note. they will say you asked for too you're probably asking for too much this year so we will give you less. the incentive is to spend money before the end of the fiscal year. congress has started cracking down on this because they know there could be unwise spending to get the money out the door. now congress has put in rules that say you cannot just wait until the end of the year and suddenly spend a huge chunk of your budget. they have milestones. when you get to the end of the third quarter of the fiscal year, you have to have spent 75% or 80% of the money depending on the rules for that year. congress is watching carefully. they are concerned about this. host: you say you saw examples in your time in military. what are some examples? guest: we called it fallout money, a general term. the fiscal year ends on september 30.

at the beginning of september, they would say do you need new furniture or computers? let's order some stuff. we got the money now so let's use it because you may not have it next year. you would try to put in orders of things in september. a lot of the contractors know this, so they will be around saying here is my catalog. here is stuff you can buy. we are on the gsa schedule. host: where did you serve and when did you get out? guest: i was in the air force reserves and got out in 2003. host: the line for active military, josh, north carolina, go ahead. caller: i heard you talk about cutting back on the military. cutting back on personnel. i believe what bleeds d.o.d. the most is private contractors paid to be deployed. i have talked to gentlemen and have heard from them that a

mechanic would be paid $200,000 a year. they would get paid three times what i would in the military. , see a lot of that overspending on that. even with medical supplies, i could buy something that cost $35,000 but a private hospital would only pay $17,000. we are fighting an unfair battle when it comes to spending and complying and not being able to do the fiscal things we are supposed to do responsibly because we have our hands tied behind our backs. guest: great point. contractors the caller was referencing, we generally call these contingency contractors. for a rock and afghanistan, for -- for every -- for iraq and afghanistan, for every troop deployed we generally had another contractor to support

them. they are well paid, highly skilled. they are doing jobs normally done by someone in the military but we did not have the forces to support all of that. very few of them did security-related jobs where they had guns. some did. that made a lot of news with blackwater and some scandals in the 2000's. but the vast majority of these contingency contractors were used for things like maintenance, base upkeep, laundry, food service, things like that. in the past when we had the draft, we would have had draft ees to take these jobs. many contingency contractors are not highly paid. they are third-party nationals. they might come from the philippines or random other places around the world. host: how many of those do we employ on a yearly basis? how does it compare to active

duty numbers? guest: at the peak of iraq and afghanistan, we had a little over 200,000 of these contractors. that has been drastically scaled back. now i think it is north of 10,000 contingency contractors. we are only talking about the ones that get deployed overseas due to contingency operations. there are many other contractors used in the united states for what we call service support contractors. those number in the range of around 800 two one million. we don't keep an exact number. we say we don't buy them by the head, we buy them by the pound. we contract for services. sendany people the company is not necessarily in the contract so we don't have a good headcount. host: jerry, good morning.

caller: good morning. these insane wars and politiciansthat our and the defense industry like to costlyin are extremely in more ways than one. show howudit able to the money is spent? in afghanistan, how is it spent? is it accounted for? do they pull up with planeloads of money that is handed out? is it off-limits? can you even look at it? i would like to know how much money we spend over there. it does not seem like we will ever get out of that place as long as there is money made we will keep going there. i wish the audit which show about how the money is

spent and if we could stop this insanity over there. guest: the audit will look at everything. nothing is off limits in the audit. even classified spending, auditors with the right clearances are able to perform the analysis on those parts of the budget. afghanistan, congress created a special inspector general to look at afghanistan reconstruction efforts. if you want more detail about special, look up some inspector general reports about afghanistan. they have found evidence of improper spending and overspending in afghanistan. they have publicized it and there have been corrective actions taken because of it. that is independent of the audit. that is the inspector general investigations over the years. nita last week, we had

crawford of brown university to talk about the cost of wars since 9/11. the estimate they have come up with is $5.9 trillion. they include not just overseas contingency operations money but also medical and disability care for post-9/11 veterans, future spending on medicare, homeland security spending, and the cost of borrowing. i wonder what your thoughts are on the $5.9 trillion number. guest: you have to keep in mind that includes future spending. they are looking at what we will have to spend in the future for veterans benefits because of injuries and activities during these wars. is $1 trillion. guest: there's a lot of uncertainty in that. but i think it is sobering to look at how much we have spent. if you just look at the direct spending on iraq and afghanistan, it is well over $1

trillion we have spent directly on those conflicts. point, we also are to consider the nonfinancial costs. the opportunity costs. as our military has been focused for almost two decades now on these conflicts in iraq and afghanistan, that has shifted priority away from other threats to national security. we have burned up the readiness of our forces. we have burned up a lot of our equipment. that is not accounted for in the financial costs. that is just opportunity cost. host: about five minutes left with todd harrison. if you want to get your phone call in, now would be a good time to do it. steve is on the line for retired military from gaithersburg. caller: i would like to ask your guest if we have an indication

of the aftermath of the sequester. was there holiday spending to do some catch up? guest: if you look at the d.o.d. budget after the budget control , starting in 2013, the budget dropped significantly. it continued to decline until 2015. then congress has passed budget deals each year that have increased the level of the budget caps, so the budget has started coming back up. in february of this year, congress passed a huge increase in the budget caps for fiscal years 18 and 19. that is what bumped the budget up to where it is today, $716 billion for total national defense. we have seen the budget rebound significantly since the low point in 2015.

did that drive some poor decision-making in the department? it surely did in 2013 because they had to make so many cuts at the last minute. and there was a sequester triggered that year which is an automatic across-the-board cut, so you have to cut every account by a certain percentage. that wreaks havoc on the budget, so it forces a lot of bad decisions like furloughing employees. civilian employees were sent home without pay for six days over the summer of 2013. we had things like the government shutdown that happened. all of these things drive bad decision-making and inefficiency into the system. i have not seen a good accounting of how much that cost us. again, it is more of an opportunity cost. it meant we were spending lots and leadership in d.o.d.

was spending time in budget turmoil trying to fix problems rather than thinking strategically and planning for long-term security of the nation. host: las vegas, independent, go ahead. caller: are we employing mercenaries anywhere? are they part of this budget? guest: it depends on how you define a mercenary. if you mean a contractor that provides security services, then yes. it is not just d.o.d. the state department at times hires contractors to perform security services. i don't think most people would consider them to be mercenaries, per se. but argument could be made for that. host: albert, miami, independent. good morning. caller: great show, great guest. i have a question for mr. harrison. i could have sworn a study came out not long ago that said up to 25% of the d.o.d. budget could not be accounted for.

is that the ballpark this audit revealed? i had another point about the higher-ups and generals, the upper echelon in the military, they don't have much incentives to cut the budget. when they retire, they start working for raytheon and boeing and everyone else. that is the two points i wanted to make. guest: the audit did not come out with a figure that 25% of the budget is unaccountable. there was a prior study by the defense business board, a quasi-independent board made up of business professionals. they performed a study that looked at how much of the pentagon's budget is spent on overhead functions and how much that could be reduced. i believe they found about 25% of the budget was spent on overhead functions. of that, they said you could probably reduce that spending by

about 5%. you multiply that out and that is about $125 billion in potential savings over five years. the caveat is they were applying a blanket savings, we think you could probably cut 5%. they did not identify specific things to cut. that is where it becomes difficult, to try to root out the waste at the detailed level. host: only a minute left. democrats take over the house in january. the ranking member of the armed services committee is expected to be the new chairman of the committee. what will you be watching for? guest: i think there will be a new level of scrutiny of defense activities and programs. i think soon-to-be chairman smith has made it clear there will be much more scrutiny of modernization programs, missile

defense programs. during his reelection campaign, he cannot opposed to the space force on the grounds of it was too expensive. so i think we will see increased scrutiny of that proposal in congress as well. host: plenty more to talk about down the road. todd harrison is the defense budget director >> c-span washington journal live every day with news and policy issues that impact you. coming up this morning, the family research council's and blackwell onken what president trump could face as democrats take over the house. discussing henderson felony voting rights and criminal justice reform. and