    [Senate Hearing 109-965]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 109-965

                       WHAT YOU DON'T KNOW CAN HURT YOU:
                  S. 2590, THE FEDERAL FUNDING ACCOUNTABILITY
                          AND TRANSPARENCY ACT OF 2006
    =======================================================================
                                    HEARING

                                   before the

                    FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT
                         INFORMATION, AND INTERNATIONAL
                             SECURITY SUBCOMMITTEE

                                     of the

                                  COMMITTEE ON
                             HOMELAND SECURITY AND
                              GOVERNMENTAL AFFAIRS
                              UNITED STATES SENATE

                           ONE HUNDRED NINTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 JULY 18, 2006

                                   __________

            Available via http://www.access.gpo.gov/congress/senate

           Printed for the use of the Committee on Homeland Security
                            and Governmental Affairs

                                  -------

                         U.S. GOVERNMENT PRINTING OFFICE

    29-512 PDF                 WASHINGTON DC:  2007
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    Washington, DC 20402-0001

            COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                       SUSAN M. COLLINS, Maine, Chairman
    TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
    GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
    NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
    TOM COBURN, Oklahoma                 THOMAS R. CARPER, Delaware
    LINCOLN D. CHAFEE, Rhode Island      MARK DAYTON, Minnesota
    ROBERT F. BENNETT, Utah              FRANK LAUTENBERG, New Jersey
    PETE V. DOMENICI, New Mexico         MARK PRYOR, Arkansas
    JOHN W. WARNER, Virginia

               Michael D. Bopp, Staff Director and Chief Counsel
                 Michael L. Alexander, Minority Staff Director
                      Trina Driessnack Tyrer, Chief Clerk

    FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, AND INTERNATIONAL
                             SECURITY SUBCOMMITTEE

                         TOM COBURN, Oklahoma, Chairman
    TED STEVENS, Alaska                  THOMAS CARPER, Delaware
    GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
    LINCOLN D. CHAFEE, Rhode Island      DANIEL K. AKAKA, Hawaii
    ROBERT F. BENNETT, Utah              MARK DAYTON, Minnesota
    PETE V. DOMENICI, New Mexico         FRANK LAUTENBERG, New Jersey
    JOHN W. WARNER, Virginia             MARK PRYOR, Arkansas

                          Katy French, Staff Director
                     Sheila Murphy, Minority Staff Director
                John Kilvington, Minority Deputy Staff Director
                           Liz Scranton, Chief Clerk

                                C O N T E N T S

                                     ------
    Opening statements:
                                                                       Page
        Senator Coburn...............................................     1
        Senator Collins (ex-officio).................................     3
        Senator Carper...............................................     4

                                   WITNESSES
                             Tuesday, July 18, 2006

    Hon. John McCain, a U.S. Senator from the State of Arizona.......     5
    Hon. Barack Obama, a U.S. Senator from the State of Illinois.....     6
    Gary D. Bass, Ph.D., Executive Director, OMB Watch...............    14
    Eric Brenner, Director, Maryland Governor's Grants Office........    16
    Mark Tapscott, Editorial Page Editor, The Washington Examiner
      Proprietor.....................................................    18

                         Alphabetical List of Witnesses

    Bass, Gary D., Ph.D.:
        Testimony....................................................    14
        Prepared statement...........................................    31
    Brenner, Eric:
        Testimony....................................................    16
        Prepared statement...........................................    47
    McCain, Hon. John:
        Testimony....................................................     5
        Prepared statement...........................................    27
    Obama, Hon. Barack:
        Testimony....................................................     6
        Prepared statement...........................................    29
    Tapscott, Mark:
        Testimony....................................................    18
        Prepared statement...........................................    50

                                    APPENDIX

    Article submitted by Senator McCain from the Washington Post
      dated July 18, 2006............................................    56
    National Taxpayers Union, prepared statement.....................    63

                       WHAT YOU DON'T KNOW CAN HURT YOU:
                          S. 2590, THE FEDERAL FUNDING
                      ACCOUNTABILITY AND TRANSPARENCY ACT
                                   OF 2006

                                  ----------

                             TUESDAY, JULY 18, 2006

                                         U.S. Senate,
                Subcommittee on Federal Financial Management,
            Government Information, and International Security,
                                of the Committee on Homeland Security
                                              and Governmental Affairs,
                                                        Washington, DC.
        The Subcommittee met, pursuant to notice, at 2:31 p.m., in
    room SD-342, Dirksen Senate Office Building, Hon. Tom Coburn,
    Chairman of the Subcommittee, presiding.
        Present: Senators Coburn, Collins (ex-officio), and Carper.

                  OPENING STATEMENT OF SENATOR COBURN

        Senator Coburn. The Federal Financial Management,
    Government Information, and International Security Subcommittee
    of the Homeland Security and Governmental Affairs Committee
    will come to order.
        I would put in this note that we have three stacked votes
    at 3:45, so we are going to try to move through this to not
    delay anyone.
        Two-thousand-six marks the 40th anniversary of the Freedom
    of Information Act, also known as FOIA. The essence of FOIA is
    to give the average citizen access to nearly all government
    documents simply by asking for them, in the hope that with more
    information would come more accountability. But FOIA requires
    government staff to respond to requests for information, and as
    the government has grown through the years, the Act has proven
    woefully inadequate at providing citizens timely and complete
    information on their government.
        Today, the government continues to grow at a tremendous
    pace. We now spend nearly $3 trillion each year to keep it
    running. This includes $460 billion in grants and subgrants,
    $340 billion in contracts, and hundreds of billions of dollars
    more in loans, insurance, and direct payments. With this kind
    of spending, transparency is more important now than it was
    when FOIA was first passed.
        This is why I, along with Senators Obama, Carper, McCain,
    Sununu, and DeMint, have introduced a bill that we believe will
    go a long way towards equipping citizens with the information
    that they need. The Federal Funding Accountability and
    Transparency Act of 2006 (S. 2490) would require the
    Administration to operate a website--that anyone can access for
    free--disclosing every recipient of Federal grants, contracts,
    and loans. This would include how much money was given and for
    what purpose, extending to subcontractors and subgrantees. On
    the issue of tracking subawards, I believe it is vitally
    important to know where the tax dollars are ultimately spent.
    Oftentimes, grants and contracts are given to initial
    recipients, but the money ultimately goes to organizations
    farther down the line. I don't think it is too much for the
    American people to ask that if they are going to supply the
    money, they should know where the money is ultimately spent.
        I like to think of this bill as ``Google for Government
    Spending.'' The concept behind the bill is really quite simple:
    Put information on government spending out there for all to see
    and greater accountability will follow. It will also change
    expectations of those receiving funds that they will know in
    advance that the information will be public.
        This is not a new concept by any means. It was espoused
    first by Thomas Jefferson, who in 1802 had this to say about
    the subject: ``We might hope to see the finances of the Union
    as clear and intelligible as a merchant's books, so that every
    member of Congress and every man of any mind in the Union
    should be able to comprehend them, to investigate abuses, and
    consequently to control them.''
        The Founding Fathers believed in transparency for
    government because even back when budgets were much smaller,
    the possibility of abuse, waste, and malfeasance was just as
    real. But with transparency comes accountability. Those who we
    envision using this information would be everyone from the man
    on the street to the watchdog organizations to media outlets to
    government auditors. The hope of our bill is to harness the
    power of an eager citizenry wanting to know where tax money is
    spent by arming them with information.
        No business or household could operate the way the Federal
    Government does. Every entrepreneur knows that transparent
    accounting and budgeting information is critical to keeping the
    business afloat and knowing the decisions that need to be made.
    I note that our government is not exactly afloat, and maybe the
    shroud of secrecy around how money is actually spent is partly
    to blame.
        Federal agencies have access to money and power often
    without the needed transparency or accountability, and so it is
    not a mystery why abuses occur. Without the level of
    transparency called for in the bill, the potential for waste
    and abuse is enormous. Consider the following examples of
    outrageous spending that we have uncovered:

         Lhalf a million dollars for a Teapot Museum in
    North Carolina;
         Lhalf a million dollars in defense money for the
    Arctic Winter Games--that is money designed to defend this
    country;
         Lhalf a million dollars for the Museum of Glass in
    Tacoma, Washington;
         Lhalf a million dollars for the Fort Dupont Ice
    Arena in Washington, DC;
         Lmore than $2 million for the Appalachian Fruit
    Laboratory in West Virginia; and
         L$5 million for the St. Louis Zoo.

        All at the time that we are running record deficits. It is
    fine that we have done that, but we should be held accountable
    for it.
        Each of these items was buried deep within a report not
    readily accessible to the public or even to Members of Congress
    who had to vote on them. The American public should know that
    its Members of Congress are spending their money on these
    things.
        Some have argued that the government already operates some
    databases and, therefore, this bill is unnecessary. Let's talk
    about some of those.
        For example, the Federal Procurement Data Base, which
    tracks Federal contracts, does not provide details on what
    Federal contractors are doing with the money they get, nor is
    the system very easy to use. Or, again, the Federal Assistance
    Awards Data System, which tracks grants, loans, and other
    awards, while giving more details than FPDS, only provides
    quarterly data and is not searchable. Even the President's
    annual budget to Congress, which gives the most comprehensive
    picture of what the Federal Government spends, is only an
    estimate.
        OMB does not collect this information. Congress does not
    collect this information. Nobody collects this information. The
    bottom line is there is no single source of information
    available to the taxpayers and Members of Congress and the
    auditors explaining where Federal money is spent and there
    should be.
        When I tell people about the bill, the response I usually
    get is, ``You mean, that doesn't already exist?'' Most people
    are astounded to hear that there is not a website available now
    disclosing everyone who gets Federal money. The idea is just so
    common sense that it is hard for anyone to oppose--that is,
    unless they have something to hide.
        As of today, the bill has been endorsed by over 100
    organizations spanning the entire political spectrum and under
    normal circumstances would not be able to agree on much.
    Liberal and conservative organizations have come together
    around this idea of sunshine. If they can agree, so can
    Congress.
        I look forward to hearing from our witnesses today, and I
    want to thank them for what they have done for us thus far.
        I would next recognize the Chairman of our full Committee,
    Senator Collins.
        Senator Carper. Madam Chairman, go right ahead, please.

                  OPENING STATEMENT OF SENATOR COLLINS

        Senator Collins. OK. I know, Mr. Chairman, that you are
    eager to hear from our witnesses, so I am going to just make a
    few comments.
        First, I want to applaud your leadership, Senator Carper,
    Senator McCain, and Senator Obama, for introducing this bill.
    It is astounding in this age of the Internet that we do not
    already have an easily accessible, searchable web-based site
    that the taxpayer can go to to see how our money is being
    spent. And I think your proposal will increase accountability.
    As you have often said, transparency is the first principle of
    accountability. If people have no idea how their tax dollars
    are being spent, then it is very difficult for them to hold us
    all accountable. So I think this is an excellent concept.
        I have been working very closely with you to refine the
    bill, and I want to give you my personal commitment to moving
    this bill out of Committee as soon as possible.
        Thank you for your leadership.
        Senator Coburn. Thank you, Madam Chairman. Senator Carper.

                  OPENING STATEMENT OF SENATOR CARPER

        Senator Carper. I have a statement I would like to give. I
    want to refrain from doing so until we have heard from our two
    witnesses.
        Mr. Chairman, you quoted our third President, and just
    sitting here, Senator Collins, I just thought, we heard a quote
    from our third President. It is possible in this first panel we
    may have a future President, maybe two future Presidents, to
    tell us why this is such a good piece of legislation.
        I have heard Senator McCain say that in the United States,
    everybody is assumed to be running for President unless--what
    is it? You are indicted?
        Senator McCain. Unless you are under indictment or
    detoxification, you automatically consider yourself a candidate
    for President.
        Senator Carper. I consider that Senator Obama throwing his
    hat in the ring as well. [Laughter.]
        I am going to hold off. One thing I would say--you quoted
    Thomas Jefferson. One of the things that--I think it was
    Jefferson who said, ``If the people know the truth, they will
    not make a mistake.'' And I really think this is what it is
    about, trying to make sure that the folks around this country
    know the truth, and if they do, they and hopefully we will not
    make a mistake.
        And with that having been said, maybe I can give the rest
    of my statement once we have heard from our witnesses. But to
    our colleagues, Senator McCain and Senator Obama, it is great
    to see you sitting side by side, and it is good to hear from
    you.
        Thank you.
        Senator Coburn. Let me first recognize Senator McCain. He
    is known by his reputation as being one of the lone voices in
    the Senate championing the cause of fiscal restraint and his
    crusade against earmarks. His support of this bill is vital,
    and he recognizes its importance to us as a Nation to control
    spending that otherwise is out of control.
        I have had the great pleasure of working with Senator Obama
    on many issues in a bipartisan fashion to make government
    spending more transparent, more accountable, and, therefore,
    doing the proper job of oversight which we are entrusted with.
    I am delighted to be working together with him on this bill,
    and I thank both of our Senators for being here, and I would
    recognize Senator McCain first, and then following that,
    Senator Obama.

    TESTIMONY OF HON. JOHN McCAIN,\1\ A U.S. SENATOR FROM THE STATE
                               OF ARIZONA

        Senator McCain. Thank you very much, Mr. Chairman, and I
    want to thank you, Senator Obama, Senator Carper, and Chairman
    Collins for your involvement in all these issues, and including
    this specific one.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Senator McCain appears in the
    Appendix on page 27.
    ---------------------------------------------------------------------------
        Mr. Chairman, I am going to make my remarks brief because
    some of it would be repetitious from what you and Senator
    Collins already said, so I would ask that my complete statement
    be made part of the record.
        Senator Coburn. Without objection.
        Senator McCain. I will summarize by saying, as you
    mentioned, Mr. Chairman, this bill would create a searchable
    database, available to the public at no cost, that lists each
    entity receiving Federal funding. It would show the amount of
    Federal funds the entity received in each of the last 10 fiscal
    years, an itemized breakdown of each transaction, the location
    of the entity, and a ``unique identifier'' for the entity and
    its parent entity. They would be very important, all of those
    provisions, Mr. Chairman.
        I think critics of this bill have suggested that the
    requirements are too burdensome and that it would be too costly
    and take too much work to collect and post this data. I do not
    buy that argument, Mr. Chairman. In fact, if you looked at--and
    I know you did--the front page of this morning's Washington
    Post--and if you don't mind, I would just quote briefly from
    it: ``On a clear, cold morning in February 2003, Nico de Boer
    heard what sounded like a clap of thunder and stepped outside
    his hillside home for a look. High above the tree line, the 40-
    year-old dairy farmer saw a trail of smoke curling across the
    sky--all that remained of the space shuttle Columbia.
        ``Weeks later, de Boer was startled to learn that he was
    one of hundreds of East Texas ranchers entitled to up to
    $40,000 in disaster compensation from the Federal Government,
    even though the nearest debris landed 10 to 20 miles from his
    cattle.
        ``The money came from the U.S. Department of Agriculture as
    part of the Livestock Compensation Program, originally intended
    as a limited helping hand for dairy farmers and ranchers hurt
    by drought.'' By drought. ``Hurriedly drafted by the Bush
    Administration in 2002 and expanded by Congress the following
    year, the relief plan rapidly became an expensive part of the
    government's sprawling system of entitlements for farmers,
    which topped $25 billion last year.''
        Mr. Chairman, the important point--and I would ask that
    this entire article be made part of the record.\2\
    ---------------------------------------------------------------------------
        \2\ The article referred to appears in the Appendix on page 56.
    ---------------------------------------------------------------------------
        Senator Coburn. Without objection.
        Senator McCain. But the interesting thing is sometimes you
    and I are derided because we talk about $75,000 for the
    Cowgirls Hall of Fame, $50,000 for this. Mr. Chairman, this was
    $1.2 billion that were given to cattle ranchers even if the
    debris from the space shuttle landed 20 miles away from the
    place where their cattle were kept.
        Now, how did we find out about it? Because there were some
    enterprising reporters who dug it up, who found it out. I did
    not know about it. I doubt if any of us here knew about such a
    program. And so why don't we have a way that people, average
    citizens, would know about the program? That is the question
    about these incredible excesses. The only way I think, Mr.
    Chairman, as Senator Collins mentioned, the first step is
    transparency. And I believe that your proposal needs to be
    enacted. It needs to be enacted quickly.
        As you know, Mr. Chairman, in 1994, there were 4,126
    earmarks. In 2005, there were 15,877. The list goes on.
        Finally, Mr. Chairman, a recent editorial in the Tennessean
    stated, ``Congress needs to open up and shed light on its
    business in many ways. With an accessible database of grants
    and contracts, the public may see spending it despises, and it
    may see spending that it approves of, down to the last penny.
    The only reason to oppose compiling the information for public
    use is if the government has something to hide.''
        I thank you, Mr. Chairman, and I want to again thank the
    bipartisanship that is associated with this bill, including
    Senator Carper and Senator Obama. I thank you, Mr. Chairman.
        Senator Coburn. Thank you, Senator McCain. Senator Obama.

      TESTIMONY OF HON. BARACK OBAMA,\1\ A U.S. SENATOR FROM THE
                           STATE OF ILLINOIS

        Senator Obama. Thank you very much, Mr. Chairman, Senator
    Carper, and Senator Collins. It is a great privilege to be
    testifying with Senator McCain, who has worked so tirelessly in
    shedding light on some of the problems that we have seen here.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Senator Obama appears in the Appendix
    on page 29.
    ---------------------------------------------------------------------------
        I want to personally thank Senator Coburn, who I think has,
    since he and I entered the Senate at the same time, been a
    constant thorn in the side of those who want to waste our
    money. It has been a pleasure to work with him consistently.
        Senator Collins has done terrific work on the Governmental
    Affairs Committee, and so I am really appreciative that you
    have taken an interest in this bill, and I think your support
    makes all the difference.
        And, Senator Carper, thank you for your outstanding work on
    it as well.
        This year, the Federal Government will spend about $2.7
    trillion. The overwhelming share of this spending will go to
    fulfill America's commitments and to support our public
    priorities. So not all money in the Federal Government is
    waste. A lot of it is good spending. We have a whole bunch of
    seniors who are going to be getting their Social Security
    checks on time, as they should. We depend on government
    spending to ensure our national defense, our homeland security,
    to safeguard our environment, to help our children receive a
    quality education, provide an adequate safety net for our
    seniors and the poor. So I strongly believe that much of the
    money that we spend here is well spent.
        But as Senator McCain pointed out, if even a small
    percentage of Federal spending is wasteful or lost to fraud or
    abuse, we should be concerned. Unfortunately, based on what I
    have seen in my relatively short time in the Senate, we are not
    talking about a small percentage of waste, fraud, and abuse. It
    is unacceptable, particularly at a time when this country's
    most vulnerable citizens need to see government at its best, at
    a time when we are running up the credit card for our children
    and our grandchildren, to be wasting money. But I think all of
    us have seen evidence just from reading the papers every day
    that waste is taking place.
        It is embarrassing to hear about the government paying 15
    times more than the market price for plastic tarps to cover
    damaged roofs in New Orleans, or paying five times too much for
    debris removal or contracting with vendors for ice or
    transportation services who do not have the relevant equipment
    or experience.
        How can we expect the American people to have confidence in
    us when they hear about overcharging and overpayment, when they
    hear about pork-barrel projects like the ``Bridge to Nowhere,''
    when they hear about money being wasted on frivolous expenses?
    How can we expect them to have confidence when the
    Administration and Congress seem unwilling or unable to hold
    people accountable?
        Now, remarkably, as Chairman Coburn and I have discovered,
    it is often not possible to get good information about Federal
    grants and contracts, even when you are a U.S. Senator. There
    are several different databases of Federal spending
    information, and some who have opposed or expressed doubts
    about this legislation have suggested that it would be
    duplicative of existing databases. But the fact is that all
    these databases work differently. They are all incomplete.
    There is no way to see the full picture of government spending,
    and they are extraordinarily hard to access, even for
    professionals whose job it is to monitor Federal spending. It
    is certainly difficult for the average citizen. And the lack of
    transparency over the use of Federal resources is, to my mind,
    and I know to the minds of Senator McCain and all of you,
    unacceptable.
        If we, as Senators, cannot get this information, we can be
    sure that the American people know even less. And the fact of
    the matter is that the taxpayers have a right to know how the
    Federal Government is managing its fiscal resources. We have
    the right to insist upon answers to reasonable questions about
    where and how our tax dollars are used.
        Let me just make a few more points. This is not a partisan
    issue, as reflected by the sponsorship of this bill. Every
    single dollar that is wasted is a dollar that cannot be used
    for reducing the deficit, investing in health and education, or
    eliminating child poverty. So I think it is important for us to
    realize that whatever our priorities, whether Republicans or
    Democrats, those priorities are compromised and shortchanged
    when Federal funds are not prudently managed. It also should
    not matter whether you think that government ought to spend
    more money or less money. We can all agree that we should spend
    money efficiently and transparently. Democrats and Republicans
    can all agree that wasteful spending is unacceptable, whether
    it is by FEMA or HUD or DOD or any other Federal agency, and
    one of the pleasures that I have had in working with Senator
    Coburn and Senator McCain, observing the work they do on the
    floor, is that sometimes it is our own favorite agencies that
    need to be taken to task. And I think that is important.
        So the first step in solving this problem has already been
    mentioned. It is shining a little light on the issue. And to
    me, at least, this should be a no-brainer. If government
    spending cannot withstand public scrutiny, then the money
    should not be spent. If a government agency is not willing to
    be held accountable for the grants or contracts it awards, then
    that agency should not have control over Federal resources.
        Now, it is important to emphasize, because I have heard
    this argument as well, and I am trying to anticipate a few,
    because I know our time is short, that transparency by itself
    is not enough, but it is necessary. It may not be sufficient,
    but it is an important place to start. Transparency would not
    have stopped FEMA from spending $880 million on temporary
    housing trailers that are now sinking and rusting away in
    Arkansas. Transparency by itself would not have prevented
    Federal relief monies from being used to perform sex change
    operations or to take Caribbean vacations. But transparency is
    a prerequisite to oversight and financial control. And my sense
    is that once agencies get a sense that somebody is watching
    them and the taxpayers are watching them, they start asking
    some tougher questions before money is spent.
        So, in closing, Mr. Chairman, I just want to thank you for
    your extraordinary leadership on this issue. I think that
    anybody who doubts that this is a sensible proposition should
    take a look at the enormous spectrum of support that this bill
    has generated. I rarely have seen so many editorials from such
    diverse outlets and such diverse organizations as on this
    issue. So I think it is time for this bill to pass the Senate.
    I applaud the Subcommittee for holding this hearing. Again, I
    thank you very much, Madam Chairman, and the Subcommittee, as a
    whole, for helping hopefully to shepherd this bill through.
        Senator Coburn. Thank you, Senator Obama.
        I just want to ask both of you, some of the critics of this
    bill have claims that the Federal Government has no business
    collecting information on subcontractors and subawardees. Do
    you believe it is important for the government to track Federal
    spending down to the point of actual use? For example, most
    grant money actually just goes to the State, but the State
    subgrants the money to other organizations. What is your
    feeling on that?
        Senator McCain. Well, Mr. Chairman, if I could just respond
    briefly, it is the taxpayers' dollars. I think we should track
    the taxpayers' dollars to its ultimate end. I know you know
    there are burgeoning scandals associated with a lobbyist and a
    group and a member and a committee, and one of the things that
    we have seen is that entities now feel, particularly small
    towns and cities across America feel, that they must hire a
    lobbyist who is well connected in order to get money for
    projects that they feel they need.
        I am not saying they should not do that. But I am saying
    that we should know where the money went and the entity that
    got the money, all of it.
        Senator Coburn. Senator Obama.
        Senator Obama. Well, I think Senator McCain summarizes it
    appropriately. Look, if the city of Chicago receives a CDBG
    grant and it is going to be using those Federal dollars to fund
    a wide range of organizations, then it should be fairly simple
    for the city of Chicago to gather up the information about how
    this money is going to be spent and report it back to this
    website so that all Federal taxpayers can know, folks in Maine
    can see, whether this money is being well spent in Chicago. And
    if we cannot defend how that money is being spent in Chicago,
    then the people of Maine or Delaware or Oklahoma have a right
    to say this is a bad use of Federal dollars.
        I think those objections particularly make no sense to me
    given that, as it is, anybody who is applying for Federal
    grants is already providing this information to somebody. And
    simply making sure that it is transmitted to OMB I don't think
    is going to be a tremendous burden on their part.
        Senator Coburn. If they are not already supplying that
    information or don't know the information, they should be.
        Senator Obama. Absolutely. I mean, I don't know who is
    getting Federal money no questions asked. If they are, then we
    should probably stop that practice.
        Senator Coburn. We have quite a bit of that. We are going
    to be outlining that in this Subcommittee.
        A couple of the concessions that we have made as this bill
    has worked through: We have proposed a pilot program for
    subaward reporting so we can streamline that to make it easy;
    we have added a study on how best to implement a governmentwide
    program to collect and report subaward data; we have added
    provisions to minimize the burdens to grantees and contractors
    of reporting subaward data; and, we have delayed the
    requirement of subaward reporting from 2007 to 2009.
        So we have answered all the questions that the subgrantees
    and subawardees and subcontractors have had with this bill by
    providing the mechanism where sunshine can flow and it will be
    easily accomplished.
        One of my thoughts when we came up with this bill was that
    we need help doing oversight. We can have 300 million Americans
    helping us do oversight. And the real question for Congress, in
    declining revenues and increasing obligations that we have
    already committed to, is how do we make the priorities? How do
    we put what is first, what is second, what is third?
        What are your thoughts on how this bill, if enacted and
    when enacted, will help us do those priorities? Senator McCain.
        Senator McCain. Well, Mr. Chairman, I just think that it is
    the heart and soul of what government should be all about. The
    more our constituents and our citizens know about how we do
    business, the greater their trust will be in us. And as I am
    sure you know from recent polls, not a lot of Americans have a
    very high opinion of us, and I think this is one of the
    reasons, because they do not know what we do with their tax
    dollars.
        I would like to make one additional point, Mr. Chairman.
    Maybe 10 years ago this would have been a very onerous task to
    set up this kind of a database and have everyone have access to
    it. I am not a computer expert, but smart people have told me
    that this is a relatively easy operation and one that is not
    too difficult nor expensive.
        So let's say it costs maybe a couple hundred thousand
    dollars to set this up. Compare that with the knowledge of some
    of the ways that this money is spent so that it will be a
    caution to people who want appropriate money that is not for
    useful purposes because they will know that their constituents
    will know and not appreciate the way their tax dollars are
    being spent. I will bet you that it justifies whatever expense
    is associated with it in the first 5 minutes.
        Senator Coburn. Senator Obama.
        Senator Obama. I concur. Look, not only do I think that it
    is a basic principle of self-government, as articulated by
    Thomas Jefferson, that taxpayers should know where their money
    is going; frankly, I also think this will help us Senators
    because I think even given the vigilance of some of the
    Senators who are here in this room, there is a lot of stuff
    that slips by that we do not know about. None of us have the
    time, even with our staffs, as able as they are, to track down
    every dollar of spending. And, I think we are all constantly
    surprised at what shows up after we have voted for a bill. This
    website will empower citizens and organizations. It is one of
    the wonderful democratizing aspects of the Internet that we can
    empower a lot of people to do what maybe a few individuals
    would have difficulty doing.
        Senator Coburn. Senator Collins.
        Chairman Collins. Thank you, Mr. Chairman.
        I think that Senator McCain hit on an issue that is very
    important, and that is the lack of public trust in government.
    And certainly the kinds of wasteful spending projects that have
    been discussed today contribute to that lack of trust.
        I think there is an upside also from this website, and that
    is in some cases people may be pleased to see what money is
    going for. I wonder if our witnesses might comment on that as
    well. I see this as helping to give the public more information
    on what their taxpayer dollars are used for, and also helping
    us to sort out the proper role of government at the Federal
    level, what kinds of projects and programs should the Federal
    Government be paying for as opposed to the State or local
    level, or perhaps projects that should not have any government
    involvement at all.
        So I would like to ask our two witnesses to comment on that
    issue, too. Senator McCain.
        Senator McCain. I certainly agree, Madam Chairman, and I
    would also like to point out that eventually, perhaps, you
    could have this listing of what the money was spent for and all
    the entities and subentities, but also you could have a link to
    the department of government that is responsible for this
    money, and they could have a website explaining exactly what
    that program does.
        I think it could be a tremendous educational factor for our
    constituents, so they would know not only the name of what that
    program is, but link up with the various agencies of government
    who would give them a full and complete explanation.
        Chairman Collins. Senator Obama.
        Senator Obama. Well, I think you are right, Senator
    Collins. To the extent that people know where dollars are going
    that can actually serve a useful purpose. For example, I serve
    on the Senate Foreign Relations Committee. If you were to poll
    the average person, they might think that 25 percent of the
    Federal budget is going to foreign aid. And when you let them
    know that actually it is less than 1 percent, then they have a
    better perspective in terms of why we might want to provide
    assistance to other countries.
        Now, they then may take a look at where some of the foreign
    aid is going to and question whether it is appropriate or not.
    The point, though, is that it can create better understanding,
    a more robust conversation within our democracy.
        I will be honest with you. One of the things that I have
    always found to be helpful in my own office--and this was true
    when I was a State legislator--is the more transparency there
    is, sometimes that helps me fend off constituents who want
    questionable projects from me. And when I explain to them that
    we are going to have to defend this and that I have to explain
    why this would be a higher priority than something else, it
    helps me do my job better.
        Chairman Collins. Thank you.
        Senator McCain. It is always easy to explain to Dr. Coburn,
    I have found.
        Senator Coburn. Senator Carper.
        Senator Carper. Sitting here this afternoon listening to
    the testimony and the responses from our colleagues, I am
    reminded of an older reporter, now deceased, who used to write
    for the News Journal paper in our State. We only have one
    statewide newspaper called the News Journal. He was a crusty
    old reporter who became a columnist. His name was Ralph Moyed.
    He died about 5 years ago. We used to say when I was a
    Congressman and then governor that when we are faced with an
    issue about whether or not to go forward and do something or
    not and it is sort of a close call, we would always say,
    ``Imagine a front-page article in the News Journal written by
    Ralph Moyed above the fold about this particular issue.'' And
    we would say, ``Well, maybe we should not do that.''
    [Laughter.]
        Or we would say, ``Well, maybe we should.''
        In a way, I think of the legislation that we have all
    cosponsored, and Senator Coburn has authored, is a little bit
    like having a whole lot of Ralph Moyeds alive and well, looking
    over our shoulder, and ready to blow the whistle, and then
    whether people want to pay attention or not, that is up to
    them.
        I don't know that there is any silver bullet out there in
    the fight that I think we all share, and that is a fight to try
    to restore some fiscal sanity in this Nation of ours, at least
    for our Federal Government. But the thought occurs to me that
    most of what we are talking about is domestic discretionary
    spending. And if you actually look at the budget deficit we
    have, I think, for the last year, we could eliminate entirely
    domestic discretionary spending, and I think we would probably
    still have a budget deficit. So while it is part of the answer,
    getting rid of the wasteful spending in domestic discretionary,
    it is not the whole answer.
        One of the things that Senator Coburn and I have been
    working on is trying to figure out where improper payments are
    occurring, and we have learned that there was roughly $50
    billion or so, maybe more, in improper payments last year.
    Mostly overpayments--that does not include the Department of
    Defense. And among the things that we have learned is that
    financial controls at the Department of Defense are so
    haphazard at best that we do not know really what their
    improper payments are.
        I would just ask both of you, in addition to taking a step
    like this, which I think we all agree is important, what might
    be some other steps that we should take to rein in the deficits
    that we all abhor and want to curtail.
        Senator McCain. Senator Carper, I think about that all the
    time. I think that the package of reforms that has recently
    been proposed by Senator Gregg and cosponsored by many Members
    of the Senate is probably a good idea. It is a package of
    budgetary controls ranging from the line-item veto to various
    other provisions that would enforce budgetary discipline.
        Senator Carper. Does that include two-way PAYGO discipline?
        Senator McCain. I think it does, but----
        Senator Carper. I think it is one-way.
        Senator McCain. Is it one-way? Do you know, Senator
    Collins?
        Chairman Collins. Yes, it is one-way. It exempts taxes.
        Senator McCain. I think it should be two-way myself, but
    anyway, I do think that at least it is a good framework of a
    package of reforms. But I think the other aspect of this, as
    you mentioned, this may be a small part of the budget we are
    talking about, but we all know that when we have to fix Social
    Security and Medicare, we are going to have to ask the American
    people for some sacrifice in order to fix these systems. How
    can you do that if we are spending their tax dollars in the
    most profligate and obscene fashion, as we did for people who
    had cows 10 miles from where the Columbia crashed?
        So that is why I think we hear so much from our
    constituents, because they just do not get it. I am sure you
    have the same experience that I do when I mention the Bridge to
    Nowhere. Everybody knows--they may not know the name of their
    Senator, but they know the Bridge to Nowhere, and they are
    offended by it. And so I think one of the reasons why we need
    to focus on this is so that we can go to the American people
    with clean hands.
        Finally, could I mention, Senator Carper, I think that this
    issue of Defense Department financial controls is really
    something that we have to get on. As you know, the largest part
    of the budget is defense appropriations, appropriately so. But
    it and procurement are totally out of control, and it has to be
    one of our highest priorities.
        Senator Carper. Thank you. Senator Obama.
        Senator Obama. I would echo what Senator McCain says. I
    think all of us are aware that at some point, in order to get
    our deficit under control, there are going to be revenue issues
    that we have to bring up, and there are going to be spending
    issues, and we are going to have to talk about entitlements. We
    are going to have to control costs. And it is very difficult to
    have that conversation, particularly at a time when Americans
    are feeling squeezed and more vulnerable, if they think that
    the money is being wasted.
        Now, once the waste has been identified and some confidence
    has been restored that we know where the money is going, then I
    think the American people are responsive to calls to sacrifice.
    They want to do the responsible thing for their children and
    their grandchildren. But right now the levels of cynicism are
    so high that it is very difficult to have these meaningful
    conversations. And so, my hope is that this would be a first
    step.
        One other aspect that I would add to this--and I think this
    dovetails into some of the legislation that has been proposed
    to shed light on what is happening with earmarks and so forth--
    is that we do not have what I think most Americans would
    consider a budget or a budget process. I mean, it is this sort
    of loose, haphazard stew in which it seems like sometimes the
    purpose is to make things obscure. And it is very hard from my
    perspective to step back and see if we are spending each dollar
    in accordance with our priorities since we cannot do
    everything.
        This kind of effort can hopefully build on other reform
    efforts to get an overview of the budget. It may help the
    Administration to start thinking about how we can change our
    practices at the administrative level in order to have a better
    overview of spending. And I think it will help put pressure on
    Congress as a whole to defend or change those practices. As you
    know, I am a big supporter of PAYGO as an example of a way to
    at least stop the bleeding, but I think that this ends up being
    just one more brick in that structure of accountability that I
    hope we are going to be building over the next several years.
        Senator Carper. Mr. Chairman, as our colleagues prepare to
    go back to work, I just want to express my thanks for their
    being here and for the leadership that they provide. I would
    just add maybe one concluding thought.
        I think Senator Obama made a very telling point here. As we
    get serious in the months and years ahead about reining in
    these budget deficits, it is going to call for some difficult
    decisions with respect to revenue and with respect to spending,
    both on the discretionary side and on the entitlement side.
        One of the other things is that a lot of people in our
    country are surprised to find out that there is a tax gap of
    over $300 billion in revenues that are owed. In some cases, the
    IRS has a pretty good idea who owes the revenues, but they are
    not being collected. And for us to be able to convince the
    American people to join us in making some of the tough
    decisions, they want to make sure that we are doing a better
    job in controlling discretionary spending. They want to make
    sure that we are getting a handle on what is going on at the
    Department of Defense, which we desperately need to do. I think
    they want to make sure that the folks who actually owe taxes
    are paying their fair share before anybody else is asked to pay
    any more.
        Again, our thanks to each of you.
        Senator Coburn. I want to thank the Senators for
    testifying.
        If the next panel will please come forward. Just to clarify
    the record, only 18 of the 32 agencies of the Federal
    Government reported improper payments. Of the 18 that reported,
    they documented $38 billion in overpayments in only 57 programs
    out of the 100 programs. The biggest problem is lack of
    compliance of the agencies with the improper payments law.
        I would also note that it is estimated that there is a $30
    to $35 billion improper payment in Medicaid, and their improper
    payments are not being tracked.
        I want to welcome our second panel: Gary Bass is the
    Executive Director of OMB Watch. He has been with OMB Watch
    since he founded the organization in 1983 to serve as a
    watchdog for Federal policies on issues of transparency,
    openness, and good government. Prior to his work at OMB Watch,
    Dr. Bass was President of the Human Services Information Center
    and received his doctorate in psychology and education from the
    University of Michigan.
        Next is Eric Brenner, Director, Maryland Governor's Grants
    Office, the office of Governor Bob Ehrlich. Mr. Brenner became
    Director of the Maryland Governor's Grants Office in February
    2004. He worked with four governors in three States for both
    Republicans and Democrats. He even worked for the Governor of
    Illinois during Senator Obama's tenure in the Illinois State
    Senate. He has a degree from Harvard John F. Kennedy School of
    Government.
        And, finally, Mark Tapscott, Editorial Page Editor of the
    Washington Examiner. In February of this year, he was named
    editor of the Editorial Page at the Washington Examiner. Prior
    to taking this position, he was Director of the Center for the
    Media and Public Policy at the Heritage Foundation. He has
    worked as a journalist for more than 20 years and will discuss
    with us today the effects our bill will have on the world of
    journalism.
        I would like to thank each of you for being here. Dr. Bass,
    you are recognized first.

      TESTIMONY OF GARY D. BASS, PH.D.\1\ EXECUTIVE DIRECTOR, OMB
                                 WATCH

        Mr. Bass. Thank you, Mr. Chairman. I would ask to have my
    written statement put in the record.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Bass appears in the Appendix on
    page 31.
    ---------------------------------------------------------------------------
        Senator Coburn. Without objection, all of your written
    statements will be placed in the record.
        Mr. Bass. Let me begin by making very clear that with
    absolutely clear and unambiguous language, OMB Watch supports
    S. 2590. It is the right bill to do, as we heard from the last
    panel. The timing is right. This is a good thing to do. It
    would be great to move this bill quickly through markup and
    then directly to the Senate floor and try and get something
    done, hopefully with unanimous consent, and have this behind us
    and then work on the implementation.
        I also want to thank you and other Subcommittee staff for
    working with OMB Watch to improve the bill as we have moved
    along. I think this has been a very cooperative and
    constructive process, and I thank you for that.
        At the same time, I think that I am going to advocate as
    much as I can for improvements in the bill as we move along.
    But I want to make very clear that we support the bill as it
    was even introduced, even before you have added some changes.
    We want this bill to pass, and we want it to pass soon. And our
    objective is to strengthen it if we can, but we want it done.
    So I want to be very clear about that.
        I also want to note that we support this bill, as the two
    Senators who spoke on the last panel did, for reasons of the
    most importance to this country. This is about democracy. This
    is about openness. It is not just simply a right-left
    coalition. This is a coalition that cares about openness and
    accountability and encourages a strengthened democracy. And as
    you have said, Senator Coburn, all along, strengthened
    accountability leads to a stronger democracy. And we believe
    that. We believe that fundamentally.
        At the same time as we believe this is a theoretical or
    philosophical view, we are also very frustrated. You cannot get
    the information. It is just not able to be obtained. And so
    something needs to be done immediately to get this information
    in the hands of the public. And I construe ``public'' in the
    broadest sense. It is Congress. It is policymakers at the State
    and local level. It is the news media. It is the citizenry.
    This is going to be used by a number of people in many
    different ways.
        Now, having said all this, I want to raise four areas where
    I would hope we give some concentration, as the bill is already
    enacted, we get more and better implementation. And I want to
    point out four areas.
        One is the challenge is going to be getting this data up in
    a user-friendly, searchable format. I know, because OMB Watch
    is now in the throes of trying to put up the two key
    databases--and we will do acronyms, since you have already
    mentioned it--FAADS and FPDS. Contracts and the data that deals
    with grants, loans, insurance, subsidies, we are trying to put
    it all available through an online service by October 1. And so
    we are wrestling with this issue of how to do it.
        I would encourage that we create some kind of citizens
    panel, require some kind of data testing from OMB so that we
    ensure that we are getting it in the way that it can be used.
        The second concern I have is the data quality. All the
    conversation in the last panel was about obtaining information
    that is so critically important, I would encourage in the bill
    we start to ask OMB to make recommendations how to improve the
    data quality.
        The third area is to make sure we are getting all the data
    we need. The issue is, as Senator McCain talked about--a
    Livestock Compensation Program--we need to be sure we are going
    to get all of that data. The way the bill might be structured,
    we need to look at it carefully to make sure we are not going
    to exclude certain key elements like farm subsidies or flood
    insurance, because they go to individuals.
        And the fourth point I would make, which you have already
    addressed, Senator Coburn, and that is make sure it is
    implemented. And the thorniest issue will be this issue of
    subrecipient. I think we are strongly supportive----
        Senator Carper. Say that again? Make sure it is what?
        Mr. Bass. Subrecipient reporting, subgrants, subcontracts.
    And I think the Chairman has identified some improvements
    already talked about, and I think those go a long distance in
    getting us there. The real issue is to touch base with the
    players who are going to have to implement this and to make
    sure it can be done in a way that makes sense. We just need to
    make sure this can be done. I want to emphasize we are
    supportive of subrecipient reporting.
        Let me conclude with a notion that this bill is a building
    block. It is not the be-all and end-all in transparency. A
    number of things the last panel talked about, like earmarks,
    mismanagement, are not going to be obtained by just simply
    legislation that calls for greater disclosure of Federal
    spending. Similarly, there are many other important issues like
    tax expenditures. These are all things that need to be done,
    and they should be added after this bill is passed. And I am
    hoping that you, Mr. Chairman, and you, Senator Carper, will
    lead in the efforts to enhance transparency once we move beyond
    this.
        So I am very excited about this bill, and I thank you for
    letting us testify today.
        Senator Coburn. Thank you, Dr. Bass. Mr. Brenner.

      TESTIMONY OF ERIC BRENNER,\1\ DIRECTOR, MARYLAND GOVERNOR'S
                             GRANTS OFFICE

        Mr. Brenner. Thank you, Mr. Chairman and Senator Carper. As
    you heard, my name is Eric Brenner, Director of the Maryland
    Governor's Grants Office, created less than 3 years ago by
    Governor Ehrlich and Lieutenant Governor Steele, and in a short
    period of time, we have been recognized by the National
    Governors Association as a ``best practice,'' and we just won a
    Special Achievement award from the National Grants Management
    Association.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Brenner appears in the Appendix
    on page 47.
    ---------------------------------------------------------------------------
        I think I can sort of cut to the chase pretty quickly here.
    We just came out with our third annual report. It lists every
    single Federal grant received by State agencies in Maryland.
    This past year, 499 Federal grants went to all of our State
    agencies, approximately $7 billion. We know from census data
    that the State of Maryland receives approximately $9 billion in
    Federal grants, so obviously $9 billiion minus $7 billion,
    there is another $2 billion floating around that goes to
    universities, nonprofits, and local governments.
        As the legislators, governors, and mayors become
    increasingly familiar with the detail we can give them on the
    money that flows through us, there is a lot of interest in
    where the rest of the money going. And there is also a timing
    aspect.
        So the first year they were happy to have anything. The
    second year the interest picked up. And this latest report, the
    Federal fiscal year 2004 is the most recent data we have. The
    census produced this December 27, 2005. They came out with
    Federal fiscal year 2004 data. So it is almost a year and a
    half late. There are reasons why it took so long, but only 3
    weeks later, my little office of three people was able to come
    up with State fiscal year 2006 and even estimates for 2007 data
    on Federal funds coming through State Government. And as I am
    working with legislators in front of the General Assembly, they
    ask me what is the deal here? Why can't I get this information
    sooner? And Senator Obama hit on a real-life example from this
    past legislative session. There was a small nonprofit, and I am
    going to call it a YMCA. It was not, but it was something like
    that with national recognition in the county looking for funds.
    And the legislator said, Can you tell me if this little YMCA is
    getting any direct Federal grants? Because if they are, maybe
    we want to give them more money if the Feds trust them to
    manage the money well. Maybe that is a good thing. Or maybe we
    want to go to another group and give them money. Or maybe we
    want to stiff them and we do not want to give them anything,
    but we would love to help them find out what other YMCAs are
    getting funds out there. And you are telling me you cannot do
    this. OK. Once the session is done, go work with your friends
    in the Federal Government and see if you can move this stuff
    along a little bit faster, because it really is valuable. There
    are real live policy decisions that ride on things like this.
        This was not the first time I was told by legislators or a
    governor to go back and talk to the Federal folks to get more
    and better data. Back when I was working for the prior governor
    in Illinois and Senator Obama was in the General Assembly, I
    was charged with setting up an Illinois Federal clearinghouse,
    and at that time the main issue was access to grant notices. At
    the time I was charged with cobbling together a website that
    could pull in all new Federal grants notices so State agencies
    and nonprofits could see what the Feds were offering up.
        That was about 7 years ago, and at that time I said, Wait a
    minute, why are we doing this? Shouldn't this all be in one
    place? And a couple years later of lobbying and cajoling and
    work from Congress, Grants.gov is now working beautifully and
    no State has to devote staff to identify what new Federal
    grants are available. It is out there on the website. Every day
    you flip on the machine in the morning, and you see what new
    grants are out there. It was a real big step forward. And yet
    even in Illinois, when we used to pull the data together, the
    timing issue would come up all the time. Why do we only know
    what we are getting through us? Why can't we see what else is
    going on out there?
        I think Governor Ehrlich is flattered that other States are
    beginning to copy our grants office. There really are just five
    or six or seven like this out there, but there are new ones
    popping up all the time.
        I got a call from Delaware in the last 3 months. A woman
    named Maureen Querey, whom I had never met before, was charged
    with setting up this office. She is working with Joe Hickey,
    whom I know really well. He did the training when you were a
    governor, and he is supposed to help her do training programs
    on grants management. But first she has got to ask, ``What are
    we getting? Help me pull the numbers together.'' And that is
    going to eat up a lot of time. So as much as Governor Ehrlich
    loves the fact that people are copying our stuff, we would love
    to see every State have this information and free up my time so
    I can work more with nonprofits and local officials to better
    match resources with policy goals.
        The last question that was addressed a bit--this is the
    first time I have seen the revisions here, and I am speaking
    just for the Ehrlich-Steele Administration and one State. But I
    do work pretty closely with the State associations on this and
    the handful of other States that have grant offices. And there
    is a real concern that what is so close to a terrific idea can
    somehow get bogged down on the issue of the subgrantee
    reporting. And so many folks have wanted this for so long, and
    even senior officials at OMB sort of went out on a limb to push
    for this initially, and this was not popular with some of the
    Federal agencies. I think they realized a little push was a
    good thing. In our 499 grant programs, each one is managed
    differently in a different statute, and we do not have a
    statewide grants management system, nor does any State.
    Michigan, I think, will be the first to get there in a year or
    two, and to merge 25 different grants management systems into
    one to get this data is going to be difficult.
        So I would urge continued consultation with the bill's
    sponsors in the House and OMB. There is a legitimate issue
    here, and I think speaking for the people on this panel and a
    lot of the State governments, the bill is terrific and we
    really want to support it and would hate to see someone who
    does not like the core concept of the bill use a little detail
    like ``you mean you want every Medicaid recipient, the amount
    of the money they got''--there are little ways you could pick
    at this if you wanted to bring it down, and a little bit of
    consultation I think can get over those rough spots.
        Senator Coburn. I assure you we are already seeing that.
        Senator Coburn. Mr. Tapscott.

       TESTIMONY OF MARK TAPSCOTT,\1\ EDITORIAL PAGE EDITOR, THE
                     WASHINGTON EXAMINER PROPRIETOR

        Mr. Tapscott. Thank you, Senator. I appreciate very much
    the opportunity to be here, and I just want to point out that,
    as one of your fellow Oklahomans, it is especially great to see
    you doing all of the things that you have been doing this past
    year on earmarks.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Tapscott appears in the Appendix
    on page 50.
    ---------------------------------------------------------------------------
        I want to also say, particularly to my colleagues over on
    the press table, that normally I would be over there with them
    getting ready to ask you guys questions rather than sitting at
    this table, hopefully answering questions from you all. But
    this is on an issue that, like the Freedom of Information Act,
    I believe is fundamentally important, both as an American
    citizens and to my profession, my chosen profession. And I
    think what is going to be possible as a result of the passage
    of this bill is of sufficient importance that I have encouraged
    all of the professional journalism organizations to become very
    vocally in favor of this bill as well.
        I want to just address the basic question that I was asked
    to talk about, and that is, What effect would passage of this
    legislation have on journalism? And I think the closest analogy
    that I can think of is the effect of having campaign finance
    data widely available to journalists and to the general public.
    This began about 20 years ago.
        As you all well know, there is really no such thing as an
    anonymous donor these days, and that is very much as a result
    of the fact that data on who is giving what to whom and which
    special interests are doing what with their money has become so
    widely and easily available.
        One of the effects of that in journalism, obviously, was
    that it enhanced the public interest in and the power of
    political reporting specifically. But even more important than
    that, it empowered investigative journalism about government in
    a way that had not been previously possible, except on an
    anecdotal basis.
        Senator McCain mentioned the fine piece of reporting by
    that other newspaper in town, the Washington Post. That was
    basically done as a result of inside sources and anecdotal
    reporting. It probably would have been done as a matter of
    course if this database was in existence. And ``as a matter of
    course'' is a good phrase for what I think would be an accurate
    description of what would happen to government reporting when
    this database becomes widely available.
        We get no comprehensive, systematic daily reporting on
    where tax dollars are going simply because, as has been
    documented in abundant detail, it is basically impossible to
    get much of the information and extraordinarily difficult to
    get the rest of it. We are in an era when most journalism
    organizations are cutting costs, unfortunately, cutting staff,
    editorial staff, unfortunately, and frankly there are just not
    enough people nor enough time to do the kind of rigorous
    investigative reporting that government deserves and the
    American people deserve.
        This would make a profound difference in that because it,
    frankly, would make it so much easier to get so much more of
    the data. And I think that you would see every basic major beat
    in a newsroom, from the cops beat where the junior reporters
    start, right up to the investigative staffs, incorporating as a
    matter of course data from this database.
        Speaking as a professional journalist of 20 years, that
    excites me. Speaking as a blogger, which I am also, I am even
    more excited about what the potential effect on the new media
    will be of this database.
        One of my blogging colleagues, Ed Morrissey of Captain's
    Quarters, has predicted that very soon after this database
    becomes available, he believes there will be 10,000 blogs
    coming into existence specifically for the purpose of exploring
    Federal spending with regard to their particular States or
    their particular congressional districts. I think, based on my
    own experience with the Porkbusters bloggers in the
    blogosphere, that Ed probably is underestimating the number of
    blogs that will come into being as a result of this.
        To summarize, I think that just as nobody who is in
    politics or journalism today can afford to ignore
    Opensecrets.org, the website where campaign finance data first
    was made available, we are very close to a time when the
    Federal spending database will also be of that much importance.
    And I am sure there will be at least one website called
    Spendingsecrets.org, and I hope I will have something to do
    with that. Thank you very much.
        Senator Coburn. Thank you.
        I want to ask each of you, the bill that came out of the
    House excluded contracts. I personally believe that is a fatal
    error in the bill, and I would like each of your comments on
    that.
        Mr. Tapscott. I think having covered Federal contracting on
    a waste and fraud beat, it makes no sense to me at all to not
    include contracting data. As a journalist, of course, I want as
    much information as I can get. But the point of this database
    is to enhance the public's ability to know where the Federal
    dollars are going. And in order to understand that, you have to
    have information about the contracts.
        Senator Coburn. Mr. Brenner.
        Mr. Brenner. The State of Maryland gets about $20 billion
    in Federal procurement each year. We only get about $9 billion
    in grants. Most States it is the reverse. They get a lot more
    grant money than procurement and contracts.
        Two years ago, we did do a real brief document showing
    which counties it goes to, which companies, and there was
    incredible interest. We have an intern working hard this summer
    to try to re-create it. That is all he is doing. He is working
    really hard to pull this stuff together, and, again, it still
    will be old data. The need is great. And it is important to
    recognize that within the Federal Government, the grants world
    and the contract procurement world are really different. I am
    not sure how they grew up to be as different as they are. But
    when you are trying to do some of the things that you and the
    various sponsors have proposed, it really works very well right
    away on the contract side. The grant side might take a little
    more tweaking, but the value of the information is absolutely
    there. I have got an audience hungry for anything I can give
    them.
        Senator Coburn. And that is to make good decisions at the
    State level. You do not want the data just for the data. You
    want the data so that you can make a better decision at the
    State level.
        Mr. Brenner. Right. Practical example with the base
    closure, the BRAC process, concluding the more we know where
    the Federal contract dollars are going, the better counties can
    prepare school systems, the better they can do roads, the
    better they can do job training with the welfare-to-work
    programs. There is a real need for this so we can efficiently
    use our money, and the longer we have to wait to get that
    information, the more we are set back.
        Senator Coburn. Dr. Bass.
        Mr. Bass. I concur with my colleagues. You must have all
    venues for expenditures. I would say down the road we also need
    to add in tax expenditures. But one thing to keep in mind is
    when we look at GAO and other audits that have occurred, the
    bulk of the patterns of mismanagement are all identified in the
    contract side. There have been no systemic patterns on the
    grant side, although I will say there have been some questions
    about allocations of funds under various forms of subsidies,
    particularly in light of Hurricane Katrina. And so I think it
    is an obvious piece to have both contracts and grants.
        Senator Coburn. With the recent revelations of
    congressional contracts and favors, that seems to make no sense
    that we would not want contracts to be--to have sunshine on the
    contracts since there is this potential conflict of interest
    between fundraising and contracts. You all would agree with
    that?
        Mr. Bass. Absolutely. If I could just add, Senator, I hate
    to use a term that I have used in other settings, but what the
    objective should be is a real accountability matrix to bring
    all these sources together.
        Senator Coburn. Right. I have worked in a lot of areas.
    Under grants, we have had flirting classes and clown
    demonstrations and all sorts of things. So I think they are
    both equally liable, although the vast majority of the dollars
    have been in the contract area.
        One final question, and then I will turn it over to Senator
    Carper. We have worked hard to try to make the U.N. accountable
    for our contributions in terms of both the Oil for Food scandal
    and all the other--we had a hearing here not long ago where
    they showed one-third of their expenditures were in waste,
    fraud, and abuse. It is pretty hard for this government to
    demand the U.N. be accountable in how they spend their money
    when we are not. And so that is another reason for it. We
    cannot claim to want to know how our money is spent elsewhere
    if we don't know how we are spending our money. So I would make
    that comment.
        Senator Carper.
        Senator Carper. Thank you, Senator. And, gentlemen, thank
    you very much for joining us and for your testimony, and,
    frankly, for your interest and involvement in these issues for
    some time.
        Mr. Brenner, thank you for your comments about Joe Hickey.
    When I was privileged to be governor for 8 years, I worked with
    Joe. Joe was in charge, as you suggested, of training in our
    personnel area. He traveled more abroad in that role. Mr.
    Chairman, I don't know how he parlayed that position into as
    much foreign travel as he made, but he made me look like a
    stay-at-home Mom or something, a stay-at-home Dad, with regards
    to his travel. We should have a hearing on him. I do not think
    he does that anymore, but----
        Senator Coburn. Well, we will later. [Laughter.]
        Senator Carper. He was also a lot of fun. He was fun and he
    was quite good in his job. I will tell him his name came up in
    vain here in this Subcommittee.
        Dr. Bass, I want to come back to you. You were making four
    points. The second I think involved data quality. The third was
    getting all the data we need. Would you just review those with
    me, with us again, please?
        Mr. Bass. The first one is a user-friendly site, and the
    problem----
        Senator Carper. Even go back before that, but these are
    four points you made with reference to?
        Mr. Bass. To strengthening as we move along to either
    implementation or in the final stages of marking up this bill,
    there are things that are--I should rephrase this to say you
    can always improve a bill, but we do not want tweaking and
    improvements to delay the passage of S. 2590. So the comments I
    am making are in the notion of a constructive element of how
    can we strengthen in minor ways this bill as it is moving
    forward to achieve unanimous consent.
        Senator Carper. OK, good. Go ahead. Just run through those
    again, if you would.
        Mr. Bass. Yes. The four, very quickly, are: A user-friendly
    website, and one of my biggest concerns is this is very complex
    data, and as we have found in trying to put up the data, you
    have Federal shares, you have non-Federal shares, you have
    obligations versus what is actually spent. It is not easy to
    penetrate. The objective is we need to do it in a way that the
    public can really understand what our government is spending
    money on.
        It strikes me that one way to do that--and there may be
    many other ways, but some suggestions I had was create some
    kind of a citizens panel to watch how OMB is doing this and to
    give feedback to you on whether this is meeting the need. It
    might be temporary. It might be during the creation of it. Or
    it may be every 3 years to assess it. A second would be to data
    test, to test with users before the site goes live with
    different kinds of users to make sure it is meeting the need.
    So that is sort of one.
        The second is the----
        Senator Carper. Well, would you say that is the most
    important of the four, or is there one that is more important
    than the other?
        Mr. Bass. Well, I think they are all equally important
    because, in order to have it in a user-friendly way, you want
    to make sure the quality of the data is good. If the data
    itself is not expressing the kinds of things that you two have
    said today you want, and the Senators before us talked about,
    then it lacks utility.
        I can tell you the data quality needs improvement, and I do
    think that the public disclosure, the bill itself in passage,
    will help to improve the quality of the data because, as Mr.
    Tapscott talks about, there are going to be a lot of reporters
    and others using this data. And so the government will have to
    clean up the data.
        Senator Coburn. Yes, that is a component of the bill.
    Public feedback is required in the bill, and a response to that
    is required as well.
        Mr. Bass. Indeed, and I think that is a critical element to
    retain. I do think maybe one notion in that response to the
    public comment, maybe we should ask OMB to comment in its
    annual report how they will proceed to improve the data quality
    year after year. That might be a sub-piece of their report.
        The third thing I talked about, which is really to the
    heart of what the two Senators in the last panel spoke to, is
    making sure we are getting all the data we expect we--what we
    say in the bill, we want to make sure what we are getting. An
    example: The Livestock Compensation Program that Senator McCain
    mentioned we may not get because it is going to individuals, or
    we may not get information about flood insurance that goes to,
    say, Hurricane Katrina victims where there are some allegations
    of abuse. So we need to find the balance here to ensure we are
    getting all the information we definitely want, without harming
    personal privacy.
        And the last point I was making is really an issue about
    the subrecipient reporting. It needs to be done in a way--it
    should be done, and it should be done in a way that does not
    create an overwhelming difficulty to have it done. I tend to
    think of it----
        Senator Carper. I am sorry. Say that again? Make sure it is
    done in a way?
        Mr. Bass. That it does not create an impossibility to
    implement. Let me break it into maybe three components. One
    issue of this bill deals with contracts and subcontractor
    reporting, which I think can relatively easily be done.
    Contracts have for-profit motivate built in. You can require
    the contractor to notify about subcontractors and on down the
    line.
        A second kind of category of subreporting is a subgrant to
    a nongovernmental entity, like a nonprofit. In some of those
    cases, it may be relatively easy to do that. However, there are
    paperwork and other kinds of burdens imposed. And as you said,
    Senator Coburn, you want to do it in a way that ensures it does
    not create unnecessary burden.
        The third category is what Mr. Brenner was talking about,
    and that is, grants that go to State and local governments,
    which is the largest share of grants. And that is a little more
    difficult because it is not simply like the community
    development block grant that Senator Obama talked about. Many
    of the grants a commingled with State monies or local monies,
    and it is hard to pull that apart and identify what is which.
        Senator Coburn. Let me, if I may, I want to answer those.
        Senator Carper. Sure.
        Senator Coburn. First of all, to be able to reply and to
    report on this is going to make every grantee and subgrantee
    and State and local government better.
        Mr. Bass. Right.
        Senator Coburn. Because if they don't have a system to know
    where their money is going now, they are going to have to have
    one to report under this. And they should. Every grantee, every
    contract should know where they are spending their money. And
    if they do not, they are going to have to have a system to be
    able to do that, which should be a part of their grant
    application. That is number one.
        Number two, and I think it is relatively easy if we are
    sending 12 percent of the money for some State program, then
    the answer in that is here is how the money was spent, of which
    12 percent of the money was Federal. They do not have to break
    it out. They can say, Here is the program, you supplied this
    much money of the total, here is how we spent the money on the
    program. So it makes States better, so they are going to have
    to report. If they are going to take Federal funds, then they
    are going to have to say here is where the money went. They do
    not have to--there is no judgment on it, but what it does is it
    creates--this bill is going to create sunshine not just for the
    Federal Government, but for grantees and nonprofits and for
    States. It is going to help everybody do better, have better
    financial control, but it is going to help everybody in this
    country know where their tax dollars are going to be going. And
    I do not think that is hard to do.
        If you can get on Google today and punch anything in and
    find out all the things associated with it, it cannot be that
    hard for the Federal Government to do this in terms of the
    spending of the budget. It is not hard. And there are programs
    out there now that you can buy to give cross-references for
    names. I mean, this is not something that has to be reinvented.
    It has already been invented. And so it is not a difficult
    process to achieve.
        Mr. Bass. Well, I think your changes that you are proposing
    go a huge distance by creating both the study you have and a
    pilot to really test out the point you are making. And I think
    Mr. Brenner could probably speak better to the State questions
    than certainly I could.
        Mr. Brenner. The fear that is out there that I think the
    OMB folks have probably expressed is that for this to be
    carried all the way through to the last dollars, the State
    governments will end up carrying a large share of the burden to
    track the dollars as they move through to counties, local
    governments, and other places. And this year was interesting
    because Grants.gov is in the process of making sure every
    Federal grant has to be done online electronically. That was a
    big deal, and they just sort of imposed that. And there have
    been some real struggles where you are sitting there and you
    hit the button and it does not go through, and just like that,
    you do not have someone to call. So there have been some rough
    spots. It is getting better, and it will be better next year.
        So the goal is----
        Senator Coburn. It will be hard when it starts. This will
    not be easy when it starts.
        Mr. Brenner. No. But, again, I know the National
    Association of State Auditors, Comptrollers, and Treasurers
    have some legitimate issues here. And yet for Maryland,
    Governor Ehrlich made this a second-term priority in looking at
    all the issues when we set it up. He knew this was going to be
    a big deal to merge all of these financial systems together.
    And yet it is a goal we have. So by moving to 2009, that is
    actually within the timeline we are looking to do it. Concern,
    again, will be the other States that have not even started to
    pull together just the basic ``who is getting the money''
    piece. So there are legitimate issues, but to see this bill
    moving is very exciting. As everyone has said today, you would
    hate to see it pulled down over what I think are some fairly
    minor issues.
        Senator Carper. Mr. Chairman, I have asked Dr. Bass to kind
    of review for us his four points that he thought would further
    strengthen the bill, and I just want to ask Mr. Brenner and Mr.
    Tapscott to react, if you will, to what he has laid out and
    what you think he has suggested that makes sense and where do
    you think that it maybe does not.
        Mr. Tapscott. I have worked with Gary Bass on this project
    for a long time and was, in fact, working on this project alone
    before Gary and I began working on it. So I associate myself
    with his first three points.
        Senator Carper. How about that fourth one?
        Mr. Tapscott. On the fourth point, I want to point out, I
    have posted on this issue on my blog many times. Almost
    invariably when I post something on this, I will be contacted
    by a private sector computer person who says, ``What is the big
    deal? We can do this. We do it every day in the banking
    industry.''
        So I am a little skeptical when I hear government people
    saying, ``Oh, we cannot do that,'' because that is what I hear
    from people in government all the time. My guess is it is
    probably analogous to the situation that we had a decade ago in
    migrating from a previous generation of computer information
    technology to a more advanced generation.
        Senator Carper. Mr. Brenner.
        Mr. Brenner. I never met Gary Bass until today, and yet I
    spoke to him once and we e-mailed back and forth on the
    testimony. His written testimony, which is quite a bit longer,
    has a detailed section on the subgrantee reporting, which I
    think is, one, pretty accurate; and, two, if I was saying this,
    it would sound pretty self-serving as here is the State
    government guy who cannot deliver. But an organization with the
    integrity of OMB Watch I think should be taken pretty seriously
    on this.
        The other fear that is out there is the issue of unfunded
    mandates being pushed from the Federal Government onto the
    State government, and that is one way to take a large number of
    State people who really like this here and even seeing any
    potential risk in language that was not even intended is a
    chance to take what should be a 100-percent good-government
    proposal here and cause some trouble.
        Grants.gov, it was interesting to me how many years it took
    to get that going. Again, if I could glue little pieces of it
    together in State government with me working half-time--and yet
    it got done. It just took a while. This is a magnitude of
    complexity way beyond just putting out the new notices, and yet
    it should be out there, and we will be doing this in Maryland,
    especially if the governor gets re-elected. And yet it is going
    to be a lot of work, and everybody recognizes it. You are
    getting treasurers, you are getting comptrollers, you are
    getting fiscal people in multiple agencies working together,
    formula grants, block grants. Each grant is a different story,
    and we have got a few I could comply with in half an hour and
    call you and get you all the information run down here. But
    then as I walk through the whole list of 500, we would squeeze
    down to the last 10 or 15 that really are difficult, and it
    would not be from a lack of wanting to comply.
        Senator Carper. All right. Gentlemen, thank you.
        Senator Coburn. You would agree, though, Mr. Brenner, that
    will cause better government in the State of Maryland.
        Mr. Brenner. As Governor Ehrlich has said from the first
    day I was hired, he wants the data out there, whether it looks
    good or bad or something else. And the more information that is
    out there, the better for everybody.
        Senator Coburn. And all of you supported the House bill. Is
    that correct?
        You did not because it did not have--but it did have
    subgrant reporting right away, which we have changed.
        And the final point I want to make before I thank you for
    being here is OMB has not expressed any difficulties with this
    bill publicly. They support this bill. They have said so. And
    so with any change is problems, and change is difficult. Just
    ask my wife when she talks about me changing. So I know change
    is difficult. But the fact is it is going to be worth it. We
    are going to have better government. We are going to have
    better democracy. We are going to have more transparency to
    make us more accountable, and it is going to help us solve the
    problem that Senator Carper and I and everybody else in this
    room are concerned about: How do we get out of the financial
    pickle we are in? And the only way we do it is know the details
    of the financial pickle we have got.
        I want to thank each of you all for being here. The hearing
    is adjourned.
        [Whereupon, at 3:50 p.m., the Subcommittee was adjourned.]

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