Focusing on Foresight (28-JUL-06, GAO-06-1041CG).		 
                                                                 
This is a Comptroller General Presentation delivered to the World
Future Society Conference in Toronto, Canada on July 28, 2006.	 
Major topics of this presentation include: the megatrends and	 
long-term challenges facing the United States, the role of GAO in
government oversight, and the need for foresight and strategic	 
planning in government operations.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-1041CG					        
    ACCNO:   A57871						        
  TITLE:     Focusing on Foresight				      
     DATE:   07/28/2006 
  SUBJECT:   Accountability					 
	     Financial management				 
	     Fiscal policies					 
	     Policy evaluation					 
	     Strategic planning 				 

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GAO-06-1041CG

Copyright

This is a work of the U.S. government and is not subject to copyright
protection in the United States. The published product may be reproduced
and distributed in its entirety without further permission from GAO.
However, because this work may contain copyrighted images or other
material, permission from the copyright holder may be necessary if you
wish to reproduce this material separately.

                                Presentation by

                         The Honorable David M. Walker

                    Comptroller General of the United States

                             Focusing on Foresight

Speech before the World Future Society Conference Toronto, Canada July 28, 2006    

     * On the Web
     * Contact
     * Copyright

Nearly a century ago, one of my favorite U.S. Presidents, Theodore
Roosevelt, said, "We have to, as a nation, exercise foresight...and if we
do not exercise that foresight, dark will be the future." These words
resonate with me, and I expect they also resonate with you.

Unfortunately, much of our world, including the United States, is consumed
with the here and now. Far too little thought is given to what's come
before or what lies ahead.

           o  Too many individuals tend to focus on their next paycheck.
           o  Too many company executives focus on the next quarterly
           earnings report.
           o  Too many politicians focus on the next election cycle rather
           than the next generation.
           o  And too many countries focus on their current position in the
           world while forgetting that we're all inhabitants of planet earth.

But whether we're talking about a government, a not-for-profit entity, or
a for-profit company, it's vital for an organization to understand the big
picture, to learn from the past and others, and to prepare for the future.
With change comes both opportunities and risks. Furthermore, change is
inevitable and essential for innovation. However, it's also important to
understand how organizations and others can manage change.

This evening, I was tempted to talk primarily about the megatrends and
long-term challenges facing the United States and many other countries
around the world. Frankly, such trends drive much of the work my agency,
the U.S. Government Accountability Office (GAO), is doing today. GAO's
strategic trends are forward looking, vertical, and horizontal in nature.
They span geopolitical and economic sectors, and they're based on an
environmental scan using input from our employees and many outside
players, including futurists like Alvin Toffler and Edie Weiner, who serve
on one of GAO's advisory committees. In fact, our strategic plan includes
a number of trends and I'll touch on them later.

But I realize I'm speaking to an audience that lives and breathes
future-oriented issues. I suspect there's little I could tell you that
hasn't already appeared in a futurist newsletter or been the subject of a
panel discussion at this conference.

So, while I will discuss a couple of the more significant long-term
challenges facing the United States and the world community, I'm going to
focus on the steps that government agencies like GAO can and should take
to help position their governments for the future. This includes promoting
improved governance structures to address a broad range of 21st century
challenges and capitalize on related opportunities.

But, first, I think it's important to understand how myopia or
shortsightedness can undermine a nation's willingness and ability to act.
In the case of the United States, strong economic growth, modest inflation
levels, relatively low interest rates, and our current superpower status
have given many policymakers and the American public a false sense of
security about our nation's current position and future prospects. Even
though we know a demographic tsunami is building silently offshore-I'm
referring to the impending retirement of our baby boom generation-America
continues to party on and pile up record levels of debt.

On the other hand, recent history shows that some nations have begun to
act on their long-term challenges. For example, two nations chose to face
their fiscal facts and made difficult decisions that caused some
short-term pain in the interest of long-term gain. I'm speaking about
Australia and New Zealand. Like the United States, these two countries
have aging populations. However, unlike the United States, these two
countries stepped up to the plate and took steps to deal with their
long-range fiscal imbalances, including their overburdened and underfunded
public entitlement programs. Australia and New Zealand are works in
progress, but at least their leaders have addressed this large, known, and
growing challenge.

When it comes to fiscal and other public policy issues, Supreme Audit
Institutions (SAI) can help focus attention on what lies ahead. Most
governments have an SAI. In the case of the United States, it's my agency,
the U.S. Government Accountability Office (GAO). In the case of Canada,
it's the Office of the Auditor General, headed by my friend and colleague
Sheila Fraser.

Over the years, government auditors have earned a reputation for
independence and professionalism. We're known for putting the facts on the
table and providing policymakers with timely, reliable and objective
information. Not everyone may like what we have to say, but we have an
important role to play in promoting transparency, improving performance,
ensuring accountability, and speaking truth to power. The truth is that
sound policy choices are more likely when policymakers are equipped with
solid facts and nonpartisan analyses rather ideological arguments and
partisan political spin.

SAIs have traditionally been in the oversight business. As government
watchdogs, we scrutinize how taxpayer dollars are spent and advise
policymakers on ways to make government work better. Many SAIs, including
GAO, also undertake a range of insight activities designed to improve
government effectiveness. These activities include performance and
value-for-money audits and benchmarking and best-practices studies.

I believe that in addition to providing oversight and insight work, SAIs
can and should alert public officials to key emerging challenges and
opportunities. I'm talking here about providing policymakers with valuable
foresight. SAIs have several tools that can help bring a sharper focus to
long-term policy issues. These tools include familiar practices like
accrual accounting and program evaluation. But SAIs should also take
advantage of other valuable methods that are well known to this audience,
such as long-term modeling and scenario planning.

More than ever, SAIs have an opportunity to encourage early action on a
range of important issues-before they reach crisis proportions and while
they're still manageable. Today, GAO is working hard to help members of
Congress better understand the trends and challenges facing the United
States and its position in the world. We're also trying to help lawmakers
grasp the long-term implications of current policy choices.

Our goal is for Congress to expand its horizon and its peripheral vision.
We want policymakers to better understand where we, how we may look 30 or
even 40 years out, and the collateral or ripple effects of various
policies and programs.

For example, New Zealand and other countries have adopted fiscal
sustainability reporting and various other measures that ensure a
long-term focus. If they can do it, then the United States and other
countries can and should do so as well.

In this spirit and in an effort to lead by example, GAO has published an
unprecedented report called "21st Century Challenges" that asks a series
of probing, sometimes provocative, questions about current government
policies, programs, and operational practices. The report brings home how
much of the U.S. government reflects organizational models, labor markets,
life expectancies, transportation systems, security strategies, and other
conditions that are rooted in the past. Clearly, the U.S. government isn't
alone in this respect. In this report, we've also sought to communicate
important foresight concepts in language used and understood by
policymakers. By the way, you can find this report free on GAO's Web site
at www.gao.gov.

At the same time, our federal government, like many others, continues to
expand, with new projects and initiatives added every year. Our Congress
and the White House rarely seem to question the wisdom of existing federal
activities. As former President Ronald Reagan once said, "The nearest
thing to eternal life we'll ever see on this earth is a government
program."

The same goes for many tax policies. For example, just this summer, the
U.S. government announced it will stop collecting a 3-percent tax on
long-distance telephone calls. This doesn't seem particularly startling
until you realize that the tax had been introduced in 1898 to help pay for
the Spanish-American War-a war that lasted only a few months!

Congress and the President need to decide which federal programs and
policies remain priorities, which should be overhauled, and which have
simply outlived their usefulness. I'm sure many other countries could also
benefit from this kind of "spring cleaning."

So, what's been the reaction of policymakers to our 21st Century
Challenges report? I'm pleased to say we're seeing some hopeful signs in
several areas that GAO has highlighted. For example, our government is
taking seriously the need to plan ahead for the possibility of a global
influenza pandemic similar to the one in 1918, which killed millions
worldwide.

Our Congress is also keeping a closer eye on new trends on the nation's
highways, particularly the growing role that high-tech driver
distractions, like cell phones, are playing in traffic fatalities. We're
also finally starting to see greater concern about our long-range fiscal
imbalance and other key sustainability challenges like energy, health
care, and the environment. Furthermore, recently proposed legislation
would convene a commission of leaders to study entitlement and tax reform
issues and recommend changes.

To better meet Congress' information need on these emerging issues, GAO
has developed an approach we call "grounded foresight." We believe that to
be credible, foresight work must have a strong factual and conceptual
basis. Such work needs to ground all trends in evidence. After all,
everyone's entitled to their own opinion but not to their own facts! At
the same time, such work also needs to clearly convey the uncertainty
that's inherent in foresight analysis.

Several key tools are available to encourage a forward focus. These tools
include strategic planning, key national indicators, and scenario
planning. Unfortunately, not all governments, including my own, have taken
full advantage of these tools.

The value of a strategic plan is probably obvious to everyone in this
room. By thinking more comprehensively, learning from the past and others,
and focusing on the future, governments can better set priorities, target
their efforts, add value, reduce risks, manage change, and capitalize on
new opportunities. After all, if you don't have a plan, you don't have a
prayer of maximizing value and mitigating risk!

In our case, GAO's strategic plan defines our agency's mission, goals, and
objectives. GAO's strategic plan also includes our agency's core values.
These values represent our institutional beliefs and boundaries that are
designed to be timeless in nature. Furthermore, our plan also includes a
range of key public policy trends and challenges that warrant attention
from lawmakers and our agency. Because these trends and challenges lack
geopolitical and sectoral boundaries, they are also relevant for many
other nations, including Canada.

Acknowledging and understanding these trends have improved the contextual
sophistication of our current work while helping us to maintain a focus on
the future. These trends have also encouraged knowledge sharing both
domestically and internationally. In turn, this has led to greater
cooperation on a range of shared sustainability challenges, including
fiscal, energy, environmental, and other key issues.

So what themes or trends does GAO expect to concentrate on in the coming
years? Perhaps the most urgent issue is America's worsening financial
condition and growing long-term fiscal imbalance. Long-term fiscal
analyses by GAO and our sister agency in the legislative branch, the
Congressional Budget Office, show that federal deficits will grow to
unsustainable levels in as little as two decades. At that point, without
significant policy changes, federal deficits could reach 10 percent or
more of our economy. States and local governments face increasing future
fiscal pressures as well. Largely because of our aging population, rising
health care costs, and relatively low revenues as a percentage of the
economy, America faces decades of red ink.

Clearly, a crunch is coming and eventually all of government will feel its
impact. If America continues on its current course, it's only a matter of
time before our ship of state hits the rocks. To put us on a more prudent
and sustainable long-term path, the federal government must begin to make
tough choices in connection with budget systems, legislative processes,
entitlement programs, spending patterns, and tax policies. There's no way
we will grow our way out of our fiscal hole. The sooner we begin to act,
the better because, as the world's largest debtor nation, time is working
against us.

The fact is that many other nations also face long-term fiscal risks. For
example, a 2005 European Union report warned of unsustainable public
finances in about half of the European Union member states, primarily
because of the growing old-age dependency ratio.

As a citizen, a senior government official, and a father and grandfather,
I take America's fiscal imbalance very seriously. It's not just a matter
of numbers, it's also about values. It's easy to forget that deficits
eventually have real-life consequences for real people, including our own
children and grandchildren. As a result, I've been speaking out on this
issue with increasing frequency and urgency in recent years. Raising
public awareness, whether through audit reports, congressional testimony,
speeches, radio commentaries, or opinion pieces, is an important part of
GAO's and my foresight role.

Some members of Congress seem to be getting the message, but it's going to
take years of sustained effort to get America's fiscal problems under
control. It's important that we do so, not just for our own sakes but also
for the sake of the global economy. After all, as the old saying goes,
when America catches a cold, the rest of the world may catch the flu.

Beyond America's staggering fiscal challenge, GAO is keeping a close watch
on several other long-term trends, many of which have no geopolitical
boundaries. These trends include changing security threats, globalization
of trade and financial markets, changing economic models, growing gaps
between the haves and the have-nots, demographic changes, immigration
patterns, energy supply and security issues, environmental concerns such
as climate change and sustainable development, health care challenges,
education needs, rapidly evolving science and technology, changing
governance structures, and a range of other issues.

Time doesn't allow me to address all of them. However, transforming
existing governance structures is a theme that's especially important to
GAO and worth elaborating on. As the pace of change accelerates in every
aspect of life, national governments face new and more complex challenges
that they cannot address alone. If we're to meet the public's wants and
needs in light of the long-term trends I've just mentioned, governance
systems in America and most other countries must be revised.

In the 21st century, an effective governance structure recognizes that
more and more policy challenges require multilateral action. We're also
going to need greater coordination among various levels of government and
the private and citizen sectors both domestically and internationally. The
plain but simple truth is that no nation in today's world, including the
United States, can or should go it alone.

Beyond changing our governance approaches, we also need to consider how we
keep score. In my view, key national and outcome-based indicators can help
policymakers better assess a nation's status, its progress over time, and
its position relative to other nations on issues like public safety,
health care, housing, education, and the environment. Such indicators can
help guide strategic planning, facilitate foresight, inform agenda
setting, enhance performance and accountability reporting, and encourage
more informed decision making and oversight, including much-needed and
long-overdue efforts to reengineer the base of our federal government.

Key indicator systems are now used by various supranational and
international entities, including the European Union, the Organization for
Economic Co-operation and Development (OECD), and the United Nations. For
years now, several countries, including Australia, Canada, and the United
Kingdom, and even some U.S. states and localities, have used indicators to
prioritize and target public resources. It's time the U.S. government did
so as well. However, rather than a strictly federal initiative, this needs
to be a national effort enlisting all levels of government, businesses,
think tanks, nonprofit groups, and others.

We at GAO are working with the National Academies of Sciences, the OECD,
and others to help make key national indicators a reality in the United
States and elsewhere. Furthermore, the International Organization of
Supreme Audit Institutions (INTOSAI), which serves as the umbrella
organization for national audit offices worldwide, has adopted key
national indicators as one of the two main themes for its 2007 Global
Congress in Mexico City. Representatives from over 150 countries will
address this topic and long-range fiscal challenges and related public
debt issues.

U.S. civilian agencies, including GAO, have started using another
foresight tool long familiar to our defense agencies: scenario planning.
For years, this technique has played an important role in GAO's work on
America's long-range fiscal imbalance. More recently, we've used scenario
planning concepts to assess our nation's preparedness for natural
disasters like Hurricane Katrina. We've found that using a range of
realistic scenarios helps agencies responsible for emergency preparedness
to identify and address various risks and possible gaps in
capabilities-before a catastrophe hits. These scenarios can also help to
identify redundancies and conflicts that need to be addressed.

But tools like strategic plans, key indicators, and scenario planning
aren't enough. The truth is, with the range of complicated problems I've
just described, nations, institutions, and individuals are going to need
to change the way they think and act. Among other things, they will need
to join forces and partner for progress. By applying our collective
expertise and experience to shared challenges, we can vastly increase our
chances for success while avoiding common mistakes.

Politicians and civil servants must be willing to reach across
institutional and geopolitical lines to share knowledge. Partnerships can
be forged not only among various government agencies but with businesses
and nonprofit groups. This approach can and should be used domestically as
well as internationally.

Fortunately, more countries are recognizing the need to partner for
progress. As never before, Europe is working together and making strides
on a range of issues of mutual interest and concern. So far, we've seen
important reforms in areas like public finance, immigration, and the
capital markets.

The accountability profession, in which GAO is a leader, is also taking
steps to focus on the future and partner for progress. For example, GAO
led efforts to develop the first-ever strategic plan for INTOSAI.
INTOSAI's members have enthusiastically embraced the plan, and it will
undoubtedly help to raise the organization and its members to new heights
in the years ahead.

If we expect to successfully tackle the tough issues I've described
tonight, we'll need more leaders in the United States and elsewhere with
four key attributes. These attributes are courage, integrity, creativity,
and stewardship.

By courage, I mean people who state the facts, speak the truth, and do the
right thing even if it isn't easy or popular. By integrity, I mean people
who practice what they preach and lead by example. People who understand
that the law and professional standards represent the floor of acceptable
behavior. People who set their sights higher and strive to do what's
right. By creativity, I mean people who can think outside the box and see
new ways to address old problems. Individuals who have foresight and can
help others see the way forward. Finally, by stewardship, I mean people
who don't just generate positive results today but who also leave things
better positioned for the future when they depart their jobs and this
earth. That's what real stewardship is all about, and we don't have enough
of it today.

In closing, focusing on foresight is an important but often a thankless
job. Frankly, it's a subject with too few constituents. Consumed with the
everyday demands of work and family, the average citizen in most countries
probably doesn't give foresight a lot of thought, much less demand their
elected representatives adopt a forward focus. But the attendees at this
conference are futurists as well as citizens. Whether you're from the
United States, Canada, or elsewhere, I hope you'll lend your voice to this
vital cause. It's time for our leaders in all sectors of society learn
from the past and others while preparing for the future. It's in our
collective best interests, as well as the interests of our countries, our
children, and our grandchildren, for them to do so.

Thank you for your time and attention.

On the Web

Web site: www.gao.gov/cghome.htm

Contact

Paul Anderson, Managing Director, Public Affairs, [email protected] ,
(202) 512-4800, U.S. Government Accountability Office, 441 G Street NW,
Room 7149, Washington, D.C. 20548

Copyright

This is a work of the U.S. government and is not subject to copyright
protection in the United States. The published product may be reproduced
and distributed in its entirety without further permission from GAO.
However, because this work may contain copyrighted images or other
material, permission from the copyright holder may be necessary if you
wish to reproduce this material separately.

                                Presentation by

                         The Honorable David M. Walker

                    Comptroller General of the United States

                             Focusing on Foresight

Speech before the World Future Society Conference Toronto, Canada July 28, 2006

GAO-06-1041CG

United States Government Accountability Office
*** End of document. ***