A Call For Stewardship: Enhancing the Federal Government's	 
Ability to Address Key Fiscal and Other 21st Century Challenges  
(17-DEC-07, GAO-08-93SP).					 
                                                                 
Since the founding of the republic and the ratification of the	 
Constitution, the U.S. government has evolved to reflect changing
circumstances at home and abroad. At the end of George		 
Washington's presidency in 1797, there were four cabinet-level	 
departments--most run by small staffs of civil servants--and five
cabinet-level officials, including the Attorney General. Today,  
there are nearly 30 major federal departments and agencies with  
cabinet-level officials in the executive branch, and the federal 
workforce, including military personnel, now totals in the	 
millions. In 1797, U.S. government spending represented about 2  
percent of the U.S. economy and now it represents over 20	 
percent. A quick look at the federal budget reveals how much we  
have expanded beyond the Constitution's framers' original	 
thoughts and our modest beginnings. In the coming decades,	 
however, our ability to sustain even the constitutionally	 
enumerated responsibilities of the federal government will come  
under increasing pressure. Without meaningful act on, by 2040 our
government could only have the resources to do little more than  
mail out Social Security checks and pay interest on the massive  
and growing national debt. This is obviously an unacceptable	 
scenario. Our current long-range fiscal path is clearly imprudent
and fiscally unsustainable. It is also alarming given the range  
of current and emerging problems that require attention: health  
care, energy dependency, environmental protection, and homeland  
security, to name a few. These long-term challenges have profound
implications for our future economic growth, standard of living, 
and national security. Unless these issues are effectively	 
addressed, they will surely begin to manage us. What is needed is
a more strategic, long-term, comprehensive, and integrated	 
approach to help capitalize on related opportunities and manage  
related risks within current and expected resource levels.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-93SP					        
    ACCNO:   A78952						        
  TITLE:     A Call For Stewardship: Enhancing the Federal	      
Government's Ability to Address Key Fiscal and Other 21st Century
Challenges							 
     DATE:   12/17/2007 
  SUBJECT:   Accountability					 
	     Budget deficit					 
	     Budgeting						 
	     Budgets						 
	     Fiscal policies					 
	     Intergovernmental fiscal relations 		 
	     Policy evaluation					 
	     Risk assessment					 
	     Risk management					 
	     Strategic planning 				 
	     Transparency					 
	     Fiscal imbalance					 
	     GAO High Risk Series				 

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Product.                                                 **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
GAO-08-93SP

   

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as part 
of a longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to [email protected]. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. 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. 

United States Government Accountability Office: 
GAO: 

GAO-08-93SP: 

Table Of Contents: 

Letter from the Comptroller General: 

Direction Setting and Performance Measurement: 

1: Key National Indicators: 

2: Governmentwide Strategic Plan and Annual Performance Plan: 

Prioritization and Decision Making: 

3: Meaningful Commission to Address Our Long-Term Fiscal Challenge: 

4: Integrated Solutions in Congress: 

5: Mechanisms for Partnerships across Federal Agencies, Levels of 
Government, and Sectors: 

Information and Transparency: 

6: Executive Branch Financial and Budget Reporting: 

7: Governmentwide Performance and Accountability Report: 

Implementation and Execution: 

8: Strategic Management Plan for the Executive Branch: 

9: Chief Operating Officers/Chief Management Officers in Key Selected 
Agencies: 

10: Revisions to the Presidential (Political) Appointment Process: 

11: Enhanced Governmentwide Acquisition and Contracting Capability: 

12: Modernized Federal Government Human Capital Models: 

13: GAOï¿½s High-Risk List: 

Next Steps: 

Congress Has Tackled Politically and Technically Complex Issues Before: 

Illustrative Legislation Resulting from Reexamination of Federal 
Programs and Policies: 

Related GAO Products: 

Image Sources: 

[End of section] 

Letter From The Comptroller General: 

December 2007: 

America is a great nation, possibly the greatest in history. However, 
our nation faces a range of forces and key sustainability challenges 
that will require action by elected officials in order to keep
America great for current and future generations of Americans. 

I am writing to inform you that GAO has now developed a list of tools 
and process improvements to help Congress and the executive branch to 
facilitate difficult discussions and decisions about various challenges 
facing our great nation in the 21st century. These tools and processes 
laid out in this report respond to the demand for continuous 
improvement in the governmentï¿½s capacity to address 21st century 
challenges and deliver real and sustainable results. 

Since the founding of the republic and the ratification of the 
Constitution, the U.S. government has evolved to reflect changing 
circumstances at home and abroad. At the end of George Washingtonï¿½s 
presidency in 1797, there were four cabinet-level departmentsï¿½most run 
by small staffs of civil servantsï¿½and five cabinet-level officials, 
including the Attorney General. Today, there are nearly 30 major 
federal departments and agencies with cabinetï¿½level officials in the
executive branch, and the federal workforce, including military 
personnel, now totals in the millions. In 1797, U.S. government 
spending represented about 2 percent of the U.S. economy and now it 
represents over 20 percent. 

A quick look at the federal budget reveals how much we have expanded 
beyond the Constitutionï¿½s framersï¿½ original thoughts and our modest 
beginnings. In the coming decades, however, our ability to sustain even 
the constitutionally enumerated responsibilities of the federal 
government will come under increasing pressure. 

Ironically, the terminology used today in the budget process for 
programs fulfilling the express activities envisioned for the federal 
government is ï¿½discretionary spending,ï¿½ while programs like Social 
Security, Medicare, and Medicaid are called ï¿½mandatory spending.ï¿½ 
Budget experts now agree that growing entitlement costs for mandatory 
spending programs like Social Security, Medicare, and Medicaid will, 
absent fundamental reforms, put intense and increasing pressure on
discretionary spending programs or tax levels or both. 

Without meaningful action, by 2040 our government could only have the 
resources to do little more than mail out Social Security checks and 
pay interest on the massive and growing national debt. This is 
obviously an unacceptable scenario. 

The cause of this growing fiscal imbalance is multifaceted, and it has 
been a long time in the making: with each new Congress and each new 
administration, lawmakers and administration officials, reacting to 
then-current conditions, have added to the responsibilities of the 
federal government. Clearly, there are certain functions that only the 
federal government, with its vast resources and its commitment to the 
greater good, is best positioned to perform. There are other functions 
that, although meritorious, may not be appropriate roles for the federal
government. 

However, once programs or agencies are created, the tendency is to fund 
them in perpetuity, even if they have achieved their original purpose, 
are no longer a priority, or are not generating real results. Existing 
commitments are rarely questioned. Instead, new programs and initiatives
are typically added on top of old ones. Th is continual layering on the 
base of government explains, in part, why the federal government has 
become so expensive and, in some cases, so ineffective. 

Much of our government now reflects conditions and priorities that date 
back to the 1940s through the 1970s. We are spending finite taxpayer 
dollars on activities that may be of questionable value and lower 
priority today. Furthermore, we do not know whether many of todayï¿½s 
federal programs, policies, functions, and activities are generating 
real, desirable, and sustainable results. 

Our current long-range fiscal path is clearly imprudent and fiscally 
unsustainable. It is also alarming given the range of current and 
emerging problems that require attention: health care, energy 
dependency, environmental protection, and homeland security, to name a 
few. These long-term challenges have profound implications for our 
future economic growth, standard of living, and national security. 
Unless these issues are effectively addressed, they will surely begin
to manage us. What is needed is a more strategic, long-term, 
comprehensive, and integrated approach to help capitalize on related 
opportunities and manage related risks within current and expected 
resource levels. 

Significant resources will be needed to address many of these areas, 
and difficult choices and trade-offs are unavoidable. The math, 
however, is clear and compelling: every dollar we spend on a ï¿½wantï¿½ or 
outdated or ineffective program or policy is a dollar that is 
unavailable to meet real needs and to capitalize on new opportunities. 
By freeing up resources, our government will have more flexibility to 
meet the needs of this and future generations of Americans. 

To this end, a top-to-bottom review of federal programs and policies is 
essential. Congress, the President, and the American people need to 
decide which federal activities remain priorities, which should be 
overhauled, and which have simply outlived their usefulness. 

Much as the framers of the Constitution did, we need to ask some basic 
questions regarding what we expect from our government. As part of this 
process, policymakers may need to reconsider some long-held assumptions 
about what government does; how it does business; who should do that 
business and how those activities should be financed, whether through
consumption taxes, income taxes, payroll taxes, or user fees. Th is 
reexamination should extend governmentwide and should be done on a 
continuing basis; goals and desired outcomes evolve over time, and 
government must stay attuned to those changes. 

GAO clearly does not have all the answers, but we have been doing our 
best to bring increased attention to these and other important issues. 
In our role serving the Congress, we have issued a number of products 
designed to help decision makers identify opportunities for next steps.
We published an unprecedented report called 21st Century Challenges: 
Reexamining the Base of the Federal Government (GAO-05-325SP) that asks 
more than 200 probing questions about mandatory and discretionary 
spending, federal regulations, tax policy, and agency operations. The 
report is available on our Web site at [hyperlink, http://www.gao.gov], 
and we can provide copies to interested congressional offices. 

In addition, I sent a letter in November 2006 to Congress suggesting 36 
areas for closer oversight (GAO-07-235R). We also recently updated 
GAOï¿½s list of government areas at high risk of waste, fraud, abuse, and 
mismanagement (GAO-07-310). 

In February 2007, I transmitted to Congress a new publication entitled 
Fiscal Stewardship: A Critical Challenge Facing Our Nation (GAO-07-
362SP) designed to provide, in a relatively brief and understandable 
form, selected budget and financial information regarding our nationï¿½s
current financial condition, long-term fiscal outlook, and possible 
ways forward. In April 2007, we updated GAOï¿½s strategic plan, which 
describes our goals and strategies for serving Congress for fiscal 
years 2007 through 2012. We also issued separately a part of it that 
contains detailed descriptions of the key themes and strategic forces 
framing our strategic plan and their implications for governance in the 
21st century (GAO-07-467SP). 

This document, as the next piece of that body of reports, lays out a 
set of analytical tools to help policymakers transform government to 
better meet the demands of the 21st century. At GAO, we strongly 
believe that consistent use of these items will help policymakers (1) 
reach consensus on the outcomes Americans most want their government to 
achieve, (2) increase transparency and accountability, (3) better 
prioritize competing demands, (4) make more-informed decisions, and (5) 
modernize federal operations and management. 

Our hope is that this information will stimulate discussion and debate 
about the need to transform government and set it on a more prudent and 
sustainable path. Fortunately, the problem is beginning to receive some 
much-needed attention. Members of Congress have started asking some 
pointed questions about where government stands and where it is headed.
In addition, the President has recently noted the need not just to 
balance the budget but to tackle further much-needed and long-overdue 
entitlement reform. 

Some of the tools outlined in this document, such as GAOï¿½s high-risk 
list and the budget and appropriations process, may be familiar to you. 
Others, such as the need for a system of key national indicators, a 
governmentwide strategic plan, a strategic management plan for the 
executive branch, and a new type of chief operating officer (COO) or 
chief management officer (CMO) for selected federal agencies are 
probably less well known. Importantly, many of these tools are already 
being used successfully at the state and local levels and by some 
foreign governments. 

Our nation has faced many challenges in the past and has always risen 
to meet them. It is a mistake to underestimate the commitment of the 
American people to their country, children, and grandchildren; to 
underestimate their willingness and ability to hear the truth and 
support the decisions necessary to deal with these and other key 
challenges. Success will be easier to achieve with the active 
involvement of both parties in both houses of Congress and of the
President. We believe that the tools and approaches summarized above 
can help Congress and the administration in framing and making the 
difficult decisions we face. 

This documents draws on GAO reports, testimony, and other products and 
several speeches and presentations I have made on government 
transformation. These and other related GAO publications are listed at 
the end of this report. 

The time for action is now. GAO stands ready to assist Congress in this 
important endeavor. If you have questions, please contact GAOï¿½s Public 
Affairs office at (202) 512-4800. 

Signed by: 

David M. Walker: 

Comptroller General of the United States: 

Figure: At A Glance: Federal Fiscal Outcomes Yesterday: 
Surplus or Deficit as a Share of GDP (Fiscal Years 1797ï¿½2007): 

[See PDF for image] 

This figure is a line graph with a line depicting the surplus or 
deficit as a share of GDP (Fiscal Years 1797ï¿½2007). The vertical axis 
of the graph represents percent of GNP/GDP from -35 to 10. The 
horizontal axis of the graph represents years from 1797 to 2007. 

Source: Department of Commerce, Office of Management and Budget,
and Congressional Budget Office. 

Note: Data until 1929 are shown as a percent of gross national product 
(GNP); data from 1930 to present are shown as a percent of gross 
domestic product (GDP). 

[End of figure] 

Figure: At A Glance: Federal Fiscal Outcomes Tomorrow: 

[See PDF for image] 

This figure is a line graph with two lines: Congressional Budget 
Officeï¿½s projected baseline extended beyond 10 years; Alternative 
simulation. The vertical axis of the graph represents percent of GDP 
from -20 to 5. The horizontal axis of the graph represents fiscal years 
from 2000 to 2050. 

Source: GAOï¿½s September 2007 analysis. 

Note: For more information on simulations see [hyperlink, 
http://www.gao.gov/special.pubs/longterm]. 

[End of figure] 

[End of letter] 

Direction Setting And Performance Measurement: 

To get where the nation wants to go, the government and the public need 
to have a clearer vision of what it is trying to achieve as well as 
where it isï¿½desired outcomes must be clearer, and there must be more 
high-quality information and public engagement describing the nationï¿½s 
position and progress in achieving those outcomes. 

1. Key National Indicators: 

The development of a system of key national outcome-based indicators 
will help the nation to set objectives, measure progress toward 
achieving selected national outcomes, assess conditions and trends, and
communicate more effectively on complex issues. Key national indicators 
(KNI) can also help to inform strategic planning, enhance performance 
and accountability reporting, and provide for more effective 
appropriations, authorization, and oversight activities. They can also 
help to formalize a much-needed and long-overdue reexamination, 
reprioritization, and reengineering of the base of government while 
enhancing public engagement and understanding. 

Other countries including Australia, Canada, and the United Kingdom have
KNI systems, and some exist at the supranational level, such as the 
European Unionï¿½s European Structural Indicators system. Although the 
United States has national-level indicators in various topical areas, 
it lacks a comprehensive and credible KNI system. 

KNI systems pull together essential information on a range of economic,
environmental, safety/security, social, and cultural issues. The value 
of indicators is well-known; the gross domestic product (GDP), 
unemployment rate, infant mortality rate, and air quality index are all 
examples of commonly used indicators today. However, it is only when 
such individual measures are combined into a larger system of 
indicators that one can begin to see the big picture and understand the 
nationï¿½s true position and progress. Keeping citizens informed is a
foundation of democratic governance, so a KNI system that provides 
accessible, high-quality information will help individuals, 
institutions, and the nation as a whole make better-informed choices on 
complex crosscutting issues and help build public confidence in 
government. 

KNIs could also be used to help clarify problems and opportunities on a 
broad array of critical issues, identify gaps in what we know, and help 
Congress set priorities and track progress toward achieving results. 
The solid facts and results-based information disseminated by such a 
system can help Congress and other policymakers develop well-framed 
questions, do appropriate analyses, and arrive at sound solutions. 
Monitoring national performance is also essential to progress and 
accountability, because it would provide basic knowledge about whether 
federal policies, programs, and activities are making a real 
difference. Given the increasingly globalized economy and society, 
comparing U.S. performance with that of other countries can provide 
insights and enhance the nationï¿½s ability to identify successful 
approaches others have used to improve performance. 

One way Congress can help the KNI initiative become a reality is through
establishing a public-private partnership. A public-private 
organization appears to offer the best possibility of customizing a 
design to interact formally with significant public and private actors 
in a variety of disciplines and sectors, combining the best features of
federal support while allowing it to solicit a wider variety of public 
and private expertise as well as retain voluntary staff. Congress
would have flexibility in chartering a public-private organization and 
delegating various responsibilities to it for the purpose of developing 
a KNI system. 

2. Governmentwide Strategic Plan and Annual Performance Plan: 

Addressing 21st century challenges will require foresight while also 
clearly defining the outcomes we want our government to achieve and the 
strategies and transformation our government will need to undertake to 
achieve those outcomes. A strategic plan for the federal government,
supported by a portfolio of key national and outcome-based indicators, 
would provide a valuable tool for governmentwide reexamination of the 
base of existing programs, as well as proposals for new initiatives. A 
governmentwide strategic plan created by the President can also provide
a cohesive perspective on the long-term goals of the federal government 
and a much-needed basis for fully integrating, rather than merely 
coordinating, a wide array of federal activities. Successful strategic
planning also requires the involvement of key stakeholdersï¿½particularly
Congressï¿½so it can serve as a mechanism for building consensus on what 
will be achieved and how. Finally, a strategic plan can provide a 
comprehensive framework for considering organizational changes, making 
resource decisions, and holding key players accountable for achieving 
real and sustainable results. 

Most major outcomes of federal activities are the product of multiple 
programs and tools (such as direct spending, federal grants, government 
guarantees, or tax incentives) that, in turn, are often sponsored by 
many different federal agencies. Although these individual programs may
address common or similar performance goals, they can result in a 
fragmented delivery network, which can result in duplication of eff 
orts and may work at cross purposes. For example, federal food safety
programs are carried out by 12 agencies with differing enforcement 
criteria and inspection practices. The plethora of federal programs 
reflects a fragmented policymaking process that is often divided among
agencies and programs, with insufficient focus on how individual 
programs contribute to overarching, crosscutting goals and missions. As 
a result, the current capacity to periodically reexamine the alignment 
and relevance of policy portfolios in a changing society is limited. 

Developing a comprehensive strategic plan for the federal government 
would be an important step in articulating the role, goals, and 
objectives of the federal government. Properly done, it would provide a 
forward-looking perspective as well as critical horizontal and vertical
linkages. It can horizontally integrate and foster synergies among 
components of the federal government as well as help to clarify the 
role of the federal government vis-ï¿½-vis other sectors of our economy 
and society. It can vertically provide a framework of federal missions 
and goals within which individual federal agencies could align their own
missions and goals that would cascade down to individual employees. 

The Government Performance and Results Act of 1993 (GPRA) requires the 
President to include in his annual budget submission a federal 
government performance plan for the upcoming fiscal year.[Footnote 1] 
Congress intended that this plan provide a ï¿½single cohesive picture of 
the annual performance goals for the fiscal year.ï¿½ The governmentwide 
performance plan is intended to help Congress and the executive branch 
address critical federal performance and management issues, including
redundancy and other inefficiencies in how we do business. It can also 
provide a framework for any restructuring efforts. Unfortunately, the 
possibilities of this provision have not been fully realized. OMB has 
used the Presidentï¿½s Budget to present high-level information about 
agencies and certain program performance issues. However, the agency-by-
agency focus of the budget does not provide the strategic, longer-
range, and integrated perspective of government performance needed for
fundamental reexamination to occur. 

[End of section] 

Prioritization And Decision Making: 

Congress and the executive branch need to augment existing mechanisms 
and explore new ones that will facilitate integrated decision making 
and address known and growing longer-range and crosscutting challenges. 

3. Meaningful Commission to Address Our Long-Term Fiscal Challenge: 

The need to address our nationï¿½s long-term fiscal challenge requires 
looking for a process that will permit real compromise and development 
of a serious ï¿½down paymentï¿½ on narrowing the growing gap between 
expected federal revenues and expected federal spending. One approach
would be creation of a capable, credible, and bipartisan commission 
involving both members of Congress and othersï¿½charged with both 
educating the public and developing a specific legislative proposalï¿½
whose suggestions would necessarily be given consideration and an up or 
down vote by Congress. Proposals along these lines have been introduced 
by Representatives Cooper and Wolf and Senators Conrad and Gregg. 

If such a commission were to conduct public hearings around the 
country, it could educate the American people on the nature and size of 
the long-term fiscal imbalance and on the choices to be made, and 
provide a forum for citizens to discuss what they want from government 
and what they are willing to pay for. 

The long-term outlook is driven primarily by rising health care costs 
and demographic trends. We have suggested that reasonable tasks for a 
commission developing a down payment on the fiscal gap would be: (1) 
develop a solution to the gap between Social Securityï¿½s currently 
scheduled benefits and projected program revenuesï¿½a solution not 
preprogrammed to require later revisiting, (2) agree on ï¿½Round 1ï¿½ of 
health care reformï¿½changes that would start us on the path of tackling 
this large and growing challenge, and (3) come to some agreement about 
ï¿½Round 1ï¿½ of tax reform and on the question of whether more federal 
revenues than the historical level of 18.3 percent of GDP will be 
necessary. Such a package would make a major down payment on the path 
to fiscal sustainability. It would have to be followed by processes to 
sustain and expand its work: to facilitate further work on health care 
and tax reform; to provide a system for monitoring, and where necessary
adjusting, the path of mandatory spending; and a way to encourage 
reexamination of all major federal programs, policies, and activities. 
Congress may also want to consider reimposing a set of statutory budget 
controls and to examine the role that a credible and independent entity
might play in publicly reporting major deviations or attempts to avoid 
or evade the lawï¿½s provisions. 

A well-designed commission can produce specific practical 
recommendations that Congress can then enact, such as the National 
Commission on Restructuring the Internal Revenue Service (IRS) did
when Congress created it in 1995 to restore confidence in the U.S. 
governmentï¿½s ability to collect revenues in a fair and courteous 
manner. In 1998, Congress passed the IRS Restructuring and Reform Act, 
which was influenced by the Commissionï¿½s report, and reorganized the 
structure and management of IRS, revised the mission of IRS, and
mandated numerous other detailed changes.[Footnote 2] 

A well-designed commission can also offer a vehicle to permit creation 
and adoption of a ï¿½shared sacrificeï¿½ package to get otherwise agreed-
upon action enacted. For example, beginning in 1988, Congress provided 
for the Base Realignment and Closure (BRAC) commission, with a specific 
mandate to recommend which military bases should be closed or have 
their functions relocated. [Footnote 3] Moreover, Congress established 
a process whereby it voted ï¿½up or downï¿½ on the submitted list of bases 
to close without amendment. By turning to a capable, credible, and 
bipartisan commission that, beginning in 1991, relied on a transparent 
process of citizen engagement in its deliberations, individual members
of Congress could commit to a process that engaged tough public 
choices, while preserving membersï¿½ ability to disagree and even 
influence the process without undermining the processï¿½s ability to 
achieve the shared objective of closing unneeded military bases 

4. Integrated Solutions in Congress: 

The increasingly complex base of how the government does its business 
and who does it presents new challenges to Congress and decision 
making. Congress has responded to the evolving public demands on the
federal government with a growing mix of tools and players as it 
creates government programs and policies. For example, tax expenditures 
are increasingly used to complement the more traditional spending in 
the delivery of government services. Another example is that the
network of multiple players involved in achieving government objectives 
sprawls far beyond the list of federal agencies and their employees, 
with a variety of nongovernmental organizations and a swelling list of 
contractors also playing an increasing role in carrying out government
activity domestically and abroad. 

To oversee this evolving governance framework, Congress will 
increasingly need to rely on an integrated mix of tools and processes, 
including the following: 

* budget, authorization, oversight, and appropriations processes; 

* performance resolutions; and: 

* House Rule X. 

Traditional congressional structures such as the budget, 
reauthorization, and appropriations processes can be used to
establish, oversee, modify, or eliminate programs, policies, and other 
federal activities. Some of the more politically or technically 
interconnected or cross-jurisdictional challenges can be examined by 
the budget processï¿½s ability to set broad policy trade-offs across 
functional categories; oversight committees with their governmentwide 
jurisdiction and broad subpoena powers; select or special committees 
with jurisdiction over other crosscutting issues; and joint committees
comprising members from the Senate and the House. Key to the 
effectiveness of these efforts will be Congress employing a 
constructive engagement approach with federal agencies that identifies 
problems while also acknowledging and highlighting examples of good 
governance, such as best practices, and encourages their dissemination 
to other agencies. 

In addition to these formal committees, congressional leaders may want 
to turn to less-formal groups like member-only task forces and working 
groups. These more neutral, flexible, and adaptable approaches allow 
mobilizing relevant expertise from across different committees and
subcommittees. Congressional committees and subcommittees can hold 
hearings to elevate issues or can turn to entities like GAO, other 
legislative support agencies, and inspectors general for support with
analyses, evaluations, investigations, and reviews of various programs, 
policies, and operations. 

We have previously suggested that Congress consider developing a more
systematic vehicle for communicating its top performance concerns that 
could then better inform and guide its authorization, appropriations, 
and oversight processes. Congress could develop a congressional 
performance resolution identifying key oversight and performance goals
that Congress wishes to set for its own committees and for the 
government as a whole. Such a resolution could be developed from 
currently used congressional budget resolutions, which are already 
organized by budget function. This may involve collecting the input of 
authorizing and appropriations committees on priority performance 
issues for programs under their jurisdiction and working with 
crosscutting committees such as the Senate Committee on Homeland 
Security and Governmental Affairs, the House Committee on Oversight
and Government Reform, and the House Committee on Rules. 

We have also previously suggested that building GPRA into the 
congressional oversight process could be useful and cited House Rule X 
as a possible means for helping make that happen. House Rule X requires 
standing committees of the House to provide oversight plans to the 
Committee on Oversight and Government Reform, which, in conjunction 
with House leadership, then publishes the plans along with 
recommendations for ensuring the most effective coordination of the 
plans. House Rule X also provides for standing committees to consider 
foresight through future research and forecasting, among other things, 
when considering laws and programs that should be continued, curtailed, 
or eliminated. 

Congress and its leadership can also develop a list of key areas of 
congressional interest and emphasis. House and Senate committees could 
then be organized and directed to develop integrated oversight agendas 
that target those areas. Such a broad, structured oversight agenda could
better coordinate a congressional perspective on crosscutting issues as 
they are addressed by the individual committees. It can also elevate 
those issues that might best be served by scheduling joint hearings or 
crosscutting studies, investigations, or other initiatives. Congress 
should also consider how best to organize itself to address our many
challenges and opportunities in the 21st century, as it has 
periodically done since the 1920s. 

Figure: At A Glance: State and Local Government Fiscal Outcomes: 

[See PDF for image] 

historical and projected receipts available to fund current 
expenditures and historical and projected total receipts minus total 
expenditures. The vertical axis of the graph represents percentage of 
GDP from -6 to +2. The horizontal axis of the graph represents years 
from 1980 to 2050. 

Source: GAO analysis. 

Note: GDP is gross domestic product. 

[End of figure] 

5. Mechanisms for Partnerships across Federal Agencies, Levels of
Government, and Sectors: 

Many national challenges, such as protecting the homeland, responding to
emergencies like Hurricanes Katrina and Rita, preparing for a possible 
influenza pandemic, and transforming federal oversight of food safety, 
cut across more than one federal agency, multiple levels of government, 
and the private sector. There is a growing understanding that the 
federal government is relying increasingly on networks and 
partnershipsï¿½often involving multiple federal agencies, state and local
governments, domestic and international nongovernmental or quasi-
governmental organizations, and for-profit and not-for-profit 
contractors and granteesï¿½to achieve critical results and develop public 
policy. In fact, there was broad agreement among participants in a 
Comptroller Generalï¿½s forum on high-performing organizations that the 
strategic use of partnerships is one of the key characteristics of a 
high performing organization. 

However, federal agencies and their partners face a range of barriers 
when they attempt to work collaboratively. There are several tools for 
forging successful partnerships across these networks. We have 
identified key practices that can help enhance and sustain federal 
agency collaboration, some of which can also be applied more broadly to
collaboration in networks. These practices include having collaborating 
parties (1) establish mutually reinforcing or joint strategies; (2) 
identify and address needs by leveraging resources; (3) agree on roles 
and responsibilities; and (4) establish compatible policies, 
procedures, collaboration, and other means to operate across 
boundaries. 

The federal government has adopted a range of national plans and 
strategies, recognizing that the federal government alone cannot 
effectively address wide-ranging and complex issues such as responding 
to disasters. Such plans are becoming an increasingly important tool
for bringing together players dispersed over geography, types of 
organizations, and levels of government. For example, the National 
Response Plan is intended to be an all-discipline, all-hazards plan 
establishing a single, comprehensive framework for managing domestic 
incidents where federal involvement is necessary. Other strategies that 
GAO has assessed include preparing the nation for a possible pandemic
influenza, administration strategies relating to combating terrorism, 
rebuilding Iraq, and improving citizensï¿½ financial literacy. 

[End of section] 

Information And Transparency: 

If Congress and the executive branch are to partner in making decisions 
about the trade-offs between competing strategies to arrive at desired 
outcomes, there needs to be greater transparency, with a long-term focus
and more outcome-oriented financial and program performance information 
flowing into the decision making processes. 

6. Executive Branch Financial and Budget Reporting: 

The budget process can and should play a control role in helping to 
address our long-term fiscal challenge and the broader challenge of 
modernizing government for the 21st century. However, budget debates 
too often focus on the short-term deficit path. It is not the deficit 
today that presents the greatest danger to usï¿½nor is balancing the 
budget over the next 5 years the critical goal. Rather, it is our
nationï¿½s long-term fiscal path and mounting unfunded obligations for 
various social insurance and other mandatory spending programs that 
endangers our future. GAO has suggested reinstating and strengthening
budget controls and enforcement mechanisms, such as the following: 

* Statutory controls that expired in 2002 should be reinstituted, 
including both meaningful caps on discretionary spending and pay-as-you-
go (PAYGO) on both the tax and spending sides of the ledger.[Footnote 
4] Congress should also look at rules to govern the use of
ï¿½emergency supplementals.ï¿½ 

* Congress should look beyond the return to PAYGO and discretionary
spending caps by designing ï¿½triggersï¿½ for mandatory programs, both on
the spending and the tax sides of the ledger, that would prompt action 
if the spending path increases significantly. Mandatory spending cannot 
remain on autopilot and be permitted to grow without limitation. This 
concept should apply to direct spending and tax preferences, which 
represent another form of spending and also affect the nationï¿½s 
financial and fiscal ï¿½bottom line.ï¿½ 

In addition, a greater understanding of and focus on the long-term 
implications of policy choices is needed. GAO has previously suggested 
a number of steps that could help. These include, but are not limited 
to, the following: 

* The Presidentï¿½s budget proposal should cover 10 years. This is
especially important given that some policiesï¿½both spending and taxï¿½cost
significantly more (or lose significantly more revenue) in their second 
5 years than in their first. In addition, the budget should disclose 
the budgetary effect of major tax or spending proposals over the short, 
medium, and long term. 

* The executive branch should provide information on existing fiscal
exposuresï¿½both spending programs and tax expenditures, that is, the 
long-term budget costs of individual programs, policies, and 
activities. 

* Information on the long-term cost implications of any major tax or
spending proposal should be provided before such proposals are voted 
on. 

* The Department of the Treasury should publish a summary annual report
presenting key information in a way more accessible to the press and lay
reader, derived from the information in the audited Consolidated 
Financial Statements of the U.S. Government and the Comptroller 
Generalï¿½s audit report on it. 

* Every 4 years the Department of the Treasury should prepare and 
publish a fiscal sustainability report including information on, and an 
assessment of, the long-term fiscal sustainability of the federal 
governmentï¿½s current spending and revenue path. 

* The Comptroller General should annually report to the Congress GAOï¿½s 
assessment of the financial condition and fiscal outlook of the U.S. 
government, drawing on such information as the Comptroller General 
deems appropriate. 

7. Governmentwide Performance and Accountability Report: 

The full benefit of establishing long-term strategic and annual 
performance goals for the federal government would be difficult to
realize without a concomitant requirement to report on the results 
achieved. As we have learned after more than a decade of experience 
with implementing GPRA in federal agencies, annual reporting is key to 
improving transparency and the accountability of federal agencies for
achieving results. 

Under GPRA and related financial management legislation, agencies are
required to report annually on the performance of their programs along
with their financial statement and audit information. This provides 
policymakers and the public with the information needed to assess and 
hold agencies accountable for what government is accomplishing with the
money it spends. 

There is currently no requirement for a combined report on the 
performance and financial accountability of the federal government as a 
whole. Such a governmentwide performance and accountability report 
would increase transparency and accountability by providing Congress 
and the public key financial information for the government as a whole. 
For example, the performance and accountability report could provide 
information on the federal governmentï¿½s progress in achieving the goals 
it set for preparing for catastrophic events, such as a natural 
disaster or terrorist attack. Furthermore, it could highlight the most
critical challenges to our fiscal well-being, such as the looming wave 
of mandatory spending that will result from the aging and retirement of 
the baby boom generation. 

Figure: At A Glance: Tax Expenditures Compared to Discretionary 
Spending: 

[See PDF for image] 

This figure is a line graph with lines depicting the sum of tax 
expenditure revenue loss estimates and discretionary spending. The 
vertical axis of the graph represents dollars in billions (in 2006 
dollars) from 0 to 1,600. The horizontal axis of the graph represents 
fiscal years from 1992 to 2006. 

Source: GAO analysis of Office of Management and Budget budget reports 
on tax expenditures, fiscal years 1976ï¿½2008. 

Note: Summing tax expenditure estimates does not take into account 
interactions between individual provisions. 

[End of figure] 

[End of section] 

Implementation And Execution: 

The execution of the policies and programs that are decided upon will
require an improved management capability to ensure their economy,
efficiency, effectiveness, ethics, and equity. 

8. Strategic Management Plan for the Executive Branch: 

Achieving fundamental change in the federal government will require the
executive branch to work with Congress and other key stakeholders in 
the development of long-term goals and strategies to overcome the 
significant management obstacles that stand in the way of progress. 
Through the Presidentï¿½s Management Agenda and its related initiatives, 
including the Office of Management and Budgetï¿½s Program Assessment 
Rating Tool (PART), the administration has taken steps in the right 
direction by calling attention to successes and needed improvements in
federal management and performance. Properly done, these and future 
efforts could provide a strong basis to support the needed review, 
reassessment, and reprioritization process. A strategic management plan 
for the executive branch that includes key management and operational 
strategic goals for the next 3ï¿½5 years could provide the additionally 
needed long-term focus. The benefit of such a plan is that it can be 
targeted to cover a range of ï¿½good governmentï¿½ issues that are 
nonpartisan in nature and can provide an integrating mechanism within an
administration as well as continuity of goals to future 
administrations. 

The root causes of some persistent problems, including some of the areas
identified by GAO as high risk, stem from outmoded management 
frameworks or fragmented approaches that require more strategic, 
systemic, and integrated solutions than can be adequately provided by
individual or interagency planning efforts. For example, resolving 
Department of Defense (DOD) supply chain management problems, which was 
first designated high risk in 1990, will require that DOD ensure that 
the logistics ï¿½road mapï¿½ it is developing provides a comprehensive,
integrated strategy for guiding supply chain management improvement 
efforts. In another example, while important progress has been made, 
strategic human capital management receives a high-risk area 
designation because federal agencies continue to lack a strategic 
approach to human capital management that aligns human capital efforts 
with agency mission and program goals. 

9. Chief Operating Officers/Chief Management Officers in Key Selected
Agencies: 

As agencies across the federal government embark on the large-scale 
organizational transformations needed to address 21st century 
challenges, there is a compelling need for leadership to provide the
continuing, focused attention essential to completing these multi-year 
transformations. A chief operating officer (COO)/chief management 
officer (CMO) position is one tool for building the necessary management
structure that could be used to help to elevate, integrate, and 
institutionalize responsibility for key management functions and 
business transformation efforts. GAO has long advocated the need for a 
COO/CMO position at DOD and the Department of Homeland Security (DHS).
Legislation has been introduced to create a CMO position at DOD, and 
recently the Undersecretary for Management position at DHS became the 
CMO, in an effort to advance management integration and business 
transformation in those departments. 

A number of criteria can be used to determine the appropriate type of
COO/CMO position in a federal agency, including the history of 
organizational performance, degree of organizational change needed, 
nature and complexity of mission, organizational size and structure,
and current leadership talent and focus. A relatively stable or small 
organization could use the existing deputy or related position to carry 
out the integration and business transformation role. A larger 
organization might designate a senior-level executive who reports to 
the deputy, such as a principal under secretary for management, to 
integrate key management functions and lead business transformation 
efforts. A large and more complex organization undergoing a significant 
transformation to reform long-standing management problems might create 
a second deputy position to bring strong focus to the integration and 
business transformation of the agency. 

There are also a number of strategies that Congress should consider as 
it develops and reviews legislative proposals to create these 
positions. The specific roles and responsibilities of the COO/CMO
position need to be clearly defined and effectively communicated 
throughout the organization. The COO/CMO needs to be given a high level 
of authority and clearly delineated reporting relationships. The 
COO/CMO needs to foster good executive-level working relationships for
maximum effectiveness. Integration and transformation structures and 
processes need to be established, in addition to the COO/CMO position. 
Individual accountability and performance need to be promoted through 
specific job qualifications and effective performance management, such 
as with a clearly defined performance agreement. Continuity of 
leadership in the COO/CMO position should be maintained, such as 
through term or career appointments, in selected agencies as needed. In 
addition, Congress should make the broad qualifications of the COO/CMO
include a proven track record as a business process change agent in 
large, complex, and diverse public and private organizations. 

In addition to GAOï¿½s work, a number of other organizations have 
supported the need for the creation of COO/CMO positions in federal 
agencies. In July 2006, McKinsey & Company recommended that a COO be
established in many federal agencies as the means to help those 
agencies successfully achieve transformation.[Footnote 5] In October 
2006, a working group within the National Academy of Public 
Administration (NAPA) recommended creating COO positions in federal 
agencies to oversee the full range of management functions, including
procurement, finance, information technology, and human capital. 
[Footnote 6] Further, the Defense Business Board and the
Institute for Defense Analyses, in separate studies, concluded that a 
chief management officer was needed in DOD to provide leadership over 
business transformation efforts. 

10. Revisions to the Presidential (Political) Appointment Process: 

Another option for building the necessary leadership and management 
structure is to examine several aspects of the presidential (political) 
appointment process. Currently, there is no distinction in the process 
among the different types of responsibilities inherent in the appointed
positions. Further, the positions generally do not require any 
particular set of management qualifications, even though the appointees 
may be responsible for non-policy-related functions. In addition, some 
federal agencies, particularly those agencies with political appointees 
in positions with operational and management responsibilities, may 
benefit from term appointments. 

For example, appointees could be categorized by the differences in 
their roles and responsibilities, such as by the following categories: 

* those appointees that have responsibility for various policy issues; 

* those appointees that have leadership responsibility for various 
operational and management matters; and; 

* those appointees that require an appropriate degree of technical
competence or professional certification, as well as objectivity and 
independence (e.g., judges, the Comptroller General, inspectors 
general). 

There has been a proliferation of political appointee positions in 
government. This needs to be reviewed and reconsidered. In addition, 
there is a need to reexamine the appointment process to assess which 
appointee positions should be presidentially appointed and Senate-
confirmed (PAS) versus presidentially appointed (PA) with advance 
notification to the Congress. 

For example, those appointees that have policy leadership 
responsibility could be PAS, while many of those with operational and 
management responsibility could be PA, with a requirement for 
appropriate congressional notification in advance of appointment. In 
addition, appropriate qualifications for selected positions, including 
the possibility of establishing specific statutory qualifications 
criteria for certain categories of appointees, could be articulated. 
Finally, the use of term appointments and different compensation
schemes for these appointees should be reviewed (i.e., for inspectors 
general and selected Executive Level II positions in federal agencies). 

11. Enhanced Governmentwide Acquisition and Contracting Capability: 

The acquisition of products and services from contractors consumes 
about a quarter of the governmentï¿½s discretionary spending. In fiscal 
year 2006, federal agencies spent over $415 billion on such contracts. 
The work of the government is increasingly being performed by 
contractors, including emergency and large-scale logistics operations 
such as hurricane response and recovery and the wars in Iraq and
Afghanistan. Many agencies rely extensively on contractors to carry out 
their basic missions. At the same time, GAOï¿½s list of high-risk areas 
includes acquisition and contract management issues that collectively
expose hundreds of billions of taxpayer dollars to potential waste and 
misuse. To improve acquisition outcomes, agencies need a concentrated 
eff ort to address existing problems while facilitating a reexamination 
of the rules and regulations that govern the government-contractor
relationship in an increasingly blended workforce. 

Agencies are making greater use of a variety of relatively new 
acquisition tools, techniques, and approaches, including performance-
based contracting, commercial item purchases, and interagency 
contracting. Th is new environment is promising, but it imposes 
additional demands on an acquisition workforce already struggling to 
deal with an increased workload with fewer government personnel. GAO has
provided Congress with a list of 15 systemic acquisition challenges at 
DOD that need to be addressed, and GAO work at other federal agencies 
indicates that they often face similar challenges. For example, since
many agencies have turned to contractor support to augment their 
capabilities, agencies need to ensure that contractors are playing 
appropriate roles and that the agencies have retained sufficient in-
house workforce capacity to monitor contractor cost, quality, and 
performance. Agencies also need to ensure that their acquisitions are 
outcome-based, and that appropriate risk-sharing contracts are in 
place. 

All agencies, particularly those with significant acquisition budgets, 
such as DOD, the National Aeronautics and Space Administration, and 
DHS, need to better align their requirements, budget, and acquisition 
processes to reconcile the differences between wants, needs, 
affordability, and sustainability, given current and future demands and 
resources. 

12. Modernized Federal Government Human Capital Models: 

To respond to current and emerging demands, federal agencies must become
more partnership-based, results-oriented, integrated, and externally 
focused. In that regard, strategic human capital management must be the 
centerpiece of any serious change-management and transformation effort. 
Yet, as amply shown by GAOï¿½s long-standing work on human capital 
issues, federal agencies do not consistently have the modern, 
effective, economical, and efficient human capital programs, policies,
and procedures they need to respond to current and emerging governance
challenges of the 21st century. Specifically, the federal government 
has not sufficiently transformed how it classifies, compensates, 
develops, and motivates its employees to achieve maximum results within 
available resources and existing authorities. A key challenge is 
determining how to update the governmentï¿½s classification and 
compensation systems to be more market-based and performance-oriented. 

Congress has provided selected entities with the authority to develop 
more performance-based human capital systems and federal agencies have 
taken steps to implement various existing human capital flexibilities.
However, a modernized governmentwide framework and infrastructure for 
advancing human capital reform can serve as a valuable tool in order to 
avoid further fragmentation within the civil service, ensure management
flexibility as appropriate, allow a reasonable degree of consistency, 
provide adequate safeguards, and maintain a level playing field among 
federal agencies competing for talent. 

Before implementing any future human capital reforms, agencies should 
follow a phased approach that meets a ï¿½show meï¿½ test. That is, each 
agency should demonstrate it has met certain conditions, including that 
it has developed an institutional infrastructure that can support 
reform. This infrastructure should include, among other things, (1) a 
strategic human capital planning process linked to the agencyï¿½s overall 
strategic plan; (2) capabilities to design and implement a new human 
capital system effectively; (3) a modern, effective, credible, and
validated performance management system that provides clear linkage 
between institutional, unit, and individual performance-oriented 
outcomes; and (4) adequate internal and external safeguards to ensure 
the fair, effective, credible, and nondiscriminatory implementation
of the system. 

As the governmentï¿½s human capital leader, the Office of Personnel 
Management has a key role in helping agencies build the needed 
infrastructure to successfully implement and sustain human capital
reforms and will likely take on the role of independently certifying 
agency readiness to implement reforms. 

13. GAOï¿½s High-Risk List: 

GAO provides updates to its list of government programs and operations 
that it identifies as ï¿½high riskï¿½ at the start of each new Congress to 
help in setting congressional oversight agendas. These reports, which 
have been produced since the early 1990s, have brought a much-needed
focus to a targeted list of major challenges that are impeding 
effective government and costing the government billions of dollars 
each year. The reports help Congress and the executive branch carry out 
their responsibilities while improving the governmentï¿½s performance and 
enhancing its accountability. In fact, GAOï¿½s focus on high-risk 
problems contributed to Congress enacting a series of reforms across 
the government to address critical human capital challenges, strengthen
financial management, improve information technology practices, and 
instill a more effective, credible, and results-oriented government. 

Congress needs to continue targeting waste in government spending, 
including mismanagement, inappropriate actions, or inadequate oversight 
that results in taxpayers in the aggregate not receiving reasonable 
value for money in connection with government-funded activities. 
Government waste is growing and far exceeds the cost of fraud and 
abuse. In addition, GAOï¿½s high-risk program has focused on those major 
programs and operations that are in urgent need of broad transformation 
and congressional as well as executive branch action to ensure that our
national government functions in the most economical, efficient, and 
effective manner possible. To help improve these high-risk operations, 
GAO has made hundreds of recommendations. 

The program has helped sustain attention from members of Congress who 
are responsible for oversight and from executive branch officials who 
are accountable for performance. Of the 47 areas that have appeared on 
our high-risk list since 1990, 18 have improved enough to be removed
from the list and 2 have been consolidated with other areas. Further, 
GAOï¿½s work related to areas it has designated as high-risk has had a 
financial effect. In fiscal year 2006 alone, actions by both Congress 
and the executive branch in response to GAOï¿½s recommendations resulted 
in approximately $22 billion in financial benefits. 

GAOï¿½s 2007 high-risk list covers 27 areas that need attention, 15 of 
which related directly or indirectly to DOD. Persistence and 
perseverance in addressing high-risk areas will continue to yield 
significant benefits, dramatically improve service to the American 
public, strengthen public confidence and trust in the performance
and accountability of our national government, and ensure the ability of
government to deliver on its promises. 

Figure: At A Glance: Federal Government Acquisitions: 

[See PDF for image] 

This figure is a pie-chart depicting $419 billion in acquisitions 
obligations in fiscal year 2006. The following data is depicted: 

* Department of Defense: 71% ($297 billion); 
* Department of Energy: 5% ($23 billion); 
* Department of Homeland Security: 4% ($16 billion); 
* National Aeronautics and Space Administration: 3% ($13 billion); 
* Department of Health and Human Services: 3% ($13 billion); 
* All others: 14% ($58 billion). 

Source: GAO analysis of data from the Federal Procurement Data System. 

Note: Due to rounding, dollar values do not add up to the specified 
total value. 

[End of figure] 

[End of section] 

Next Steps: 

Congress Has Tackled Politically and Technically Complex Issues Before: 

Throughout our history Congress has consistently shown the ability to 
respond to the nationï¿½s most technically complex and politically 
difficult challenges. GAO recently reviewed historical records of
congressional activity in the past three decades and found that about 
half of the legislated reforms that various academic observers have 
labeled ï¿½significantï¿½ or ï¿½landmarkï¿½ have been driven at least in part 
by reexamination of preexisting federal programs or policies. 

The list below illustrates this capability of Congress to enact 
significant reform when faced with the need to reexamine politically 
and technically complex issues. 

When committed to enacting such significant legislation, Congress has
deregulated the airline industry (1978), which paved the way for 
deregulating other sectors of the economy; overhauled the income tax 
code (1986); reorganized DOD (1986); and reformed the nationï¿½s insurance
and benefit programsï¿½specifically Social Security (1983), farm 
subsidies (1996), welfare (1996), and Medicare and Medicaid (1998). 
These changes involved making tough choices among competing claims on 
federal resources, and the willingness of the public and Congress to 
confront those trade-offs typifies the spirit of what is needed in the 
coming years. 

Illustrative Legislation Resulting from Reexamination of Federal 
Programs and Policies: 

Airline Deregulation Act of 1978: 
Spurred by the Presidentï¿½s regulatory reform drive in early 1977 and 
previous congressional hearings, Congress reexamined federal regulation 
of the airline passenger industry and determined that to increase 
competition and to lower fares, federal price and route controls should 
be phased out over a 7-year period. Industry and labor groups opposed 
the changes and the increased risk of industry instability. This act 
eventually ended most federal price regulation of the passenger airline 
industry. Pub. L. No. 95-504 (Oct. 24, 1978). 

Social Security Amendments of 1983: 
Pending system insolvency prompted Congress to reexamine Social 
Security in 1981, which involved partisan debates over hard choices 
among benefits for the elderly, balancing the budget, and keeping the 
retirement fund solvent. Congress subsequently negotiated a compromise 
and enacted a $165 billion bipartisan package of tax increases and 
benefit cuts to delay system insolvency. Pub. L. No. 98-21 (Apr. 20, 
1983). 

Goldwater-Nichols Department of Defense Reorganization Act of 1986: 
In 1986 Congress wrestled with the entrenched bureaucracy of DOD and 
reexamined the existing organization, confronting the cultural and 
institutional resistance to reorganize it. The reorganization 
dramatically shifted authority from the separate military services to 
the Joint Chiefs of Staff. Pub. L. No. 99-433 (Oct. 1, 1986). 

Tax Reform Act of 1986: 
Congressional calls for reform since 1981 aimed at simplifying tax laws 
were echoed in the 1984 presidential State of the Union address, 
prompting Congress to reexamine the existing tax codes and make 
difficult choices balancing public interest, supporters of reform, 
opposition forces, and corporate concerns. With this act Congress 
enacted a sweeping overhaul of tax law, which, among other revisions, 
collapsed 14 tax brackets into 2; eliminated many breaks; cut rates 
sharply; and shifted burden from individual to corporate taxes. Pub. L. 
No. 99-514 (Oct. 22, 1986). 

Personal Responsibility and Work Opportunity Reconciliation Act of 1996
(welfare reform): 
After an at-times-contentious national debate, Congress replaced 
federal programs, some over 60 years old, of welfare grants directly to 
individuals and families with block grants to states. The act generally 
required welfare recipients to work within 2 years of receiving 
benefits and limited their benefits to a period of 5 years. Pub. L. No. 
104-193 (Aug. 22, 1996). 

Federal Agricultural Improvement and Reform Act of 1996 (farm bill): 
The 1996 farm bill substantially changed U.S. agricultural policy that 
had been in place for almost 50 years by replacing the link between 
federal income support payments and farm prices with seven annual fixed 
but declining payments, intended to move U.S. agriculture toward a more 
ï¿½market-orientedï¿½ farm policy. Congress also changed the administrative 
reimbursement fee paid to insurance companies delivering crop 
insurance, resulting in billions of dollars of savings. (Partly in 
response to changes in the farm economy in the late 1990s, in 2002
Congress modified the approach legislated in the 1996 Act.) Pub. L. No. 
104-127 (Apr. 4, 1996). 

Balanced Budget Act of 1997 (Medicare reform): 
Over the years, Congress has had to weigh issues critical to the 
sustainability and affordability of Medicare and Medicaid. In 1997, 
budget pressures prompted Congress to reexamine Medicare and Medicaid 
and reduce spending for both programs by approximately $120 billion
over several years and included more managed care alternatives as well 
as a pilot program for medical savings accounts. Pub. L. No. 105-33 
(Aug. 5, 1997). 

No Child Left Behind Act of 2001: 
Following two decades of debate over the federal role in public school 
policy, Congress cleared a landmark education bill that holds states 
accountable for the academic progress of all public school students as 
a condition of receiving federal funds. In addition, the act further 
expanded the federal role by establishing requirements for teachers to 
be ï¿½highly qualified,ï¿½ which includes demonstrating subject matter 
competency in each core academic subject they teach. Pub. L. No. 107-
110 (Jan. 8, 2002). 

GAOï¿½s review of the congressional record of over 160 reforms and 
interviews with a mix of experts on congressional processes suggest 
several additional considerations as Congress moves forward with a
reexamination agenda: 

* reexamination will take time and require sustained effort; 

* a ï¿½championï¿½ for reform can galvanize support, and; 

* different challenges will require different approaches. 

Policymakers and their staff should be prepared to start early and 
often in efforts to effect change. Many policy and program changes in 
the past three decades have as part of their history earlier attempts 
preceding them by as much as several decades, suggesting that some of
the changes needed may require multiple attempts and may, literally, 
take a generation to result in significant reform. For example, the 
Goldwater-Nichols Department of Defense Reorganization Act of 1986, 
[Footnote 7] which reorganized the Pentagon, implemented a 
recommendation to shift power from the separate military services to 
the Joint Chiefs of Staff ï¿½an organizational change recommended as 
early as 1958 by President Eisenhower and by numerous study groups
since that time. Earlier attempts that do not result immediately in 
enactment of reforms can and have contributed to ï¿½moving the issue 
forward,ï¿½ thus making it easier for later attempts to succeed. 

Of the many ways for Congress to effect change, leadership is central. 
Many significant reforms that Congress enacted in the past benefited 
from a ï¿½championï¿½ or ï¿½championsï¿½ï¿½publicly recognizable and credible 
advocates who actively supported and persistently promoted the necessary
change. Whether a champion comes from within Congress or is the 
President, or both, a champion can galvanize support for change. 
Congress can also exercise leadership through outreach efforts to
special interest groups and the general public, since public opinion 
can effectively move issues onto the national agenda. 

The congressional approaches chosen should depend on the specific 
issue, and multiple approaches may be more effective in moving the 
issue forward. Indeed, while the vast majority of the reforms relied on 
Congressï¿½s traditional processes, nearly half of them also benefited 
from multiple approaches. Th e level of public knowledge on an issue,
the publicï¿½s readiness and familiarity with it, the presence of 
incentives to deal with itï¿½such as budgetary constraintsï¿½the desires 
and need for consensus among stakeholders, and the extent to which
alternative solutions have already been identified and discussed will 
all affect the choice of the next step by Congress. 

There has long been discussion of the benefits of early action to put 
Social Security on a sustainable course and to reform Medicare as well 
as our overall health care system. Acting sooner rather than later can 
turn compound interest from an enemy to an ally. Acting sooner rather
than later permits changes to be phased in more gradually and gives 
those affected time to adjust to the changes. Delay does not avoid 
actionï¿½rather it makes the steps that have to be taken later more 
dramatic and potentially harder. 

Unfortunately, it is getting harder to talk about early actionï¿½the 
future is upon us. In 2008 the first baby boomers will be eligible for 
retirement under Social Security. The Congressional Budget Office 
projects the average annual growth rate of real GDP will decline from 
2.9 percent in 2008 to 2.5 percent in 2017. This slowing of economic
growth will occur while spending on Social Security, Medicare, and 
Medicaid continues to growï¿½accounting for 51 percent of all federal 
spending by 2017 compared to 40 percent in 2006. This trend in spending
will accelerate beyond 2016 as health care costs continue to grow. 

The specific policy choices made to address this fiscal challenge are 
the purview of elected officials. And the policy debate will reflect 
differing views of the role of government and differing priorities for 
our country. But the American people know that there is something 
wrong; that these deficits and rapidly mounting debt levels are a 
problem. They can accept difficult decisions as long as they understand 
why such steps are necessary. They need to be given the facts about the 
fiscal outlook: what it is, what drives it, and what it will take to 
address it. People must understand that the status quo is not an option 
and that tough choices and real trade-offs will be required. They need 
to know that there is no easy solution, miracle cure, or magic bullet to
address the long-term fiscal challenge. 

The Long-Term Fiscal Problem Cannot Be Solved by: 

* a growing economy; 
* wiping out fraud, waste, and abuse; 
* ending the Iraq War or cutting defense; 
* restraining discretionary spending; 
* eliminating congressional earmarks; and; 
* letting 2001 and 2003 tax cuts expire. 

With this understanding, the American people can engage with their 
elected leaders about what government should do and how it should do 
business. By doing so, we can keep America great and help to ensure that
our future will be better than our past. 

[End of section] 

Related GAO Products: 

Direction Setting and Performance Measurement: 

Key national indicators: 

* Environmental Indicators: Better Coordination Is Needed to Develop 
Environmental Indicator Sets That Inform Decisions. GAO-05-52. November 
17, 2004. 

* Informing Our Nation: Improving How to Understand and Assess the 
USAï¿½s Position and Progress. GAO-05-1. November 10, 2004. 

* Forum on Key National Indicators: Assessing the Nationï¿½s Position and 
Progress. GAO-03-672SP. May 2003. 

Governmentwide Strategic Plan and Annual Performance Plan: 

* Results-Oriented Government: GPRA Has Established a Solid Foundation 
for Achieving Greater Results. GAO-04-38. March 10, 2004. 

Prioritization and Decision Making: 

Integrated solutions in Congress: 

* 21st Century Challenges: Performance Budgeting Could Help Promote 
Necessary Reexamination. GAO-05-709T. June 14, 2005. 

* Comptroller Generalï¿½s Forum: High-Performing Organizations: Metrics, 
Means, and Mechanisms for Achieving High Performance in the 21st 
Century Public Management Environment. GAO-04-343SP. February 13, 2004. 

* Managing for Results: Continuing Challenges to Effective GPRA 
Implementation. GAO/T-GGD-00-178. July 20, 2000. 

* Mechanisms for partnerships across federal agencies, levels of 
government, and sectors: 

* Financial Literacy and Education Commission: Further Progress Needed 
to Ensure an Effective National Strategy. GAO-07-100. December 4, 2006. 

* Catastrophic Disasters: Enhanced Leadership, Capabilities, and 
Accountability Controls Will Improve the Effectiveness of the Nationï¿½s 
Preparedness, Response, and Recovery System. GAO-06-618. September 6, 
2006. 

* Rebuilding Iraq: More Comprehensive National Strategy Needed to Help 
Achieve U.S. Goals. GAO-06-788. July 11, 2006. 

* Results-Oriented Government: Practices Th at Can Help Enhance and 
Sustain Collaboration among Federal Agencies. GAO-06-15. October 21, 
2005. 

* Comptroller Generalï¿½s Forum: High-Performing Organizations: Metrics, 
Means, and Mechanisms for Achieving High Performance in the 21st 
Century Public Management Environment. GAO-04-343SP. February 13, 2004. 

* Combating Terrorism: Evaluation of Selected Characteristics in 
National Strategies Related to Terrorism. GAO-04-408T. February 3, 
2004. 

Information and Transparency: 

Executive branch financial and budget reporting: 

* The Nationï¿½s Long-Term Fiscal Outlook: August 2007 Update. GAO-07-
1261R. September 2007. 

* Fiscal Stewardship: A Critical Challenge Facing Our Nation. GAO-07-
362SP. January 31, 2007. 

* Understanding Similarities and Differences between Accrual and Cash 
Deficits. GAO-07-117SP. December 1, 2006; and its Update for Fiscal 
Year 2006. GAO-07-341SP. January 22, 2007. 

* Statement of the Comptroller General of the United States. December 
15, 2006. 

* 21st Century: Addressing Long-Term Fiscal Challenges Must Include a 
Re-examination of Mandatory Spending. GAO-06-456T. February 15, 2006. 

* Understanding the Primary Components of the Annual Financial Report 
of the United States Government. GAO-05-958SP. September 2005. 

Governmentwide performance and accountability report: 

* Results-Oriented Government: GPRA Has Established a Solid Foundation 
for Achieving Greater Results. GAO-04-38. March 10, 2004. 

Implementation and Execution: 

Chief management officers/chief operating officers in key selected 
agencies: 

* Organizational Transformation: Implementing Chief Operating 
Officer/Chief Management Officer Positions in Federal Agencies. GAO-08-
34. October 16, 2007. 

* Defense Business Transformation: Achieving Success Requires a Chief 
Management Officer to Provide Focus and Sustained Leadership. GAO-07-
1072. September 5, 2007. 

* Department of Homeland Security: A Comprehensive and Sustained 
Approach Needed to Achieve Management Integration. GAO-05-139. March 
16, 2005. 

* Chief Operating Officer Concept at DHS. GAO-04-876R. June 28, 2004. 

* Highlights of a GAO Roundtable: The Chief Operating Officer Concept: 
A Potential Strategy to Address Federal Governance Challenges. GAO-03-
192SP. October 4, 2002. 

Revisions to the presidential (political) appointment process: 

* Highlights of the Comptroller Generalï¿½s Panel on Federal Oversight 
and the Inspectors General. GAO-06-931SP. September 11, 2006. 

* Human Capital: Trends in Executive and Judicial Pay. GAO-06-708. June 
21, 2006. 

* Confirmation of Political Appointees: Eliciting Nomineesï¿½ Views on 
Leadership and Management Issues. GAO/GGD-00-174. August 11, 2000. 

Enhanced governmentwide acquisition and contracting capability: 

* Federal Acquisitions and Contracting: Systemic Challenges Need 
Attention. GAO-07-1098T. July 17, 2007. 

* High-Risk Series: An Update. GAO-07-310. January 2007. 

* Suggested Areas for Oversight for the 110th Congress. GAO-07-235R. 
November 17, 2006. 

* Highlights of a GAO Forum: Federal Acquisition Challenges and 
Opportunities in the 21st Century. GAO-07-45SP. October 2006. 

* DOD Acquisitions: Contracting for Better Outcomes. GAO-06-800T. 
September 7, 2006. 

Modernized federal government human capital models: 

* Human Capital: Designing and Managing Market-Based and More 
Performance-Oriented Pay Systems. GAO-05-1048T. September 27, 2005. 

* Human Capital: Principles, Criteria, and Processes for Governmentwide 
Federal Human Capital Reform. GAO-05-69SP. December 2004. 

* Human Capital: Key Principles for Effective Strategic Workforce 
Planning. GAO-04-39. December 11, 2003. 

* Highlights of a GAO Forum: Mergers and Transformation: Lessons 
Learned for a Department of Homeland Security and Other Federal 
Agencies. GAO-03-293SP. November 2002. 

GAOï¿½s High-Risk list: 

* High-Risk Series: An Update. GAO-07-310. January 2007. 

[End of section] 

Image Sources: 

This section contains credit and copyright information for images and
graphics in this product, as appropriate, when that information was not 
listed adjacent to the image or graphic. 

Front cover, pages 23 and 24: BrandX Pictures (Capitol); 

Pages i, 2, 6, 12, 16, 24, and 28: GAO (flag and Capitol), Comstock 
(Statue of Liberty); 

Page iii: Photodisc (pen); 

Pages 1 and 2: Corbis (highway); 

Pages 5 and 6: Photodisc (globe chess piece); 

Pages 11 and 12: Photodisc (computers); 

Pages 15 and 16: Dynamic graphics (gears); 

Page 26: GAO (books). 

[End of section] 

Footnotes: 

[1] 31 U.S.C. ï¿½ 1105(a)(28). 

[2] Pub. L. No. 105-206 (July 22, 1998). 

[3] Pub. L. No. 100-526 (Oct. 24, 1988). 

[4] Both the House and the Senate have reinstated PAYGO discipline in 
their respective rules for the 110th Congress. Statutory PAYGO has the 
advantages of enforcement and duration: it may be easier to waive a 
rule than ignore a law, and a law can carry a stronger penalty designed 
to encourage compliance. 

[5] McKinsey & Company, How Can American Government Meet its
Productivity Challenge? (July 2006). 

[6] NAPA, Moving from Scorecard to Strategic Partner: Improving
Financial Management in the Federal Government (October 2006). 

[7] Pub. L. No. 99-433 (Oct. 1, 1986). 

[End of section] 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the performance 
and accountability of the federal government for the American people. 
GAO examines the use of public funds; evaluates federal programs and 
policies; and provides analyses, recommendations, and other assistance 
to help Congress make informed oversight, policy, and funding 
decisions. GAO's commitment to good government is reflected in its core 
values of accountability, integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each 
weekday, GAO posts newly released reports, testimony, and 
correspondence on its Web site. To have GAO e-mail you a list of newly 
posted products every afternoon, go to [hyperlink, http://www.gao.gov] 
and select "Subscribe to Updates." 

Order by Mail or Phone: 

The first copy of each printed report is free. Additional copies are $2 
each. A check or money order should be made out to the Superintendent 
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 
more copies mailed to a single address are discounted 25 percent. 
Orders should be sent to: 

U.S. Government Accountability Office: 
441 G Street NW, Room LM: 
Washington, D.C. 20548: 

To order by Phone: 
Voice: (202) 512-6000: 
TDD: (202) 512-2537: 
Fax: (202) 512-6061: 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]: 
E-mail: [email protected]: 
Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Gloria Jarmon, Managing Director, [email protected]: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, D.C. 20548: 

Public Affairs: 

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

*** End of document. ***