GAO-09-441CG

GAO: PROMOTING ACCOUNTA

TRANSPARENCY IN GOVER

Before Lycoming College

James Harding Executive Speaker 

Williamsport, PA

March 23, 2009

By Gene L. Dodaro

Acting Comptroller General
GAO-09-441CG

Outline

• About GAO• Financial Markets and Economic Recovery• Transition – New President and Congress• Long Term Fiscal Outlook and Risks
GAO-09-441CG

About GAO

GAO’s mission is to support Congress and imp

• An independent, nonpartisan agency in the 

branch of the federal government.

• 3,200 employees, i.e., economists, account

policy analysts, attorneys and computer exp

• Issues hundreds of reports, congressional t

other products each year on breadth of federesponsibilities
GAO-09-441CG

About GAO

GAO’s Strategic Plan Framework -- provide timservice to the Congress and the federal govern

• Address current and emerging challenges to 

being and financial security of the American 

• Respond to changing security threats and th

of global interdependence

• Help transform the federal government’s rol

does business to meet 21st century challeng

• Maximize the value of GAO by being a mod

agency and world-class professional service
GAO-09-441CG

Our Core Values

Accountability Help the Congress oversee federal programs, operations to ensure accountability to the AmeIntegrityEnsure that our work is professional, objectivefact-based, nonpartisan, nonideological, balancReliabilityProvide high-quality, timely, accurate, useful, ccandid information
GAO-09-441CG

Financial Markets a

Economic Recover

• Financial Regulatory System• GAO Role in Financial Rescue • Auditors of Bank Insurance Fund, FHFA, TARP

Government Financial Statements

• American Recovery and Reinvestment Act
GAO-09-441CG

Modernizing the U.S. Fin

Regulatory System

Financial Regulation: A Framework for Crafting 

Proposals to Modernize the Outdated U.S. FinRegulatory System

• Explains the origins of the current fi

regulatory system

• Describes market developments an

pose challenges to the current syste

• Presents an evaluation framework t

and others can use to craft or evaluregulatory reform efforts

(GAO-0
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Outdated Regulatory S

Risks posed by:• Emergence of large, complex, and inter

financial conglomerates

• Less-regulated entities are playing incre

roles in the financial system

• New and complex products pose challe

stability and consumer protection
GAO-09-441CG

For Crafting or Assessing Re

Reform Proposals: GAO Fram

9 Essential Characteris

• Clearly defined regulatory goals in statute • Appropriately comprehensive• Systemwide focus• Flexible and adaptable• Efficient and effective• Consistent consumer and investor protectio• Regulators provided with independence, pr

authority, and accountability

• Consistent financial oversight• Minimal taxpayer exposure
GAO-09-441CG

Financial Institutions and 

• Emergency Economic Stability Act of 2008 

billion TARP in October 2008 

• GAO given statutory oversight role• GAO’s TARP reports recommendations fo

• Monitoring the use of funds to meet the • Articulating a better communication stra• Ensuring effective Treasury manageme
GAO-09-441CG

American Recovery & Reinve• Signed February 17, 2009• Purposes:

• preserve and create jobs and promote • assist those most impacted by the rece• invest in science and health-care techn• invest in infrastructure• stabilize state and local government bu

• Total cost, tax and spending: $787 billion, i

• over $580 billion in additional spending 
GAO-09-441CG

American Recovery & Reinvest

• Inspectors General: review federal progr

implementation 

• Recovery Accountability and Transparen• GAO: responsibilities include:

• conducting bimonthly reviews of sele

localities 

• commenting on the estimates of the n

reviewing areas such as trade adjusassistance, new education incentive efforts to increase small business len
GAO-09-441CG

Global Financial Crisis Task 

• Created by International Governing Board in No• Purpose: 

• enhance the knowledge base of NAOs on f

economic matters related to the crisis

• be a source of information to help governm

community respond to the crisis 

• Membership: U.S.A. is lead, other countries inc

Austria Estonia Mexico SCyprus Hungary Morocco SCanada Indonesia Netherlands UChile Italy Poland VChina Japan RussiaDenmark Korea Slovakia
GAO-09-441CG

Transition: Assisting Th

Administration & The New 
GAO-09-441CG
GAO-09-441CG
GAO-09-441CG

Other Urgent Issue

Timely Action Is Crit

• U.S. efforts in Iraq, Afghanistan, and Pakis• Defense readiness, spending, and care for • Protecting the homeland and preparing for 

emergencies

• Improving U.S. image abroad• Food safety • Transition to digital TV
GAO-09-441CG

Long-Term Challeng

• Today’s focus—understandably—is on

• Dealing with financial system stress • Addressing the economic downturn

• BUT.... Underlying long-term fiscal challen

addressed
GAO-09-441CG

Long-Term Fiscal Chal

-20-15-10

-5

05

2005 2010 2015 2020 2025 2030 2035 

Fiscal year

Percent of GDP

Combined 

Surplus/Deficit

Source: GAO January 2009 analysis.aFederal surplus/deficit is from GAO’s Alternative Simulation using the Trustees’ assumptions.
GAO-09-441CG

Long-Term Fiscal Challe

Driven by Health Care Spe

05

1015202530

2008 2020 2030 2040 2050 2060 

Social Security

Medicaid

Medicare

Source: GAO analysis of data from the Office of the Chief Actuary, Social Security Administration, Office of the Services, and the Congressional Budget Office.Note: Social Security and Medicare projections based on the intermediate assumptions of the 2008 Trustees’ RCBO’s January 2009 short-term Medicaid estimates and CBO’s December 2007 long-term Medicaid projections consistent with the 2008 Trustees intermediate assumptions.

Percent of GDP
GAO-09-441CG

2009 HIGH-RISK LIS

30 items grouped into four categories:• Broad-Based Transformation Challenge

(e.g., DOD, DHS, surface transportation, fooversight)

• Federal Contracting• Tax Law Administration• Insurance and Benefit Programs

(e.g., Medicare, Medicaid, PBGC, flood ins
GAO-09-441CG

Latest High-Risk List Ad

• Modernizing the Outdated U.S. Financial R• Protecting Public Health through Enhanced 

Medical Products

• Transforming EPA’s Processes for Assess

Toxic Chemicals
GAO-09-441CG

THE VALUE O

PUBLIC SERVI
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On the Web

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

Contact

Chuck Young, Managing Director, Public AffairsYoungC1@gao.gov (202) 512-4800 

U.S. Government Accountability Office441 G Street NW, Room 7149Washington, D.C. 20548

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