    [Senate Hearing 115-185]
    [From the U.S. Government Publishing Office]

             LEGISLATIVE BRANCH APPROPRIATIONS FOR FISCAL YEAR 2018

                                  ----------

                            WEDNESDAY, JUNE 21, 2017

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.

        The subcommittee met at 3:05 p.m., in room SD-124, Dirksen
    Senate Office Building, Hon. James Lankford (chairman)
    presiding.
        Present: Senators Lankford, Kennedy, Rubio, Murphy, and Van
    Hollen.

                          CONGRESSIONAL BUDGET OFFICE

    STATEMENT OF DR. KEITH HALL, DIRECTOR

                  OPENING STATEMENT OF SENATOR JAMES LANKFORD

        Senator Lankford. Good afternoon, everybody. The
    subcommittee will come to order.
        I would like to welcome everyone to our second fiscal year
    2018 budget hearing for the agencies under the jurisdiction of
    the Legislative Branch Appropriations Subcommittee. Today, we
    have with us the director of Congressional Budget Office--CBO,
    as we affectionately call it around here--Dr. Keith Hall; and
    the head of the Government Accountability Office, Comptroller
    General Gene Dodaro. I appreciate the willingness of both of
    you to appear before the subcommittee, and I look forward to
    your testimony.
        We obviously received your written statements as well, and
    they are extensive.
        Total Congressional Budget Office request for fiscal year
    2018 is $49.9 million, an increase of $3.4 million above the
    fiscal year 2017 enacted level. This funding request supports
    the current full-time equivalent level of 237 and an additional
    four analysts devoted to the areas of healthcare policy,
    dynamic scoring requirements, and appropriations. It also
    includes funding required to move CBO's data center.
        The total GAO request for fiscal year 2018 is $590.7
    million, an increase of $46.2 million above fiscal year 2017
    enacted level. This funding request supports an increase in
    FTEs from 3,000 to 3,100, which will continue to progress
    towards GAO's multi-year plan to rebuild its staff capacity to
    an optimal level of 3,250.
        Each of your agencies provide vital support services to us
    as legislators. As the nonpartisan watchdog and the
    scorekeepers of legislation, your agencies provide reports,
    analysis, and information that can have very far-reaching
    policy implications. That analysis requires highly trained
    staff, a need which is reflected in both of your budget
    proposals.
        Personnel expenses account for more than 80 percent of your
    budgets, which creates a unique challenge in a year where
    available resources must be stretched among multiple
    priorities, and increases will be difficult to accommodate.
        Given this challenge, I do look forward to our discussion
    today, during which I hope to gain a better understanding of
    your agencies' priorities and the ongoing work you do.
        Now, I would like to turn to ranking member and friend,
    Senator Chris Murphy, for his opening remarks.

                    STATEMENT OF SENATOR CHRISTOPHER MURPHY

        Senator Murphy. Thank you very much, Mr. Chairman.
        Thank you both for being here today.
        Let me just note that both of our thoughts are obviously
    with our colleague and those others who were shot and
    terrorized on a baseball field not far from here. Ironically,
    we were set that day to hold a hearing on the Capitol Police's
    budget and the Capitol Security budget, and that hearing now
    will be even more important. I appreciate the chairman's
    commitment to moving forward with that.
        I am glad to have your testimony here today. I share the
    chairman's interest. I will just note that GAO has been an
    indispensable partner to those of us who think it is our
    mission to be very careful with the dollars that our taxpayers
    send to Washington. Since 2006, GAO has helped provide $63
    billion in benefits for the Government. That is a rate of
    return that investors in my State would love, $112 in savings
    for every dollar invested in GAO, so it is a pretty good use of
    our taxpayer dollars to put it into your operations to keep
    spending honest.
        I am really glad to have Dr. Hall here today. I got to
    visit with him yesterday at GAO. And, Mr. Chairman, I think it
    is a really--excuse me, at CBO. It is really important to have
    CBO here today. I will just express my deep concern about the
    actions of the majority party in the House and the Senate with
    respect to the continued relevance and independence of the
    Congressional Budget Office. We do not just rely on CBO; our
    constituents rely on CBO. The only way that we are able to have
    a real meaningful debate in this country about the impact of
    legislation that affects people's lives is because of the
    nonpartisan analysis that CBO provides us.
        The House healthcare bill, which was rammed through with
    almost no public debate, with no time for any legislator to
    read that piece of legislation, was done so without a CBO
    score, and so hundreds of Members of Congress voted on a piece
    of legislation that reorders one-fifth of the American economy,
    that as we eventually found out, strips healthcare from up to
    23 million Americans without a nonpartisan analysis.
        And for those of us who believe in CBO, I think there is a
    deliberate campaign to try to reduce its relevance because why
    have CBO if you are not going to ask it to give its opinion on
    a piece of legislation that is that big and that sweeping ahead
    of the vote.
        Similarly, we are headed towards a potential debate and
    vote on a piece of legislation next week that is equally
    sweeping that none of us have seen, that theoretically CBO is
    working on today but may release their analysis with only a
    handful of hours or days prior to the vote. That is if the
    Senate majority decides to wait for their analysis before the
    vote.
        In addition, leading up to CBO's analysis of the House
    bill, there were some very sharp attacks on CBO from Members of
    Congress, attacks that, you know, got a little bit too personal
    at times. We should be investing in CBO's relevance by
    demanding that on major pieces of the legislation we see a CBO
    score before we vote, and we should refrain from compromising
    CBO's nonpartisanship and independence by trying to frame them
    in a political context. So, I think it is a really important
    moment for both of you to be here and particularly Dr. Hall,
    and I look forward to their testimony.
        Senator Lankford. Thank you. I look forward to the
    testimony as well.
        A quick side note on that, as you know, the Senate rules do
    not allow us to even take up a reconciliation bill without a
    CBO score, so there will most certainly be a score. It is my
    understanding the scoring will be available sometime before
    Monday. If you want to provide an update today on the process
    or timing for that, we would be happy to receive that.
        Now we are ready to receive your testimony, and we
    obviously have the written testimony already from both of you.
    Thank you for preparing that. Each of you have an opening
    statement time of approximately 5 minutes. If you fudge on that
    a few seconds, I think we will be okay one way or the other.
        Mr. Hall, or I should say Dr. Hall, since you earned it, we
    are glad to receive your statement.

                      SUMMARY STATEMENT OF DR. KEITH HALL

        Dr. Hall. Sure. Great. Chairman Lankford, Ranking Member
    Murphy, and Members of the subcommittee, thank you for the
    opportunity to present the Congressional Budget Office's budget
    request for fiscal year 2018.
        CBO was established in 1974, and its mission is an
    important one: to provide nonpartisan budgetary and economic
    analysis that is timely and carefully thought out in order to
    support the work of this subcommittee, and the Congress as a
    whole, as you address the critical issues facing the Nation.
        That mission is one that we all take very seriously. To
    fulfill its mission, CBO does a variety of things: We analyze
    trends and recent developments related to Federal spending and
    revenues; we prepare projections of budgetary and economic
    outcomes for the coming decade and reports describing them; we
    estimate the cost of legislative proposals; we examine the
    effects of the President's budgetary proposals and numerous
    alternative policy choices for the budget and the economy; we
    conduct policy studies of government activities that have
    significant budgetary and economic impact; and we provide
    testimony on a broad range of budget and economic issues.
        In 2016, for example, CBO produced multiple budget
    projections and economic forecasts, several hundred formal cost
    estimates and mandate statements, thousands of informal
    estimates, aimed at helping committees and Members to craft
    legislation, and more than 100 ``scorekeeping'' tabulations for
    appropriation acts. In addition, the agency released several
    dozen analytic reports and working papers.
        In carrying out its mission of serving the Congress during
    2017 and 2018, CBO will focus on meeting three goals: We will
    continue to provide the Congress with budget and economic
    information that is objective, insightful, and timely; we will
    continue to present and explain the methodology and results of
    CBO's analyses clearly, and pursuing opportunities to enhance
    the transparency of the agency's work; and we will continue to
    improve CBO's internal operations.
        CBO is asking for appropriations of $49.9 million for
    fiscal year 2018. That amount represents an increase of $3.4
    million, or 7.4 percent, from the $46.5 million provided to CBO
    for 2017. There are three reasons for requesting an increase.
        First, we must move our data center. CBO will need to spend
    $1.1 million in 2018 because of an unusual expense. Our primary
    data center currently resides in the House of Representatives'
    data center on the sixth floor of the Ford House Office
    Building. Because House Information Resources has decided to
    repurpose that facility, CBO must remove its IT equipment by
    the end of the next March. The Congress's offsite Alternative
    Computing Facility, which is currently CBO's backup data
    center, will become the agency's primary data center, and the
    agency will establish a new backup center at a different
    location.
        Second, the other costs of maintaining existing operations
    will be higher next year, requiring an additional $1.5 million.
    That amount includes $1.1 million for increases in personnel
    expenses, which would result from a small increase in
    employees' average salary and a rise in the cost of benefits.
    The remaining amount would be used to fund nonpersonnel
    expenses, mainly the upgrade of several cybersecurity systems.
        And third, CBO proposes to expand its analytical capacity,
    requiring about $800,000. That amount includes $500,000 for
    salary and benefits for four new FTEs. The additional FTEs
    would be devoted to healthcare analysis, scorekeeping for
    appropriation bills, and analyzing the economic effects of
    Federal tax and spending policies--work that would include the
    dynamic analysis of certain legislation, which is required by a
    recent budget resolution.
        Of course, interest in legislative proposals related to
    healthcare remains very great. As you know, the Congress is
    actively considering major legislation that would repeal,
    modify, or replace many provisions of the Affordable Care Act,
    and such activity has already significantly boosted CBO's
    workload.
        In addition to responding to that and other immediate
    legislative concerns, we are engaged in longer-term projects,
    analyzing various aspects of the healthcare system and
    enhancing our analytical capacity to assess the effects of
    legislation on that system and on the Federal budget.
        We are also anticipating a larger workload associated with
    appropriations--as analysts have been asked more often to work
    simultaneously on combinations of continuing resolutions,
    individual appropriation bills, omnibus appropriation bills,
    and supplemental appropriation bills. And we expect to further
    develop our capacity to conduct dynamic analysis in the coming
    year.
        In addition to those four new FTEs, CBO seeks additional
    resources--about $300,000--for creating additional on-site
    capacity to use sensitive data securely to meet the growing
    congressional demand for certain analyses.
        In closing, I would like to thank the Committee for its
    long-standing support of CBO. That support has allowed CBO to
    provide budgetary and economic analysis that is timely,
    thoughtful, and nonpartisan as the Congress addresses issues of
    critical importance. Thank you.
        [The statement follows:]
                      Prepared Statement of Dr. Keith Hall

      (See  the full report ``Testimony, CBO's Appropriation Request for
         Fiscal Year 2018'' in the appendix at the end of the hearing.)

        Chairman Lankford, Ranking Member Murphy, and Members of the
    subcommittee, thank you for the opportunity to present the
    Congressional Budget Office's budget request. CBO is asking for
    appropriations of $49.9 million for fiscal year 2018. That amount
    represents an increase of $3.4 million, or 7.4 percent, from the $46.5
    million provided to CBO for 2017. Of the total amount, nearly 90
    percent would be used for personnel costs.
                 reasons for the requested increase in funding
        There are three reasons for requesting an increase. CBO must move
    its data center; the other costs of maintaining existing operations
    will be higher next year; and the agency proposes to expand its
    analytical capacity.
    Moving the Data Center
        CBO will need to spend $1.1 million in 2018 because of an unusual
    expense. The agency's primary data center currently resides in the
    House of Representatives' data center on the sixth floor of the Ford
    House Office Building. Because House Information Resources has decided
    to repurpose that facility, CBO must remove its information technology
    (IT) equipment by March 2018. The Congress's off-site Alternate
    Computing Facility, which is currently CBO's backup data center, will
    become the agency's primary data center, and the agency will establish
    a new backup center at a different location.
        The move is projected to result in a onetime expenditure of $1.1
    million (and in recurring lease and maintenance costs in later years).
    About $0.2 million of the onetime cost will be incurred in fiscal year
    2017, delaying other important IT projects. In 2018, a cost of $0.9
    million will be incurred for moving the data center, as will a cost of
    $0.2 million for the delayed projects. If CBO does not receive funding
    for the relocation, the agency will be forced to pay for it by cutting
    back on the size of its staff and providing less information and
    analysis to the Congress.
    Maintaining Other Existing Operations
        CBO requests an increase of $1.5 million to fund existing
    operations in 2018. That amount includes $1.1 million for increases in
    personnel expenses, which would result from a small increase in
    employees' average salary and a rise in the cost of benefits. An
    additional $0.4 million would be used to fund nonpersonnel expenses,
    mainly the upgrade of several cybersecurity systems that are vital to
    the agency's mission but nearing the end of their life cycle and the
    renewal of long-term maintenance support for other major cybersecurity
    systems. As with the previous item, if funding is not provided, CBO
    will need to shrink its staff and provide less information and analysis
    to the Congress.
    Expanding Analytical Capacity
        CBO proposes to add four new analysts in 2018 and to create
    additional on-site capacity to use sensitive data securely. The total
    cost of those additions would be $0.8 million.
        Adding four full-time-equivalent positions (FTEs) would cost $0.5
    million for salary and benefits. The additional FTEs would be devoted
    to healthcare analysis, scorekeeping for appropriation bills, and
    analyzing the economic effects of Federal tax and spending policies
    (work that would include the dynamic analysis of certain legislation,
    which is required by a recent budget resolution). Congressional
    interest remains high in modifying or replacing the Affordable Care Act
    and changing Medicare or Medicaid. CBO is also anticipating a larger
    workload associated with appropriations and is aiming to respond to
    requests for information more quickly. And CBO expects to further
    develop its capacity to conduct dynamic analysis in the coming year.
        About $0.3 million would fund expansions of on-site capacity to
    securely use sensitive data, such as data from the Internal Revenue
    Service, the Social Security Administration, and other agencies. That
    capacity would help CBO meet growing demand from the Congress for
    analysis that draws on such data to understand changes in earnings,
    marriage, mortality, and other factors affecting benefits, tax
    revenues, and other parts of the Federal budget. The additional
    resources would make access to such data speedier and more consistent,
    increasing the quality and timeliness of CBO's work.
       cbo's budget request and its consequences for staffing and output
        In fiscal year 2018, CBO will continue its mission of providing
    objective, insightful, timely, and clearly presented budgetary and
    economic information to the Congress. The $49.9 million in funding that
    CBO requests would be used for personnel costs (that is, salaries and
    benefits), IT, and other costs, such as training.
    Funding Request for Personnel Costs and Consequences for Staffing
        CBO requests $44.3 million for salary and benefits, which equals 89
    percent of its funding request. Those funds would support 241 FTEs. The
    requested amount represents an increase of $1.6 million, or 4 percent.
    Of the total requested amount:
      --$33.0 million would cover salaries for personnel--an increase of
            $1.4 million, or 5 percent, from the amount that will be spent
            in fiscal year 2017. The increase would cover $0.4 million in
            pay for four additional analysts, as well as performance-based
            salary increases for current staff and an across-the-board
            increase of 2.4 percent for employees earning less than
            $100,000 (if such an increase is authorized for executive
            branch agencies).
      --$11.4 million would fund benefits for personnel--an increase of
            $0.2 million, or 2 percent, from the amount projected to be
            spent in 2017. The increase would cover a boost in the cost of
            Federal benefits, as well as benefits for the four additional
            analysts.
    Funding Request for Nonpersonnel Costs
        CBO requests $5.6 million for costs other than personnel, which
    equals 11 percent of its funding request. Those funds would cover
    current IT operations--such as software and hardware maintenance,
    software development, commercial data purchases, communications, and
    equipment purchases--and would pay for travel, training, interagency
    agreements, facilities support, printing and editorial support, expert
    consultants, financial management auditing support, and subscriptions
    to library services. The requested amount represents an increase of
    $1.8 million, or 47 percent.

        Of the increase, $1.1 million would fund two non-recurring IT
    costs:

      --Required relocation of CBO's data center ($908,500) and
      --IT cybersecurity projects that are expected to be delayed because
            of the 2017 costs of that relocation ($200,000).

        An additional $0.7 million of the increase would allow CBO to fund:

      --The upgrade of several cybersecurity systems that are vital to the
            agency's mission and the renewal of long-term maintenance
            support for other major cybersecurity systems ($385,000, a
            small portion of which results from price increases for current
            IT contracts) and
      --The costs of creating additional on-site capacity to use sensitive
            data securely ($315,000).
    Consequences for Output
        The requested amount of funding would allow CBO to provide the
    following estimates and other analyses to the Congress:
      --More than 600 formal cost estimates, most of which will include not
            only estimates of Federal costs but also assessments of the
            cost of mandates imposed on State, local, and Tribal
            governments or the private sector;
      --Thousands of preliminary, informal cost estimates, the demand for
            which is very high as committees seek a clear picture of the
            budgetary impact of proposals and variants of proposals before
            they formally consider legislation;
      --More than 100 scorekeeping tabulations, including account-level
            detail for individual appropriation acts at all stages of the
            legislative process, as well as summary tables showing the
            status of discretionary appropriations (by appropriations
            subcommittee) and running totals on a year-to-date basis;
      --About 60 analytic reports and papers--generally required by law or
            prepared in response to requests from the Chairmen and Ranking
            Members of key committees--about the outlook for the budget and
            the economy, major issues affecting that outlook under current
            law, the budgetary effects of policy proposals that could
            change the outlook, and a broad range of related budget and
            economic topics in such areas as defense policy,
            infrastructure, and energy policy;
      --Numerous files of data documenting detailed 10-year baseline budget
            projections, 10-year economic projections, long-term budget
            projections (spanning 30 years), and other information
            underlying analytic reports--all of them posted on CBO's
            website; and
      --Descriptions of policy options that would reduce budget deficits
            and publications that increase the transparency of CBO's work
            and communicate about that work graphically.
        Despite high productivity by a dedicated staff, CBO expects that
    the anticipated volume of estimates and other analyses will fall
    considerably short of the number of congressional requests. The demands
    on the agency remain intense. For example, the workload associated with
    the analysis of appropriations has risen; the Congress remains acutely
    interested in analyses of the Affordable Care Act and numerous
    proposals for further changes in Federal healthcare programs; and the
    now-required dynamic analyses of how certain legislative proposals
    would affect the economy and how those economic effects would, in turn,
    affect the Federal budget require complex modeling. Other issues arise
    frequently and create a heavy demand for analysis: Over the past year,
    for example, CBO analyzed legislation related to the privatization of
    the air traffic control system, sentencing reform, trade facilitation
    and the enforcement of certain trade laws, child nutrition programs,
    child welfare programs, and Puerto Rico's debt crisis. Analyzing the
    possibilities and proposals has strained the agency's resources in many
    areas. CBO regularly consults with committees and Congressional
    leadership to ensure that its resources are focused on the work that is
    of highest priority to the Congress.
        In closing, I would like to thank the Committee for its long-
    standing support of CBO. That support has allowed CBO to provide
    budgetary and economic analysis that is timely, thoughtful, and
    nonpartisan as the Congress addresses issues of critical importance.

        ----------------------------------------------------------------

        This testimony summarizes information in CBO's budget request for
    fiscal year 2018, which was written by Leigh Angres, Theresa Gullo,
    Deborah Kilroe, Cierra Liles, Terry Owens, Stephanie Ruiz, and Mark
    Smith, with guidance from Joseph E. Evans, Jr.
        The testimony was reviewed by Mark Hadley, Jeffrey Kling, and
    Robert Sunshine. Benjamin Plotinsky edited the testimony, and Jorge
    Salazar prepared it for publication. An electronic version is available
    on CBO's website at www.cbo.gov/publication/52785.

    Keith Hall
    Director
    June 2017

        ----------------------------------------------------------------

        Senator Lankford. Thank you. Mr. Dodaro.

                        GOVERNMENT ACCOUNTABILITY OFFICE

    STATEMENT OF HON. GENE DODARO, COMPTROLLER GENERAL

                          2018 BUDGET REQUEST OPENING

        Mr. Dodaro. Thank you very much, Mr. Chairman.
        Good afternoon to you, Ranking Member Senator Murphy,
    Senator Van Hollen. I appreciate the opportunity to discuss
    GAO's budget request for fiscal year 2018.
        We appreciate the subcommittee's support of GAO. We believe
    that we have returned that confidence that you have established
    in us with a handsome return on your investment.
        As Senator Murphy mentioned, last year, we returned $112 in
    financial benefits for every dollar invested in GAO. The
    Consolidated Appropriations Act for 2017 contains dozens of
    references to GAO's work for agencies to implement our
    recommendations. The Act also require agencies to report on the
    progress they have made in our past recommendations that
    Congress has directed them to implement and it actually reduced
    spending in a number of areas that reference our work.

                            OVERLAP AND DUPLICATION

        The work that we have done on overlap, duplication,
    fragmentation, cost-savings, and revenue enhancements in the
    Federal Government has yielded $136 billion in financial
    benefits. GAO's work has helped the Congress avoid
    sequestration since 2013 and the last 4 years by implementing a
    number of recommendations that make smart budget cuts with
    minimal effects on people or programs, as opposed to the
    across-the-board cuts called for by the sequester. The last
    Bipartisan Budget Act included over $30 billion in savings as a
    result of GAO's work.

                                   HIGH RISK

        Our high-risk work series, identifies the most difficult
    problems facing the Federal Government from a management
    perspective. Over the last decade, there has been over $240
    billion saved as a result of our high-risk work. High-risk work
    also provides the types of recommendations that GAO makes to
    strengthen public safety and security, and improve vital
    programs and operations. This includes everything from the
    Veterans Administration healthcare, Medicare, Medicaid,
    cybersecurity issues, oversight and safety of medical products
    and food safety, as well as the assessing and controlling toxic
    chemicals. Our work also has nonfinancial benefits that are
    significant in terms of strengthening government operations for
    the benefit of the American people.
        Our request for fiscal year 2018 enables us to continue to
    do this work. As referenced, Mr. Chairman, in your opening
    statement, we would like 100 additional full-time equivalent
    positions. I believe that will enable us to address a growing
    problem of billions of dollars in improper payments in the
    Federal Government. Last year, these payments exceeded $140
    billion. That is an understatement. Additionally GAO will
    address the yawning tax gap, a difference of about $400 billion
    on an annual basis between taxes owed and taxes that are
    collected by the Federal Government.

                             SCIENCE AND TECHNOLOGY

        GAO has also been asked to do more work in science and
    technology areas, particularly since the Congress no longer has
    the Office of Technology Assessment to provide those services.
    We have been doing that more and more. There are rapidly
    evolving issues in that area, diagnostic techniques for
    emerging diseases, security concerns from the internet of
    things beyond the information system security concerns that
    already exist, dealing with nuclear waste cleanup technologies
    that could help the Government do more to clean up hazardous
    materials at a cheaper cost.

                         GAO INFRASTRUCTURE TECHNOLOGY

        And then also, we need to make some investments in our IT
    infrastructure. It is aging. In fact, the average equipment
    that we have, is about 7 years beyond the useful life. We need
    to replace it over time. We plan to merge our telephone and our
    computer operations. That will save money over time by using
    Voice over Internet Protocols.
        We made a prudent budget request. GAO is a solid investment
    for the Congress with great returns. I know that you will give
    careful consideration to our request. I understand the
    limitations very well. As an auditor of the Federal
    Government's financial statements, I know the challenges you
    are confronting. We have made our request in good faith. It
    will be a good return on that investment, and I look forward to
    answering your questions.
        [The statement follows:]
                   Prepared Statement of Hon. Gene L. Dodaro

    (See  the full report GAO-17-604T, ``Testimony Before the Subcommittee
     on the Legislative Branch, Committee on Appropriations, U.S. Senate''
                  in the appendix at the end of the hearing.)

        Chairman Lankford, Ranking Member Murphy, and Members of the
    subcommittee:

        On behalf of the U.S. Government Accountability Office (GAO), thank
    you for the opportunity to discuss our fiscal year 2018 budget request.
    I also appreciate the confidence this subcommittee has shown in GAO by
    supporting our efforts to serve Congress and improve government
    performance, accountability, and transparency.
        Since 2014, Congress has provided funding that has resulted in
    GAO's work achieving $192.5 billion in financial benefits and 3,808
    other improvements in government programs and operations. GAO also
    provided 357 testimonies to dozens of Congressional Committees over
    this time period. Even with this record of success, much work remains
    to be done to improve government performance and accountability and
    help Congress address its highest priorities. Our fiscal year 2018
    budget submission was formulated keeping in mind the constrained budget
    environment in which the government operates.
        GAO's fiscal year 2018 budget requests $618.2 million in
    appropriated funds to enable GAO to bolster our staff capacity to
    better serve the Congress. With a return of $112 for every dollar
    invested in GAO in fiscal year 2016, GAO is an exceptional investment.
    Last fiscal year alone, our work generated over $63 billion in
    financial benefits and 1,234 program and operational improvements
    across government.
        Our fiscal year 2018 budget request is focused on maintaining
    sufficient staff so that GAO will be better positioned to help Congress
    meet its oversight responsibilities. The funding requested will also
    enable us to make critical information technology investments that
    improve our productivity and work product.
                        fiscal year 2018 budget request
        In fiscal year 2016 GAO's work resulted in a return of $112 for
    every dollar invested in GAO, generating over $63 billion in financial
    benefits to the Federal Government. Implementation of GAO's
    recommendations led to 1,234 program and operational improvements
    across the Federal Government including many important contributions to
    enacted budget, appropriations and authorization legislation. GAO
    reports contained more than 2,000 recommendations across a vast array
    of areas to foster government efficiency, effectiveness, and
    responsiveness on high priority challenges facing Congress and the
    Nation.
        Congress used GAO's work to improve agency operations and generate
    billions in savings. These will result in improved program efficiencies
    and services through implementation of GAO's recommendations, including
    such areas as DoD acquisitions and financial management, services to
    veterans, management of IT systems, and fraud detection.
        GAO also continues to draw attention to issues facing Congress and
    the Nation by producing regular updates based on our bodies of work. In
    February 2017 we issued our biennial high risk report updating Congress
    on progress made on the 32 areas identified in 2015 and added 3 new
    areas: (1) Improving Federal Programs that Serve Tribes and their
    Members; (2) the 2020 Decennial Census; and (3) U.S. Government
    Environmental Liabilities. In April we issued our seventh annual report
    on fragmentation, overlap and duplication among Federal programs and
    opportunities to reduce government operations costs or enhance
    revenues. It identified 79 new actions that Congress and executive
    branch agencies can take to improve government efficiency and
    effectiveness. Progress in addressing the 645 actions identified in the
    six previous years resulted in roughly $136 billion in financial
    benefits.
        GAO is requesting a fiscal year 2018 appropriation of $618.2
    million to continue to address congressional priorities, and fulfill
    our mission. This will support a staffing level of 3,100 full-time
    equivalents (FTE). We expect to offset our funding needs with $27.5
    million in reimbursements from program and financial audits, as well as
    rental income, resulting in a net appropriation request of $590.7
    million.
        In planning fiscal year 2018 resources, GAO recognized several key
    areas that merit increased attention as additional staffing is made
    available. Focus in these areas will provide long term benefits to the
    Nation. They include identifying strategies and actions agencies can
    take to reduce a growing amount, now over $140 billion annually, of
    improper government payments; finding ways to close the yawning tax gap
    of over $400 billion dollars annually between taxes owed to the
    government and total taxes paid; and helping the Congress determine
    policy implications of increasingly complex and rapidly evolving
    development of science and technology.
                 priority areas for resource enhancement at gao
        While GAO always responds to the oversight and legislative
    priorities of the Congress, in fiscal year 2018 we would also propose
    to focus additional resources on certain areas as staffing is made
    available, including:

        Growing Amounts of Improper Payments.--Payments that should not
    have been made or that were made in an incorrect amount are a growing
    government-wide issue. Since fiscal year 2003, when certain agencies
    were required by statute to begin reporting improper payments,
    cumulative improper payment estimates have totaled over $1.2 trillion.
    The improper payments annual estimate in fiscal year 2016, attributable
    to 112 programs across 22 agencies, was over $144 billion, up from
    almost $137 billion in fiscal year 2015 and almost $125 billion in
    fiscal year 2014.
        Three large programs, Medicare, Medicaid, and the Earned Income Tax
    Credit, account for over 78 percent of the fiscal year 2016 government-
    wide improper payment estimate. Federal spending for Medicare and
    Medicaid is expected to increase significantly, so it is especially
    critical to take appropriate measures to reduce improper payments in
    these programs.
        In fiscal year 2016, 14 Federal programs had improper payment
    estimates greater than $1 billion. Eleven programs had payment error
    rates that exceeded 10 percent. To address the issue of improper
    payments, agencies should first identify the root causes of improper
    payments and then implement internal controls aimed at both prevention
    and detection.
        The government's ability to understand the scope of the issue is
    hindered by incomplete, unreliable, or under stated estimates; risk
    assessments that may not be accurate; and noncompliance with criteria
    listed in Federal law. For example, 18 Federal programs determined to
    be at risk for improper payments did not report estimates of improper
    payments in fiscal year 2016.
        In addition, DoD lacks quality assurance procedures to ensure the
    completeness and accuracy of its estimates. Further, various Inspectors
    General reported deficiencies related to compliance with the criteria
    listed in the Improper Payments Elimination and Recovery Act of 2010
    for fiscal year 2015 at their respective Federal entities.
        Our work identifies a number of strategies and specific actions
    agencies can take to reduce improper payments, which could yield
    significant savings and help better ensure that taxpayer funds are
    adequately safeguarded.

        Yawning Tax Gap.--According to the 2016 Financial Report, the
    estimated size of the annual gross tax gap between taxes owed to the
    government and total taxes paid on time is $458 billion. The tax gap
    arises when taxpayers, whether intentionally or inadvertently, fail to
    (1) accurately report tax liabilities on tax returns (underreporting);
    (2) pay taxes due from filed returns (underpayment); or (3) file a
    required tax return altogether or on time (nonfiling). Underreporting
    accounted for 84 percent of the tax gap across tax years 2008 to 2010.
        This resulted in an annual net tax gap of $406 billion. Given the
    size of the tax gap, increased attention to this area would yield
    significant financial benefits and help improve the government's fiscal
    position.
        Addressing the tax gap requires strategies on multiple fronts. Key
    factors that contribute to the tax gap include limited third party
    reporting and tax code complexity. For example, the extent to which
    individual taxpayers accurately report their income is correlated with
    the extent to which the income is reported to them and the IRS by third
    parties.
        Our work identifies a number of strategies and specific actions
    Congress and agencies can take to reduce the tax gap, including
    simplifying the tax code. Additional resources would enable us to
    expand our work in finding ways to further close the tax gap, thus
    improving the government's financial position.

        Science and Technology.--Science and technology developments
    influence almost every aspect of the American experience; they present
    great opportunities to improve the quality of life, the performance of
    the economy and the government, and the relationship of the government
    to its population. While information technology is a major
    technological force of this era, linking individuals, organizations,
    and economies around the world, other kinds of scientific and
    technological advances are also creating significant changes.
        The increased development and use of new technologies challenge the
    government's and the Congress's ability to evaluate their potential and
    assess their program and policy implications in areas such as security,
    safety, privacy, and equity.
        In fiscal year 2016 we reported on Zika virus as an emerging
    infectious disease, the continued need for effective oversight of high-
    containment laboratories, the status of bio forensic capabilities in
    the law enforcement and homeland security communities, the emergence of
    data analytics and its overall impact on society and the economy, and
    how municipalities can use technology to improve the efficiency of
    their water distribution systems and tap nontraditional sources to
    address water scarcity, among others.
        GAO has already issued two best practice guides, addressing capital
    acquisitions in the areas of lifecycle cost estimates and project
    scheduling. These best practice products are designed to assist Federal
    managers in addressing major projects, and they also serve as a means
    by which GAO can evaluate such projects. Adding to these initial
    efforts, GAO's science and technology group issued a third best
    practice guide, this one addressing technology readiness assessment.
        We expect this most recent work will be a means by which program
    managers can identify technologies and manage their risks throughout
    the development of technology-dependent projects. Given the persistent
    and growing demand for this technical work, GAO strives to continue to
    build our staff capacity in this growing area.
        Additional resources would enable us to expand our work including
    the completion of key strategic technology reports on the Internet of
    Things, sustainable chemistry, rapid point-of-care medical diagnostics
    for detecting infectious diseases (e.g., Ebola), artificial
    intelligence systems, electromagnetic pulse threat mitigation
    technologies, oversight of biosafety labs, nuclear waste immobilization
    technologies, and emerging infectious diseases.
        Based on interest expressed by various Committees of jurisdiction,
    potential future science and technology work could focus on antibiotic-
    resistant bacteria, freshwater conservation technologies for the
    agricultural sector, block chain technologies (financial technology),
    unmanned aerial systems, high-frequency trading technologies, and
    regenerative medicine, among others.
                      information technology improvements
        In fiscal year 2017, GAO requested funding to continue investments
    to enhance our management information systems, IT infrastructure and
    security, as well as our telecommunications capabilities. Fiscal year
    2018 funding will seek to continue these efforts as well as make
    additional improvements in these areas. For fiscal year 2018 GAO is
    requesting funding needed to continue our efforts to improve and
    modernize GAO's technology infrastructure and services.
        Over the past few years GAO has undertaken the Engagement
    Management System (EMS) and New Blue initiatives to better leverage
    technology. These new systems will enhance our core business processes
    and enable GAO products to be created and distributed in the most
    efficient manner using currently supported technology.
        GAO developed and deployed EMS to help manage the work throughout
    the agency. This new system has been rolled out across the agency and
    has allowed us to retire multiple legacy applications. New Blue will
    enable the end-to-end processing of GAO products from drafting through
    issuance to the Congress and posting on GAO's website. New Blue will
    allow GAO to keep pace with the evolving methods of demand and
    consumption of information from our clients and stakeholders by
    supporting multiple formats and product types. Both EMS and New Blue
    have been planned and are being executed to ensure the quality and
    reliability of GAO products continues to be met at the highest levels
    allowing greater efficiency and flexibility in best supporting
    Congressional needs.

        With funding requested for 2018, GAO will be able to meet key
    demands for technology upgrades, including:

      --GAO needs funding to upgrade its data center and the infrastructure
            that supports GAO operations. GAO's data center requires 24/7
            operational availability to adequately support staff located in
            headquarters and GAO's 11 field locations throughout the United
            States. GAO needs to improve data management operations and
            security to ensure adequate support and meet ongoing needs. As
            such, in fiscal year 2018, we will assess options to upgrade
            the equipment supporting the center to provide a modern
            computing environment, which could reduce costs and enhance
            security, capacity, and availability. We expect to initiate
            replacement of the equipment and support beginning in fiscal
            year 2018.
      --GAO is looking to make strategic investments into cloud-based
            solutions to maximize efficiency, improve the security of our
            data and our ability to best combat cyber threats to our
            infrastructure, and position us to leverage technology
            opportunities in the future.
      --Funding is also being sought to retire our aging telephone and
            video teleconferencing infrastructures and replace them with a
            state of the art communications platform. Given that
            collaboration is so vital to our mission, we are looking to
            invest in new technologies that will improve how our staff
            works and communicates when doing our work across geographic
            locations.
      --Another key priority in fiscal year 2018 is our effort to replace
            our aging document management solution with a modern content
            management solution. A new solution will improve our
            capabilities to store and re-use the information and content we
            produce in support of core Agency work processes and products.
            A modern content management solution will enable GAO to more
            effectively and efficiently serve Congress and the American
            Public by providing new workflow management capabilities.

        Cumulatively these technology improvements will help the GAO
    workforce deliver its analysis to the Congress in the most robust and
    modern manner and consistent with currently supported technology
    standards. We are consistently looking to improve our technology
    platforms to take advantage of technology advances that best enable GAO
    to deliver value to our clients while seeking cost saving
    opportunities. We sincerely appreciate the Committee's support to date
    and look forward to your support in fiscal year 2018 and beyond.
                           gao's current environment
        GAO operated at the Continuing Resolution (CR) level through the
    beginning of May. This had a significant impact on human resource and
    operations. We deferred or reduced staffing and curtailed spending on
    technology investments that are critical to our efforts to modernize
    GAO's infrastructure and business processes.
        The fiscal year 2017 funding provided in the Omnibus will afford us
    an opportunity to address many of the staffing and operations
    challenges presented during the Continuing Resolution period.
        The fiscal year 2018 budget request would enable GAO to bolster its
    staff capacity to 3,100 FTEs through a targeted recruitment program to
    help address succession planning and fill critical skill gaps. This
    funding level will also help ensure that GAO is able to recruit and
    retain a talented and diverse workforce as well as make progress
    towards an optimal staffing level of 3,250 FTEs.
        We expect to offset our funding needs with $27.5 million in
    reimbursements from program and financial audits and rental income,
    resulting in a net appropriation request of $590.7 million.
                   assisting congress in shaping legislation
        GAO continues to be recognized for its non-partisan, objective,
    fact-based, and professional analyses across the full breadth and scope
    of the Federal Government's responsibilities and the extensive
    interests of Congress. In fiscal year 2016, and to date in fiscal year
    2017, Congress used GAO's work as the basis for a wide range of
    significant legislative decisions.

        The Consolidated Appropriations Act, 2017.--In many cases requires
    an agency to take action based on GAO findings and recommendations. For
    example, the act requires:

      --Census to address shortcomings in its cost estimate, identified by
            GAO, for the 2020 Census;
      --Federal agencies to resolve duplication in programs identified by
            GAO, by identifying substantive challenges, legal barriers, and
            by making legislative recommendations;
      --IRS to develop a customer service plan with specific goals,
            strategies and, resources; GAO recommended that IRS assess gaps
            between desired and actual customer service performance;
      --GSA to improve its ability to account for Federal property and its
            value; the management of Federal real property has been on
            GAO's high risk list since 2015;
      --Labor to finalize and implement regulations related to the
            Workforce Innovation and Opportunity Act; GAO found that
            limited guidance and regulations slowed the act's
            implementation; and
      --Defense to
        --produce information clarifying the content, scope, and phasing of
                developments, and capabilities of Joint Strike Fighter
                components; GAO found current management of follow-on
                development potentially posed greater costs and schedule
                risk;
        --report on the cost, schedule, and obligations of the Defense
                Healthcare Systems Modernization program.

        The act also cited GAO work on deficiencies in agencies'
    information technology systems and directed agencies to implement those
    recommendations. Among those agencies included were the Farm Service
    Agency, the IRS, Housing and Urban Development, and the Federal
    Emergency Management Agency.
        The Act also directed agencies to implement other GAO
    recommendations. For example, the act directs:

      --Customs and Border Patrol to document the time unaccompanied
            children spend in custody, the care afforded them, and to
            develop a way to register, track and analyze complaints for
            trends.

        In other cases, the Act required an agency to report on its
    progress implementing a GAO recommendation. For example, the act
    requires progress reports on the following:

      --the State Department's efforts to utilize cost containment, risk
            assessment, and strategic planning for oversees facilities,
            such as embassies; and establish performance goals for programs
            meant to reduce global poverty and to collaborate with similar
            U.S. programs; and
      --Interior's actions to ensure the Bureau of Indian Education schools
            and facilities have effective management controls and comply
            with Federal laws and regulations.

        Finally, the act included reductions to budget requests, including
    to the Department of Defense's (DoD) fiscal year 2017 appropriations
    based on GAO work. For example, GAO found that DoD had overstated its
    fiscal year 2017 O&M budget request for fuel, resulting in $1.1 billion
    in reductions.

        The Fiscal Year 2017 Military Construction and Veterans Affairs,
    and Related Agencies Appropriations Act.--Requires Veteran Affairs (VA)
    to clarify access and wait times for mental health serves and how it
    manages appointments for these services. GAO found that the Veterans
    Health Administration calculations of veteran mental health wait times
    may not have always reflected the overall amount of time a veteran
    waited for care.

        The Bipartisan Budget Act of 2015.--The Congress used GAO's work to
    contribute to an agreement on spending caps in fiscal years 2016 and
    2017 by identifying $30 billion in offsets or revenue enhancements,
    including (1) making new provider-based off-campus hospital outpatient
    departments ineligible for inpatient reimbursements, saving $9.3
    billion; (2) streamlining and simplifying audit procedures for certain
    partnerships, increasing tax revenue by an estimated $9.3 billion; and
    (3) requiring agencies to increase civil monetary penalties annually
    reflecting the consumer price index, generating $1.3 billion.

        The National Defense Authorization Act for Fiscal Year 2017.--
    Undertakes significant reform of military acquisition policy.
    Specifically, the Act requires DoD to improve reporting about the
    volume and types of defense services acquired, control costs, enhance
    access to supply chains, and take steps to reduce acquisition risks and
    encourage the development of new prototypes.

      --These changes reflect GAO's body of work on military acquisition
            that concluded, among other things, that senior DoD leadership
            needed to be better positioned to make informed decisions about
            acquisition. Changing approaches to acquisition could result in
            significant savings. In addition, access to innovative
            technology could be improved.
      --In addition to reforming acquisition, the Act requires DoD to
            report on rebuilding military readiness, specifically
            comprehensive readiness goals, implementation strategies,
            progress metrics, and related costs and other best practices.
            These requirements reflect GAO's finding that the lack of a
            comprehensive plan put DoD's readiness rebuilding efforts at
            risk.
      --The Act did not fund the request for $15,260,000 in funding to
            create a repository for defense nuclear waste, based on GAO's
            finding that DOE's cost estimates for its repository plan
            excluded billions of dollars in likely costs.
      --Separately, the Act directs Federal agencies to use paid
            administrative leave more judiciously, so leave does not exceed
            reasonable amounts. GAO had reported that Federal agencies had
            inconsistent policies for the use and reporting of paid
            administrative leave and that 263 Federal employees had used 1
            to 3 years of leave during a 3 year period.

        The Fraud Reduction and Data Analytics Act of 2015.--Requires the
    Office of Management and Budget (OMB) to establish guidelines based on
    GAO's 2015 Framework for Managing Fraud Risks in Federal Programs to
    help prevent and respond to fraud and improper payments in Federal
    programs.
        The Framework identifies leading practices to help managers combat
    fraud and preserve integrity in government agencies and programs. The
    act should help agencies reduce their vulnerability to fraud by
    encouraging them to identify risks and vulnerabilities; implement
    financial and administrative controls; and by requiring transparency
    through reporting on these efforts.

        The Frank R. Lautenberg Chemical Safety for the 21st Century Act.--
    GAO has had ``Transforming EPA's Process for Assessing and Controlling
    Toxic Chemicals'' on our high-risk list since 2009 because EPA had not
    developed sufficient chemical assessment information to limit exposure
    to many chemicals that may pose substantial health risks. This act
    provides EPA with greater authority to address chemical risks.

        Program Management Improvement Accountability Act.--The act seeks
    to improve program and project management in Federal agencies. Among
    other things, the act requires the Deputy Director of the Office of
    Management and Budget (OMB) to adopt and oversee implementation of
    government-wide standards, policies, and guidelines for program and
    project management in executive agencies.
        The act elevates agencies' attention to GAO's high risk list by
    requiring the Deputy Director to address programs on our High-Risk List
    through portfolio reviews; creating an interagency forum to review
    programs on the High-Risk List and make recommendations to the Deputy
    Director or designee; and having GAO review the effectiveness of key
    efforts under the act.

        The No Veterans Crisis Line Call Should Go Unanswered Act.--
    Requires Veterans Affairs to ensure that each telephone call, text
    message, or other communication that their crisis line receives is
    answered in a timely manner by a person. GAO found that VA did not meet
    its call response time goals for the Veterans Crisis Line and that some
    test text messages did not receive responses.
          financial benefits to the federal government from gao's work
        GAO's findings and recommendations produce measurable financial
    benefits for the Federal Government. Examples include financial
    benefits resulting from changes in business operations and activities,
    the restructuring of Federal programs, or modifications to
    entitlements, taxes, or user fees.

        In fiscal year 2016, we exceeded our target of $50.0 billion in
    financial benefits by $13.4 billion, reaching $63.4 billion in benefits
    for the government. This is a return of about $112 for every dollar
    invested in us. Key financial benefits arising from our work included:

      --reducing improper payments in the Medicare Advantage Program (about
            $21.4 billion);
      --increasing the use of strategic sourcing by the VA to reduce
            procurement costs (about $3.6 billion); and
      --improving cost estimates for the DoD's Bulk Fuel Operation and
            Maintenance budget (about $2.3 billion).
                                program benefits
        Many other benefits resulting from our work cannot be measured in
    dollars, but lead to program and operational improvements. In fiscal
    year 2016, agencies and Congress implemented 1,234 of these other
    benefits. For example, our work on public safety and security:

      --prompted DOT to enhance its oversight of roadside safety hardware
            (e.g., guardrails), including a new process to verify third-
            party crash-test results;
      --led the Consumer Financial Protection Bureau (CFPB) to issue a
            comprehensive data privacy protection plan and develop
            procedures to mitigate privacy risks and remove personally
            identifiable information from the consumer data that it
            collects;
      --induced the Army to complete a mission risk assessment on planned
            support unit force reductions, and assess options to minimize
            such risks;
      --prompted the Federal Bureau of Investigation to (1) conduct audits
            to ensure that staff who submit face image searches comply with
            privacy laws and (2) undertake an operational review of its
            face recognition technology to see if it is meeting law
            enforcement user needs; and
      --led the Department of State to enhance its management of
            transportation-related security risks to better protect U.S.
            diplomatic personnel and their families when posted overseas.

        Similarly, our work related to vulnerable populations:

      --addressed protection of children including: identifying (1) safety
            and health issues at Indian school facilities and the need for
            better Federal coordination to assist K-12 schools with
            emergency preparedness, (2) the need for better use of data to
            help agencies identify disparities in K-12 education, and (3)
            the importance of further assisting States to keep foster
            children in family based care;
      --prompted the Federal Trade Commission and CFPB to issue consumer
            advisories to reduce the exploitation of vulnerable people
            regarding pension advances;
      --prompted VA to improve the accuracy of the data collected on
            veteran suicides across its medical centers to better inform
            suicide prevention efforts; and
      --led the Department of Education to enhance assistance for homeless
            youth in planning for college, navigating the admissions
            process, and applying for Federal student aid.
                         testimonies and digital media
        In fiscal year 2016 senior GAO officials testified 119 times before
    69 separate committees or subcommittees on issues that touched
    virtually all major Federal agencies.
        We also engaged key stakeholders on social and digital media. Our
    testimonies, reports, and legal decisions appeared in nearly 40,000
    twitter feeds. Watch Blog, which provides context about our work, has
    been viewed more than 165,000 times. Figure 1 shows examples of topics
    we testified on in fiscal year 2016, by strategic goal.

              FIGURE 1: SELECTED GAO FISCAL YEAR 2016 TESTIMONIES

    _______________________________________________________________________
    Goal 1: Address Current and Emerging Challenges to the Well-Being and
            Financial Security of the American People
    _______________________________________________________________________

    Addressing Improper Payments in the Supplemental Nutrition Assistance
    Program
    Improving Oversight of the Small Business Administration's HUB Zone
    Program
    Timely Handling of Veterans' Health Care Claims
    Controls for Preventing Human Trafficking
    Reforming Regulation of Scientific Research
    Ensuring Safety and Health at Indian Schools
    Managing Federal Agencies' Vehicle Fleets
    Safeguarding Transport of Spent Nuclear Fuel
    U.S. Postal Service Management Challenges
    Overseeing the Nuclear Security Enterprise
    Commercial Space Industry Developments and FAA Challenges
    Improving Medicaid's Allocation to States
    Managing and Leasing Federal Real Property

    _______________________________________________________________________
    Goal 2: Respond to Changing Security Threats and the Challenges of
            Global Interdependence
    _______________________________________________________________________

    Addressing NASA's Management Challenges for Major Acquisition Projects
    Meeting Pilot Workforce Needs for Unmanned Aerial Systems
    Addressing Acquisition Shortfalls with the Ford Class Aircraft Carrier
    Reducing Migration of Unaccompanied Children from Central America
    Oversight of Humanitarian Aid to Syria
    Future Access and Capabilities Challenges for Trusted Defense
    Microelectronics
    Addressing Southwest Border Security
    Improving DoD's Whistleblower Protections
    Implementing SEC's Conflict Minerals Rule
    Combatting Nuclear Smuggling
    Addressing IT Security and Identity Theft
    Providing Data on Proposed Assistance to Palau
    Enhancing National BioSurveillance Capacity

    _______________________________________________________________________
    Goal 3: Help Transform the Federal Government to Address National
            Challenges
    _______________________________________________________________________

    DATA Act Implementation Challenges
    Observations on the Zika Virus Outbreak
    Improving Enrollment Controls for Medicare Providers and Suppliers
    Reducing Fragmentation, Overlap, and Duplication in Federal Programs
    Addressing Cyber-based Risks to Federal Systems
    Modernizing Federal IT Systems
    Improving Integration of VA and DoD Electronic Health Records
    Improving IRS's Efforts to Protect Taxpayer data and Combat Identity
    Theft Refund Fraud
    Oversight at High Containment Laboratories
    Addressing Numerous IT Challenges at the VA
    Addressing Government-Wide Improper Payments and the Tax Gap
    Improving Oversight of DHS' Human Resources IT
    Recruiting and Retaining Millennial Employees in the Federal Workforce
    Improving Management of IT for the 2020 Census
    Improving Federal Financial Management
    ----------
    Source: GAO  GAO-17-1SP
                            high-risk program update
        Every 2 years GAO publishes our high-risk list that highlights
    Federal programs and operations that are especially vulnerable to
    waste, fraud, abuse and mismanagement, or that need transformative
    change.
        GAO's 2017 edition reported that many of the 32 high-risk areas on
    the 2015 list have shown solid progress (Enclosure I). Twenty-three
    high-risk areas, or two-thirds, have met or partially met all five
    criteria for removal from the High-Risk List; 15 of these areas fully
    met at least one criterion. Progress in high risk areas over the past
    decade resulted in financial benefits totaling approximately $240
    billion, or an average of $24 billion per year.
        Progress has been possible through the concerted efforts of
    Congress and leadership and staff in agencies. For example, Congress
    enacted over a dozen laws since GAO's last report in February 2015 to
    help address high-risk issues.
        GAO removed one high-risk area on managing terrorism related
    information, because significant progress had been made to strengthen
    how intelligence on terrorism, homeland security, and law enforcement
    is shared among Federal, State, local, Tribal, international, and
    private sector partners.
        Sufficient progress was made to remove segments of two areas
    related to supply chain management at DoD and gaps in geostationary
    weather satellite data.
        Two high-risk areas expanded: DoD's polar-orbiting weather
    satellites and the Department of the Interior's restructuring of
    offshore oil and gas oversight. Several other areas need substantive
    attention including VA healthcare, DoD financial management, ensuring
    the security of Federal information systems and cyber critical
    infrastructure, resolving the Federal role in housing finance, and
    improving the management of IT acquisitions and operations.

        GAO added three areas to the High-Risk List, bringing the 2017
    total to 34:

      --Management of Federal Programs That Serve Tribes and Their
            Members.--GAO has reported that Federal agencies, including the
            Department of the Interior's Bureaus of Indian Education and
            Indian Affairs and the Department of Health and Human Services'
            Indian Health Service, have ineffectively administered Indian
            education and healthcare programs and inefficiently developed
            Indian energy resources. Thirty-nine of 41 GAO recommendations
            on this issue remain unimplemented.
      --The 2020 Decennial Census.--The cost of the census has been
            escalating over the last several decennials; the 2010 Census
            was the costliest U.S. Census in history at about $12.3
            billion, about 31 percent more than the 2000 Census. The U.S.
            Census Bureau plans to implement several innovations including
            IT systems for the 2020 Census. Successfully implementing these
            innovations, along with other challenges, would minimize risks
            to the Census Bureau's ability to conduct a cost-effective
            census. Since 2014, GAO has made 30 recommendations related to
            this area; however, only 6 have been fully implemented.
      --U.S. Government's Environmental Liabilities.--In fiscal year 2016
            this liability was estimated at $447 billion (up from $212
            billion in 1997). The Department of Energy is responsible for
            83 percent of these liabilities and DoD for 14 percent.
            Agencies spend billions each year on environmental cleanup
            efforts, but the estimated environmental liability continues to
            rise. Since 1994, GAO has made at least 28 recommendations
            related to this area; 13 are unimplemented.

        Details on each high-risk area can be found at http://www.gao.gov/
    highrisk/overview.
        opportunities to reduce fragmentation, overlap, and duplication
        Since 2011, we have reported on Federal programs, agencies,
    offices, and initiatives that have duplicative goals or activities as
    well as opportunities to achieve greater efficiency and effectiveness
    that result in cost savings or enhanced revenue collection.
        GAO's 2017 annual report, our seventh, identifies 79 new actions
    that Congress and executive branch agencies can take to improve the
    efficiency and effectiveness of government in 29 new areas. Of these,
    GAO identified 15 areas in which there is evidence of fragmentation,
    overlap, or duplication.
        For example, GAO found that the Army and Air Force need to improve
    the management of their virtual training programs to avoid
    fragmentation and better acquire and integrate virtual devices into
    training to potentially save tens of millions of dollars.
        GAO also identified 14 areas to reduce the cost of government
    operations or enhance revenues. For example, GAO found that the
    Department of Energy could potentially save tens of billions of dollars
    by improving its analysis of options for storing defense and commercial
    high-level nuclear waste and fuel.
        Congress and executive branch agencies have made progress in
    addressing the 645 actions that GAO identified from 2011 to 2016.
    Congressional and executive branch efforts to address these actions
    over the past 6 years have resulted in roughly $136 billion in
    financial benefits, of which $75 billion has accrued and at least an
    additional $61 billion in estimated benefits is projected to accrue in
    future years.
        To manage our congressional workload, we continue to take steps to
    ensure our work supports the highest congressional legislative and
    oversight priorities while focusing on areas with the greatest
    potential for results, such as cost savings and improved government
    performance.
      managing workload by focusing resources on congressional priorities
        We actively coordinate with congressional committees in advance of
    new statutory mandates \1\ by identifying mandates in real time as
    bills are introduced, participating in ongoing discussions with
    congressional staff, and collaborating to ensure that the work is
    properly scoped and consistent with the committees' highest priorities.
    ---------------------------------------------------------------------------
        \1\ Congressional mandates include requirements directed by
    statutes, congressional resolutions, conference reports, and committee
    reports.
    ---------------------------------------------------------------------------
        In fiscal year 2016, we devoted 97 percent of our engagement
    resources to work requested or mandated by the Congress. The remaining
    3 percent was initiated under the Comptroller General's authority.
        Chairs and Ranking Members of committees and subcommittees are
    regularly consulted for feedback on our performance. Their priorities
    ensure we maximize the return on your investment in us.
        We continue to collaborate with the Congress to revise or repeal
    mandated reporting requirements which have, over time, lost relevance
    or usefulness. For example, we worked with the armed services
    committees to have three mandates repealed or revised in the 2017
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    (Public Law 114-301).
                              gao's strategic plan
        GAO's Strategic Plan provides a comprehensive roadmap for how our
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        The Strategic Plan Framework (Enclosure II) summarizes the global
    trends affecting government and society, as well as the strategic goals
    and objectives that guide our work. We will issue the next update to
    our strategic plan in 2018.
        To effectively assist the Congress, we perform not only oversight
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                               concluding remarks
        We value the opportunity to provide Congress and the nation with
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        I appreciate, as always, your careful consideration of our budget
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    year 2018 budget with you.

        [Enclosures I and II follow:]

                     ENCLOSURE I: GAO'S 2017 HIGH RISK LIST

                    GAO'S HIGH-RISK AS OF SEPTEMBER 30, 2016
    ------------------------------------------------------------------------
                       High Risk Area                       Year Designated
    ------------------------------------------------------------------------
    Strengthening the Foundation for Efficiency and Effectiveness
    ------------------------------------------------------------------------
        Improving Federal Programs that Serve Tribes and               2017
         their Members (new) \a\........................
        2020 Decennial Census (new).....................               2017
        U.S. Government Environmental Liabilities (new)                2017
         \a\............................................
        Improving the Management of IT Acquisitions and                2015
         Operations.....................................
        Limiting the Federal Government's Fiscal                       2013
         Exposure by Better Managing Climate Change Risk
        Management of Federal Oil and Gas Resources.....               2011
        Modernizing the U.S. Financial Regulatory System               2009
         and the Federal Role in Housing Finance \a\....
        Restructuring the U.S. Postal Service to Achieve               2006
         Sustainable Financial Viability \a\............
        Funding the Nations Surface Transportation                     2007
         System \a\.....................................
        Managing Federal Real Property..................               2003
        Strategic Human Capital Management \a\..........               2001
    ------------------------------------------------------------------------
    Transforming Defense Department Program Management
    ------------------------------------------------------------------------
        DoD Approach to Business Transformation.........               2005
        DoD Support Infrastructure Management \a\.......               1997
        DoD Business Systems Modernization..............               1995
        DoD Financial Management........................               1995
        DoD Supply Chain Management.....................               1990
        DoD Weapon Systems Acquisitions.................               1990
    ------------------------------------------------------------------------
    Ensuring Public Safety and Security
    ------------------------------------------------------------------------
        Mitigating Gaps in Weather Satellite Data.......               2013
        Protecting Public Health through Enhanced                      2009
         Oversight of Medical Products..................
        Transforming EPA's Processes for Assessing and                 2009
         Controlling Toxic Chemicals....................
        Ensuring the Effective Protection of                           2007
         Technologies Critical to U.S. Nations Security
         Interests \a\..................................
        Improving Federal Oversight of Food Safety......               2007
        Strengthening Department of Homeland Security                  2003
         Management Functions \a\.......................
        Ensuring the Security of Federal Information                   1997
         Systems and Cyber Critical Infrastructure and
         Protecting the Privacy of Personally
         Identifiable Information.......................
    ------------------------------------------------------------------------
    Managing Federal Contracting More Effectively
    ------------------------------------------------------------------------
        DoD Contract Management \a\.....................               1992
        DOE's Contract Management for the National                     1990
         Nuclear Security Administration and the Office
         of Environmental Management....................
        NASA Acquisition Management.....................               1990
    ------------------------------------------------------------------------
    Assessing the Efficiency and Effectiveness of Tax Law Administration
    ------------------------------------------------------------------------
        Enforcement of Tax Laws \a\.....................               1990
    ------------------------------------------------------------------------
    Modernizing and Safeguarding Insurance and Benefit Programs
    ------------------------------------------------------------------------
        Managing Risks and Improving VA Health Care \a\.               2015
        National Flood Insurance Program................               2006
        Improving and Modernizing Federal Disability                   2003
         Programs.......................................
        Pension Benefit Guaranty Corporation Insurance                 2003
         Programs \a\...................................
        Medicaid Program \a\............................               2003
        Medicare Program \a\............................               1990
    ------------------------------------------------------------------------
    \a\ Legislation is likely to be necessary to effectively address this
      high risk area

    Source: GAO  GAO 17-317

                  ENCLOSURE II: GAO'S STRATEGIC PLAN FRAMEWORK

     (See  Enclosure II in the full report GAO-17-604T, ``Testimony Before
           the Subcommittee on the Legislative Branch, Committee on
        Appropriations, U.S. Senate'' in the appendix at the end of the
                                   hearing.)

        Senator Lankford. Thank both of you for your testimony.
    Senator Murphy and I are going to defer our questions to the
    end, and recognize Senator Van Hollen.
        Senator Van Hollen. Thank you. Thank you, Mr. Chairman and
    Ranking Member Murphy. I am grateful for the opportunity.
        Thank both of you for your testimony today. Most
    importantly, thank you and your teams for the good work you do
    on behalf of our constituents, the American people and
    taxpayers.

                                METRO ENGAGEMENT

        Mr. Dodaro, I just have a couple questions. One is a
    regional issue regarding the Washington Metro system, which
    carries hundreds of thousands of Federal employees to work
    every day, and I appreciate your oversight work on SafeTrack.
        As I am sure you are aware, Members of the regional
    delegation here, Senator Warner, Senator Cardin, Senator Kaine
    and others have requested that GAO look into some additional
    challenges with a view to making recommendations as to how we
    move forward with this multijurisdictional metro system that is
    the Nation's subway.
        My question to you is, number one, have you had a chance to
    review that request, and do you have any sense of when your
    analysis might be ready?
        Mr. Dodaro. We have reviewed the request. We have accepted
    the request. The work of our staff is underway and--we will
    have to give you a date later. I am not prepared to give a date
    right now.
        Senator Van Hollen. Got it.
        Mr. Dodaro. It is important work. We will finish it as soon
    as we can.
        Senator Van Hollen. I appreciate that.

                          OVERSEAS CONTINGENCY ACCOUNT

        Next question relates to budget issues and OCO. For those
    of us who have been working on budget issues over time, there
    are issues of sequestration and then there are issues of what
    the overall defense spending will be and nondefense. And then
    within defense and some nondefense categories we have the
    overseas contingency----
        Mr. Dodaro. Right.
        Senator Van Hollen [continuing]. Accounts. And as I think
    both parties have recognized, over time, these accounts have
    been used in some cases for more of a slush fund to pay for
    things that are not necessarily contingencies but may be
    enduring costs. I know that in January GAO recommended that
    both DoD and OMB work together to revise the criteria for
    determining what meets the requirements of being considered
    overseas contingency account expenditures.
        So, my question is do you know where those agencies are? I
    believe that they were waiting for a new administration to
    pursue your recommendation. What is the status of that? What is
    this new administration thinking in that regard?
        Mr. Dodaro. Yes. I have a meeting next month with Secretary
    Mattis over at the Department of Defense (DoD), and I plan to
    follow up. I met once with Director Mulvaney, and I did not
    address this issue with him at that time. I had a long list of
    other things to talk to him about. I will follow up with him. I
    do not know offhand, Senator Van Hollen. It is something that I
    will follow up with both of them on.
        Senator Van Hollen. I hope you will. OMB Director Mulvaney
    and I do not agree on everything, but we actually had a
    bipartisan amendment in the House of Representatives, which
    passed at least 1 year, to end the abuse of OCO because all of
    us I think should agree that, at least from an accounting
    perspective, we should be honest and transparent with the
    American people, so I really hope you will----
        Mr. Dodaro. Yes.
        Senator Van Hollen [continuing]. Pursue that because I am
    sure this is an issue that will arise in the context of the
    upcoming budget negotiations and the appropriations.
        Mr. Dodaro. Yes. I will do two things. One, I will provide
    an answer for the record based upon checking with our staff,
    and then I will follow up with both of those individuals.
        [The information follows:]
       response for the record on status of recommendations for overseas
      contingency operations: omb and dod should revise the criteria for
    determining eligible costs and identify the costs likely to endure long
                                term (gao-17-68)
        GAO made the following recommendations for executive action in this
    January, 2017 report.
        1.  To provide additional information for congressional decision
    makers regarding DoD's budget, the Secretary of Defense should direct
    the Under Secretary of Defense (Comptroller), in consultation with the
    OMB, to reevaluate and revise the criteria for determining what can be
    included in DoD's OCO budget requests to reflect current OCO-related
    activities and relevant budget policy directing in which budget
    requests OCO funds may be included.
        2.  To assist decision makers in formulating DoD's future budgets,
    the Secretary of Defense should direct the Under Secretary of Defense
    (Comptroller) to develop a complete and reliable estimate of DoD's
    enduring OCO costs and to report these costs in concert with the
    department's future budget requests, and to use the estimate as a
    foundation for any future efforts to transition enduring costs to DoD's
    base budget.
        The Department of Defense (DoD) and Office of Management and Budget
    (OMB) have not taken action on our recommendations. In DoD's response
    to a draft of our report, DoD concurred with our first recommendation
    and stated it planned to propose updated criteria to OMB to reflect
    current and evolving threats and reflect any changes in overseas
    contingency operations policy under the new administration. As of June
    2017, neither OMB nor DoD has publically released updated criteria, and
    DoD has not made any updates to Volume 12, Chapter 23 of its Financial
    Management Regulation that governs contingency operations to reflect
    the criteria.
        According to an official at DoD, at this time, there are no updates
    to the criteria for determining what can be included in DoD's overseas
    contingency operations budget request nor are there efforts underway
    between DoD and OMB to update the criteria. In addition, DoD's fiscal
    year 2018 budget request continued to include activities that our
    report identified as not being specifically addressed in the OMB
    criteria, including operations in Syria, the European Reassurance
    Initiative, and security cooperation funds (formerly the known as the
    Counterterrorism Partnership Fund).
        Regarding our second recommendation, the department has not, as
    yet, responded, and DoD's fiscal year 2018 budget request, issued in
    May 2017, did not include an estimate of its enduring overseas
    contingency operations costs as we had recommended. In its response to
    our draft report, DoD partially concurred with our second
    recommendation and commented that developing reliable estimates is an
    important first step in any future effort to transition these costs to
    the base budget.
        However, DoD stated that until there is relief from the budgetary
    caps established by the Budget Control Act of 2011, DoD would need
    overseas contingency operations funds to finance counterterrorism
    operations, such as Operation Freedom Sentinel and Operation Inherent
    Resolve. DoD also offered no plans to take action to address this
    recommendation in its response to our draft report.

                                 PENTAGON AUDIT

        Senator Van Hollen. Thank you. My last question for you,
    Mr. Dodaro, is that the Pentagon waste and the fact that DoD
    has still not passed an audit, we discussed this briefly----
        Mr. Dodaro. Right.
        Senator Van Hollen [continuing]. During the Budget
    Committee hearing. Just to quote from the GAO's report that the
    Pentagon's inability to manage its finances affects its, quote,
    ``ability to control costs, ensure basic accountability,
    anticipate future costs, measure performance, prevent and
    detect fraud, waste, and abuse, and address pressing management
    issues and prepare auditable financial statements.''
        Now, the DoD Inspector General--well, we had set out a
    deadline of September 30 of this year for DoD to pass the
    audits. Do you have any current assessment of whether they are
    going to be able to do that?
        Mr. Dodaro. Well, DoD has been expanding the scope of the
    audits. The last couple years they have just been trying to
    audit 1 year of budget execution data and they have not been
    able to pass those audits. They have expanded the scope of the
    audits, which is a good thing because they need to learn more
    about what they need to do to be able to pass an audit. The
    Department has said they do not expect to pass the audits, but
    it is important for them to continue to prepare the data and
    systems to conduct the audit.
        The audits that were done for 2015 and 2016 had over 700
    recommendations for improvement. We have made recommendations
    and DoD need to better monitor the corrective actions and fix
    some of these underlying problems, that would put themselves in
    a better position to ultimately be able to pass an audit.
        Senator Van Hollen. Right.
        Mr. Dodaro. This is one of the things I want to talk to the
    Secretary about. It's important for them to get their people in
    those positions and focused on----
        Senator Van Hollen. Right.
        Mr. Dodaro [continuing]. Those issues, so I am on that
    case.
        Senator Van Hollen. I know, but this has been a story----
        Mr. Dodaro. Yes.
        Senator Van Hollen [continuing]. That goes on----
        Mr. Dodaro. Yes.
        Senator Van Hollen [continuing]. Year after year after
    year, and I think we all appreciate your work at GAO to try to
    make sure we identify Medicare fraud or Medicaid fraud or EITC
    fraud. None of us want to see taxpayer dollars wasted. But with
    DoD, they seem to go on with impunity, and so we look forward
    to that conversation.

                         COPY OF HEALTHCARE REFORM BILL

        So, my last question is really for Dr. Hall, and it is, you
    know, more of a statement of sympathy than a question, but I do
    want to associate myself with the remarks of Senator Murphy
    with respect to the way this process on so-called healthcare
    reform has rolled out here in the United States Senate. We have
    not had a single hearing on a bill, that apparently is going to
    be sprung on the American public as early as tomorrow.
        My question to you is do you have a copy of that bill? And
    when do you expect to be able to issue a CBO analysis of that
    bill?
        Dr. Hall. Well, as you are probably aware, we do a lot of
    work on draft legislation in a confidential mode where we will
    look at pieces of it, we will look at drafts, and give feedback
    and et cetera. And when we are in that mode, we will not talk
    about what we have got, even what we are working on. I can tell
    you we are working on a number of things on a number of topics,
    so I really cannot tell you at this point.
        Senator Van Hollen. Well, apparently, the Republican leader
    is not able to tell the public or even Senator or his members.
    But let me ask you this. Based on your review of the earlier
    iterations of this legislation like the original House bill and
    the second House bill, what is the expected turnaround time
    from when you actually get a final product to when you think
    you are going to be able to provide an analysis? Because that
    will determine potentially the amount of time the American
    public has to look at the nonpartisan analysis of facts before
    we enter into a debate on this legislation.
        Dr. Hall. Well, the answer is it depends. It depends on how
    early we have seen drafts and how much work we have been able
    to do, and they are almost always on things--there are almost
    always little iterations and changes. So, you know, on
    something like that we could spend a fair amount of time on it
    before it is made public, in which case it will not be so long
    to get something out. It actually just--it just sort of
    depends.
        I will say, though, when we are in this confidential mode,
    we are very concerned about the level playing field. So once
    some legislation is in final full form and it becomes public,
    then any estimate we finished becomes public, as soon as we
    finish it or as soon as the bill is made public. So, we will
    make it public as soon as we can once it is sort of full and
    finally released to the public and we have finished our work.
        Senator Van Hollen. Okay. Well, just when you do that, I
    look forward to sitting down with you and your team to go over
    your findings.
        Dr. Hall. Okay. We are happy to do that.
        Senator Van Hollen. Thank you.
        Senator Lankford. Let me just bounce several questions off
    of you, and we will do a couple of rounds of questions and try
    to keep them in smaller bites so we can run through some
    things.

                                 2017 GAO STAFF

        Mr. Dodaro, the omnibus funding allocated additional funds
    for GAO to support additional staffing requests and to be able
    to make some changes. How is it going currently implementing
    those at this point, with a shortened fiscal year to be able to
    accomplish that? What is the status?
        Mr. Dodaro. Since we received the funds last month, we have
    expedited our hiring plans. We plan to hire about 211 people
    that would get us to the 3,000 FTE mark that we talked with you
    and your staff about. We have hired about 160 of those already,
    and we are working on the remaining hiring. We expect to be in
    good shape. We expect to have over 3,000 people at the start of
    next fiscal year, so we would be in a position, if we receive
    the additional funds in 2018, to reach the 3,100 mark.
        Exactly where we end up this year will depend on how
    quickly those people get on board in the next couple months
    before the end of the fiscal year. We are being aggressive. We
    are out looking for the people that we need.
        Senator Lankford. What is your typical time to hire as far
    as number of days typically to add an additional employee?
        Mr. Dodaro. I do not know off the top of my head----
        Senator Lankford. That could possibly be the first time I
    have ever asked you a question you did not know the answer to.
        Mr. Dodaro. Well----
        Senator Lankford. And I have asked you a lot.
        Mr. Dodaro. Well, it depends. Most of our hiring is done by
    hiring summer interns back that had been there in the previous
    summer. In those cases, we actually make them job offers before
    they leave. Last year we did not make those offers because we
    did not know our appropriation for the year. We have contracted
    and made offers to them now. If we have to post an announcement
    and evaluate new applicants, then it takes a little longer.
        Senator Lankford. Which, by the way, you just made several
    hundred Federal agencies jealous by saying you are able to hire
    summer interns onto your full-time staff because, of the 120
    hiring authorities they have, they struggle with that one,
    which for most Americans is the most obvious of all the hiring
    authorities that should be in place that most agencies do not
    have. That is a different conversation for a different day.
        Mr. Dodaro. Right.
        Senator Lankford. Hopefully, we can get that done. Senator
    Heitkamp and I are working on getting that hiring authority.

                            FISCAL YEAR 2018 REQUEST

        You have asked for an increase of $11.9 million. Give me a
    quick return on investment on that on why that would be
    beneficial. And not to embarrass you, you have asked for 100
    additional people. The person to your right asked for four. So,
    tell me the return on investment on that to the Federal
    taxpayer.
        Mr. Dodaro. Yes. On a percentage basis----
        Senator Lankford. Yes.
        Mr. Dodaro [continuing]. It is about the same----
        Senator Lankford. I understand.
        Mr. Dodaro [continuing]. Senator. I point that out----
        Senator Lankford. Yes.

                               IMPROPER PAYMENTS

        Mr. Dodaro [continuing]. I think there would be a good
    return on investment in the following areas. I am very
    concerned about the growth in improper payments in the Federal
    Government. Since reporting started by the agencies in 2003,
    over $1.2 trillion has been reported by the agencies as
    improper payments during that period of time. I think we have
    money going out the door that should not, and we have revenue
    that should be coming in that is not. The Congress struggles
    every year to stay under the discretionary caps and find tens
    of billions of dollars in savings. We have a situation where
    the government agencies have eliminated $144 billion in
    improper payments last year alone and $400 billion missing from
    revenue that should be collected.
        We have made contributions in these areas. I am confident
    that we could make additional contributions in this area----
        Senator Lankford. Yes, your opening statement implied that
    would be the priority of people that you would add. Is that
    true?
        Mr. Dodaro. That is true. It would be improper payments,
    tax gap, and also I mentioned the science and technology area.
    That is where we would add additional resources.
        Senator Lankford. Okay.
        Mr. Dodaro. Yes, I am particularly concerned about the
    improper payments; that the number is understated. That is
    particularly true for the managed care portion of Medicaid,
    which is now growing to about 40 percent of the Medicaid
    expenditures. I have been working with the State auditors. I
    have a dozen State auditors now that want to do more work
    because it is such a significant portion of the State budget.
    We are trying to work with some of the committees in Congress
    to get some support to the State auditors. I think that will
    have a good return on investment as well. We are working on
    multiple fronts here.

                               GAO WORK PRODUCTS

        Senator Lankford. Okay. Terrific. I understand about 97
    percent of the different work products that you create are
    congressionally requested, and about 3 percent are at your
    discretion. Help me understand some of the priorities that you
    see in the future and some of your leadership discretion----
        Mr. Dodaro. Right.

                                  DEBT CEILING

        Senator Lankford [continuing]. And say this is not
    requested but it should be and we need to take a look at it.
        Mr. Dodaro. Right, right. Well, some good areas where it
    has been used in the past, include our work on the debt
    ceiling. Nobody asked us to do this work on the debt ceiling.
    We did work and found that impasses over the debt ceiling
    distorted and had a negative impact on the Treasury market.
    Treasury securities are regarded throughout the world as safe.
    However, we found that investors were avoiding Treasury
    securities that would become due when the extraordinary actions
    expired. In addition, we found that the Federal Government was
    paying additional interest costs because of that. After the
    last impasse period in 2013 it paid between $38 and $70 million
    in additional interest based on our estimates. The current debt
    limit affects liquidity in the secondary market for Treasury
    securities, increase interest costs and, because it is an
    after-the-fact measure, the current debt limit approach does
    not do anything to control the debt.
        Senator Lankford. Right.
        Mr. Dodaro [continuing]. I have made suggestions on how
    that could be changed.

                             HOUSING FINANCE MARKET

        I am very concerned about the housing finance market. We
    have used some of that authority to look at options for
    ultimate resolution for Fannie Mae and Freddie Mac. Since they
    have been in Federal conservatorship since 2008-09 timeframe,
    we need to resolve that. The Federal Government has absorbed
    all the risk. Two-thirds of the mortgages for single-family
    homes are either directly or indirectly supported by the
    Federal Government. If there is a downturn in that area, all
    that risk is with these organizations. The private mortgage
    market has not really returned to where it was before the
    recession hit.

                       FEDERAL GOVERNMENT FISCAL POSITION

        We have used it in doing long-range projections of the
    Federal Government's fiscal position. We issued a special
    report this past January that explains that the Federal
    Government is on a long-term unsustainable fiscal path, and
    calls for the Congress to develop a plan, recognizing you need
    to make a lot of short-term investments. We also need a long-
    term plan to deal with this problem.
        Our simulations and that of CBO show the same trend, as
    well as OMB and Treasury and the financial report of the
    Federal Government all show in the next 15 to 25 years, absent
    any fiscal policy changes, you will have more debt held by the
    public as a percent of gross domestic product. This will go
    over the historic average, which is 106 percent in World War
    II, which means we will owe more than our entire economy is
    producing. It goes up beyond that to 200 percent and above.
        This is all going to happen when the disability portion of
    the Social Security Trust Fund also will have only 87 cents on
    the dollar to pay benefits by 2023. The Hospital Insurance
    Fund, Medicare by 2028 will only have 89 cents on the dollar.
    Social Security--The Old Age, survivors fund--by 2035 will only
    have 77 cents on the dollar to pay benefits. And in the midst
    of that, I think there is a good possibility that the multi-
    employer plan of PBGC could be insolvent as well.
        We have very difficult issues to address. Those are the
    type of things. I use them for big-ticket things. We always let
    the committees know that we are working on on things that we
    decide to do under our own authority.

                                 CYBERSECURITY

        Many things that we start under our own authority are then
    mandated by the Congress going forward. You know, for example,
    we put cybersecurity on the high-risk list--the first time we
    ever designated anything high-risk across the Federal
    Government in 1997--so this was 20 years ago we warned about
    the problems at the Federal level. Now we are inundated with
    requests from Congress to look at various cybersecurity areas
    over time. So, I use it judiciously----
        Senator Lankford. Right.
        Mr. Dodaro [continuing]. But in very important areas. There
    are no fishing expeditions here.
        Senator Lankford. Yes. No, I did not anticipate they were
    but----
        Mr. Dodaro. Yes.
        Senator Lankford [continuing]. Trying to get a feel for
    some of the----
        Mr. Dodaro. Yes.
        Senator Lankford [continuing]. Type of projects you are
    looking for in the future on that.

                     CHILD SECURITY AND RETIREMENT SECURITY

        Mr. Dodaro. Yes. Yes, there are two other ones now I
    mention. One is on child well-being. I am very concerned that
    there is no focus on children collectively across the Federal
    Government. Also no focus on retirement security. I am
    concerned about the overall picture in retirement security in
    our country with the baby boom generation retiring. I have
    talked about the Social Security issues. PBGC is also on our
    high-risk list, and they are about $74 billion right now in
    liabilities that exceed their assets. The private sector is
    offering fewer pension plans. If they do, they are defined
    contribution versus defined benefit. State and local
    governments are struggling with underfunding in some of their
    pension systems in some of the big States.
        The shift is more to individuals to save for their own
    retirement rather than through employers and the government
    programs. Most people in those cases do not have any money
    saved. About 40 percent of Americans do not have any money
    saved for retirement on their own. Those that have some savings
    are relatively modest.
        I want to bring this to Congress' attention in a broad
    picture and basically say we need a national strategy to deal
    with some of these issues. Those are a couple other examples of
    what we are using right now on our authority that will come to
    the Congress in reports this year.
        Senator Lankford. Great. Thank you.

                    CBO'S INTEREST IN A LEVEL PLAYING FIELD

        Senator Murphy.
        Senator Murphy. Thank you, Mr. Chairman.
        Dr. Hall, I want to continue on your answer to Senator Van
    Hollen. You talked about your interest in a level playing
    field, and so it suggests that there are, you know, some
    values-based decisions that you make with respect to the
    release of your scores.
        My fear is that the way in which Congress is interacting
    with CBO is changing radically, so here is the list of CBO
    publications related to healthcare legislation that were
    released in 2009 and 2010. And it is a very long list. CBO
    started sending out reports in early 2009, and then began
    releasing estimates of the committee products once committees
    began their work so that, you know, by the fall of 2009, there
    were complete CBO reports that Members could look at as the
    basis for considering legislation on the Floor.
        What is happening here is very different. Republicans are
    not going through the committee process. There is no bill being
    produced by committee. They are negotiating the product in
    secret and then having confidential conversations with CBO. So,
    to the extent that you are interested, and these are your
    words, in a level playing field, what do you do about the fact
    that this relationship of confidentiality can be taken
    advantage of to effectively hold the CBO score until the last
    possible minute, giving Members of the minority party a very
    small amount of time to look at that legislation? This policy
    of waiting to release it until it was made public made a lot
    more sense back when committees functioned and you had a CBO
    score on the committee bill. Does your view of maintaining a
    level playing field change given the fact that you may no
    longer ever do a committee-based score on a major piece of
    legislation?
        Dr. Hall. Well, you know, we work confidentially basically
    because Congress finds it valuable for us to work
    confidentially. They can give us informal estimates and get
    some idea of what we think about them. I think it probably
    helps make better products. It is done all the time on a lot of
    different pieces of legislation. But I understand the issue,
    that during this time period, it is kept confident. And we do
    that because we are asked to.
        And I think it is sort of above my pay grade to recommend a
    change in that. I do think it would probably change the nature
    of a lot of the work. You know, the healthcare stuff is one
    particular case, but we do this on a lot of different things.
    And we do the confidential work for the minority side as well
    for committees, so one would have to sort of think about that.
    But we do do our best, like I say, when legislation becomes
    public. That's when we will no longer do the confidential work,
    and any work we do on that piece of legislation will be public.
    That is sort of the--I think it is sort of the--certainly the
    best that we can do in striking a balance.

             CBO'S ASSUMPTIONS ABOUT FUTURE IMPLEMENTATION OF AHCA

        Senator Murphy. Yes, I do not think we can ask you to make
    that change in policy unilaterally. I have raised it in the
    context of this hearing because, you know, I just think that
    you are being used by the Republican majority for political
    purposes, and I think it compromises your independence and it
    will encourage Democrats, when they are in the majority, to
    similarly use you, use that confidentiality to hold the CBO
    score until the last minute. That is at the basis of my worry
    about the way in which Republicans are acting today.
        Let me ask you a question about your House score. In the
    House--opponents of the Affordable Care Act have a favorite
    phrase, ``death spiral.'' They say that the Affordable Care Act
    is in a death spiral and that we have to rescue it from this
    death spiral. And I do not read your summary of the House
    healthcare bill as predicting that. You score out what would
    happen to the number of people without insurance in this
    country over a 10-year period of time with the House healthcare
    bill and without it.
        Without it, you come to the conclusion that at the end of a
    10-year-period of time there will be 28 million people without
    insurance, which is a slightly higher number than today, but
    with the House healthcare bill, 51 million people will be
    without insurance.
        And I want to ask you about the 51 number. I want to ask
    you about the 28. What assumptions are you making about the
    future of the implementation of the Affordable Healthcare Act
    to come to the conclusion that, by and large, the number of
    people with insurance will be stable over a 10-year period of
    time? Are you assuming that the administration is going to
    actively implement that act, and has the conduct of the
    administration over the course of the first, you know, 4 months
    of 2017 changed your opinion as to what the number of people
    with insurance will look like at the end of that 10-year period
    of time?
        Dr. Hall. Yes, we have not changed our view on
    implementation, and we hesitate to do that unless there are
    specific actions that will likely impact implementation, if
    anything, that we can see, and then we will take that into
    account on our baseline. So, as you say, our view of the
    Affordable Care Act, we assume a certain level of
    implementation going forward.
        One of the more difficult parts about that, of course, is
    the Medicaid side of things. And here, we are predicting what
    State governments are going to do. And so a big part of the ACA
    going forward and the AHCA would involve how many States decide
    to expand Medicaid or not going forward, so that is not really
    an issue of--less an issue, I guess of implementation by the
    administration, more of how we are projecting that States will
    behave going forward. And that is a difficult thing, but that
    is a big part of the uncertainty I think for us going forward
    in this number.

                         IMPACT OF A FLAT BUDGET ON GAO

        Senator Murphy. Just one question for you, Mr. Dodaro. What
    happens to you in a flat-funded budget? Are you able to
    maintain your existing staff levels in a flat-funded budget?
        Mr. Dodaro. No. There is no way we will be able to do that.
    In a flat-funding scenario, we would lose about 200 people by
    the end of the year. We would be at our lowest staff levels
    since the 1930s if that happened. We had been hovering around
    that staffing level since the sequestration occurred. During
    that period we lost 15 percent of our staff. Thanks to this
    subcommittee, for the last few years we have regained some of
    that and been able to rebuild. Any flat-funding scenario would
    send us back down to that scenario and affect our ability to
    provide service to the Congress.
        Senator Murphy. And who do you----
        Mr. Dodaro. It would have pretty dramatic effects.
        Senator Murphy. Who do you lose--you know, who are those
    200 that you would lose?
        Mr. Dodaro. Well, that is about what our attrition is every
    year.
        Senator Murphy. Yes.
        Mr. Dodaro [continuing]. So that would be normal attrition
    with zero replacement.
        Senator Murphy. Right.
        Mr. Dodaro. I have often likened us to being a college
    football coach where the seniors leave and there are no
    freshman or sophomores coming in. You just tell the juniors to
    work harder, and it is a problem. It would have very serious,
    negative consequences on us to be in a flat-funding scenario.
    It would ill serve the Congress.
        Senator Murphy. All right. Thank you. Thank you, Mr.
    Chairman.
        Senator Lankford. Can I ask a follow-up question on that as
    well, why with flat funding you would lose 200 people? Help
    provide additional clarity to that. Why if the funding stayed
    static, why a loss of 200 people?
        Mr. Dodaro. Salary increases for the staff. Based on the
    cost of living adjustment increased this year and next raises
    staff costs so it costs more to keep the same level of staffing
    on board because of that increase in salary costs.
        Senator Lankford. Even when you have seniors that are
    leaving and you are hiring freshman, which are cheaper than
    seniors?
        Mr. Dodaro. Yes.
        Senator Lankford. Yes.
        Mr. Dodaro. We would not hire during that period of time to
    replace attrition. Not all of the 200 people that leave are at
    senior levels--I was using it as an analogy----
        Senator Lankford. Sure. I understand.
        Mr. Dodaro [continuing]. Of replacement scenario.
        Senator Lankford. I was trying to get the----
        Mr. Dodaro. Maybe I should have used the chemistry----
        Senator Lankford. Yes, I am just trying to get the
    details----
        Mr. Dodaro [continuing]. Analysis. Part of the 200 people
    that leave will be junior people, too. About 40 percent of the
    people will be people retiring are at more senior levels. The
    other 60 percent are people at junior levels that move on, take
    other positions, have changes in family----
        Senator Lankford. Okay.
        Mr. Dodaro [continuing]. Circumstances.

                    ESTABLISHMENT OF SENIOR-LEVEL POSITIONS

        Senator Lankford. Great. Thank you.
        Dr. Hall, let me ask you this question, same question I
    asked Mr. Dodaro earlier about the omnibus funding, and that is
    we included some language to establish senior-level positions
    to allow the agency to try to retain folks. Has that been
    implemented? How is that going? Has that been helpful so far?
        Dr. Hall. Well----
        Senator Lankford. I know it is early.
        Dr. Hall. Yes, well, first of all, thank you for providing
    the authority.
        Senator Lankford. Yes.
        Dr. Hall. I think that will be very helpful to us. It
    really impacts our most senior-level people. We have only about
    10 people, and those folks, compared to their executive branch
    counterparts, were literally about $15,000 per year difference,
    falling behind, so that is going to make a difference. I think
    we are going to not fully implement, and probably in 2018 we
    will start trying to implement that. But it will not have a big
    impact I think on our spending because it is only a few people,
    but our retention will make a really big difference because we
    have lost a number of senior managers, and most of them have
    gone to higher-paying jobs.

                               CBO'S TRANSPARENCY

        Senator Lankford. Last year at this same hearing you had
    mentioned some of your goals for the next year and things that
    the agency could improve on. One of the things that you
    mentioned last year the agency can improve upon was
    transparency. How is that going? Tell me how the agency has
    improved transparency in the last year.
        Dr. Hall. Sure. We have worked on transparency in almost
    everything that we do to be honest, and a lot of it starts with
    our legislative cost estimates. We are spending a little extra
    time. It is always this rush where we are getting things done
    as quickly as we can but then explaining what we have done very
    carefully. We have improved our efforts on that. The recent ACA
    estimate I thought was a good example of that because that is
    really a fairly long document where we tried very hard to
    explain things.
        We made extra effort to get in to see Members and explain
    things when people ask. You know, every time we produced an
    estimate or anything, if anybody has any questions or any
    problems with it, we are happy to go in and talk about what we
    have done.
        We have produced a number of extra products, supplementary
    products explaining things. One of the things, for example, was
    where we have done a dynamic scoring of the ACA a couple years
    ago, and what is the GDP effect. You know, we had some
    estimates in that of an ACA repeal, and then later, we produced
    this little supplementary report where we talked about how we
    estimated the labor supply effects of the ACA, and explained
    that in some detail.
        That was an effort in transparency, a number of things like
    that. We are trying very hard. We are talking about putting up
    some of our--more of our documentation of our models. We
    literally have probably hundreds of models that we use. And it
    is very hard to put the models themselves up but documentation
    we are putting up quite a bit, so it is a lot of little things
    that we are doing to increase transparency, and as always, we
    are open to ideas.
        Senator Lankford. Yes. So, help provide some clarity. As
    you mentioned, it's hard to be able to put the models up
    themselves----
        Dr. Hall. Right.
        Senator Lankford [continuing]. That we can get a chance to
    see basically the calculator that you put together. Why would
    that be?
        Dr. Hall. Well, some of them are very, very complicated,
    and it takes a lot of work to prepare things to put into the
    model. And the models--what the analogy is like, the human
    aspect of almost everything we do is really great, even with a
    model involved. One of the things that we are trying to do and
    what we can do is, for example, updating the healthcare stuff.
    We are updating the healthcare model. We will try to document
    that as we go along. And we will see about trying to make it
    available. It is hard to do because it is hard for people to
    understand it. It takes a lot of time to support it.
        Senator Lankford. Right. And it does, and that is part of
    the challenge is that every time a decision is made on
    something that requires a model, every economist pokes their
    head up at the same time and says what were the assumptions in
    that model----
        Dr. Hall. Right.
        Senator Lankford [continuing]. Who made the model? Did they
    take this and this and this into account?
        Dr. Hall. Right.
        Senator Lankford. Typically, the answer from Congress is we
    do not know. We do not know what assumptions, we do not know
    what other alternatives were considered. We do not know how it
    was ran based on what other products were not there. That is
    part of the difficulty because we will have--any given piece of
    legislation, there may be five different models out there, one
    of them being CBO, and we do not see all the assumptions on it.
    That would help us just to be able to look at it.
        Obviously, we ask you and require of you to be a neutral
    arbitrator, but seeing the model helps us to be able to know,
    to tell us the assumptions that were there in that.
        Dr. Hall. We are certainly trying to address that with the
    documentation. We are making the assumptions clear and
    providing enough detail that somebody else could actually sort
    of reproduce what we have done. That is sort of the goal.
        Senator Lankford. Yes, that would be great, that basic
    science to be able to come back and reproduce it and somebody
    else would be able to look at it and run the same numbers in
    the same type of model and get the same results.
        Dr. Hall. Yes.
        Senator Lankford. Otherwise, you get four economists
    together and you get 4.785 different results as you run through
    it.
        Dr. Hall. Yes.
        Senator Lankford. Let me recognize Senator Kennedy.

                       COMPARING ACA PROJECTION TO ACTUAL

        Senator Kennedy. Thank you, Mr. Chairman. I apologize,
    gentlemen, for being late. I was in another committee.
        Dr. Hall, let me preface my remarks by saying I am a big
    fan of your agency. I have followed you through the years, and
    I know you and your colleagues are in good faith and none of us
    are clairvoyant. Have you ever--let me get more specific.
    Looking back to when we passed the Affordable Care Act,
    Congress did, how much did CBO predict it would cost, and now
    with, what, 7 years' worth of experience, how much has it cost?
        Dr. Hall. Yes, you know, I do not have the numbers right in
    front of me, but I will say we have tried very hard to keep up
    with the actual data once it came in. You can remember a few
    years ago----
        Senator Kennedy. I understand but----
        Dr. Hall [continuing]. It was----
        Senator Kennedy. But ballpark, how close were you?
        Dr. Hall. On the spending, I do not think we were too far
    off on the spending side of things, and I think we were pretty
    close on the number of uninsured as well. The part that we
    struggled most with was with something like the number of
    people on exchanges versus number of people on Medicaid. That
    shifting between those two groups turned out to be difficult.
    Not as many people did the exchanges. More people did Medicaid.
        Senator Kennedy. Do you recall, did you make a prediction
    or an estimate--not a prediction I guess is the wrong term--did
    you make an estimate at the time about the cost and the number
    of people that would join Medicaid?
        Dr. Hall. Yes, we did, but I do not--I am sorry, I do not
    have it in my memory right now.
        Senator Kennedy. Sure. Do you know how close you turned out
    to be?
        Dr. Hall. I do not offhand.
        Senator Kennedy. Have you gone back and looked?
        Dr. Hall. Yes, we have gone back and looked, and we have
    done some work on that. I would be happy to follow up----
        Senator Kennedy. Could you----
        Dr. Hall [continuing]. On that.
        Senator Kennedy. Could you get me that information from----
        Dr. Hall. Sure.
        Senator Kennedy [continuing]. Medicaid and for your
    estimates on the Affordable Care Act----
        Dr. Hall. Yes.
        Senator Kennedy [continuing]. And now that we have, what, 7
    years' worth of experience, the reality.
        Dr. Hall. Okay. And let me just say we will do what we can.
    It is a little difficult because so many other things change at
    the same time. It is hard to know, but we will tell you what we
    know. We will tell you what we know about how well we did on
    the estimate.
        Senator Kennedy. Well, what I am looking for is something
    pretty simple.
        Dr. Hall. Okay.
        Senator Kennedy. Here is what we said would happen; here is
    what happened.
        Dr. Hall. Okay. We can do that.

        [Clerk's Note: See the answer to Senator Kennedy's question
    above in the ``Additional Committee Questions'' at the end of
    the hearing.]

        Senator Kennedy. Okay. When President Bush passed his
    prescription drug plan, did CBO do an estimate of the cost
    then?
        Dr. Hall. Yes.
        Senator Kennedy. Okay. Now, we have a lot of experience
    with the prescription drug plan.
        Dr. Hall. Right.
        Senator Kennedy. What did you estimate it would cost, and
    what has it cost? Do you have that data?
        Dr. Hall. Yes, I do not know right off the top of my head.
    I am happy to follow up, though. I am sorry I do not have those
    numbers.

        [Clerk's Note: See the answer to Senator Kennedy's question
    above in the ``Additional Committee Questions'' at the end of
    the hearing.]

        Senator Kennedy. That is okay. That is all right. Do you
    customarily, as a practice at CBO, continually look back and
    say, okay, we predicted this, it turned out this, this is what
    we got right, this is what we got wrong, here is how we can
    learn from this and do better in the future?
        Dr. Hall. Yes, we--once a year, we go through all the
    accounts and see how the cost of programs and how many people
    are taking up, and we adjust that on our baseline. So once a
    year, we actually adjust all those numbers.
        We do not do a full analysis of individual pieces of
    legislation because it is so hard, but one of the things that
    we are actually doing right now, every year, we have been
    looking back at all of our economic forecasts and looking at
    our record; how do we do compared to other people on our
    economic forecast? And a little over a year ago we did that
    with revenues, and right now, we are looking at expenditures.
    How have we done in forecast----
        Senator Kennedy. Okay.
        Dr. Hall [continuing]. Spending compared to the actual
    outcomes, so we are going to have a big-picture view of that
    actually sometime this year I think. That will give you a big
    picture about how well we do. And it is exactly for the reason
    that you are talking about. We want to try to be better at what
    we do.
        Senator Kennedy. Okay. Well, do not misunderstand my
    questions. I am a big fan.
        Dr. Hall. Sure.
        Senator Kennedy. I realize that when you give folks a
    number they like, you are the best thing there is, and when you
    give them a number they do not like, it is you do not know what
    you are doing. And I understand that. That is human nature.
        But I do think it is a good idea to look back and say,
    okay, this is where we were then and this is where we are now.
    And if you could get it for me for the prescription drug
    program, for the Medicaid expansion, and for the Affordable
    Care Act in general.
        Dr. Hall. Okay.
        Senator Kennedy. I do not really have any questions of the
    general. I wanted to thank him for his good work. I am a big
    fan. I had my staff do a little research. You have a return on
    investment of $112 return for every $1 in taxpayer money you
    spend. I will take a dozen of those. That is pretty
    extraordinary.
        I really want to thank you for the hard work you have done
    in so many areas but particularly improper payments. And I just
    wanted to--I am fully supportive of your efforts. I know you
    are not the most popular person in America at times, too, but
    you have to have folks--the metrics are important. The focus in
    government today is too much on how much money we are spending
    as opposed to what are the metrics, what are we getting for the
    money.
        Anyway, I probably went over. I am sorry, Mr. Chairman.
        But thank you both for your service.
        Mr. Dodaro. Thank you very much.

                CBO MODELS AND ALTERNATIVE PROJECTION/ASSUMPTION

        Senator Lankford. Thank you, Senator Kennedy. Thank you.
        Let me run a couple other questions past you and see if
    there are others that have additional questions as well.
        Just to be able to finish up, Dr. Hall, on the modeling
    aspect of it. During the budget hearing last year as well, you
    were also asked specifically about the healthcare model, said
    you were rebuilding it, and when it was rebuilt, you would make
    that publicly available. That is still one of those things that
    would be very helpful to get, that rebuilt product and whatever
    you are revising in that 2016 to 2017 time, and then some ideas
    of why you felt like it needed to be rebuilt. I want to be able
    to get better information.
        CBO has been very good about putting out--and it is a
    fairly recent addition--alternative futures basically.
        Dr. Hall. Right.
        Senator Lankford. Here is an alternative projection in
    baseline. You have been tasked to look at what is, but CBO has
    been very good at saying I know what is, but I also know what
    Congress will probably do. The greatest example of that was
    things like the SGR, the ``doc fix'' for years. CBO would look
    at that and say Congress has fixed that every year, they come
    up with a new way to fix that every year, we can put that in
    the baseline or we can assume they are going to do what they
    have done the last 15 years. And you have made some of those
    assumptions. How is the progress going on some of those things
    to be able to look at it and to provide different opinions?
        So, again, in your modeling to be able to look at it and
    say this is what is, but I would assume in the conversation
    around the table in the closed room there is also some frequent
    statements that say we all know this is what is really going to
    happen. This is what we have as a legislative mandate right
    now, what is in front of us. This is what is really going to
    happen.
        Dr. Hall. Sure.
        Senator Lankford. Is that going to continue to progress in
    other ways to provide to Congress new models? It is basically
    two opinions of what was happening in the room. I am not trying
    to double your work, but that opinion is already there; we just
    do not get that second one.
        Dr. Hall. Okay. Yes. We will take a look. I am not sure
    what we have planned. To be honest, our biggest alternative
    path that we talked about we do not do anymore because it has
    sort of come true.
        Senator Lankford. Right.
        Dr. Hall. So we will have to think about if there is
    another one. One that we are going to work on carefully is, you
    know, we are asked to assume, for example, that things like the
    trust funds are fully paid out even though the law says they
    cannot pay out, so we are going to work on that alternative
    assumption of, well, what if they are not?
        Senator Lankford. Right.
        Dr. Hall. And that will be one of our alternate
    assumptions. And we would be happy to think about some others.
        Senator Lankford. Again, that is helpful information to
    Congress----
        Dr. Hall. Right.
        Senator Lankford [continuing]. As we work through the
    process to be able to see what is forecasted and what actually
    is. Both those things side by side give us the information I
    think that we need.
        Dr. Hall. Okay.
        Senator Lankford. I would also say in what opinions come
    out, do not feel an obligation to I guess water it down to the
    lowest common denominator Congress can handle. There were split
    decisions in this as we discussed it, here is one option--here
    is the general piece. Here is one option, here is another one,
    what it could be, and be able to give us different varieties of
    it and to be able to lay that out.
        Dr. Hall. Okay.
        Senator Lankford. We are fine to be able to see that. More
    data in its rawest form is helpful to us rather than its
    refined lowest-common-denominator-type form. Does that make
    sense?
        Dr. Hall. Sure.
        Senator Lankford. So that is extremely helpful to us.
        I would also be interested to be able to get from CBO, as
    you do the scoring, the things that everyone around your table
    and every economist there knows good and well is not true. For
    instance, my favorite budget gimmick, the changes in mandatory
    programs. Everyone knows that is not real, but yet the law
    allows it. And in the scoring, that scores. It is really 8, 9,
    $10 billion more in deficit spending, but on paper, it is not
    more deficit spending. In real life, it is.
        There are things that your economists see that I want you
    to know we would be welcome to be able to receive back, whether
    that is a note, a footnote to say this is accomplished by
    changes in mandatory programs, which is allowed by law, but it
    will increase deficit spending by this same amount. That gives
    us information.
        Dr. Hall. Right.
        Senator Lankford. So do not pull back from giving us
    accurate information for the sake of saying we have to play the
    Washington game on things. You see that in multiple areas, I am
    confident. I just noted one of those to you in the changes in
    mandatory programs that, again, other CBO directors that I have
    talked to have all said the law says, so we have to do it that
    way, but everyone at the table knows it is not right. Does that
    make sense?
        Dr. Hall. Sure.

                                    TELEWORK

        Senator Lankford. So even a notation to be able to help
    explain it for what it really is would be helpful to get good
    clarity for everyone that is getting a chance to go through
    that document.
        One other quick question for Mr. Dodaro as you go through
    this, and that is telework. I know it is something that you
    have explored before and have looked at not only at GAO but in
    other agencies and entities. I would be interested to be able
    to know in the future, as you are looking at telework, on how
    it can be evaluated for metrics. Is the taxpayer getting its
    maximum benefit? How do you evaluate supervision in that? What
    basic metrics can be put into place or areas where there are no
    metrics. There is telework, but we do not know if it is helpful
    or not helpful.
        Again, it may be great for morale for employees. Is it
    great for the taxpayer as well to be able to have that as a
    good fit? And I do not have a preconceived notion----
        Mr. Dodaro. Right.
        Senator Lankford [continuing]. To say this does not work,
    but that is one of those many areas that, as multiple agencies
    look at both the cost----
        Mr. Dodaro. Right.
        Senator Lankford [continuing]. Of office space and also the
    value of work, and we have multiple agencies that have a large
    backup right now and backlog of work that needs to be done, but
    yet they have a high percentage of telework folks as well, to
    say is there a correlation between those or is that just
    coincidental----
        Mr. Dodaro. Yes.
        Senator Lankford [continuing]. Does it make sense?
        Mr. Dodaro. There are some clear areas where there should
    be metrics, cost is one of them in terms of the office space,
    also transit benefits. There are other measures of cost. Each
    agency will have to have different metrics in terms of the
    work, the quality of the work, as well as the productivity of
    staff.
        Senator Lankford. Right.
        Mr. Dodaro [continuing]. And the out-put. We will be
    looking at those issues. We are doing that within our own
    agency----
        Senator Lankford. Right. And we had talked about that
    before.
        Mr. Dodaro [continuing]. As well and it is very important.
    I agree with you. I think it has big benefits from the
    employees' standpoint. I think it has good benefits from the
    Government's standpoint if it is managed----
        Senator Lankford. If----
        Mr. Dodaro [continuing]. If it is managed properly----
        Senator Lankford. If----
        Mr. Dodaro [continuing]. And if you have good metrics.
    There are conditions on that part of it.
        Senator Lankford. I have had some conversations with some
    Federal managers that have said they have very strong high
    walls that they cannot supervise on telework days and it has
    made it very difficult to be able to get good metrics. And when
    I ask supervisors of different agencies how is it going, how is
    that working, their answer is ``We do not know.'' That is a
    problem----
        Mr. Dodaro. Yes.
        Senator Lankford [continuing]. When we have literally
    thousands of people that are teleworking, and we do not know if
    it is working or not. In some agencies, it may be working
    exceptionally, but just the last several months, IBM, after
    years of doing telework----
        Mr. Dodaro. Right.
        Senator Lankford [continuing]. Decided this is not working
    and they are pulling people back in----
        Mr. Dodaro. Right.
        Senator Lankford [continuing]. And trying to determine
    that. So, there are some trends going the other way based on
    effectiveness.
        Mr. Dodaro. I am dispatching some people in GAO to talk to
    IBM and Aetna. You have had Yahoo and others. I want to see
    what the lessons learned, where did it go off the rails. What
    could be applied to better manage it if we are going to
    continue in that----
        Senator Lankford. That is great.
        Mr. Dodaro [continuing]. Area.
        Senator Lankford. Senator Murphy.
        Senator Murphy. Thank you, Mr. Chairman.
        I think Senator Kennedy's point about constant reevaluation
    is an important one, but just to rise to the defense of CBO's
    ability to score on healthcare, here is the bottom line that
    you were referencing on the ACA score. Initially, CBO said that
    by 2016, 92 percent of Americans would have insurance, going up
    from 83 percent. CBO revised that after the Supreme Court
    decision where it was held that States did not have to accept
    the Medicaid allowance expansion, revised that number down to
    89 percent of Americans having insurance by 2016. That is the
    number today, 89 percent of Americans have insurance today.
        But, to your point, inside that, there were and are
    differences. There was a belief that there would be a lot more
    people on the exchanges. There are not as many people on the
    exchanges as CBO estimated for two reasons: One, many fewer
    employers dropped coverage than CBO estimated, thus more people
    stay on their employer coverage; and second, Medicaid expansion
    actually insured more people, about 4 million more people.
        As to cost, you know, ballpark at $130 billion was the
    estimate I think by 2016. The number is about $110 billion, so
    it is a little bit less, but it is, you know, not well outside
    of the estimate, so I think it is an important point that we
    should constantly go back and reevaluate, but those numbers are
    pretty solid.

                    POSTPONEMENT OF BIG CHANGES IN MEDICAID

        I just have one last question for you, Dr. Hall. Again, in
    the theoretical world where you are working to score a
    Republican healthcare proposal that we are going to be voting
    on in 7 days, one of the points of discussion is a postponement
    of some very big changes in Medicaid such that the losses you
    estimated in Medicaid coverage in the House bill would not
    occur until later in the 10-year window. And, you know, I have
    no idea what that postponement is. Some people say it will be a
    3-year postponement; some people suggested it will be a 7-year
    postponement.
        But to the extent that the Medicaid--the reduction in
    people enrolled in Medicaid happens outside the 10-year window,
    will you opine on that subject? Let us say they start the
    Medicaid changes in year 9, which means that year 10 will not
    look that bad, but years 11 through 20 will look pretty
    catastrophic. Would something like that be included in an
    estimate theoretically?
        Dr. Hall. Yes, theoretically. If we know there is going to
    be a chance outside the window and we have some notion of how
    big it will be, we will talk about it.
        Senator Murphy. Okay. Thank you.
        Senator Lankford. Senator Kennedy.
        Senator Kennedy. I just wanted to mention one other thing
    to the general that I forgot. I read you and your staff's
    analysis comparing public sector Federal Government employee
    salaries and benefits to private sector, and it was excellent.
    I mean, you broke it down. You explained your model. You
    controlled for a lot of different factors. It was a very
    reasoned, rational approach, and I wanted to thank you for
    that, too. I forgot about it. And I hope you will do that
    periodically. I learned a lot. As I recall, we are underpaying
    if you will at the higher-level positions and overpaying at the
    lower level, and a lot of--to the extent that we are
    overpaying, that is not meant to be pejorative, but we are
    paying more for the comparable job. It is in retirement
    benefits it sounds to me like.
        Mr. Dodaro. I appreciate your comments, but a point of
    clarity. I believe that was a CBO report. You know, people mix
    us up all the time. Sometimes it is for my benefit, sometimes--
    --
        Senator Kennedy. Well, then I----
        Mr. Dodaro [continuing]. It is not to my benefit----
        Senator Kennedy [continuing]. Direct that to Dr. Hall.
        Mr. Dodaro [continuing]. But----
        Senator Kennedy. It was an excellent report----
        [Laughter.]
        Senator Kennedy [continuing]. And you are an honest
    American because you could have taken full credit. [Laughter.]
        Mr. Dodaro. No, I was not going to do that.
        Dr. Hall. I was quietly feeling good about it.
        Senator Kennedy. Well, then, let me tell you, Dr. Hall, it
    was excellent.
        Dr. Hall. Well, thank you.
        Senator Kennedy. I learned a lot, and it was very fair. You
    adjusted for all the different circumstances.
        Dr. Hall. Thank you.
        Senator Lankford. Okay. The two of you look so much alike
    that it is----
        [Laughter.]

                          CENTER FOR AUDIT EXCELLENCE

        Senator Lankford [continuing]. Just get you confused all
    the time.
        Let me ask one quick question and see if there are any
    closing comments on this. Gene, the Center for Excellence was
    supposed to be self-funded with revenue.
        Mr. Dodaro. Right.
        Senator Lankford. That was the theory initially when it
    began. How is it going so far? You are a couple years into it
    or a year-and-a-half or so into it. Is the----
        Mr. Dodaro. Right.
        Senator Lankford [continuing]. Revenue coming in as you
    expected to be able to cover expenses?
        Mr. Dodaro. Yes. The business plan that we called for that
    was approved by the committees was self-funding after a 5-year
    period of time. We are in our second year of funding now.
    Receipts are in excess of the first year. It is looking pretty
    good, and I hope to get to the self funding point. We have a
    number of commitments underway. We are negotiating. We have a
    standing memorandum of understanding now with USAID so they can
    access our services to provide training to auditors,
    particularly where the United States is providing foreign
    assistance, to have those auditors provide greater coverage and
    flexibility.
        We are providing assistance to the country of Georgia
    through a World Bank arrangement right now to improve their
    information technology auditing. A number of State and local
    governments and local entities are also using our services. We
    will provide a report to the subcommittee. We had to work
    through getting arrangements in place. We brought in revenue
    the first year. This year, I think we are about triple the
    first year----
        Senator Lankford. Okay.
        Mr. Dodaro [continuing]. In revenue.
        Senator Lankford. So you are on track?
        Mr. Dodaro. We are on track.
        Senator Lankford. Okay.
        Mr. Dodaro. I will know for sure the third and fourth year.
    If we are not going to be self-sustaining, then we will have to
    come to a different conclusion. I never meant it to be
    subsidized to any significant amount. It is yielding a lot of
    benefits.
        Senator Lankford. Sure. Yes. At some point, I guess 5, 10
    years out, we will be able to audit every country in the world
    except our own Pentagon. [Laughter.]
        Mr. Dodaro. I kid the people at GAO sometimes. You know, we
    changed our name from the General Accounting Office to the
    Government Accountability Office. Maybe we could be the global.
        Senator Lankford. Yes, the Global Accountability Office.
        Mr. Dodaro. Just kidding. [Laughter.]
        Senator Lankford. Any other quick comments from anyone?
        Thank you both for being here. Dr. Hall, this is not to
    leave Gene out in any way, but you have got a very busy
    schedule right now and a lot of pressure on you as well. I
    appreciate you taking the time to both prepare to be here and
    to be here, and with all that is happening in your schedule, we
    do appreciate it very much.

                         ADDITIONAL COMMITTEE QUESTIONS

        This does conclude the Legislative Branch Appropriations
    Subcommittee hearing regarding 2018 funding for the Government
    Accountability Office, and the Congressional Budget Office. The
    hearing record will remain open for 7 days, allowing Members to
    submit statements or questions for the record, which should be
    sent to the subcommittee by the close of business on Wednesday,
    June 28th, 2017.
        [The following questions were not asked at the hearing, but
    were submitted to the Departments for response subsequent to
    the hearing:]
                     Questions Submitted to Dr. Keith Hall
                  Questions Submitted by Senator John Kennedy
        Question. How do the original CBO cost estimates compare with the
    actual budgetary effects of the Medicaid expansion under the Affordable
    Care Act (ACA) and of the ACA in general?
        Answer. In CBO's original cost estimate, which was released in
    March 2010, the agency projected that spending in 2016 on people made
    eligible for Medicaid because of the ACA would equal $68 billion. The
    amount that was actually spent, CBO now estimates, was $65 billion.
    However, in the March 2010 projection, CBO had anticipated that all
    States would adopt the ACA's expansion of eligibility for Medicaid. In
    June 2012, the Supreme Court ruled that that expansion was optional for
    States. CBO's projection in July 2012, which incorporated that ruling,
    was $38 billion for 2016--about 60 percent of the currently estimated
    amount of $65 billion.
        It is difficult to identify the budgetary effects of the ACA in
    general, because the budgetary effects of many provisions are embedded
    in the spending for preexisting programs--Medicare, for example--and in
    broad categories of Federal tax revenues. But the effects of health
    insurance subsidies can be more readily identified. In March 2010, CBO
    and the staff of the Joint Committee on Taxation projected the cost to
    the Federal Government of premium tax credits and cost-sharing
    subsidies for health insurance purchased through the health insurance
    marketplaces established under the ACA. The projected cost was $77
    billion for fiscal year 2016. That projection proved roughly twice as
    large as the estimated actual amount, about $36 billion, primarily
    because the agencies overestimated the number of people who would
    enroll in the marketplaces.\1\
    ---------------------------------------------------------------------------
        \1\ For discussion of the reasons for changes in those estimates
    since the enactment of the ACA, see Congressional Budget Office,
    Federal Subsidies for Health Insurance Coverage for People Under Age
    65: 2016 to 2026 (March 2016), p. 23, www.cbo.gov/publication/51385.
    ---------------------------------------------------------------------------
        Question. How does the original CBO cost estimate compare with the
    actual budgetary effect of Medicare's prescription drug insurance
    program?
        Answer. In CBO's original cost estimate, which was released in
    November 2003, the agency projected that spending in 2013 for the
    prescription drug benefit known as Part D would equal $99 billion. That
    projection proved about twice as high as the actual amount spent in
    2013, $50 billion. A combination of broader trends in the prescription
    drug market and lower-than-expected enrollment in Part D contributed to
    that difference.\2\ (This answer focuses on 2013 because CBO's original
    cost estimate covered the period through 2013.)
    ---------------------------------------------------------------------------
        \2\ For discussion of why the Part D program cost less than
    anticipated, see Congressional Budget Office, Competition and the Cost
    of Medicare's Prescription Drug Program (July 2014), pp. 5-12,
    www.cbo.gov/publication/45552.
    ---------------------------------------------------------------------------
                                     ______

                   Questions Submitted by Senator Marco Rubio
        Question. In your testimony, you note that the CBO's requested four
    new analysts for 2018 would work on the ``dynamic analysis of certain
    legislation.'' How can CBO's dynamic analysis be improved?
        Answer. Examining the effects of Federal policy on the economy is
    called dynamic analysis. In CBO's view, those effects differ in the
    short term and the long term. In the short term, policy affects the
    economy primarily by changing the overall demand for goods and
    services. In the long term, policy affects the economy primarily by
    changing the incentives to work, save, and invest; by altering the
    amount of funds available for private investment; and by affecting
    private-sector productivity.
        CBO conducts dynamic analysis with various kinds of macroeconomic
    models, depending on the policy proposal being examined. The agency
    considers the latest findings from economics and business research in
    developing those models, so they reflect the latest thinking among
    experts in the field. CBO also conducts original research to estimate
    the economic and budgetary effects of policies for which there are few
    or no estimates available from other sources.
        CBO has proposed adding four new analysts in fiscal year 2018. Of
    those, one would conduct dynamic analysis. (Of the others, two would
    analyze healthcare and one would analyze appropriations.) The new
    analyst would also give CBO more capacity to conduct projects to
    improve the models. Such projects include the following:
      --Research and model development to allow CBO to conduct dynamic
            analysis of a broader set of policies and to reduce the time
            needed to respond to Congressional requests;
      --Better integration of estimates from different macroeconomic
            models;
      --A more comprehensive analysis of how different kinds of policies
            affect the economy in the longer term;
      --A more detailed specification of how changes in the economy affect
            the Federal budget;
      --A more detailed characterization of the sources of uncertainty
            underlying CBO's estimates, including uncertainty stemming from
            the models as well as from broader economic, demographic, and
            policy considerations;
      --A more detailed analysis of the effects of Federal investment (that
            is, spending on infrastructure, education, and research and
            development) on private-sector productivity; and
      --A modification of CBO's overlapping-generations model to better
            estimate the effects of changes to social security and Federal
            health insurance programs on the U.S. economy.\3\
    ---------------------------------------------------------------------------
        \3\ An overlapping-generations model focuses on the working,
    saving, and retirement decisions of households over their life cycles.
    Because that model explicitly incorporates households' response to
    changes to future policy and includes households of different ages and
    in different socioeconomic groups, it is particularly helpful for
    analyzing changes to Social Security and Medicare programs.
    ---------------------------------------------------------------------------
        In addition, CBO is currently working on more comprehensive
    documentation of its models for dynamic analysis. Better documentation
    will make the agency's methods more accessible to the Congress, outside
    experts, and the interested public.
        Question. One issue that I am interested in exploring is new ways
    of dynamic scoring for the child tax credit and paid family leave, both
    policies with tremendous economic impact not easily identified in
    scoring models.
        There is a wealth of research surrounding the social and economic
    benefits of the child tax credit: from reduced crime, increased
    educational achievement, and labor force participation, to changes in
    birth rates that affect the sustainability of pension and retirement
    programs. How can we more accurately measure the returns to investment
    in our children?
        Has CBO considered expanding the scope of what research might be
    acceptable to best capture the costs and benefits of child subsidies?
        Answer. CBO has assessed the economic and budgetary effects of
    changes to some Federal programs that provide benefits to families and
    children. For instance, in undertaking its macroeconomic analysis of
    the President's 2017 budget request, CBO assessed the economic and
    budgetary effects of increasing spending for programs and activities
    such as Head Start and primary and secondary education.\4\ Such
    programs, because they provide supervision for children, make it easier
    for parents to work and can therefore boost parents' earnings in the
    short run. In the longer run, such programs can also boost earnings by
    increasing the skills that children bring to the labor force when they
    become adults. In its analysis, CBO found that most of the economic
    effects of changes in spending for such programs that would occur
    within the 10-year budget window would tend to be small and would
    result from changes in the amount of labor supplied by parents. The
    economic effects resulting from changes to children's subsequent
    earnings would probably be larger, but they would occur later and are
    more uncertain.
    ---------------------------------------------------------------------------
        \4\ Congressional Budget Office, A Macroeconomic Analysis of the
    President's 2017 Budget (June 2016), www.cbo.gov/publication/51625. For
    additional information, see Congressional Budget Office, ``How CBO
    Analyzes the Economic Effects of Changes in Federal Subsidies for
    Education and Job Training,'' CBO Blog (May 3, 2017), www.cbo.gov/
    publication/52361.
    ---------------------------------------------------------------------------
        Expanding the child tax credit would probably affect people's
    earnings and the Federal budget through similar channels. Measuring
    those effects accurately would require understanding how the credit
    affected parents' earnings in the short run and children's in the
    longer run. Expanding the credit would probably increase the incentive
    to work and earn for some parents (mainly lower-income ones, if under
    the expansion they received a greater amount of money for each $100
    that they earned, up to a maximum) while reducing that incentive for
    other parents (mainly higher-income ones, if they received a greater
    reduction in their credit for each $100 that they earned). Those
    effects are largely offsetting, however, so expanding the credit
    probably would not significantly affect parents' earnings in the short
    run. There is some evidence that the credit improves children's
    eventual college attendance and boosts their earnings when they become
    young adults, but most of those effects do not occur within the 10-year
    budget window.
        CBO has studied many mechanisms through which Federal programs that
    provide benefits to families and children could affect the economy,
    such as the short-run effects on earnings and labor supply and the
    long-run effects on education and earnings just mentioned. But there
    are other ways in which such programs might affect well-being--for
    instance, by affecting crime, health, or longevity, changes that could
    have some fiscal impact. CBO may incorporate those effects into its
    future analysis as more research is published.
        Question. One of the important roles that CBO plays for the
    legislative branch is that of referee: your scores and analysis shape
    the congressional debate over policy. Due to this influence, the
    behind-the-scenes assumptions that determine these scores matter a good
    deal to Congress. And in a time of increasing diversity and
    decentralization, a more open scoring process may produce better, more
    accurate outcomes by increasing the number of inputs for a score.
        What role does transparency play in CBO scoring?
        Have you considered implementing open-source modeling, in which
    outside analysts could test CBO's assumptions?
        What kinds of congressional requirements for CBO would need to be
    changed in order to ease a transition to a more open-sourced model?
        Answer. CBO works hard to make its analyses of legislative
    proposals transparent. To begin with, CBO's cost estimates go well
    beyond simply presenting results; instead, the agency explains the
    basis of its findings so that Members of Congress, their staff, and
    outside analysts can understand the results and the methods used. CBO
    has also increased public documentation of its modeling efforts--by
    publishing more appendixes and background reports, providing details
    about its analyses for nonexperts, and by publishing more working
    papers with technical descriptions for experts.
        The agency is actively exploring ways to provide additional
    information about its modeling that would be most useful to the
    Congress, such as furnishing further public documentation, presenting
    the sensitivity of budgetary effects to changes in key parameters of
    policy proposals, and writing accessible source code for computer
    programs used in analyses. Those tasks require considerable resources;
    to best allocate those resources, the agency is in the process of
    assessing which tasks are the most valuable.
        CBO will use such a multifaceted approach to enhancing the
    transparency of its modeling because that modeling--and CBO's analysis
    more broadly--is much more than the output of computer programs. It is
    primarily the identification of the main mechanisms through which
    proposed legislation would affect the budget; the assessment of which
    mechanisms would probably have effects important enough to quantify;
    and the integration of different types of research, on the basis of
    data from the past, to project responses in individuals' and
    institutions' behavior to changes in those mechanisms. That process
    generally differs for each estimate so that CBO can make the best use
    of different types of research to model the effects of a particular
    legislative proposal. One example is the agency's analysis of potential
    changes to premiums in Medicare Advantage. The effects of such a change
    on people's decisions to enroll in a private plan through that
    program--and thus on the Federal budget--would not simply be
    proportional to the size of the change, so CBO's modeling differs
    depending on whether proposed changes are small or large.
        Because the overall demand for CBO's work is high and its resources
    are constrained, the agency needs to balance requests to explain more
    about finished analyses with requests for new analyses and with its
    other responsibilities, such as regularly updating its baseline budget
    and economic projections. Those demands and constraints, and not any
    requirements written in law, are the main factors limiting public
    documentation, reporting of the effects of changes in key parameters,
    writing accessible computer code, and related activities.
        The Role of Transparency. When CBO completes a budget or economic
    projection, a cost estimate for a public piece of legislation, or
    another type of analysis, it makes the results of that analysis
    available to all Members of Congress, their staff, and the public.
    CBO's analysts spend a great deal of time meeting with interested
    Members of Congress and their staff to explain the details that
    underlie cost estimates. In its blog, CBO also highlights answers to
    questions that have frequently been raised by Members, sometimes
    explaining what the limitations of its analyses are and how new data
    and results from well-designed studies could help the agency better
    predict the potential effects of legislative proposals.\5\
    ---------------------------------------------------------------------------
        \5\ For example, see Noelia Duchovny, Eamon Molloy, Lori Housman,
    and Ellen Werble, ``Estimating the Effects of Federal Policies
    Targeting Obesity: Challenges and Research Needs,'' CBO Blog (October
    26, 2015), www.cbo.gov/publication/50877.
    ---------------------------------------------------------------------------
        Even though CBO devotes substantial time and energy to presenting
    its work as clearly and nontechnically as possible, the pace of
    Congressional action often requires the agency to produce analyses
    quickly. So the amount of explanation that can be provided when an
    estimate or analytic report is released is sometimes limited by the
    time available.
        Information About Models. CBO has made a variety of information
    available so that outside analysts can examine the basis for its
    estimates, and the agency intends to make more available in the future.
    For example, in June, CBO published a paper describing the simulation
    model that it uses to inform its baseline budget projections for the
    Pension Benefit Guaranty Corporation's multiemployer program.\6\ The
    paper explains the interest rates used, the way stock market returns
    are simulated, the role of plan-specific parameters, how they are
    calibrated by means of information from a plan's filings with the
    Internal Revenue Service, and so on.
    ---------------------------------------------------------------------------
        \6\ See Wendy Kiska, Jason Levine, and Damien Moore, Modeling the
    Costs of the Pension Benefit Guaranty Corporation's Multiemployer
    Program, Working Paper 2017-04 (Congressional Budget Office, June
    2017), www.cbo.gov/publication/52749.
    ---------------------------------------------------------------------------
        Another complex simulation model is the one that CBO uses to
    estimate how rates of coverage and sources of health insurance would
    change if various insurance options underwent alterations in
    eligibility criteria and subsidies and thus net cost. CBO has described
    the data underlying that model, which include information about the
    income, employment, health status, and health insurance coverage of a
    representative sample of individuals and families.\7\ The model also
    incorporates information from the research literature about people's
    and employers' responsiveness to price changes and about people's
    responsiveness to changes in eligibility for public coverage. CBO's
    publications explain how changes in coverage of different types depend
    on the difference in price between those types. In addition, those
    publications present the parameter values used to estimate the change
    in the probability of choosing coverage of a particular type with
    respect to a percentage change in price.\8\
    ---------------------------------------------------------------------------
        \7\ See Jared Maeda and susan Yeh Beyer, ``How Does CBO Define and
    Estimate Health Insurance Coverage for People Under Age 65?'' CBO Blog
    (December 20, 2016), www.cbo.gov/publication/52352.
        \8\ For additional information, see Congressional Budget Office,
    ``Methods for Analyzing Health Insurance Coverage'' (accessed August 1,
    2017), www.cbo.gov/topics/health-care/methods-
    analyzing-health-insurance-coverage.
    ---------------------------------------------------------------------------
        Most of CBO's cost estimates, however, do not involve simulation
    models. In those cases, the agency generally describes the building
    blocks of the estimate. In October 2016, for example, CBO estimated
    that the Veterans First Act would, among other provisions, authorize
    the Veterans Administration (VA) to place up to 900 veterans with
    severe service-connected disabilities in Medical Foster Homes (MFHs).
    Here is an excerpt from CBO's cost estimate:

            CBO estimates that half of the veterans eligible for this
            program (about 450 individuals) would become residents of MFHs
            as a result of the bill's enactment. For those veterans, VA
            would pay for their living expenses, as well as the costs for
            Home Based Primary Care services. We estimate that those
            veterans would receive healthcare that would cost $9,000 per
            year more than they would receive under current law because
            providing care in the individual homes is costlier than
            providing healthcare at VA medical facilities. Including the
            costs for living expenses at the MFHs of $39,000 per year, we
            estimate total costs per new resident of $48,000 per year. As a
            result, total costs for new MFH residents would be about $22
            million a year, CBO estimates.\9\
    ---------------------------------------------------------------------------
        \9\ See Congressional Budget Office, cost estimate for S. 2921, the
    Veterans First Act (October 24, 2016), page 17, www.cbo.gov/
    publication/52133.

        Outside analysts with a different estimate of one component, such
    as the cost of care in the individual homes, can draw on that
    explanation to make their own calculations.
        How CBO Incorporates Feedback From Outside Analysts. CBO
    continually seeks feedback about its analytical efforts in order to
    ensure their effectiveness. For example, the agency has a Panel of
    Economic Advisers and a Panel of Health Advisers, which consist of
    experts with a wide variety of backgrounds and specialized knowledge
    who are selected to represent a range of views. The first of those
    panels meets twice a year to provide input about CBO's latest economic
    forecast and other issues, and the second meets annually to discuss key
    issues affecting the agency's projections and analyses and to examine
    new research in healthcare and healthcare financing.\10\ CBO also
    regularly consults with those experts and with others for guidance.
    ---------------------------------------------------------------------------
        \10\ For additional information about those meetings, see
    Congressional Budget Office, ``Agendas From Prior Meetings of CBO's
    Panels of Advisers'' (accessed August 1, 2017), www.cbo.gov/about/
    processes/meeting-agendas.
    ---------------------------------------------------------------------------
        Furthermore, CBO's analysts regularly make presentations at
    conferences and elsewhere to obtain feedback and to answer questions
    about the agency's analytical methods. For example, CBO has devoted
    significant effort to developing and enhancing analytical tools for
    assessing the macroeconomic effects of fiscal policies and the feedback
    of those effects into the budget. The agency has engaged in dialogue
    about that effort at meetings of numerous professional associations and
    at universities (in addition to obtaining input from its Panel of
    Economic Advisers).\11\
    ---------------------------------------------------------------------------
        \11\ For links to CBO's presentations at those meetings and
    universities, see Congressional Budget Office, ``Dynamic Analysis''
    (accessed August 1, 2017), www.cbo.gov/taxonomy/term/1632/
    latest?type=5.
    ---------------------------------------------------------------------------
                                     ______

                   Question Submitted to Hon. Gene L. Dodaro
                   Question Submitted by Senator Marco Rubio
        Question. Thank you for your work in 2016 that shed light on the
    emergence of the Zika virus and the need for the public to have access
    to information and resources on the disease.
        GAO's research on funding to combat this terrible disease has been
    essential in justifying congressional support to the CDC and FDA.
        Given continued uncertainty surrounding the total number of
    infections and full spectrum of outcomes, what efforts should we
    prioritize to better understand, and thus better fight, the Zika virus?
        Answer. Currently available Zika virus prevention methods include
    various mosquito control methods, guidance on safe sex practices if a
    person has or is suspected of having Zika virus or has traveled to an
    area with high rates of local transmission, and guidance for travel to
    areas affected by Zika virus. Although at present no vaccine has been
    approved by the Food and Drug Administration (FDA) to prevent Zika
    virus disease, several vaccines are in different development phases.
    Because Zika virus disease cannot yet be prevented by drugs or
    vaccines, mosquito control is critical in mitigating risks associated
    with this disease.
        We have previously described different types of mosquito control
    methods used in the United States.\1\ The Federal Government has a
    limited role in implementing mosquito control because mosquito control
    efforts are implemented at the State and local levels. The Federal
    Government faces a number of challenges in supporting these mosquito
    control efforts.
    ---------------------------------------------------------------------------
        \1\ GAO, Emerging Infectious Diseases: Actions Needed to Address
    the Challenges of Responding to Zika Virus Disease Outbreaks, GAO-17-
    445 (Washington, DC: May 23, 2017); Emerging Infectious Diseases:
    Preliminary Observations on the Zika virus outbreak, GAO-16-470T
    (Washington, DC: March 2, 2017).
    ---------------------------------------------------------------------------
        In our May 2017 report, we identified four challenges to the
    Federal Government's efforts to support mosquito control activities:
    (1) the timing of the availability of funds and sustaining expertise,
    (2) communication of data about mosquito distribution, (3) linking the
    effects of mosquito control to disease outcomes, and (4) limited
    information about mosquito control entities.
        We identified several challenges in regards to epidemiology of Zika
    virus that should be prioritized including determining the total number
    of infections; the biological mechanisms, risks, reasons for geographic
    differences, and full spectrum of outcomes associated with maternal-
    fetal transmission; the presence and duration of the virus in different
    bodily fluids; the role of prior Zika virus infections or exposure to
    other related flaviviruses; and the full spectrum of outcomes of Zika
    virus infection. In addition, Zika virus case counts obtained from the
    national disease surveillance system underestimate the total number of
    Zika virus infections over a specified time period.
        The causes of this underestimate include: an infected person may
    not seek medical care for a variety of reasons such as having only mild
    or no symptoms, an infection may not be diagnosed because of
    limitations in Zika virus diagnostic testing, and surveillance
    reporting can be incomplete for a variety of reasons. CDC, the Counsel
    of State and Territorial Epidemiologists (CSTE), and State and local
    public health agencies faced several challenges in implementing
    surveillance for Zika virus and its associated health outcomes. Efforts
    that should be prioritized to better understand Zika virus surveillance
    include establishing early case definitions, timely communication of
    critical information, and interoperability between surveillance
    databases. We identified key challenges to Zika virus epidemiological
    research: study designs needed for establishing association and
    causality challenged linking Zika virus and associated health outcomes,
    and insufficient data and lack of developed models challenged
    prediction of the spread of the virus. Efforts to overcome these
    challenges should be prioritized.
        Zika virus diagnostic tests varied in their ability to detect the
    Zika virus and provide accurate results. In developing the diagnostic
    tests, manufacturers faced challenges in several areas that should be
    prioritized, including access to clinical samples and other authorized
    diagnostic tests for comparison purposes. Users of the tests also
    encountered challenges, including determining the most accurate test to
    use, and obtaining equipment needed to conduct the tests. Some
    manufacturers we interviewed raised concerns about the difficulty in
    developing diagnostic tests that met the Food and Drug Administration's
    (FDA) requirements for Emergency Use Authorization and some users
    expressed concerns about selecting tests amongst those authorized.
        We also determined that CDC and FDA did not follow some of their
    guidance in communicating with users of diagnostic tests, including
    providing clear information that would have enabled users to more
    easily compare performance across different tests.
        Our May 2017 report made several recommendations to the Department
    of Health and Human Services (HHS) to ensure that information about
    different diagnostic tests is more readily comparable and available,
    establish a transparent process for CDC to provide diagnostic tests to
    manufacturers in the final stages of diagnostic test authorization, and
    provide additional details to better inform mosquito control experts
    and the general public.\2\ Currently, these recommendations are still
    open and the department stated it is in the process of addressing these
    recommendations.
    ---------------------------------------------------------------------------
        \2\ GAO, Emerging Infectious Diseases: Actions Needed to Address
    the Challenges of Responding to Zika Virus Disease Outbreaks, GAO-17-
    445 (Washington, DC: May 23, 2017).
    ---------------------------------------------------------------------------
        The Zika supplemental appropriation funds provided for in the Zika
    Response and Preparedness Appropriations Act, 2016 (Public Law No. 114-
    223, div. B) must be obligated by the end of the fiscal year 2017
    (i.e., September 30, 2017). The Act also includes a provision that GAO
    conduct oversight of the activities supported with funds appropriated
    by the Act, which we have begun.

                               SUBCOMMITTE RECESS

        The next hearing of this subcommittee will be held on
    Thursday, June 29, at 10:15 a.m., Dirksen room 124. We will
    hear testimony from Capitol Police and the Senate sergeant-at-
    arms. It is the rescheduled meeting that Senator Murphy had
    talked about before for their fiscal year 2018 budget request.
    Immediately following that public hearing, which will be fairly
    short, it will be followed by a closed session to evaluate
    security needs for those same two agencies. Until then, this
    committee stands adjourned.
        [Whereupon, at 4:19 p.m., Wednesday, June 21, the
    subcommittee was recessed, to reconvene at 10:15 a.m.,
    Thursday, June 29.]

                                    APPENDIX

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