[Congressional Record (Bound Edition), Volume 147 (2001), Part 8]
[House]
[Pages 10350-10352]
[From the U.S. Government Publishing Office, www.gpo.gov]



 DISCUSSING SPEECH OF COMPTROLLER GENERAL OF THE UNITED STATES, DAVID 
                                 WALKER

  The SPEAKER pro tempore (Mr. Grucci). Under a previous order of the 
House, the gentleman from California (Mr. Horn) is recognized for 5 
minutes.
  Mr. HORN. Mr. Speaker, I am going to discuss and I am putting in the 
Record this evening a very fine address of the Comptroller General of 
the United States, David Walker. He has a 15-year term, as you know. He 
is part of the legislative branch, and he has had a great career before 
joining us. He is a certified public accountant.
  He was an Assistant Secretary of Labor under President Reagan for 
Pension and Welfare Benefit Programs, and I just want to talk about 
some excerpts from his address recently.
  Speaking for his agency, the United States General Accounting Office, 
he noted, ``We do not keep the books and records of the Federal 
Government. That is the primary responsibility of the chief financial 
officers of the various departments and agencies in the government. And 
the Congress is our primary client.
  ``American people are our beneficial clients. Our mission is to help 
maximize the performance and assure the accountability of the Federal 
Government for the benefit of the American people.
  ``We are in the accountability business. Many people like 
accountability until they are the ones being held accountable.''
  He continued on that, ``While we should have zero tolerance for 
fraud, waste, abuse and mismanagement, it will never be zero.
  ``We perform audits, investigations evaluations, policy analyses, and 
provide legal services to the Congress.''
  He notes that over 90 percent of his work in the GAO with his 
excellent colleagues is done at either the mandate of Congress or a 
request of Congress.
  ``As a result, we are very client focused. We are also very results 
oriented, and we strive to lead by example.
  ``Being the leading accountability organization in the United States, 
and arguably one of the leading in the world, we believe that we have a 
responsibility to be as good or better than anybody else that we 
evaluate, or else we would be a hypocrite, and none of us wants to be 
called a hypocrite.''
  Mr. Speaker, I will now mention some of the points he made in both 
dealing with management and dealing with our major thrust, which must 
be the infrastructure, the human infrastructure of the executive 
branch. We are losing first-rate people, thousands a year.
  And he goes on to note, this is a major thing for Congress and the 
General Accounting Office to do these and concern these and get an 
incentive system where the senior civil servants can help manage the 
world's largest complex information, which is the executive branch of 
the United States.
  He believes that where certain key trends and are undeniable and 
which have significant implications for the United States as well as 
many other industrialized nations around the world; these include the 
following: First, globalization. Globalization of markets, information 
and enterprises. There are no islands in a wired interconnected and, 
yes, interdependent world.
  Changing dynamics, aging societies, longer life spans, decreasing 
worker-to-retiree ratios.
  Third, changing security threats. The Cold War is over, and we won.
  The next is rapidly evolving technology. These new technologies 
provide opportunities to increase productivity and decrease costs.
  Quality-of-life considerations are also of increasing importance. 
From education to the environment to work-family issues to urban 
sprawl, quality of life is becoming increasingly important for many 
people.
  Rising healthcare costs, we all know that is a major problem.
  Last but not least, evolution, devolving more activities closer to 
the people and from the government to the private and not-for-profit 
sectors leads to shared responsibility and more difficulties associated 
with accountability.

                              {time}  1900

  Although there are differences sometimes between the Congressional 
Budget Office, the Comptroller General notes that the first one he is 
going to touch on is the long-range budget challenges.
  While the CBO's, the Congressional Budget Office's, most recent 10-
year projections showed higher projected services over the next 10 
years, the fact is that the long-term situation has gotten worse. It is 
worse primarily due to known demographic trends and rising health care 
costs.
  Our budget picture has changed dramatically since 1962, he notes. In 
that year, over two-thirds of the Federal budget was represented by 
discretionary spending.
  Mr. Speaker, I include the following for the Record:

   National Press Club Luncheon Remarks by David Walker, Comptroller 
                      General of the United States

       Mr. Walker. Thank you very much. It's a pleasure to be here 
     to address all of you at the Club, as well as those of you 
     viewing the C-SPAN and those listening via National Public 
     Radio.
       I would like to acknowledge at the outset that I am pleased 
     that so many of you are here. I wish to also acknowledge 
     Congressman Steve Horn, who is able to join us from 
     California, and Sarah McClendan, the grand dame of the 
     Washington press corp, who is able to join us as well.
       I've been asked to address you today on a number of the 
     challenges facing the United States and many other 
     industrialized nations in the 21st century. My remarks today 
     will be based primarily upon GAO's work, and our work can be 
     found on our Web site, www.gao.gov.
       Before I begin, I think it's important to add a few words 
     as to what we do and what we don't do at GAO, because quite 
     frankly our name is somewhat confusing. Despite our full 
     name, which is the U.S. General Accounting Office, we do not 
     keep the books and records of the federal government. That is 
     the primary responsibility of the chief financial officers of 
     the various departments and agencies in government. We do, 
     however, have the responsibility for auditing the financial 
     statements of the consolidated U.S. government; and 
     inspectors general or private sector firms will audit the 
     various departments and agencies.
       We are in the legislative branch of government. The 
     Congress is our primary client; the American people are our 
     beneficial clients. Our mission is to help maximize the 
     performance and assure the accountability of the federal 
     government for the benefit of the American people. I can 
     assure you that's a full-time job. I can also assure you it 
     is a job that will be never-ending; and therefore neither I 
     nor any of my colleagues at GAO will ever have to worry about 
     whether or not there will be a need for our services.
       We are in the accountability business. Many people like 
     accountability until they're the ones being held accountable. 
     I find that this view exists not only in Washington, D.C., 
     but also around the world. But that's our business. Yes, we 
     do have the responsibility to fight fraud, waste, abuse and 
     mismanagement wherever it may exist in government. However, 
     the inspectors general in each of the major departments and 
     agencies are on the front line of fighting fraud, waste, and 
     abuse within their respective departments and agencies. Our 
     job tends to focus more on strategic issues, longer-range 
     issues, and cross-governmental issues because we are better 
     positioned to be able to address these than they are.

[[Page 10351]]

       The U.S. government is the largest, the most complex, the 
     most diverse, and arguably the most important entity on the 
     face of the earth. The U.S. is the only superpower on earth. 
     While we should have zero tolerance for fraud, waste, abuse 
     and mismanagement, it will never be zero. Fortunately, we 
     have very little as compared to most other countries around 
     the world, and we should be proud of that. While we will 
     continue to fight these matters, we should also look for ways 
     that we can improve the economy, the efficiency and the 
     effectiveness of government. In fact, the return on 
     investment by focusing on these areas can be multiple times 
     greater than the traditional focus.
       We perform audits, investigations, evaluations, policy 
     analyses, and provide legal services to the Congress. We 
     cover everything the government does, anywhere in the world. 
     It's a big job, and it's a full-time job, and over 90 percent 
     of our work is done at either the mandate of Congress or 
     request of Congress. As a result, we are very client focused. 
     We are also very results oriented, and we strive to lead by 
     example. Being the leading accountability organization in the 
     U.S., and arguably one of leading in the world, we believe 
     that we have a responsibility to be as good or better than 
     anybody else that we evaluate, or else we would be a 
     hypocrite, and none of us wants to be called a hypocrite.
       With regards to results orientation, let me give you some 
     examples. Just last year, in fiscal 2000, we had 23 billion--
     that's ``b''--billion dollars in financial benefits for the 
     roughly $378 million that the Congress and the American 
     taxpayers invested in us. That's a return on investment of 61 
     dollars for every dollar invested--probably number one in the 
     world. But, in addition to returning dollars, we helped to 
     achieve a number of important nonfinancial accomplishments 
     like: strengthening weapons system acquisition practices; 
     improving the quality of nursing home care; modernizing 
     federal human capital practices; and enhancing computer 
     security within the federal government.
       In doing our work, we must be dedicated to professional 
     standards and core values and rise above partisan politics or 
     ideological battles.
       Finally, as was mentioned with the 15-year term, the 
     comptroller general of the United States is uniquely 
     positioned to not just focus on today but to think about 
     tomorrow and to take on the tough issues that need to be 
     done. There just aren't enough people willing to do it in 
     today's environment.
       And what is today's environment? Quite frankly it's a new 
     ballgame at the dawn of the 21st century. We have several 
     important transitions underway. From a political perspective, 
     we have a new Congress. The Republicans are in the majority, 
     but there are narrower margins, and shared power in the 
     Senate. In addition, there are many new committee chairs and 
     ranking members. From the standpoint of the executive branch, 
     we have a new administration. The Bush administration has 
     come to town. However, only a fraction of their key players 
     are in place at this point in time.
       From a fiscal perspective, we are transitioning from a 
     period of actual past deficits year after year into a period 
     of continued and projected surpluses for a number of years 
     into the future.
       From an economic perspective, we are transitioning from the 
     industrial age to the knowledge age. In the knowledge age, 
     people will be the key factor in attaining and maintaining 
     the competitive advantage, whether they are in the private 
     sector, the public sector, or not-for-profit sector. People 
     will be the key.
       From a timing and psychological perspective, we have 
     entered a new millennium. The beginning of the 21st century 
     creates a natural tendency to reflect on the past and to 
     contemplate the future. There are certain key trends that are 
     undeniable and which have significant implications for the 
     United States as well as many other industrialized nations 
     around the world. These include the following.
       First, globalization--globalization of markets, of 
     information, and enterprises. There are no islands in a 
     wired, interconnected and, yes, interdependent world.
       Changing demographics, aging societies, longer life spans, 
     decreasing worker-to-retiree ratios, slower work force 
     growth, greater diversity and growing skills gaps.
       Third, changing security threats. The Cold War is over and 
     we won. We now face more diverse and more diffuse security 
     threats that range from weapons of mass destruction of 
     various types to illegal drugs, to infectious diseases, to 
     cyberterrorism attacks. These threats are from rogue nations 
     and groups, and in a more open border environment.
       The next is rapidly evolving technologies. These new 
     technologies provide opportunities to increase productivity 
     and decrease costs; but they also pose an increased threat to 
     national security and personal privacy. They can also lessen 
     the emphasis on the critical human element.
       Quality-of-life considerations are also of increasing 
     importance. From education to the environment to work family 
     issues to urban sprawl, quality of life is becoming an 
     increasing interest for many people.
       Rising health care costs. The resurgence of health care 
     costs due to a variety of factors will put increasing 
     pressures on government, employers and individuals in the 
     years ahead. We have a huge imbalance between what people 
     want, which is unlimited; what they need, which should be 
     defined and hopefully be met; and what we can collectively 
     afford in the health care area. Stated differently, there is 
     a huge imbalance between what has been promised and what 
     resources are likely to be available in this area, especially 
     in connection with Medicare.
       Last but not least, devolution--devolving more activities 
     closer to the people, and from the government to the private 
     and not-for-profit sectors leads to shared responsibility and 
     more difficulties associated with accountability.
       These trends have significant implications for what 
     government does and how government should do business in the 
     21st century. They impact a number of emerging challenges, 
     and they also have direct effects on a number of long-
     standing issues. In that regard, let me touch on a few as 
     illustrative examples just to bring this point to life.
       With regard to emerging issues, the first one I'll touch on 
     is long-range budget challenges. While although Congressional 
     Budget Office most recent 10-year projections showed higher 
     projected surpluses over the next 10 years, the fact is the 
     long-term situation has gotten worse; and it's gotten worse 
     primarily due to known demographic trends and rising health 
     care costs. While budget projections are necessary, they are 
     inherently uncertain, especially the farther out that you go. 
     At the same point in time, demographic projections are much 
     more certain. Why do I say that? Because the vast majority of 
     the people that they relate to are alive and with us today.
       Our budget picture has changed dramatically since 1962, 
     over two thirds of the federal budget was represented by 
     discretionary spending. Now it's down to about a third. So 
     it's flipped since 1962. In fiscal 2000, about a third was 
     discretionary, and about 16 percent of the budget was 
     dedicated to defense. In 1962, 50 percent of the federal 
     budget was dedicated to defense. The reductions in defense 
     spending over the last 38 years went to health care. Social 
     Security, and interest on the federal debt. This was not a 
     conscious trade-off; it's just a fact--it's what happened.
       The fact of the matter is that Social Security costs, 
     Medicare, and other health care costs are only going to go in 
     one direction under our current system, and that is up. As a 
     result, the pressures on discretionary spending are likely to 
     become more acute in the years ahead. We don't know what 
     interest on the federal debt will be in the future. While we 
     know it's coming down, due to recent efforts to pay down the 
     debt, it's debatable as to how much debt will be paid down in 
     the years ahead. Even if public debt was all paid off, the 
     fact of the matter is our long-range budget simulations show 
     that we are going to have significant fiscal challenges in 
     the years ahead. For example, if Congress saves every penny 
     of the Social Security surplus, but if the on-budget surplus 
     is spent either through tax cuts and/or spending increases, 
     then by the year 2030, discretionary spending will have to be 
     cut in half, and it will have to be eliminated by 2040. There 
     are alternatives: significantly increasing tax burdens over 
     current levels in the longer term; or further mortgaging the 
     future in the outyears. But these aren't very attractive 
     options.
       Guess what's in discretionary spending? National defense, 
     the judicial system, education programs, some of which are 
     specifically provided for in the Constitution of the United 
     States. Given these long-range fiscal challenges we must be 
     prudent today about what is done with the current surplus, 
     and we must get on with entitlement reform, if we want to 
     avoid a train wreck down the road.
       The human capital crisis. The key competitive element in 
     the 21st century will be people. People are the source of all 
     knowledge. In this knowledge age, having the right people 
     with the right skills will make the difference between 
     success and failure. Yes, business processes and information 
     technology are important; but people are essential. 
     Unfortunately, government and all too many private sector 
     employers have treated people as a cost to be cut rather than 
     an asset to be valued. This must change. Due to largely 
     driven numbers and inadequately planned downsizing campaigns 
     that have occurred in the last 10 to 15 years, the federal 
     work force is much smaller. However, it's also out of shape, 
     has a range of skills imbalances, and is facing a huge 
     succession planning challenge. As a result, we at the 
     Government Accounting Office GAO placed strategic human 
     capital management, or I should say the lack thereof, on our 
     high risk list within the last two months.
       The problem is not federal employees. It is the outdated 
     policies, practices and legislative framework that governs 
     human capital practices in the federal government. We must 
     take a range of steps within the context of current law to 
     address these challenges and to attract and to retain a 
     quality work force for the federal government. We

[[Page 10352]]

     must also move over time to build a consensus for 
     comprehensive civil service reform, whose time will come, but 
     it has not yet arrived.
       We can't afford to have anything other than top-quality 
     people running the U.S. government. I already mentioned it's 
     the largest, most complex, most diverse entity on the face of 
     the earth. We can't afford to have second-class players 
     running that type of enterprise, the only superpower on 
     earth. The stakes are simply too high to do otherwise.
       Finally, given the key transitions and trends that the 
     Comptroller General discussed, I think it's also important to 
     note that both federal and private sector employment policies 
     and practices will have to change in order to make better use 
     among other things, and that is our senior citizens--probably 
     the largest untapped resource that we have.
       Third, emerging challenges. The Postal Service. The U.S. 
     Postal Service is the second largest employer in the United 
     States as a separate free-standing entity, second only to 
     General Motors, with $65 billion a year in annual revenues. 
     It serves an important public purpose, but it is facing 
     increasing competition and other pressures, both from a 
     domestic and foreign perspective. The U.S. Postal Service 
     lost $200 million last year and recently projected it will 
     lose two to three billion this year, despite a recent rate 
     increase. They've also projected that it's likely to get 
     worse unless they get additional rate increases.
       The basic statutory framework which governs the Postal 
     Service has not been changed since 1970, despite the fact 
     that the world has changed significantly since then, and will 
     change even more in the years ahead. These and other factors 
     have caused the Postal Service's transformation efforts to be 
     put on our high risk list just within the last two weeks. The 
     time has come to take a comprehensive look at the governance 
     structure, management practices, labor policies and statutory 
     framework relating to the Postal Service. Simply raising 
     postal rates is not the answer. We must deal with a range of 
     structural and fundamental challenges that have built up over 
     the years. This will be tough, but it is essential.
       The Postal Service challenge is too big to ignore. It also 
     illustrates the need to relook at a range of federal 
     policies, programs and practices in light of the key trends 
     that I discussed earlier.
       Now let me transition to how these trends affect several 
     continuing challenges. First, federal financial management. 
     The federal government has been a lag indicator when it comes 
     to federal financial management and accountability factors. 
     It's only been in the last 10 years that the federal 
     government has even had to come up with consolidated 
     financial statements. It's only been four years that the 
     federal government has had to have audited consolidated 
     financial statements. While progress is being made, much 
     remains to be done. The simple fact of the matter is that no 
     private sector enterprise could survive with the type of 
     financial management system the federal government has. While 
     18 of 24 major departments and agencies received so-called 
     clean opinions on their financial statements this past year, 
     only six received a clean opinion, had no material control 
     weaknesses, and didn't have compliance problems. So six of 24 
     rather than 18 of 24. In fact, of the 18 of 24 that did get a 
     so-called clean opinion, a majority of those only got the 
     clean opinion through engaging in so-called heroic efforts 
     where they dedicated vast amounts of financial and human 
     resources to basically recreate the books as of one day six 
     months prior; that is, as of the end of the fiscal year. This 
     is no way to run an enterprise, whether it be in the public 
     sector or the private sector. It must change.
       Government leaders have a responsibility, and the taxpayers 
     have a right to assure, that the federal government has 
     appropriate systems and controls in place to safeguard 
     taxpayer dollars and to assure government accountability. 
     Other countries much smaller than the United States have done 
     this already. It's time that we do. In addition, federal 
     reporting standards must place additional emphasis on 
     performance information, long-range commitments and 
     contingencies, and the government's most valuable asset, 
     namely its employees.
       Federal acquisition and sourcing strategies. While the 
     federal work force is smaller, the so-called shadow work 
     force has grown dramatically in the last 10 years. The shadow 
     work force is primarily comprised of contract personnel 
     performing services for the federal government. In addition, 
     more and more functions are being devolved to lower levels of 
     government and to non-governmental sources. This raises a 
     number of policy, equity and accountability issues. We need 
     to fundamentally review and reassess a range of federal 
     policies, procedures and practices in this area. In doing so 
     we must balance a number of competing interests among a 
     variety of stakeholders, such as taxpayers, the government, 
     federal workers, and contractors. I am hopeful that the 
     recently announced Commercial Activities Panel, that I will 
     chair, will be able to make some meaningful progress in this 
     area. Some of the panel members may be able to help lay the 
     groundwork for more comprehensive action in the human capital 
     area in the years ahead.
       Last but not least on the example of continuing challenges: 
     Defense Department business process transformation. We have 
     the best military forces on earth. We have proved that we are 
     number one on the battlefield several times over the past ten 
     years. Yes, the Department of Defense and the military forces 
     that it represents rate an A on effectiveness in fighting and 
     winning armed conflicts. However, the Department of Defense 
     is a D-plus at best on economy, efficiency and 
     accountability. Defense has six of 21 high-risk areas on our 
     list, and they also have the two government-wide high-risk 
     challenges as well. DOD's poor financial management reporting 
     practices represent the primary road block in the federal 
     government obtaining a clean opinion on its financial 
     statements. DOD's economy, efficiency and related 
     accountability problems result in billions of wasted dollars, 
     dollars that can be better spent on readiness, a better 
     quality of life for our uniformed personnel and closing the 
     gap between wants and available funding in connection with a 
     variety of major weapons systems. DOD must change the way 
     that it does business, and this will be tough given the 
     culture at DOD and the many organizations within it. But 
     basically what we are talking about is that government has to 
     change how it does business if it is to be effective and 
     maximize the return on taxpayer dollars, while achieving its 
     missions.
       In closing, the 21st century is a new ballgame. Much has 
     changed in the last 20 years, and the world is likely to 
     change even more in the next 20. Now is the time for us to 
     ask two key questions as we look forward, especially in light 
     of our long-range fiscal challenges. First, what is the 
     proper role of government in the 21st century? Secondly, how 
     should the government do business in the 21st century? The 
     first question raises a range of public policy issues that 
     must be answered by elected officials. It involves relooking 
     at a range of government programs, policies and tools in 
     light of past and expected changes and future challenges. In 
     addressing this question, GAO will be there to help by 
     getting facts, analyzing the situation, laying out options, 
     and discussing the pros and cons so that elected officials 
     and other policymakers can make timely and informed 
     judgments.
       The second question--How should government do business?--is 
     much more operationally oriented. GAO will continue to 
     aggressively pursue this area not only to identify problems, 
     but also to recognize progress. We will continue to provide 
     tools and methodologies to help others help themselves see 
     their way forward, maximize their performance, and ensure 
     their accountability in a range of areas. In doing so, we'll 
     continue to be committed to our professional standards and 
     our core values of accountability, integrity and reliability.
       The press can play an important role as well, helping to 
     engender the public debate, to identify not only the 
     problems, but also be able to acknowledge progress while 
     recognizing that government does do some things right.
       Let's work together to make government work better for all 
     Americans.
       I appreciate your time and attention, and would be more 
     than happy to answer any questions you may have. Thank you.

                          ____________________