Pentagon Hit on Windfalls by Overestimating Inflation : But Weinberger Credits Good Management

The Pentagon reaped windfalls of up to $50 billion by making inflation predictions that were too high, and then absorbed the money into a “trackless tangle of vast and vanishing funds,” the chairman of the House Armed Services Committee said today.

But Defense Secretary Caspar W. Weinberger said the funds are accounted for and that “good management” helped bring about the savings.

Rep. Les Aspin (D-Wis.) in a speech prepared for delivery on the House floor, said the Reagan Administration has consistently overestimated inflation in preparing the Pentagon budget and “therefore overcompensated for it.”

Aspin said that since 1983, the Pentagon has provided for 30% more inflation in the cost of procuring its major weapons system than it projected for the nation’s economy.

‘It’s Astounding’

“We’re talking about needless appropriations totaling no less than $18 billion and possibly on the order of $50 billion,” Aspin said. “It’s startling that we should be so uncertain about how we throw the taxpayers’ money around and it’s astounding so much money is involved.”

The Pentagon says budget surpluses resulting from lower inflation and better military management practices are regularly reported.

Weinberger drew criticism last week from members of Congress, who have been trying to hammer out a scaled-back 1986 defense spending plan, when he said the Pentagon would have a $4-billion surplus from its 1985 budget.

Source of Satisfaction

Weinberger, appearing on NBC-TV on Sunday, said the latest surplus would normally have been reported later in the year, and added that it “should be a source of considerable satisfaction.”

“For three years now we have managed to make savings--not quite this high--but we have done it because of good management, because we’ve had increased competition and we’re getting a lot better defense for the price,” he said.

Deputy Defense Secretary William H. Taft IV acknowledged today that the savings run into the billions of dollars but insisted, “that’s good news, not bad.”

Testifying before a House Armed Services subcommittee, he attributed the savings to lower inflation rates as well as to “better management” and added, “I think its very regrettable that words like ‘windfall’ or ‘secret’ are being applied to this. It means we get more defense for less money.”

Later, he told reporters that some of the money has been applied to other military programs, with congressional approval.

“Some of it has not been spent and won’t be spent,” he said.

He said those funds will be returned to the Treasury as “a direct saving to the taxpayer.” But he said he didn’t know exactly how much money is involved or how much has been returned to the Treasury.