The shortfalls have forced carrier air wings to deploy without being fully trained. That may have resulted in pilots missing half the targets on which they dropped laser guided bombs and one in three targets overall in recent combat situations.
The report, completed last April, concluded that, "strike success rates in Iraq and the former Yugoslavia (are) far below those that should be achievable."
The news of the report comes at a time when the issues of America's military readiness and defense spending have surfaced in the presidential race.
The Pentagon said Thursday that most U.S. combat forces are ready to perform wartime missions.
But the inspector general's report claims a link between scarce resources and a decrease in the military's combat effectiveness.
However, while a lack of money is cited as the primary reason for what the report called a declining but still acceptable level of readiness, the inspector general also blamed the Navy for mismanaging or just plain wasting some of the funds it does get.
The report concluded that, "While weapons and tactics have grown more complex and demanding opportunities to train have diminished."
Much of naval aviators' training takes place at what the Navy calls "Strike U.": Fallon Naval Air Station in Nevada. The inspector general said the warplanes in which pilots train at Strike U. do not have up-to-date electronics, and that a shortage of spare parts keeps so many of the planes grounded that the pilots do not get enough flight hours.
In addition, air space restrictions at Strike U. require pilots to drop their bombs much closer to the ground than in real combat.
Also, laser-guided bombswhich cost $25,000 a pieceare so scarce that the first time most Navy pilots get a chance to drop one is in combat, the inspector general found.
As a result, the "Navy experienced less than a 50 percent success rate with laser guided bombs during recent (combat) operations," according to the report.
Overall, when Navy pilots go into combat "strike success rates begin very low", with pilots hitting the target on only one out of every three tries, the report found.
The success rate quickly improves to three hits out of every four tries, but that is what the report called "training in combat", and combat is the last place anyone should train.
The inspector general blamed a "pervasive shortage of money" for the lapses in training and deterioration in pilots' performance.
However, it also determined that many carrier takeoffs and landings, which burn fuel and cause wear and tear, have n operational need other than to set a new record for the most flying hours.
Concerns about the Navy's planesit has 4,108 aircraft in operationaren't new.
In February 1999, a Navy budget document said that "drops in non-deployed readiness" were "most evident in aircraft readiness" and that the budgets in 1999 and 200 added more money for spare parts to try to address the problem.
In the White House's 2001 budget request, the Clinton administration asked for $471.7 billion for the Navy and Marine Corps from 2001-2005.
The Navy's airborne forces aren't the only ones under scrutiny.
The Marines grounded virtually their entire fleet of Harrier Jump Jets in July after determining that a crash in June was caused by a defective main engine bearing.
In late August, the Marines took 165 CH-53E Super Stallion transport helicopters, 198 AH-1W Cobra and 11 MV-22 Osprey tilt-rotor aircraft out of operation for different reasons.
Last year, Army aircraft were grounded 18 times. From January to July this year, there were 31 grounds.
Part of the problem is the age of some of the planes in America's arsenal.
"The average age of most fighters in the Navy, Marine Corps and the Air Force is only a little bit higher today than it was 10 years ago at the end of the Cold War, but over the next five to 10 years, that age is going to increase a lot," defense budget analyst Steven Kosiak said in July.