[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

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        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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