“October 4th, 2018 was a busy news day…. The only thing that did not make the news was an announcement by a little-known government body called the Federal Accounting Standards Advisory Board—FASAB—that essentially legalized secret national security spending.”
~ Matt Taibbi (Rolling Stone, January 16, 2019)
From fiscal years 1998 to 2015, $21 trillion went missing from the U.S. Departments of Defense and Housing and Urban Development (DOD and HUD). After Catherine and Professor Mark Skidmore published several landmark reports documenting this astounding fact, the government forestalled any further research into the missing money by promulgating, in October 2018, Federal Accounting Standards Advisory Board Statement 56 (“SFFAS 56” or, as we refer to it, “FASAB 56”). FASAB 56 is an administrative policy that essentially lets the government keep secret books in contravention of the federal financial management laws enshrined in the Constitution.
People often ask us, “Why does no one else ever talk about the missing money?” In early 2019, intrepid journalist Matt Taibbi did. After the implementation of FASAB 56, Taibbi not only gained mastery over the complex topics of “classified money-moving” and failed Pentagon audits but wrote two excellent articles about these developments at Rolling Stone (see links below).
Taibbi’s prose is elegant, evocative, and at times, comedic. In his article about SFFAS 56, he wrote,
“I spent weeks trying to find a more harmless explanation for SFFAS 56, or at least one that did not amount to a rule that allows federal officials to fake public financial reports. I couldn’t find one. This new accounting guideline really does mean what it appears to mean…. Add now the possibility of future ‘modifications,’ and the real answer for how big a share of national spending belongs to the intelligence community is probably ‘God only knows.’”
In his subsequent article about the Pentagon’s ridiculous claims that it is unable to manage its books, Taibbi suggested that the “failures” were likely to be cover for “long-tolerated fraud” and “Enron-esque accounting trick[s]”:
“Despite being the taxpayers’ greatest investment—more than $700 billion a year—the Department of Defense has remained an organizational black box throughout its history. It’s repelled generations of official inquiries, the latest being an audit three decades in the making, mainly by scrambling its accounting into such a mess that it may never be untangled. Ahead of misappropriation, fraud, theft, overruns, contracting corruption and other abuses that are almost certainly still going on, the Pentagon’s first problem is its books. It’s the world’s largest producer of wrong numbers, an ingenious bureaucratic defense system that hides all the other rats’ nests underneath. Meet the Gordian knot of legend, brought to life in modern America.”
As we fast-forward to 2025, we would note that DOGE and the Trump Administration have remained utterly silent on the topic of the missing money, nor have they mentioned or taken any steps to reverse FASAB 56, which took effect during the first Trump Administration. Shouldn’t missing trillions and secret books be at the top of any “government efficiency” priority list?
Related:
Racket News (Matt Taibbi on Substack)
Has the Government Legalized Secret Defense Spending?
The Pentagon’s Bottomless Money Pit
Related at the Solari Report:
FASAB Statement 56: Understanding New Government Financial Accounting Loopholes
The Solari Papers #3: Musings on the Department of Defense
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