S. HRG. 111–381 

TASK FORCE HEARINGS 

HEARING 

BEFORE THE

COMMITTEE ON THE BUDGET 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

October 29, 2009-PERFORMANCE-INFORMED BUDGETING: 

OPPORTUNITIES TO REDUCE COST AND IMPROVE SERVICE 

November 10, 2009-BIPARTISAN PROCESS PROPOSAL FOR LONGTERM FISCAL STABILITY 

December 10, 2009-DATA-DRIVEN PERFORMANCE: USING 

TECHNOLOGY TO DELIVER RESULTS 

( 

Printed for the use of the Committee on the Budget 

TASK FORCE HEARINGS 

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55–507pdf 2009

S. HRG. 111–381 

TASK FORCE HEARINGS 

HEARING 

BEFORE THE

COMMITTEE ON THE BUDGET 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

October 29, 2009-PERFORMANCE-INFORMED BUDGETING: 

OPPORTUNITIES TO REDUCE COST AND IMPROVE SERVICE 

November 10, 2009-BIPARTISAN PROCESS PROPOSAL FOR LONGTERM FISCAL STABILITY 

December 10, 2009-DATA-DRIVEN PERFORMANCE: USING 

TECHNOLOGY TO DELIVER RESULTS 

( 

Printed for the use of the Committee on the Budget 

COMMITTEE ON THE BUDGET 

KENT CONRAD, NORTH DAKOTA, CHAIRMAN 

PATTY MURRAY, WASHINGTON 

RON WYDEN, OREGON 

RUSSELL D. FEINGOLD, WISCONSIN 

ROBERT C. BYRD, WEST VIRGINIA 

BILL NELSON, FLORIDA 

DEBBIE STABENOW, MICHIGAN 

ROBERT MENENDEZ, NEW JERSEY 

BENJAMIN CARDIN, MARYLAND 

BERNARD SANDERS, VERMONT 

SHELDON WHITEHOUSE, RHODE ISLAND 

MARK WARNER, VIRGINIA 

JEFF MERKLEY, OREGON 

JUDD GREGG, NEW HAMPSHIRE 

CHARLES E. GRASSLEY, IOWA 

MICHAEL ENZI, WYOMING 

JEFF SESSIONS, ALABAMA 

JIM BUNNING, KENTUCKY 

MIKE CRAPO, IDAHO 

JOHN ENSIGN, NEVEDA 

JOHN CORNYN, TEXAS 

LINDSEY O. GRAHAM, SOUTH CAROLINA 

LAMAR ALEXANDER, TENNESSEE 

MARY ANN NAYLOR, Majority Staff Director 

CHERYL JANAS REIDY, Minority Staff Director 

(II) 

iii 

C O N T E N T S 

HEARINGS 

Page 

October 29, 2009—Performance-Informed Budgeting: Opportunites to Reduce 

Cost and Improve Service .................................................................................... 1 

November 10, 2009—Bipartisan Process Proposals for Long-term Fiscal Stability ...................................................................................................................... 65 

December 10, 2009—Data-Driven Performance: Using Technology to Deliver 

Results .................................................................................................................. 153 

STATEMENTS BY COMMITTEE MEMBERS 

Chairman Conrad....................................................................................................... 1, 65 

Ranking member Gregg .......................................................................................... 79 

Senator Bunning ...................................................................................................... 7 

Senator Byrd ............................................................................................................ 150 

Senator Cardin ......................................................................................................... 9 

Senator Cornyn ........................................................................................................ 151 

Senator Session ........................................................................................................ 76 

Senator Whitehouse ................................................................................................. 8 

WITNESSES 

Honorable Roger W. Baker, Assistant Secretary for Information and Technology and Chief Information Office, US Department of Veterans Affairs.................................................................................................................... 189, 191 

Sir Michael Barber, Partner, McKinsey & Company, and Former Chief Adviser on Delivery to Britis Prime Minister Tony Blair...................................... 26, 28 

Honorable Evan Bayh, A United States Senator from the State of Indiana ......................................................................................................................... 86, 88 

Honorable Aneesh Chopra, Assistant tot the President and Chief Technology 

Officer, Associate Director for Technology, Office of Science and Technology 

Policy ................................................................................................................. 158, 162

Honorable Jim Cooper, A Representative in Congress from the State of Tennessee .................................................................................................................... 90, 92 

Mr. Brad Douglas, Commissioner, Department of Administrative Services, 

State of Georgia ................................................................................................ 201, 206 

Honorable Dianne Feinstein, A United States Senator from the State of 

California .............................................................................................................. 84 

William A. Galston, The Ezra K. Zilkha Chair in Goverance Studies and 

Senior Fellow, Brookings Institute ................................................................. 118, 121 

Douglas Hotlz-Eakin, President, DHE Consulting, LLC, and Former Director, 

Congressional Budget Office............................................................................ 108, 111 

Mr. Vivek Kundra, Federal Chief Information Officer, Administrator for Electronic Government and Information Technology, Office of Management and 

Budget ............................................................................................................... 168, 171 

Honorable Joseph I. Lieberman, A United States Senator from the State 

of Connecticut ....................................................................................................... 77 

Maya MacGuineas, President, Committee for a Responsible Federal Budget ........................................................................................................................ 122, 125 

Paul L. Posner, Ph.D, Director, Master’s in Public Administration Program, 

George Mason Univesity ...................................................................................... 34, 37 

Honorable George V. Voinovich, A United States Senator from the State 

of Ohio ................................................................................................................... 81, 83 

Page

iv 

David Walker, President and Chief Executive Office, Peter G. Peterson Foundation, and Former Comptroller General of the United States...................... 99, 103 

Honorable Frank Wolf, A Representative in Congress from the State of Virginia....................................................................................................................... 94, 96 

Honorable Jeffrey D. Zients, Deputy Director for Management and Chief 

Performance Officer, Office of Management and Budget.................................... 9, 13 

QUESTIONS AND ANSWERS 

Questions and Answers ......................................................................................... 61, 220 

(1) 

PERFORMANCE-INFORMED BUDGETING: OPPORTUNITIES TO REDUCE COST AND IMPROVE SERVICE 

THURSDAY, OCTOBER 29, 2009 

U.S. SENATE, 

COMMITTEE ON THE BUDGET AND THE TASK FORCE ON

GOVERNMENT PERFORMANCE, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:02 a.m., in room 

SD–608, Dirksen Senate Office Building, Hon. Kent Conrad, Chairman (ex officio), and Hon. Mark Warner, Chairman of the Task 

Force, presiding. 

Present: Senators Conrad, Warner, Nelson, Cardin, Whitehouse, 

Bunning, and Ensign. 

Staff present: Mary Ann Naylor, Majority Staff Director; and 

Cheri Reidy, Minority Staff Director. 

OPENING STATEMENT OF CHAIRMAN CONRAD 

Chairman CONRAD. The hearing will come to order. Welcome, all. 

Today’s hearing will examine the issue of performance budgeting, 

a topic that this Committee has a special interest in. As Chairman 

of the Budget Committee, several months ago Senator Whitehouse 

came to me and said, Senator, we have talked before about the 

need to have greater oversight and to try to focus on things that 

would improve the overall operations of the Federal Government. 

It is very clear to members of this Committee that insufficient time 

has been spent on oversight on how the Government performs its 

function. How can it improve? How can we affect efficiency 

throughout the Federal Government? 

And Senator Whitehouse had the idea to form a Task Force of 

this Committee to focus on these issues. More than that, he also 

recommended that Senator Warner be made the head of this Task 

Force based on his extraordinary performance as Governor of Virginia. 

I thought this was an exceptionally good idea of Senator 

Whitehouse’s, and I thought his suggestion that Senator Warner 

lead the Task Force was not only gracious on his part but right on 

point, because all of us who watched Governor Warner when he 

was Governor of Virginia—we were close by following the way he 

conducted himself as Governor—recognized that he has the background in both the public and private sector to bring real experience and real skills to this job. 

2 

And so we have put in place a Task Force on Government Performance that will be led by Senator Warner, and Senator 

Whitehouse and Senator Cardin on our side will serve. And I also 

want to thank very much Senator Gregg, the Ranking Member of 

this Committee, for his gracious and helpful agreement to go forward with the Task Force on Government Performance. 

We all know that our Government and our country faces very 

tough choices, and choices that we are going to need to make soon. 

Performance information can aid us in making those decisions and 

making them in a way that makes the most sense. 

Senator Warner, as I said, has the right experience and background for this job. As Governor of Virginia, he successfully used 

performance metrics and other private sector best practices to 

transform Virginia into a model State in terms of management. 

TIME magazine named him one of America’s five best Governors. 

In one notable example, Senator Warner led the development of a 

centralized procurement system now used by over 500 State and 

local agencies that has driven lower, more competitive prices and 

generated more than $218 million in cumulative savings for the 

State. We are fortunate to have Senator Warner’s experience on 

the Budget Committee. 

I also want to thank the other members of the Task Force, as I 

indicated, Senators Cardin and Whitehouse on our side, and I am 

very grateful to Senator Bunning and Senator Crapo who have 

agreed to serve on the Republican side. And I again want to thank 

Senator Gregg for all he did to make this Task Force a reality. 

I would like to also welcome our first witness today, Jeffrey 

Zients, Deputy Director of Management and the Chief Performance 

Officer at OMB, an outstanding selection by President Obama, I 

might add. I look forward to hearing about the administration’s 

plans for performance budgeting and how this Committee can assist you in the effort. 

In addition, we want to welcome Sir Michael Barber, a partner 

at McKinsey & Company and, before that, the head of British 

Prime Minister Tony Blair’s very successful delivery unity. And, finally, Dr. Paul Posner, the Director of Public Administration at 

George Mason University, well known to this Committee for his 

many years of service at the GAO—that is, the Government Accountability Office—working on budget issues where he enjoyed a 

very good reputation, and we are delighted that he is here as well. 

Let me stop there and turn to Senator Warner, who is going to 

be running this Task Force. He is going to be chairing this hearing. 

This Task Force is going to be under his leadership, and I again 

want to thank the Republican side as well and especially thank 

Senator Bunning, who is here today, who will be an important 

member of this Task Force as well. 

With that, I am going to turn the gavel and the chair over to the 

Senator Warner, thank the witnesses for being here, thank him for 

his leadership. We deeply appreciate it. 

OPENING STATEMENT OF SENATOR WARNER 

Senator WARNER. Thank you, Chairman Conrad. Thank you for 

this opportunity. I thank Senator Whitehouse for his good idea and 

willingness to suggest me as someone who could take a lead on 

3 

this. I also want to thank Senator Bunning. I know this is an issue 

that is terribly important to him as well. 

You know, this is our first meeting of the Task Force on Government Performance, and I again want to thank the Chairman and 

the Ranking Member not only for giving us this opportunity, but 

for a first-rate staff who have been working diligently over the last 

couple of months to get ready not only for this first hearing but for 

the ensuing actions that I think we will be taking. 

The Chairman has outlined our panels today: Jeff Zients, the 

President’s Chief Performance Officer; and then Sir Michael Barber 

and Dr. Paul Posner, who will be on a second panel. 

I want to make a couple opening comments, and then I will turn 

to Senator Bunning and Senator Whitehouse if they want to make 

any opening comments. 

Anyone who has ever worked with me knows that I am kind of 

obsessed about performance and trying to make sure that we measure things. I have this phrase that ‘‘What gets measures gets 

done.’’ That became a hallmark when I had the opportunity to 

serve as Governor of Virginia. 

Senator Conrad was very gracious in his comments about what 

we are able to accomplish when I was Governor in this area. I 

would love to say it was all driven purely by my obsession with 

measurement, but it was also driven by necessity. I remember becoming elected Governor only to discover that I had inherited a $6 

billion deficit on a $34 billion base. So the necessity of making 

changes and thinking differently was truly born of necessity. That 

led to a series of painful cuts in State spending. 

But what we also tried to do—and I think the analogy to what 

we are facing now at the Federal level is similar—we turned this 

budget shortfall and crisis into an opportunity to reexamine how 

we spent our taxpayer dollars. We started to think differently 

about budget planning, about measuring performance. We set 

broad policy goals, and then we started to look across agency lines 

and use these policy goals to gauge how we were spending and 

what we were accomplishing. 

Senator Conrad made mention of some of the recognition we received. The thing I was proudest of was the fact that Virginia was 

recognized as the best managed State in the country for these efforts. And Virginia was also recognized by three or four outside 

sources as the best State for business. Oftentimes that best State 

for business was reflected based upon our prioritization in terms of 

State spending. 

I think some of those lessons that took place in Virginia—and for 

that matter, in other States across the country—can be brought 

here to Washington. And the Budget Committee under the Chairman’s leadership is the place do it. 

I think we all know over the past 60 years Presidents of both 

parties usually early on in their administration announced some 

level of management review or Government performance project, 

usually with great fanfare in the early days of the administration, 

and then these efforts often fade into the past. Well, our hope is 

that while this has been a focus of the executive branch of Government, there is a very valuable role that the legislative branch can 

4 

play as well in making sure that these efforts do not fade into obscurity. 

For instance, the Government Performance and Results Act—this 

was started under President Clinton—asked each agency to lay out 

their goals and report the progress each year they make toward 

their goals. I was actually, with the help of staff, just recently looking at the 2008 USDA Performance and Accountablility Report. 

You can see a fairly weighty tome based upon their GPRA efforts, 

clearly a lot of information. I sometimes think that we could do 

with a little less reporting and a little more focus on more valuable 

data. But as we have pointed out, in the area of food safety, there 

are literally 17 different programs that cross a series of agencies 

and areas. 

We looked a little bit deeper under one goal in food safety that 

I think is important to all of us. The policy goal was to reduce the 

incidence of foodborne illness related to meat, poultry, and egg 

products in the United States. 


55507.001
5 

Well, we got a lot of results, but what we showed here was while 

they made progress on poultry, the overall exposure of the public 

in E. coli in terms of beef actually went up from 2007 to 2008. 

Well, this is great data, but what came out of this data was there 

was nothing that said, Well, what are we going to do about it? How 

are we going to take this data and then actually turn it into productive, corrective action? 

Well, my belief is, particularly, that part of our role on the Budget Committee is to make sure that this voluminous amount of information just does not go down a black hole and that we actually 

ask these questions. And I think from the Budget Committee’s perspective, we have an opportunity to think differently about performance, to look across agency lines, to look at specific policy 

areas, and to examine the various programs that might be gauged 

toward that specific policy goal, but too often have very little coordination. 

I can again recall as Governor one of the most frustrating areas 

that I found was how we could try to right-size and rationalize 

Government training. I found at a State level we had a variety of 

different programs about employment and training. They were all 

siloed. And too often, as we tried to rationalize that approach, we 

found that the funding streams all led to Washington, and there 

was actually no collaboration at all. 

For example, in employment and training, we have 44 Federal 

programs in nine departments, and in fiscal year 2002, just within 

employment and training we spent $12 billion and served more 

than 30 million participants. 


55507.002
6 

Well, that is great information. But amongst these 47 programs, 

there has been no analysis, to my mind at least, that shows how 

do these programs compare, and how could we actually look at perhaps collapsing some of these programs to get a more effective 

bang for our dollar. 

We need to start asking the right questions, and, again, I would 

hope that part of the efforts we could do going forward is not only 

look at the data that we collect, but perhaps looking—and this 

might be of great service not only from our first witness but to the 

Government employees who collect all this data—how we might actually eliminate some of the data collection and focus more tightly 

on the appropriate data collected in the right way. 

Now, Chairman Conrad mentioned as well, Why do we want to 

do this? Well, partially, we want to do it, obviously, to have better 

performance but, and I know this is something that Senator 

Bunning will, I am sure, speak to, we want to save money. There 

is enormous duplication and repetition. 

Chairman Conrad mentioned the fact that in Virginia, by 

leveraging our purchasing power, we were able to save over $200 

million. Sometimes these numbers get lost, and that seemed like a 

lot at the State level. When you get to the Federal level, the numbers even become much larger. 

The way I used to explain this to folks in Virginia, by leveraging 

our purchasing power we were able to lower the price of our light 

bulbs from 32 cents to 23 cents. Now, that did not close the $6 billion shortfall, but we buy an awful lot of light bulbs at a State 

level. That same type of leveraging our purchasing power across 

the Federal level I think could have similar results, if not greater. 


55507.003
7 

So let us now get to our witnesses. I know we are going to hear 

from Jeffrey Zients in a few moments. He is the Deputy Director 

of Management for OMB. He is the Chief Performance Officer. I 

have known Mr. Zients for years in the private business area. I 

think the President made a great selection in choosing him. We 

will be hearing from him in a few moments, and then we will be 

hearing from our second panel. But, again, I want to thank the 

Chairman for giving me this opportunity, and I believe we will now 

hear from Senator Bunning. 

OPENING STATEMENT OF SENATOR BUNNING 

Senator BUNNING. Thank you, Mr. Chairman and Senator 

Conrad and Senator Whitehouse. 

First of all, I would like to thank Senators Warner, Conrad, and 

Gregg for forming the Task Force on Government Performance. We 

have a lot of work to do on this subject. 

I would also like to thank the witnesses that will be here today 

for taking part and taking their time to come to appear here. Their 

input and advice in this process is much appreciated. 

This is one of the most important things that this Committee and 

these Senators can do. It is unfortunate but true that there is a 

general perception among the American people that we do not 

spend their money well. We owe it to them to see that they get the 

most for their tax dollars. I am hoping that this Task Force will 

be able to help us learn what Government is doing right and what 

it is doing wrong. That is why I joined the Task Force. 

We do have some significant obstacles to our goals of devising a 

comprehensive system of evaluating the performance of Government programs. The three previous administrations have all attempted to tackle the problem of performance evaluation. During 

the Clinton administration, there was the National Partnership for 

Reinventing Government, headed by Vice President Al Gore. The 

Bush administration implemented the Program Assistance Rating 

Tool, known as PART. Finally, earlier this month, the Obama Administration released its own plan to analyze Government performance. I look forward to hearing about this effort today firsthand 

from Jeffrey Zients, who will be implementing this program at the 

OMB. 

I think this illustrates why Congress should play a large role in 

this process. It appears that every time there is a new administration, we get a new system of performance evaluation. The involvement of the legislative branch ensures that we have some stability 

in this area, even after the Presidencies have been changed. However, the most important reason to do this, hopefully, is to save 

money. 

As I am sure just about every American knows, we are at a historical level of debt. The Federal deficit stands just shy of—it is 

hard for me to say it—$12 trillion. During fiscal year 2009, which 

ended a month ago, we racked up about $1.4 trillion in debt. Under 

plans put forward by the administration, the debt will double by 

2013 and triple by 2019. In fact, just recently, the administration 

wrote to Congress asking us that we raise the debt ceiling as soon 

as possible because we have spent more than we have legally been 

allowed to do. 

8 

This should motivate us to find savings. The first undertaking of 

this Task Force will be to make sure we are promptly measuring 

the performance of Government programs. And as you saw from 

Senator Warner’s charts, we have a lot of measurements, but we 

do not have any results after we get them. 

It will not be easy. However, our second job might be even harder: to remove the wasteful spending that we find. It is no secret 

that Congress is not very good at cutting programs. Everybody has 

their little program, and they have their own little fiefdom, and 

they protect that fiefdom as well as possible. That is why it is critical that we include proper enforcement in whatever product we 

produce. It will do us no good if we come up with a way to identify 

wasteful spending but then do nothing about it. 

The American people know there is waste in Government, and 

they expect us to do something about it. Let us make sure we do 

not let them down. 

Thank you for being here. Thanks. 

Chairman CONRAD. Let me just congratulate Senator Bunning 

because the Phillies, his former team, won the first game of the 

World Series last night and did it in fine fashion. And I know he 

is going to be there, and I think he is going to be throwing out the 

first pitch in one of the games coming up in Philadelphia, and I am 

going to look forward to that as well. So that was a great night. 

I also want to again say how much I appreciate Senator Warner’s 

taking the lead on this Task Force. I want to thank again Senator 

Whitehouse for his idea that this Task Force be formed. I think it 

is critically important. And with that, I want to hand the gavel formally to Senator Warner. 

Senator WARNER. Thank you, Mr. Chairman. 

Senator Whitehouse. 

OPENING STATEMENT OF SENATOR WHITEHOUSE 

Senator WHITEHOUSE. Mr. Chairman, first of all, let me thank 

you for your kind words and let you know that it will come as no 

surprise to my wife and family that I have been able to think up 

an idea that involves other people doing more work. 

[Laughter.] 

Senator WHITEHOUSE. I want to thank particularly Chairman 

Conrad for his leadership on this. It is one thing to come up with 

an idea. It is another thing to organize it, put the staff behind it, 

and harness the considerable energies of our friend Senator Warner toward that purpose. So my immense gratitude to Senator 

Conrad and to Senator Warner for taking up this charge. 

I know that some of what we do is not going to be very thrilling. 

We will end up in sort of dull corridors of governmental endeavor, 

like H.R. and IT and procurement. But I do hope that real savings 

and real efficiencies will result, and I hope that we will get to the 

point where we are able, in future budgets, to actually identify by 

line item performance savings. I think that might be a good metric 

for this Task Force to shoot for. 

So, without further ado, I see Senator Cardin has arrived, but I 

did want to thank both of you for this, and I thank Senator 

Bunning and Senator Crapo for participating. I hope this will be 

9 

a Committee that works in strong, technical, hard-working, bipartisan fashion. 

Chairman CONRAD. If I could just say, Senator Cardin has joined 

us now. He is the third member of the Task Force on our side, and 

we selected Senator Cardin because he is somebody that knows 

with great experience the functionings of Government. He has 

served with distinction in the House. He has served with distinction in his home State as a legislative leader, and we are delighted 

to have him in the U.S. Senate. 

One of the things you learn about Senator Cardin, he does not 

do things without really digging in and drilling down, and that is 

exactly what we need on this Task Force. We are delighted that he 

agreed to serve on it. 

Senator Cardin. 

OPENING STATEMENT OF SENATOR CARDIN 

Senator CARDIN. Well, I am glad I came by for that introduction. 

That was worth my morning. Let me thank you and the Ranking 

Member for putting together this Task Force and certainly thank 

Senator Warner for his leadership on this. He has been working 

with all of us to try to focus us on areas where we can really make 

a difference on Government efficiency. 

Mr. Chairman, this may not be a glorious area in which to work, 

but we all know that we can do a much better job on efficiency, and 

we can do it without compromising the services that the people of 

this Nation need and deserve. 

I think we all are anxious to really understand this area better. 

One of the problems is the Federal Government is so big. It is just 

huge. And we all divide our time in such a way that we want to 

get involved in policy issues, and we want to do things that can 

make a difference for the people of our State and our Nation. We 

can all contribute to that result by figuring out how Government 

can operate more efficiently and more accountably. I hope that will 

be the result of this work, and I look forward to hearing from our 

witnesses. 

Senator WARNER. With that, we will have our first witness, Deputy Director of OMB and Chief Performance Officer for President 

Obama, my friend Jeffrey Zients. Jeff. 

STATEMENT OF THE HONORABLE JEFFREY D. ZIENTS, DEPUTY DIRECTOR FOR MANAGEMENT AND CHIEF PERFORMANCE OFFICER, OFFICE OF MANAGEMENT AND BUDGET 

Mr. ZIENTS. Thank you, Chairman and members of the Committee. I appreciate the opportunity to be here today, and I applaud the Task Force coming together and look forward to working 

closely with all of you. 

The President believes that it is more important than ever to 

maximize the effectiveness of every tax dollar we spend. When programs work, we should support them and continue to push for improved performance. When they do not work, we need to fix them 

or end them. To accomplish this, we need to measure the performance of programs and continually search for more effective and efficient ways to operate and save money. 

10 

During my 20 years in the private sector, as a CEO and adviser 

to CEOs, I found that leadership measurement and a motivated 

work force create the foundation for good performance. I am confident the same is true here in Government. 

Congress and previous administrations laid some of the ground 

work for govermentwide performance management, including the 

Clinton administration’s GPRA and the Bush administration’s 

PART. The result is that today we have thousands of metrics and 

plans. 

I believe the test of a performance management system is whether it is actually used. Despite the extent and breadth of these historic efforts, the current system fails this test. Congress does not 

use it. Agencies do not use it. And the public does not have meaningful information. 

There is too much focus on process and not enough focus on outcomes. You do not track progress on goals that cut across agencies. 

Overall, too much emphasis has been placed on producing performance information to comply with a checklist of requirements. 

Senator Warner and I repeat over and over: what gets measured 

gets done. At the same time, to measure everything is to measure 

nothing. This must change. Federal managers and employees at all 

levels must use performance goals and measures to set priorities, 

monitor progress, and diagnose problems. We can build on the 

promising performance management developments in State and 

local governments and other countries. The Virginia Performs 

website shows how government can clearly communicate State performance priorities, track progress against goals, and make these 

results transparent to the public. Local governments—New York 

City and Baltimore and others—have effectively used performance 

management practices to improve outcomes and drive down costs. 

Other countries, including the United Kingdom, offer instructive 

lessons. 

We are committed to taking the best of what works elsewhere— 

in other governments, in the private sector, and within our own 

four walls—to create a new performance management system. This 

system will be a foundation of our efforts to improve the efficiency 

and effectiveness of the Federal Government. 

As we develop the new system, there are five key principles we 

will follow. 

First, senior leader ownership. It is critical that senior agency 

leaders own the overall performance management process and their 

agency goals and measurements. Secretaries and Deputies will be 

charged with the setting of the agency goals, and they will be held 

responsible for performance against these goals. 

Second, cascading goals. A clear line must link agencies’ strategic 

goals and measurements to program level and individual targets. 

Third, outcome-oriented, cross-agency targets. Outcome-oriented 

goals and measures connect Government agencies to their missions. 

Similarly, achieving broad Government outcomes often requires 

contributions, as we saw on those charts, from multiple actors 

across different agencies. 

Fourth, relentless review. Measurement has no value if it is not 

used. Clear communication of progress against targets and freVerDate Aug 31 2005 10:39 May 18, 2010 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6601 C:\DOCS\55507.TXT SBUD1 PsN: TISH
11 

quent reviews of performance against plans are essentials. These 

reviews must be performed at all levels of Government. 

Fifth, and last, transparency. Achieving important Government 

goals requires the active engagement of Congress, the public, and 

the overall Government work force. Transparency plays a critical 

role in holding our feet to the fire—accountability—and in creating 

innovation and new ideas. 

Using these five principles, the administration is committed to 

driving performance gains across the Federal Government. We 

have already begun to move forward. In this year’s spring budget 

guidance, OMB asked every major agency to identify a small number of outcome-oriented, high-priority goals which they intend to 

achieve in the next 12 to 24 months. Senior leaders are actively involved in this effort. Secretaries and Deputy Secretaries are fully 

scrubbed in. This level of involvement is a significant break from 

the past. Agency leaders will review their progress against these 

goals on an ongoing basis. 

Agencies have also identified goals, such as climate change and 

homelessness, that are a high priority for multiple agencies and require close collaboration across agencies. 

In June, we launched the IT Dashboard, which displays cost and 

schedule variants for every major Federal IT program or project. 

The IT Dashboard is already having an impact. The VA has put 45 

over-budget and/or behind-schedule projects on hold until it decides 

whether those projects should continue with new plans or be terminated altogether. We plan to roll out similar dashboards across 

other functional areas. 

In September, the United States Citizenship and Immigration 

Service set up a system that allows applicants to see their status 

via the Web or via e-mail updates, and they can see the processing 

time of their case compared to the processing time of other people’s 

cases. This makes a notoriously opaque and slow process much 

more transparent. We are encouraging agencies to identify other 

service areas that can benefit from similar customer-facing systems. 

For certain types of programs, measurement alone is not sufficient. These programs require periodic in-depth evaluation to determine their effectiveness. On October 7th, OMB encouraged Federal 

agencies to request fiscal year 2011 funding to conduct significant 

evaluations and strengthen their own agency evaluation capacity. 

Among the Obama Administration’s Cabinet and sub-Cabinet appointments are several former colleagues of then-Governor Warner, 

Governors and State officials who have experience using performance goals and measures to drive Government performance. We are 

enlisting them and other leaders across the Federal agencies to 

work together as a vanguard for Federal performance management 

with particular emphasis on adopting the best practices from State 

and local governments to create performance management systems 

that are used daily. 

As we move forward, we will also identify measurement efforts 

that are not used and are burdensome. We will either eliminate 

them altogether or streamline them. This will include making the 

performance and accountability reports more useful by scaling back 

their hundreds of pages of work per agency per year. 

12 

OMB is using performance information to inform the budget decisions. The President’s fiscal year 2010 budget proposed reduced 

funding or termination of 121 programs. Agency goals and relevant 

performance information are informing our internal fiscal year 

2011 budget discussions. 

Overall, across the last several months, I believe we have made 

progress in setting up a new performance management system, and 

we have begun to pilot key parts of it. That said, we are just at 

the beginning. We have a lot of work to do to put in place a system 

that is used by senior decisionmakers across Government to make 

decisions. 

As we undertake these efforts, we would love to work with you, 

and to make sure that the information that you receive from agencies is useful. We look forward to partnering with you as we learn 

more about the Committee’s performance improvement priorities. 

In particular—and the charts would support this—we believe we 

have a unique perspective for examining how the Government can 

more effectively achieve broad goals that cut across agency borders. 

I thank the Committee for holding the hearing and for hosting 

me here today. I look forward to working with you to accomplish 

our mutual objectives, and I look forward to answering any questions you may have. 

[The prepared statement of Mr. Zients follows:] 

13 


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Senator WARNER. Thank you, Mr. Zients, and we have been 

joined as well by our colleague Senator Ensign. Senator, thank you 

for being here as well. Since we have five of us here, we will try 

to do 5-minute rounds. I will get right at it. 

Senator Bunning mentioned the fact that the last two administrations’ GPRA and PART were both efforts that got some fanfare 

and perhaps made some progress. Looking at those past two administrations’ efforts, were there parts of their initiatives that you 

have kept, parts of them that you have decided were not necessary? 

How do we not reinvent the wheel with the beginnings of the 

Obama Administration? 

Mr. ZIENTS. Yes, we are in the middle of that right now, but I 

absolutely believe we should not throw the baby out with the bath 

water. There are usable, useful advances. I think there is way too 

much, as you have talked about and I have talked about in my 

comments. On PART in particular, many of the metrics were more 

internal or more process-oriented and not outcomes-based. We will 

maintain the more outcomes-based metrics. 

I think the annual performance accountability reports are the 

right vector, but are too lengthy and too burdensome, so we will 

scale those back. There are some citizen reports that Interior and 

Education have produced which were much shorter, 25-page reports. Those are headed in the right direction. 

We are committed to streamlining, becoming much more outcomes-focused, making sure that you and others find the information useful, and, most importantly, we are actually holding people 

accountable to the results; and when the results are not what we 


55507.008
18 

hoped for them to be, the way you pointed out in your chart, we 

are actually doing something about it. 

Senator WARNER. You said in one of your five policy goals senior 

leadership, ownership, and it would seem to me that one of the 

ways you could perhaps gain some senior leadership buy-in is actually eliminating some of the reporting requirements so they could 

actually take ownership of a few key measurement criteria. Have 

you thought in terms of either penalties or incentives to make sure 

that the senior leadership buys into this? 

Mr. ZIENTS. I think, Senator, you are right. Given the scale of the 

historic efforts, almost definitionally senior leaders are not going to 

be engaged. So with the high-priority performance goals, we have 

asked for a handful by agency, generally three to eight, developed 

by Secretaries and Deputy Secretaries, the key management priorities for the next 12 to 24 months. We are in the process right now 

of making sure that those priority goals are incorporated into the 

fiscal year 2011 budget. 

So I think for better or for worse, our starting base is that the 

senior team for the most part has not been involved because it has 

been too burdensome and it has not been a high priority. And we 

are starting this new administration, I believe, with a good effort 

to have them focus on what are truly the highest priority management objectives. 

And so far so good. It is good work. We are going back and forth 

with agencies in a collaborative fashion to refine their goals and to 

make sure that they are tied to the budget. 

Senator WARNER. We would obviously like to see those goals as 

well, so as we from the Budget Committee standpoint—— 

Mr. ZIENTS. Absolutely. As we exit, the deliberative process we 

are in right now by fiscal year 2011, we plan on making these goals 

transparent and available to you and to the public. 

Senator WARNER. One other area I want to go into, because my 

time is running down—I want to make sure every member—you 

know, one thing I have learned as a new member, if you make sure 

everybody gets involved, they actually come back. So I do not want 

to go over my time here, but, you know, one of the comments I 

know we have talked about before, sometimes this stuff gets a little 

bit esoteric in government-speak, and I think it is terribly important that we have not only these broad management goals, but that 

we actually have some customer service goals. 

Mr. ZIENTS. Yes. 

Senator WARNER. You cited one example that I thought was important around immigration. You might want to speak to that 

again, and if there are other areas where we have put some lowhanging fruit where our customers, the American taxpayer and the 

American citizen, can actually see improved performance. 

Mr. ZIENTS. Yes, I do think that we all would agree that people 

form their opinions of Government and the effectiveness and the efficiency of Government when they touch Government. At USCIS, 

that had been an area where you literally would have to engage a 

lawyer to figure out where you were in the process, and even then 

it would take probably several weeks to get an answer. Now an applicant can instantly pull up on the Web or be notified by an e-mail 

where he is in the process. I think that is important, but as imporVerDate Aug 31 2005 10:39 May 18, 2010 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6601 C:\DOCS\55507.TXT SBUD1 PsN: TISH
19 

tant, you can benchmark how your processing speed compares to 

like cases in different processing centers around the country. That 

inevitably creates accountability and also spurs innovation, and 

what is happening at the processing center where things are going 

faster or what can we learn to improve service quality and to save 

money. 

We are looking for other areas at the VA, Education, Treasury, 

and elsewhere, where there are these customer-facing services, to 

stand up systems that not only improve the service but also provide better benchmarking and better visibility into Government 

performance on these customer-facing services. 

Senator WARNER. So we could actually compare office to office. 

Mr. ZIENTS. Yes. 

Senator WARNER. Which then might have some consequences. 

Thank you. 

Senator Bunning. 

Senator BUNNING. Thank you, Mr. Chairman. 

The administration’s plan will rely on voluntary participation. Is 

that correct? 

Mr. ZIENTS. Sir, what you mentioned in your earlier remarks, 

was a component of the plan. The component of the plan that you 

are referring to is to ramp up our evaluations. This is a periodic 

look at programs that are usually in the health or social area. 

Senator BUNNING. The reason I bring that up, what incentive 

have you given others for a program or agency to self-assess their 

performance? 

Mr. ZIENTS. I think all programs are going to need to be examined in this fiscal environment, and those programs the outcomes 

are not clear, or the return on our taxpayer dollars is not clear, will 

be subject to evaluation and potentially either need to be fixed or 

terminated if their performance does not seem appropriate or a 

good return on taxpayer dollars. So you are referring—— 

Senator BUNNING. Won’t already performing programs or agencies volunteer for something like this and non-performing agencies 

choose not to participate? 

Mr. ZIENTS. Well, the decisions will not be made at the program 

level. They will be made at the senior level across the—— 

Senator BUNNING. Well, you said you are having difficulty getting senior-level people—— 

Mr. ZIENTS. I think historically there has been difficulty getting 

senior-level people involved. We are putting a lot of effort to ensure 

that senior folks are involved. The areas for evaluation are coming 

forward from senior folks who have a view across programs, and 

they are picking programs where they believe there are needs for 

evaluation in order to understand the return on our taxpayer dollars. 

So far so good, a lot of participation, and I think we are going 

to have a very rigorous, unprecedented level of analysis, which is 

required in these types of programs, to figure out whether they are 

working or not. Measurement alone is not—— 

Senator BUNNING. But didn’t you mention that the first year of 

the administration you have recommended approximately 120 programs be reevaluated or discontinued? 

20 

Mr. ZIENTS. Yes, 121 programs in the fiscal year 2010 budget 

were recommended for termination. 

Senator BUNNING. The Bush administration recommended well 

over 200. None that I know of were we able to discontinue, and I 

am worried about the 121 that you have recommended. You know, 

you have recommended it, but we sitting up here have to enact, 

and—— 

Mr. ZIENTS. Right. I think you mentioned that in your opening 

comments. I could not agree more. I think making sure that we 

work together early to ensure that we have the right kind of 

metrics and evaluations needed to support decisions as we make 

our recommendations is essential to ensuring that we actually get 

some of this stuff done. 

Senator BUNNING. What ensures that agencies’ self-evaluation of 

performance will be accurate? Would you consider some kind of 

third-party evaluation? 

Mr. ZIENTS. These are not self-evaluations by any stretch. These 

are rigorous evaluations, often facilitated by third parties. So when 

we talk about evaluations here—— 

Senator BUNNING. In other words, you are going to seek outside 

help. 

Mr. ZIENTS. Absolutely. These are randomized, controlled samples. These are sophisticated, rigorous, analytic evaluations of programs. 

Senator BUNNING. Would you support some of us sitting up here 

at the table and/or this Task Force also being involved? 

Mr. ZIENTS. Sure, absolutely. We would love to work together 

with the Committee and across Congress to understand the programs—— 

Senator BUNNING. If we are going to be the ones that eventually 

are going to have to fight off those trying to protect the program, 

even though it has been designated inefficient or non-performing, 

and try to subtract their budgets or do away with their budgets, 

we are going to need the cooperation of both OMB and the people 

sitting at this table or a lot more of us. 

Mr. ZIENTS. Yes, I think that these types of evaluations create 

the rigorous analytics that are required to have real conclusions 

and—— 

Senator BUNNING. We have to have real facts to do it. 

Mr. ZIENTS. Real facts, and with real facts, we need real cooperation to ensure we actually get it done. 

Senator BUNNING. Well, thank you very much, Mr. Chairman. 

Senator WARNER. You know, Senator Bunning, one of the things 

that I—and there is a longer tenure on this Committee than I 

have, but looking at the old OMB lists, sometimes they are just 

lists of programs that may not be that effective, but there is no 

interrelationship between a program that has been listed as being 

ineffective and how it relates to the other programs within that 

broad policy goal area. So the notion that—— 

Senator BUNNING. I think that is absolutely essential if we are 

going to be effective in eliminating any of them. 

Senator WARNER. One of the things that we have started on from 

the staffing standpoint is do a little bit of policy mapping, take a 

21 

policy goal and look at—we cited employment and training and 

food safety—— 

Senator BUNNING. I like the food safety one. 

Senator WARNER [continuing]. As examples where we might 

want to kind of dive in, the working group might want to pick— 

we cannot take all, but we might want to pick two or three policy 

areas where we would dive in for the first few months to try to get 

our arms around a couple of these—— 

Senator BUNNING. It does no good for us to find out that E. coli 

from 1 year to the next went up when we are evaluating it and 

doing nothing about fixing it. 

Senator WARNER. And I would also argue that it does not do any 

good to say program X has been ruled by OMB not to be effective 

if you do not know how program X relates to the other programs 

within that policy area. 

Senator Whitehouse? 

Senator WHITEHOUSE. Thank you. 

Mr. Zients, I am interested, since this is our very first formative 

meeting, in your thoughts about what we should be doing and what 

your advice is on the scope of our activities given the fact that this 

is a relatively small Task Force of a single Committee in one 

branch of the Congress looking into an enormous landscape, as 

Senator Cardin described, of executive agencies, boards, commissions, and so forth. 

I assume that you would agree that the boring back office stuff 

is worth us taking a good look at having seen how much back-office 

efficiencies have saved in banking and retail and other industries. 

Is that correct? 

Mr. ZIENTS. Yes. 

Senator WHITEHOUSE. What would you think about looking at 

the role of contractors? And if we were to look at the role of contractors—I do not have a number on how much of the Federal expenditure goes out to—— 

Mr. ZIENTS. Over $500 billion. 

Senator WHITEHOUSE. Yes, it is massive. And, again, given our 

scope and size, what do you think would be the high-value areas 

looking into contracting and contractors? 

Mr. ZIENTS. I just came off a hearing yesterday on contracting 

with your colleagues in Homeland Security and Governmental Affairs, and it certainly is a large—over $500 billion—and complex 

area where I believe we can save a lot of money. $40 billion in the 

next couple of years is our target. 

Senator WHITEHOUSE. It strikes me, just to offer a thought, that 

once a contract is let, we have very considerable oversight apparatus to try to keep the contractor within the scope of the contract 

and make sure the contractor is performing and that funding is 

going out appropriately, you know, that kind of stuff. But I think 

that we seem to have less scrutiny and judgment applied to contractors before letting of the contract; i.e., what is appropriate for 

a contractor to have in the first place? 

Mr. ZIENTS. Yes. 

Senator WHITEHOUSE. And what are the discussions that led to 

the decision to have that contract? And the time flow of a particular contract, are there areas where you think the Federal GovVerDate Aug 31 2005 10:39 May 18, 2010 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6601 C:\DOCS\55507.TXT SBUD1 PsN: TISH
22 

ernment is good at overseeing and not so good at overseeing looked 

at from the whole start-to-finish process of the glimmer in somebody’s eye that a contract would be a good way to act through the 

letting of the contract and on? 

Mr. ZIENTS. Your insight is absolutely correct that getting the requirements right up front is essential, and then there needs to be 

good, cross-functional coordination across the life of a contract, because it goes beyond procurement to program management. 

But to your question, I first, we would love to work closely with 

the Task Force to understand, as we go about creating this new 

performance management system, what your priorities are and 

how we make sure that we create something that is used by you 

to make your decisions. If we do that, we will certainly have a system that will be used elsewhere, knowing that it is ultimately 

going to be used by Congress to make decisions. 

I think as to the particular area of focus, I believe Senator Warner is on to the right idea. I think too much of what we do is in 

silos, so we look at a program. And sometimes we look at a program and how it compares to other programs within an agency. 

Rarely do we go beyond agency lines, and so much of what we need 

to do to serve the American people does not exist in the silo of a 

program or the silo of an agency. It goes across. And employment 

and training are great examples. Food safety is a great example. 

Housing issues—foreclosures, homelessness. Picking a few of those, 

I think you are in a unique position to do that. 

Senator WHITEHOUSE. In my last minute, let me touch on agencies, boards, and commissions that are outside the direct executive 

branch of Government, the so-called independents or quasi’s. 

Should we be looking at them as well since they are part of what 

we fund? 

Mr. ZIENTS. It is not where we have focused our initial efforts 

given how much we have to do and a $3 trillion Government, but 

that is something I think over time we should talk about. 

Senator WHITEHOUSE. OK. Thank you very much. 

Senator WARNER. Senator Ensign. 

Senator ENSIGN. Thank you. 

First of all, I want to applaud the work that you all are attempting to do. I know others have tried, and I want to encourage you 

to stay with it. The bureaucracies will try to beat you down, as well 

as the interest groups. The problem is when you have a program, 

you have an interest group. They want to keep their jobs, so they 

come up and lobby. You know, one Senator thinks, ‘‘I have to keep 

that program,’’ or one Congressman, or whomever it is. So you have 

a huge challenge, and we know there is a lot of duplication among 

Government programs. We know just in job training, for instance, 

how many different job training programs exist. And the metrics, 

I think you are exactly right, the outcome metrics need to be the— 

really need to be something that we are looking at. It is not a question—for instance, whether a job training serves x number of people but how many people actually got jobs from the job training 

program. And we do not seem to look at those kinds of things 

today. So I would very much encourage you. 

I want to take, though, maybe just a little different approach to 

this and even challenge you to look at some other areas dealing 

23 

with, for instance, procurement. And I have thought about this 

when I was on the Senate Armed Services Committee. Right now 

we know a lot of what happens with defense procurement. We have 

programs. We go out there and we pay for the research, and then 

somebody gets a big contract. Maybe they are the lowest bid or 

whatever it is, and then they get that 10-year multi-billion-dollar 

contract, and inevitably we know what happens. They come back 

to us and they say, ‘‘Well, there are cost overruns,’’ and maybe 

some general wants something a little different. 

And my thought is that this whole idea of going back to the X 

prize when folks design something, somebody put a prize out there 

and said, ‘‘You guys compete for these types of things.’’ Well, what 

if the Government, whether it is a retrievable vehicle for NASA, 

whether it is the next major weapons system or whatever, that the 

Government decides that this is what we want the private sector 

to develop, these are the parameters, these are the specifics of the 

program or the weapons system. And you put it out there and let 

the private sector put their capital at risk, and when within that, 

if they meet that, then they get the contract. But not just there. 

Maybe they get 70 percent of the contract and second place gets 30 

percent of the contract, and in 2 years you are going to reevaluate 

so that if that person who got 70 percent of the contract comes 

back and says, ‘‘There are cost overruns,’’ but that person who got 

30 percent says, ‘‘No, there really are not, and we can develop the 

same product,’’ we can encourage that kind of competition in the 

private sector to keep the costs to the Government. This presents 

the kind of the game playing that currently goes on with so many 

of our Government programs and contracting. 

It has been talked about, with regards to contracting, as being 

a big issue, and I think that it is. But I think there are perverse 

incentives that we set up as far as the Government. We spend the 

money on the research. We give the contract. And then when there 

are cost overruns, we pay the cost overruns, because we have invested so much into the system. 

So I would challenge the Administration to look throughout the 

Government at where you could apply these ideas. There is expertise that is out there and there are actually people in the private 

sector looking at how innovative ideas can be applied in many 

areas within the Federal Government. 

Mr. ZIENTS. You are a step ahead. The contracting work we need 

to do is to ramp up competition, which is part of what you are saying. There also is a big movement that needs to move faster toward 

performance-based acquisition. Starting with what outcomes we 

want and asking vendors or suppliers to propose how they are 

going to get us to those outcomes. Then we are going to judge their 

performance against those outcomes, so it is the same outcomesbased rather than process-based orientation. 

If we want to save $40 billion in contracting across the next couple of years, we need to do things like what you are talking about— 

ramp up competition and focus on outcomes, not process, in order 

to save that $40 billion, and at the same time, improve the quality 

of the services that we are receiving. 

Senator ENSIGN. The challenge that you are going to have is 

that, once again, it is a paradigm shift that is going to happen 

24 

through departments and agencies, and they are going to try to 

beat you down. They just are, because that is not the way—people 

do not like change. This change is going to have to originate from 

the President to the Secretaries on down. And I was glad to hear 

you say that there is that kind of involvement because, if they are 

not that involved and they are not that passionate about it, the bureaucracy will just say, yeah, we have seen that before, you know? 

Mr. ZIENTS. Agreeing with the challenge, I think two things: 

One, we have to prioritize. If we try to do things across every area, 

we are not going to get anything done. So we need to prioritize, 

start with what is most important, to show that we can get things 

done. And how you do that I think is just through relentless pursuit. Pick those few priorities, track them very carefully, make midcourse corrections and insist upon results. 

Senator ENSIGN. Thank you. 

Thank you, Mr. Chairman. 

Senator WARNER. Our hope is that we can reinforce those efforts, 

and, again, echoing what you said and I think all of us have said, 

we need to get some early winds in this effort. 

Senator Cardin? 

Senator CARDIN. Thank you, Mr. Chairman, and let me just underscore a couple of points. 

First, I am glad you are looking at what the Governors have 

done, what the States have done. In my own State of Maryland, 

Governor O’Malley, with CityStat when he was mayor, used exactly 

the type of metrics that you want on accountability. He was able 

to look at bottom-line results for the people of Baltimore City. The 

advantage he had is that Baltimore city is small compared to the 

Federal Government. 

Second, you have a system of government in which the mayor 

can implement change almost immediately and eliminate programs 

or make other reforms quickly. It gets more complicated at the 

State level and we now have StateStat. As governor, he has to deal 

with the legislature, which is different from a city council, and 

much larger. Now, here at the Federal level, it becomes huge. 

This is not just about the metrics. The metrics are important. 

They lend credibility to the recommendations that are being made. 

But you must get the involvement of the decisionmakers. 

Now, it may be easy for you to come up with a list, and if it does 

not have the enthusiastic support not only of the agency but also 

of the White House, if it is not a priority, then the chances of success are not that great. And you can have all the support on the 

Budget Committee you want, but if you do not have the support 

of the authorizing committees and the appropriating committees, it 

is not going to get done. 

So I do not know if I have the answer for you, but you really 

have to have personal investment by the decisionmakers. They 

must have confidence the metric is reliable, but they also have to 

be part of the process so that they are prepared to stand up for the 

right type of efficiencies in Government. 

You are on the way to getting that done, but you have to reach 

out a lot further than you have in the past. 

Mr. ZIENTS. I agree. I totally agree. And I think we have started 

those efforts. We have been in close contact with this Task Force, 

25 

the Committee, and committees across both the House and the 

Senate, and we will do a lot more of that. Early involvement is important, and then a collaborative approach. I think one of the criticisms, probably valid, of the last administration’s approach is that 

it was much more command and control, tops down, especially between the White House and the agencies. Our approach with the 

agencies was not to say, ‘‘Here are your three to eight goals.’’ It 

was, ‘‘Bring forward your three to eight. Let us in a very collaborative, constructive way, refine those goals and refine those 

metrics.’’ It is collaboration, early and frequent involvement, which 

will get us there. 

Senator CARDIN. And I concur on Chairman’s advice. Let us look 

for some early victories, nothing beats early victories. 

Mr. ZIENTS. I agree. 

Senator CARDIN. Thank you, Mr. Chairman. 

Senator WARNER. Thank you, Senator Cardin. 

I want to thank you, Mr. Zients, for being here. I think you hear 

great enthusiasm from the members here that we want to work 

with you, we want to collaborate. We think that as well intentioned 

as past efforts of past administrations have been, perhaps the missing piece has been an ongoing, cross-cutting congressional support 

that goes beyond the specific authorizing area or appropriating 

area, and I think you are going to have that kind of partnership. 

So thank you for your attendance here, and recognizing we have 

a second panel, we will ask the panel to—— 

Mr. ZIENTS. Thank you. 

Senator WARNER. Thank you. Let me go ahead and start to introduce the second panel as they come to the table. First we will be 

hearing from Sir Michael Barber. Sir Michael is currently a partner at McKinsey & Company’s Global Public Sector Practices. From 

2001 to 2005, Sir Michael Barber was the founder and the first 

head of the British Prime Minister’s Delivery Unit where he 

oversaw implementation of former Prime Minister Tony Blair’s priority programs. Prior to joining government, Sir Barber was professor at the Institute of Education at the University of London. He 

is the author of ‘‘Instruction to Deliver’’ and numerous other books 

and articles. Sir Michael Barber was actually the individual who 

headed up for the U.K. under Tony Blair’s government all of these 

efforts in terms of government performance, and there are, I think, 

a lot of lessons we can learn from some of the U.K.’s efforts. 

Also, let me not only introduce but I know someone who is familiar to most of my colleagues Dr. Paul Posner. Dr. Posner is the Director of the Public Administration Program at George Mason University. Formerly, he served with the U.S. GAO where he was 

Managing Director for the Federal Budget and Intergovernmental 

Issues for many years. At GAO, he led the agency’s work on performance budgeting, the long-term Federal budget outlook, and 

emerging challenges for public sector finances. Dr. Posner has been 

a long-time resource to this Committee, and we appreciate him 

being with us today. 

We will ask each of the witnesses, so we can get to questions, to 

try to limit their testimony to 5 minutes each. Sir Michael? 

26 

STATEMENT OF SIR MICHAEL BARBER, PARTNER, McKINSEY 

& COMPANY, AND FORMER CHIEF ADVISER ON DELIVERY 

TO BRITISH PRIME MINISTER TONY BLAIR 

Mr. BARBER. Thank you very much, Senator Warner. It is actually a great honor to appear before a Task Force of the U.S. Senate 

and somewhat daunting for a British person. After all, this is a 

body that was set up partly in reaction to an overbearing British 

executive, and there were people—— 

[Laughter.] 

Mr. BARBER. There were people in Britain who accused me of 

being part of an overbearing British executive, so thank you for the 

honor of inviting me here. 

The theme that you have chosen for this Task Force I think is 

extremely important, not just for the United States but for every 

government. It has always been important, but in the current fiscal 

climate, it is more important than it has ever been all around the 

world. 

What I want to do very briefly is describe the approach we developed in the Blair administration to driving delivery of outcomes on 

the Prime Minister’s top priorities, and there are eight steps to 

that. 

First of all, as the Senator said, Prime Minister Blair in 2001, 

after his second election victory, established the Prime Minister’s 

Delivery Unit, which he asked me to lead and establish. And he 

gave us an agenda of 20 major domestic policy priorities that he 

wanted to ensure were delivered during his second term. 

We then took those 20 priorities and debated them with members of the cabinet, with the treasury, and so on and turned them 

into a set of very clear goals, and they included things such as improving the performance of elementary schools, reducing wait times 

significantly in the National Health Service, bringing about major 

reductions in crime, and improving punctuality of the railways. 

Of course, they were not the only things that the government 

had to deal with; they were the things that the Prime Minister 

thought were the most important to the citizens over his second 

term and things that would benefit from a more intensive focus 

from the center of government. 

Then for each of those priority areas we set published targets, 

measurable goals with a deadline, such as no one should wait more 

than 4 hours to be seen and treated in an emergency room of a hospital by December 2004; or a 30-percent reduction in vehicle crime 

by December 2005. Those targets were public, and citizens could 

track progress toward them on a website. 

In my view, successful reform does not require published targets, 

but it does require clear, specific definitions of what success would 

look like, and the targets have the benefit of making everything 

transparent. 

Having established those priorities and targets, we then, on behalf of the Prime Minister, asked the relevant government departments to draw up what we called delivery plans—plans for making 

sure that those outcomes were delivered. It took a while for them 

to get those plans in place. What we really wanted to see were the 

major milestones, the major decision points, the steps on the way 

toward implementation; and, above all, we wanted to see a trajecVerDate Aug 31 2005 10:39 May 18, 2010 Jkt 000000 PO 00000 Frm 00032 Fmt 6633 Sfmt 6601 C:\DOCS\55507.TXT SBUD1 PsN: TISH
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tory. How would the data change from where it was in 2001 when 

we were beginning to the achievement of the target in 2004, 2005, 

or 2006? 

That required the departments to think hard about the relationship between the actions they were taking and the outcomes they 

would deliver, and that is often a missing piece in government 

planning. It also required them to get better data systems, exactly 

as the Senator did when he was the Governor of Virginia. 

Having gotten the plans in place, we then established a series of 

routines. If I have one single insight from working for 4 years in 

Downing Street, it was that government most of the time is driven 

by crises and unexpected events, but it is really effective routines 

that drive performance and deliver results. So we established a set 

of routines. 

Every month, we sent to the Prime Minister a briefing note— 

very short, a couple of pages—updating him on each of these 20 

priorities. That meant that in literally a few minutes, on a Sunday 

afternoon at Checkers, he could read what was happening on his 

key priorities, he could comment back, usually saying something 

like ‘‘Couldn’t they be bolder? Why can’t they go faster?’’ That kind 

of comment that we would then inject back into the system. But 

that way we kept him completely in the loop on his key priorities. 

Then every quarter, the Prime Minister held a stock-taking 

meeting with each of the relevant cabinet ministers. So, for example, the Minister of Health would come two or three advisers and 

officials and sit on one side of the cabinet table, the Prime Minister 

and his advisers on the other. I would present the data, progress 

against trajectory, what are the successes, what are the challenges, 

and then there would be a performance management conversation 

between them. 

I can remember the pleasure of hearing the Prime Minister say 

for the first time to the Health Secretary, ‘‘That looks like a plateau to me, Alan. What are you going to do about it?’’ 

And then every 6 months, we reviewed the whole 20 priorities 

and rank-ordered them according to what we believed was their 

likelihood of delivering on time, on standard, and that meant the 

Prime Minister on one page could see his whole program, which 

ones were likely to deliver, which ones were unlikely to deliver, and 

then focus our attention on those ones that needed most help. 

So, for example, in 2004, we were able to identify a significant 

underlying problem with progress toward the health wait times 

target, which was then unlocked and solved in time for the target 

to be hit. If we had not done that, we would have really struggled 

to hit the target. 

Then out of those routines, we were able to take problem-solving 

actions, sometimes just a conversation with the department, getting them to pay attention to it; sometimes an in-depth review 

where we went out to the front line with the department and 

looked at what the barriers to delivery were; and occasionally fullscale crisis management involving the Prime Minister, such as we 

did in street crime on 2002 when we had crime going completely 

the wrong way, but we were able to turn it around in about 6 

months. 

28 

Above all, what we were trying to do was change the culture. We 

were trying to get a culture of delivering results embedded in the 

civil service, and we were challenging the belief that it was always 

too difficult. We were challenging the view that these targets were 

too ambitious. We took the view from the Delivery Unit that the 

targets were achievable and the amount of money that had been 

allocated was enough, and we would not accept any excuses. 

We were very persistent. We were very plain-speaking and direct. We would not go away until the problem was solved, but we 

never banged the table or shouted. 

We also built a relationship by promising that if in 3 or 4 years 

the cabinet secretaries and departments did not like us, we would 

abolish ourselves. But as it turned out, 3 or 4 years later they 

found us very helpful because we kept them focused on the agenda. 

So what were the outcomes of this work? First of all, around 80 

percent of the targets we set in 2001 were achieved. On the other 

20 percent, in almost cases progress was made, although we had 

fallen short of the target. 

Prime Minister Blair described the Delivery Unit as the best reform he ever made of government. We did build the capacity of government to deliver results, and that has continued since. And the 

focus on data and transparency made sure that evidence-informed 

policymaking became the norm. 

And then just to pick up one point from the previous debate, I 

think the fact that we focused on the outcome and then mapped 

back meant that we required departments and agencies to collaborate in pursuit of a goal rather than just monitoring agency performance or specific programs. 

Thank you very much for your attention. 

[The prepared statement of Mr. Barber follows:] 

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Senator WARNER. Thank you, Sir Michael. 

Dr. Posner. 


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STATEMENT OF PAUL L. POSNER, PH.D., DIRECTOR, MASTER’S 

IN PUBLIC ADMINISTRATION PROGRAM, GEORGE MASON 

UNIVERSITY 

Mr. POSNER. Thank you. First of all, I want to applaud this Committee for creating the Task Force. It is a very welcome initiative. 

I also want to say I am appearing in my own capacity as well 

as as President of the American Society for Public Administration 

this year. I am drawing on the expertise and background of our 

8,000 members who are practitioners and academics in the field of 

public administration. 

I think the Task Force comes at an opportune time in our history. We are building on what is really one of the unexpected successes in Government: the sustainable focus on performance in the 

Federal Government for 16 years—something nobody would have 

expected when we passed GPRA in the middle of the night in 1993. 

Both for GPRA and the PART, we have had several administrations as well as the current one with a sustained commitment to 

improving performance within the Federal agencies, and, we have 

proceeded, as you demonstrated, to develop a voluminous supply of 

information. What we need to do is make people walk across that 

bridge and facilitate the demand for that information. 

But even with that, I think it is important to recognize the 

progress agencies have made, and that is where this has really 

taken root, not yet that much in the Congress, but places like the 

Coast Guard, for example, that reexamined their accident programs 

away from an investigative focus on the condition of vessels to real 

understanding of what caused accidents in marine waterways, resulting in a nearly 300-percent decrease in towing accidents in the 

towing industry in 4 years. That is a result of applying the discipline of performance analysis and metrics from GPRA. The FDA 

and the Veterans Health Administration also have really made sustainable changes to reduce death and improve efficiency in Government programs, and we need to celebrate that. 

It is also important, as we think about performance budgeting, 

that we have adopted budgeting as the tail to wage the performance dog because we know that is an annual process that grabs 

people, and if we get the budget process, we have their interest. 

However, it is important to understand what the limits are, that 

performance budgeting is not taking politics out of budgeting. Performance does not automatically tell us how much to raise a program or how much to reduce a program. 

If a program, for example, for drug control, we find that we are 

increasing the number of cocaine deaths, we are not going to reduce funding for drug control programs. We will try to investigate 

why, but there is no mechanical result from applying performance 

metrics to budgeting. Budgeting is still a political process and a difficult one, particularly in the times that we are sailing into. 

We are now faced, I think, with a new dilemma that was built 

on our success. We have now developed more sophisticated information. Now, how can we use it to solve the more significant problems that are facing the Congress, particularly the greater fiscal 

challenges that we are facing? And I think as we think about 

where do we go from here, I think there are several areas that really need renewed emphasis, both in the executive branch and in the 

35 

Congress. One is to continue strengthening the foundations in the 

agencies. This takes a long time to develop metrics to measure 

things like Head Start and other complex Federal interventions in 

highly difficult settings. 

We need to think about how we can build budget accounts that 

more focus on performance rather than inputs, which is a longterm process that must involve the Congress. And we need to think 

about how to make budgeting more a strategic enterprise. GPRA 

had a feature called a Governmentwide Performance Plan that has 

never been implemented that would have focused on the cross-cutting dimensions of performance that are so critical. We have never 

done that. We still have a budget that is largely stovepiped by accounts and agencies, and we need to kind of step that up as well. 

And, finally, I think we need to sustain a program assessment 

emphasis like PART did, but we need to change it. It needs to be 

more targeted, more selective, and broader purpose to focus more 

on the broader outcomes rather than each narrow budget account. 

I think that is going to be an important way forward. 

And, most importantly, as has been mentioned here, we need to 

engage in the Congress. Anything that can be sustained in this 

area has to involve the Congress. Whether it is performance targets 

or new reforms in the agencies, why, we need to get Congress on 

board. 

And I do not think Congress has been a performance wasteland 

by any means. There have been hearings up here on a variety of 

programs and overseeing PART and GPRA in general. I think what 

we need to think about is where do we go from here and what is 

the role of this Committee. This Committee in some sense fills a 

missing blank here, that there has never been a focus, as you have 

said, on the broader outcomes that we are shooting for in Government. Each Committee tends to focus on its narrow programs, and 

its narrow stovepipes, go to speak. 

In fact, there are profound disincentives for us to look across the 

board at outcomes, across the different tools of Government. There 

are walls that divide discretionary and mandatory spending, for example, and disincentives to cross those walls. There is tremendous 

disincentive to look at the largest growth area in Federal activity, 

which is tax expenditures. We now lose as much revenue in tax expenditures as we spend in discretionary spending every year on 

over 150 particular tax credits and tax exclusions and deductions 

that have extraordinary significance for performance, whether it is 

in housing or health care. 

If you held up the performance book for HUD, for example, for 

many years, you would never find the largest tax program, the 

largest Federal program for production of low-income housing, 

which is the tax credit, because HUD did not take ownership of 

that, since it came through the Tax Code. That was Treasury’s 

problem. 

So we have tremendous fragmentation in what I call the tools of 

Government. We have seen it from the health care debate. On the 

one hand, we are trying to expand access and control costs. On the 

other hand, we have a very expensive tax exclusion for health benefits that is increasing the incentive to raise costs in the health 

care system. 

36 

So these are the kinds of challenges that I think you face with 

the fiscal winds behind you, if you will, and the mother of necessity 

being fiscal crisis. I think you have the opportunity to possibly 

overcome this fragmentation within the Congress. This Committee 

is the only one that can do it. It has the annual budget process. 

It has the budget functions and sub-functions as the meaningful 

categories of analysis to transcend the specific stovepipes. It has 

the ability to use outcomes as the great unifier. The point is outcomes can unify the purposes of a variety of programs. In the process, the Committee can ask, as you did, how do each of these programs work. Do they work together synergistically? Or do they 

work at cross purposes? 

To what extent is fragmentation causing overall substandard 

performance? How do the programs compare with each other in 

terms of their performance against these broader targets? And 

which ones appear to be the better bets in terms of bang for the 

buck? 

And in my testimony, I have talked about three areas based on 

GAO’s work. You have already highlighted one—food safety—which 

has legendary fragmentation that contributes to real health and 

safety problems. The issues you should deal with are things that 

really complicate people’s lives, that not only cause problems on 

paper but cause problems in practice. 

GAO did a wonderful report on higher education subsidies that 

chronicled the growing thickening of subsidies across grants and 

loans and tax expenditures and how many of these things work at 

cross purposes. Families and students are confused, often do not 

take all the assistance they can get because there is such confusion. Tax credits oftentimes results in families being ineligible for 

grant programs and loan programs and the like. 

There has been little examination of the performance of these different tools of Government with regard to higher education. Nobody really knows, for example, whether the HOPE and Lifelong 

Learning tax credit has really increased participation in higher 

education or, worse, whether it has actually caused universities to 

raise tuition, as some studies have indicated. 

Those are the kinds of analysis, I think, that this Committee is 

uniquely positioned to do. 

One of the things we need to think about when we look at these 

various areas is not just the programs, but as you have been indicating here, the tools of Government, because looking across Government, Government uses tools that we really do not understand 

that well. We have talked about contracts. The problems there are 

legendary. We also have systemic design problems in grants. You 

know, many grants are not well targeted. Much grant money—we 

did a study at GAO 15 years ago that showed overall, for every dollar of Federal funds that gets sent to State and local governments, 

about 68 percent is substituted for State and local money. They reduce their own funds as a result. 

How can we get better bang for the buck when we use a grant? 

How can we get better accountability that ensures a marrying of 

Federal and State and local objectives? How can we get better assurance that loans are going to get paid back and that we are going 

37 

to actually involve banks in sharing risks when we engage the financial community in that? 

And, finally, and fundamentally, how can we get a handle on tax 

expenditures to make them more performance oriented? We added 

tax expenditures to GPRA. Frankly, it is the lagging participant in 

the whole GPRA enterprise, and much work needs to be done to 

document that. 

Well, you have obviously a lot of candidates and targets that you 

can focus on for your Task Force. I have also in my testimony 

talked a little bit about how this Committee can go beyond your 

own Task Force to develop a more institutionalized focus in the 

Congress on these cross-cutting areas? And when I was at GAO, we 

came up with this notion of a performance budget resolution where 

possibly the budget process and the Congress could marry up with 

the executive process. You know, the executive process is not just 

about dollars anymore. It really is about performance. There is a 

conversation that OMB has with the agencies that focuses on both 

dollars and results. The question is: Can congressional budget process come along with that same trend? Can we encourage the committees of the Congress to engage in a performance-related discussion following the budget resolution process? That is something 

that remains to be seen. 

[The prepared statement of Mr. Posner follows:] 


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Senator WARNER. Thank you, Dr. Posner. I guess I will take it 

as kind of a left-handed compliment that Congress is not—what did 

you say?—‘‘a performance wasteland.’’ And I do think your—— 

Senator WHITEHOUSE. An oasis. 

Senator WARNER. An oasis. But your comment that we do often 

look at the spend piece but not the tax pieces is terribly important. 

Let me again try to limit each of ourselves to 5 minutes so we 

can make sure everybody gets a chance to get their questions in. 

Sir Michael, one of the things that may have been a major difference between the U.K. and the States is that you seem to be 

able to do a better job of getting out of the silos. Perhaps the governmental structure is so much different, but we have both State, 

local, and Federal challenges. And then even within the Federal 

level, we have an enormous challenge getting outside of the agencyby-agency department. 

When you took these broad policy goals that you outlined in your 

project, you had to have some of the similar problems in terms of 

a policy goal having programmatic efforts in different agencies. 

How did you overcome that, No. 1? And, No. 2, did you also look 

at kind of—I believe Senator Whitehouse talked about the back-office functions, HR, procurement, IT, both from an efficiency standpoint and how they led toward your achieving your policy goal? 

Mr. BARBER. Thank you for the question. I am not sure whether 

we do better or worse on the silos than the United States, but we 

certainly faced that problem. So if I take an example like some of 

the reforms we are bringing to the criminal justice system where 

we have to get prosecutors, police, prisons, and various other aspects of the criminal justice system to collaborate around delivery 

of some of the outcomes like reducing crime, that was very hard 

work. We had three or four devices that we could use. One was 

simply using the Prime Minister’s authority to get the relevant 

ministers to collaborate. The second was we used cabinet committees to which we sometimes gave a budget that was not given to 

any particular department. It was given to a committee to solve a 

particular problem. So there was a criminal justice system budget 

that did not go to the home office or the prosecutors or the prisons. 

It went specifically to that committee, and that budget could only 

be unlocked when the various players agreed how it was going to 

be spent. 

The other thing was the continuous pursuit by us of delivery of 

the outcomes. The regular use of the data and the sharing of that 

data with the Ministers meant that it was persistently on the agenda of the top decisionmakers. You were talking earlier on about the 

importance of this being an issue for the people at the top. Because 

the Prime Minister was focused on it, because we were sharing 

that data, and because the Ministers were engaged, they were 

under pressure to solve these problems. We did similar things on 

the national drug strategy. But I would not say for a minute that 

we completely overcame all those problems. But we did make 

progress. 

On the back-office question, we were focused on delivering the 

outcomes, so we went right out to the front line, wherever that 

was, whether it was the trains running on time or the hospitals or 

whatever, and then came back. And if procurement was part of the 

55 

problem, that would get picked up by our process, and then there 

were other parts of Government dealing with that. 

We had a separate part of the treasury called the Office of Government Commerce that dealt with procurement and contracting, 

and so we would pass the problem on to them. 

But we did come across major performance issues that were 

down to procurement. For example, we discovered that whenever 

we got new trains supplied to the British railway system, performance got worse. And as amateurs at the center of government asking about performance, we thought this was very strange. Whenever we asked the Department of Transport, ‘‘Why does performance get worse when you get new trains?’’ they said, ‘‘Oh, it is 

teething problems.’’ 

So then we did what we often did. We phoned another government. So we called the Government of Singapore and said, ‘‘You get 

trains from the same supplier that we do. When the new trains arrive, does performance get worse?’’ And they said, ‘‘No, it does not. 

Why would it?’’ And we said, ‘‘You do not have teething problems?’’ 

And they said, ‘‘Not in Singapore we don’t.’’ 

So then we go back to the minister, we summon the chief executive of the company that is supplying the trains, and we get the 

contract changed. So very often the pursuit of performance reveals 

the problems in the way the contracts are being let and managed. 

Senator WARNER. Thank you. I am very intrigued. I am not sure 

how we could translate that, although maybe the Budget Committee would be the place. This notion of—you said that you would 

give a budget to actually a committee of agencies, and those funds 

would not be unlocked until they agreed upon how they would 

reach a policy goal. 

Mr. BARBER. Right. 

Senator WARNER. Very interesting. 

Mr. BARBER. That is what we did with the criminal justice system, exactly. 

Senator WARNER. Very interesting. My time is about up, but, Dr. 

Posner, could you—one of the things we want to try to do, building 

on what Sir Michael said, is examples of other States and/or countries that might be good places for us to look for best practices, recognizing that I have only got a few more seconds. I want to make 

sure everybody else gets their turn. 

Mr. POSNER. Yes. Well, of course, you do not need to look farther 

than Virginia in some sense for a sustained focus on performance. 

We did a study several years ago at GAO and were really quite 

surprised at how longstanding many States were in this game. Virginia, the State of Washington, even the State of Maryland often 

have laws similar to GPRA. 

I think some of the most impressive things have happened in the 

crucible of fiscal crisis. One of the things we have seen in OECD 

countries is something called program review, which is similar to 

what we have been talking about with PART. Places like the Netherlands do a series of studies, maybe ten every year, that they call 

interdepartmental reviews, which is very similar to what you are 

talking about. They cut across the stovepipes. They involve the finance office and the program office and academics on a task force 

to look at and evaluate a whole set of programs that reach common 

56 

goals, and they come up with recommendations. The parliament accepts them or does not accept them, whatever the case may be. But 

they have saved extraordinary amounts of money over the years. 

This has happened in Canada. It has happened in a number of 

other systems. And so the program reviews are quite an interesting 

parallel to what you are doing. 

Senator WARNER. Thank you. 

Senator Bunning. 

Senator BUNNING. Thank you, Mr. Chairman. 

Sir Michael, Congress and the executive are separate branches of 

Government here in the United States—I do not have to explain 

that to you—unlike the United Kingdom. How can we ensure a balance between these branches in performance in oversight? In other 

words, you were able to get Prime Minister Blair at the table, and 

you were able to review those things with him and get his direction 

and certainly get the attention of the people you were reviewing. 

Is that a potential problem here? 

Mr. BARBER. Well, as I said in my opening remarks, Senator, in 

reaction to an overbearing British executive, you made Government 

a whole lot more complicated in this country than we have it. 

Senator BUNNING. Yes, we do. 

Mr. BARBER. And that has many, many benefits which we have 

seen over the last 200 years, but it also has some challenges. 

The way we thought about this in the Blair government, first of 

all, we did have the Prime Minister actively involved, and I think 

in the previous debate one of the Senators was saying it is important to persist with this, not just at the beginning of an administration but right the way through, and Tony Blair did really pay 

attention to this all the way through, which was very important. 

Second, through him and about every year or 6 months, I reported to the cabinet and updated the whole cabinet on the process. 

And then periodically I was summoned, as in this case, to the Public Administration Committee of the House of Commons, and the 

Prime Minister reported to what was called the Liaison Committee 

of Parliament on a two-monthly basis, and then once a year he and 

I reported through his press conference to the whole general public. 

So that is how we tried to take the process outside of the executive 

through those means. 

Here, I guess, as you were debating with Jeffrey Zients, getting 

the executive and the legislature to collaborate around a performance agenda would be the way forward. But it will admittedly be 

substantially more difficult. 

Senator BUNNING. There is a barrier between the executive and 

the legislative branch, and to get the executive to examine and to 

get the Congress or the legislative to cooperate always seems to be 

a very—and, of course, we have outside interests always banging 

us one way or the other. So it is very difficult to eliminate one 

agency or one program. They all have their own little fiefdom or 

their own little lobbyist that they have hired to continue something 

that might not be productive. 

Mr. BARBER. Right. 

Senator BUNNING. How do we overcome that? That is what I am 

trying to find out. 

57 

Mr. BARBER. Well, we fed the data we had on which government 

programs were working and helping to deliver the agreed outcomes. We fed that into the treasury. So for each time the spending 

review went through, which is every 2 years, where the budgets 

were reallocated, the treasury was taking account of our data on 

which of these programs were working and which ones were not. 

And they themselves began to gather data in a similar way on the 

programs outside of the priorities. And I think that was important. 

The other way the legislature in the U.K. influences this is 

through the Public Accounts Committee, which is an independent 

body not usually chaired by the governing party. 

The problem that I saw in that committee was very often the debate was about point scoring rather than getting to the fundamental problems of government expenditure. And I think there is 

a lesson for the Public Accounts Committee in the way that we 

went about that. They needed to get beneath the relatively shallow 

point scoring that went on in that committee to the underlying 

problems of government expenditure and the deficits. 

Senator BUNNING. Mr. Posner, in your work on this subject, do 

you know of any example where a performance evaluation had a 

real impact on a program or agency’s funding, either positive or 

negative? 

Mr. POSNER. I hope so. I spent 30 years of my career at GAO 

doing that. 

Senator BUNNING. Well, that is why I asked the question. 

[Laughter.] 

Mr. POSNER. I have a self-interest in redeeming my career here. 

I think there is an impact. It is somewhat indirect. I remember one 

report we did at GAO on the taxation of the insurance industry 

that sat on the shelves for several years. In the tax reform deliberation in 1986 in the conference committee, Mr. Rostenkowski 

called in the GAO staff that prepared that report and adopted the 

recommendation to change the tax acconting. This action saved 

considerable Federal revenues and helped achieve fiscal balance for 

the bill itself. That is the discursive— 

Senator BUNNING. For 8 years it sat. 

Mr. POSNER. For 8 years it sat, so you have—you know, it is 

water on a stone in some cases. GAO’s work on student loans 

showed 20 percent of student loans were in default in the early 

1990’s. We worked together with the executive branch and the congressional committees to design a package of wage garnishment 

and a program to kick out some of the proprietary schools that 

were the most seriously in default from their students, and that 

student default rate has been cut from 20 percent to 8 percent. 

There are real changes that happened as a result of evaluations. 

The whole Medicare program has taken advantage of some efficiencies as a result of work that GAO and others in the evaluation 

community have done. Typically it happens when there is a window of opportunity that opens in a budget resolution, for example, 

and suddenly everything becomes possible, and you have a window 

of opportunity opening. And then people do reach for the studies 

to kind of at least rationalize or find real budget cuts when it is 

needed. 

58 

Tthat kind of process requires some patience on the part of analysts to really keep your powder dry. 

I would say that on the question about our system, there is no 

question it is more difficult to achieve change here. I remember 

when President Clinton signed performance agreements and targets with his Cabinet Secretaries, Secretary Babbitt of the Interior 

Department came up to the Hill and was talking with Mr. Conyers, 

who chaired one of his oversight committees. And Mr. Conyers 

said, ‘‘I understand that you have agreed to a series of objectives 

on performance with the President.’’ And he says, ‘‘Where is your 

agreement with me, Mr. Secretary?’’ And, of course, he had not 

been part of that. 

So the question is: How can you and the Congress collaborate 

with people in OMB and the agencies early in the process to agree 

on the performance targets? And when that happens, it is quite a 

remarkable synergy. When IRS and the Congress agreed on goals 

for electronic processing of tax returns, that really had a big impact 

on the efficiency of the tax system, for example, so it can happen. 

Senator BUNNING. My time is past due, and I appreciate your answer. Thank you. 

Senator WARNER. My hope is, Senator Bunning, with the red ink 

as far as the eye can see, if we do not see this as an opportunity 

to actually move a little more quickly, then shame on us. 

Senator Whitehouse. 

Senator WHITEHOUSE. Thank you, Senator Warner. 

Sir Michael, the enterprise that you undertook for the Prime 

Minister to run the Delivery Unit had both an efficiency component 

and a prioritization component. One could imagine that a Delivery 

Unit could be very successful at producing the 20 top priorities for 

the Prime Minister at the expense of cannibalizing every other program that those ministries were obliged to discharge. 

How effective were you at protecting the non-priority programs 

while you were emphasizing and succeeding with the delivery of 

the programs that had been assigned to the Delivery Unit? 

Mr. BARBER. Thank you for the question. Can I just comment before I answer that on this question of evaluations. I think there are 

two different types of evaluation. One is post hoc evaluations where 

something has happened and you are trying to understand it, and 

then you are trying to improve performance in the future. The 

other are evaluations which we tried to develop in the Delivery 

Unit where inside the executive you are trying to evaluate a program before there is a problem and solve it in advance so that you 

avoid crisis management. And those things need to be real-time 

and quite brief, whereas the post hoc evaluations can be in-depth 

and profound. But I think both are necessary to get effective delivery. 

On the question you have just asked, which I think is very important, we clearly focused on the priorities. That is what it means 

to have priorities, and the Prime Minister was very decisive in that 

respect, and I think that was important. 

What we said to the departments was, ‘‘We are going to focus on 

the delivery of these priorities. Can you anticipate for us what you 

think the perverse consequences might be or the unintended consequences?’’ So we would then measure those things to make sure 

59 

either that it turned out not to be the case, or if they were happening, that was a tradeoff we wanted to make. 

So, for example, if you take a crime topic, as we were trying to 

do in 2002, if you want to reduce street crime, mugging and that 

kind of thing, which we did very well on, the police said, ‘‘We will 

be able to reduce this because we will move police on to this, but 

other crimes will get worse.’’ We said, ‘‘We will check.’’ What we 

discovered, actually, was that the police forces that did best in reducing street crime also reduced other crimes, because good policing is good policing. And many times the unintended consequences 

or perverse consequences do not happen, but you need to know in 

order to win the argument. 

Clearly, if you are going to set priorities—sorry. If you do not set 

priorities, it is very difficult to achieve anything. But you do need 

to know what the consequences are. 

And I would say, being straightforward about this, we did see the 

best officials being moved onto these priority programs. After all, 

they were the government’s priorities, and that may have had delaying consequences on some of the other parts of the agenda. But 

any government has to set priorities if it is going to achieve anything, and you just have to watch that the costs that you pay in 

the other areas are not too high. 

Senator WHITEHOUSE. Yes, we just need to make sure that that 

distinction is clear in this Task Force because we are not a 

prioritization Task Force. We do not have that authority or role. 

We really are trying to drive the efficiency equation. 

Dr. Posner, Senator Warner said something earlier about you get 

what you measure, or words to that effect. The way I have heard 

it says is, ‘‘You do not get what you expect. You get what you inspect.’’ 

You have given, I think, very thoughtful testimony about the role 

of this Committee, and as we are getting started and feeling our 

way into this new area, I would encourage you to stay in touch 

with us. I think it was very helpful testimony. As you know, we 

are active from January 1st until the budget passes, usually in 

April, and then we have time available to move onto other projects. 

We do not quite hibernate particularly the staff do not, because the 

next year is coming. But we do have some time and effort to dedicate to this, and we do have the ability in our oversight function 

to inspect. And I hope that you will continue to be helpful to us 

at teeing up not only bests but also worsts that you think might 

be helpful to play a little bit of the legislative searchlight over. 

Mr. POSNER. Absolutely. 

Senator WHITEHOUSE. And the last question for Sir Michael, 

what was the role of Parliament in your Delivery Unit, if any? Did 

you have a consultative function? Did you have a pre-warning function? Did you just let them know if a particular prerogative was 

being effected? 

Mr. BARBER. As you know, in the British Parliament both the 

Prime Minister weekly through the question time and ministers 

monthly through their own question time in their own area are accountable to Parliament. So I was accountable to the Prime Minister, and he was accountable to Parliament. So I was personally 

and the Delivery generally was rarely summoned to Parliament, alVerDate Aug 31 2005 10:39 May 18, 2010 Jkt 000000 PO 00000 Frm 00065 Fmt 6633 Sfmt 6601 C:\DOCS\55507.TXT SBUD1 PsN: TISH
60 

though I did give airing to the Public Administration Select Committee and the Treasury Select Committee. But basically the accountability to Parliament was through the ministers, and we were 

an internal function inside the executive helping the departments 

solve their problems. And as I said in my testimony, at the beginning the departments were somewhat suspicious of us thinking it 

was the Prime Minister’s spies checking up on them. But after a 

while, they found us helpful because we kept the focus on the priorities, we helped them solve their problems, and we gave them the 

credit. But it was very important the way we functioned that we 

did not get in the way of the direct accountability of ministers to 

Parliament, and so we were generally in the background in that 

process. 

Senator WHITEHOUSE. Thank you, Sir Michael. 

Just before we conclude, I want to take a moment and express 

my appreciation to Senator Warner for having stepped up to this. 

I think even in this first hearing we have seen the qualities of energy and inquiry that I think will help make this a very valuable 

Task Force, and certainly he has a very well established record 

from his time as Governor in this performance area. And an obsession with performance, if I have the quotation right, I think is a 

very good thing for us to have, and I think that this Committee, 

given its hiatus, its post-budget hiatus, does have significant opportunities here to help either facilitate or drive this agenda. 

So I am extremely grateful to Senator Warner and wish to conclude with that observation. 

Senator WARNER. Well, thank you, Senator Whitehouse, and 

thank you for your participation. And since it was your original 

idea to the Chairman, I thank you for coming up with the idea and 

volunteering my service. I feel we have had a very productive 

morning. I want to thank again the Chairman and the Ranking 

Member and all the members who participated. And I want to 

thank the staff as well who have done a great deal of work getting 

ready for this, and as we move forward, I think the working group 

will focus on a few of these policy areas, and we will try to do this 

policy mapping and look at how we can get outside these silos. 

I want to again thank all of the witnesses but particularly Sir 

Michael for your examples of what happened and what worked and 

did not work in the U.K. and you, Dr. Posner, for your consultation, 

I know, both in advance of this hearing, and echoing what Senator 

Whitehouse said, we look forward to partnering with you on an ongoing basis. 

For those in the room, this is a beginning of what we hope will 

be an iterative process working with the administration. I know I 

had a chance to meet a few of the folks who were here. There is 

a lot of interest in this area. We are open to—we are kind of going 

in uncharted waters here a little bit. We welcome any other additional input. 

I think at the end of the day clearly the goal, the actual implementation will be the role and function of the executive and Mr. 

Zients. But I think the Congress can be an active partner to make 

sure that this effort, unlike perhaps past administration efforts, 

does not start with great fanfare but then fade off. 

61 

So I thank the witnesses, I thank all of my colleagues for participating, and the hearing is adjourned. 

[Whereupon, at 11:44 a.m., the Committee was adjourned.] 


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55507.035
(65) 

BIPARTISAN PROCESS PROPOSALS FOR 

LONG-TERM FISCAL STABILITY 

TUESDAY, NOVEMBER 10, 2009 

U.S. SENATE, COMMITTEE ON THE BUDGET, Washington, DC. 

The Committee met, pursuant to notice, at 9:30 a.m., in room 

SD–608, Dirksen Senate Office Building, Hon. Kent Conrad, Chairman of the Committee, presiding. 

Present: Senators Conrad, Whitehouse, Warner, Gregg, Sessions, 

and Alexander. 

Staff present: Mary Ann Naylor, Majority Staff Director; and 

Cheri Reidy, Minority Staff Director. 

OPENING STATEMENT OF CHAIRMAN CONRAD 

Chairman CONRAD. Welcome to today’s hearing that will focus on 

proposals to establish a special bipartisan process to address the 

Nation’s unsustainable long-term fiscal imbalance. 

We have a number of distinguished witnesses. Our first panel 

will include Senator Lieberman, Senator Voinovich, Senator Feinstein, Senator Bayh, Representative Cooper, and Representative 

Wolf. Senator Lieberman and Senator Voinovich teamed up to develop a proposal for a special bipartisan process. Senator Feinstein 

originally introduced a proposal with Senator Domenici and is now 

working with Senator Cornyn. Senator Bayh cosponsored the 

Conrad-Gregg bipartisan fiscal task force proposal and is a leading 

advocate for establishing such a bipartisan process. 

Representatives Cooper and Wolf authored their own bipartisan 

process proposal on the House side, which is very thoughtful and 

very constructive. 

All of your proposals are similar to what Senator Gregg and I 

have offered in many respects. Most importantly, we all agree that 

some kind of special bipartisan process is going to be needed. The 

regular legislative process is simply not going to get it done. 

Our second panel includes David Walker, the former Comptroller 

General and now head of the Peter Peterson Foundation; Doug 

Holtz-Eakin, the former Director of the Congressional Budget Office and now head of DHE Consulting; William Galston, a senior 

fellow at the Brookings Institution; and Maya MacGuineas, the 

President of the Committee for a Responsible Federal Budget. 

Before we turn to the first panel, I would like to highlight the 

situation that we face. The health care reform effort currently underway has the potential to improve our long-term debt outlook, 

but it will not be enough. We must also address the demographic 

66 

challenge we face in Social Security and the revenue challenge we 

face from an outdated and inefficient revenue system. 

Ideally, these problems would be addressed through the regular 

order. The regular order would mean that House and Senate committees with jurisdiction over health, retirement, and revenue 

issues would individually take up legislation to address the imbalances in their particular areas of legislative responsibility and then 

move that legislation through Congress. The simple reality is that 

will never happen. 

I want to go to a first slide here because I want to remind everyone of the dramatic deterioration we have seen in our Nation’s 

budget picture. The final deficit total in 2009 was $1.4 trillion. Not 

million, not billion. Trillion. That should sober us all—$1.4 trillion. 

67 

Looking over the next 10 years, we see a sea of red ink. Let us 

go to the second slide if we could. 


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The deficits have led to an explosion of debt. Under the 10-year 

outlook I just described, gross Federal debt would rise to more than 

114 percent of gross domestic product by 2019. That is approaching 

a record 121 percent of GDP debt level that was reached at the end 

of World War II. 

Slide 3. We need to remember that to finance these deficits and 

debt, we are becoming increasingly indebted to foreign nations. 

Last year, 68 percent of our debt was financed by foreign entities. 

Here is the latest tally of the top ten foreign holders of our national 

debt. We now owe China almost $800 billion, we owe Japan $730 

billion, and on and on it goes. 


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The worsening budget outlook can also be seen in the worsening 

status of the Social Security and Medicare trust funds. Because of 

the weak economy, the Social Security trust fund is temporarily 

cash negative right now. It is projected to go permanently cash 

negative in 2016 and to be insolvent by 2037—4 years earlier than 

forecast just last year. The Medicare Hospital Insurance trust fund 

is in even worse shape. It went cash negative last year and is projected to be insolvent in 2017—2 years earlier than forecast just 

last year. 


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We also have a severe revenue problem. We have an outdated 

and inefficient tax system that is in desperate need of reform. Here 

are some of the reasons that I believe we need thoroughgoing tax 

reform. 


55507.073 55507.074
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No. 1, our tax system is simply out of date and is hurting U.S. 

competitiveness. 

Second, we are hemorrhaging revenue through the tax gap, offshore tax havens, and abusive tax shelters. 

Third, the alternative minimum tax continues to threaten millions of middle-class taxpayers and has to be fixed. 

Fourth, we have a long-term fiscal imbalance that must be addressed. 

And, fifth, simplification and reform can help keep rates low. 

Here is how the Congressional Budget Office summed up the 

need for action on our long-term fiscal situation. This is what they 

said in a hearing: ‘‘The difficulty of the choices notwithstanding, 

CBO’s long-term budget projections make clear that doing nothing 

is not an option.’’ Doing nothing is not an option. Legislation must 

ultimately be adopted that raises revenue or reduces spending, or 

both. Moreover, delaying action simply exacerbates the challenge. 

I think there is growing consensus that the only way we are 

going to get this done is through the enactment of a special bipartisan process. This is what House Majority Leader Steny Hoyer 

said in testimony before this Committee in 2007, and I quote: ‘‘I 

would like to believe that Congress could address these issues 

through the regular legislative process. However, the experience of 

recent years suggests that it is extremely difficult in the current 

political environment. I have reluctantly concluded that a task 

force or commission may be the best way to bring us to the place 

where we can spur action on this issue and reach agreement on solutions.’’ 


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And here is what Leon Panetta, who is former Chairman of the 

House Budget Committee, former OMB Director, and former chief 

of staff to the President of the United States, said at the same 

hearing: ‘‘It will never happen. The committees of jurisdiction will 

never take on the kind of challenges that are involved in this kind 

of effort. If you just leave them under their own jurisdictions, that 

will never happen.’’ 


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And earlier this year, the Treasury Secretary, Mr. Geithner, said: 

‘‘It is going to require a different approach if we are going to solve 

the long-term fiscal imbalance. It is going to require a fundamental 

change in approach because I don’t see realistically how we’re going 

to get there through the existing mechanisms.’’ 


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A Washington Post editorial last month said the same thing. It 

stated: ‘‘The Medicare payment formula is one of a number of fiscal 

time bombs that will need diffusing soon. The alternative minimum 

tax, the Bush tax cuts, the estate tax, other expiring tax provisions—this is an enormous problem practically and politically. It 

requires a comprehensive solution, one that probably cannot be 

achieved within the existing political framework, but that will require some kind of bipartisan commission to craft.’’ 


55507.078
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And, finally, let me conclude by reviewing the highlights of the 

Conrad-Gregg bipartisan fiscal task force proposal, and I might say 

that yesterday Senator Gregg and I reached agreement on the composition of such a task force, and we will be unveiling that at a 

later time. Today we wanted to hear from all of our other colleagues before we reach a conclusion. 


55507.079
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Many of the components of our task force are similar to the proposals of the members on the first panel. The task force would be 

tasked with addressing our long-term fiscal imbalance. It would 

consist of a panel of lawmakers and administration officials. Everything would be on the table. The panel’s legislative proposal would 

get fast-track consideration, and Congress would have to vote on 

the proposal. And it would be designed to ensure a bipartisan outcome. 

The last point, I believe, is key to any proposal. The only way 

the changes needed are going to be adopted is if we have a bipartisan outcome. No one party can or will do this on its own. The 

record is as clear as it can be on that. Both parties must be invested in the outcome and committed to its success. 

With that, Senator Sessions, did you want to make a statement 

on behalf of your side? Or do you want to wait until Senator Gregg 

arrives for his statement? 

OPENING STATEMENT OF SENATOR SESSIONS 

Senator SESSIONS. I would be glad to wait for Senator Gregg, but 

a couple of minutes would be sufficient for something that I would 

like to share. 

I have given a lot of thought to this, and I know that this commission has potential. I believe from a political sense this debt 

limit extension provides an opportunity to do something that would 

not happen any other time. 

I would point out that we have to recognize that the interest on 

the public debt was $170 billion this past year. According to CBO 

under President Obama’s 10-year budget, by 2019, 1 year’s interest 

payments will be $800 billion. So when you think about it, we 


55507.080
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spend $100 billion on education, $40 to $50 billion on roads, and 

to go from 170 to 800 billion will crowd out spending. One of the 

most dramatically dangerous things in the budget that has been 

submitted is that in the tenth year the deficit is going to be over 

$900 billion, almost $1 trillion in 1 year, the tenth year, and there 

is no projection that show the deficits going down and no projection 

showing any reform. 

So I think this kind of fundamental effort that we have talked 

about but have not done is important. I would note that of the discretionary spending bills, not counting the incredible stimulus 

package, Transportation increased 23 percent; Interior-EPA increased 17 percent. That means a baseline budget would double in 

less than 5 years. There was also a 15-percent increase in Agriculture, a 33-percent increase in Foreign Ops Appropriations. 

So those are baseline budget bills that indicate we are not in 

sync with the American people who would like to see us do something, Mr. Chairman. I think the commission could at least could 

be a start, but at some point we have to stop these huge increases 

in spending. 

Thank you. 

Chairman CONRAD. Thank you. 

Now we will turn to our distinguished panel of witnesses. Senator Lieberman, who has another Committee to chair at 10 o’clock, 

will go first, and then we will go to Senator Voinovich, Senator 

Feinstein, Senator Bayh, and Representatives Cooper and Wolf. 

Welcome, Senator Lieberman. We appreciate very much the effort that you and Senator Voinovich have initiated to make a proposal with respect to a special process, and welcome to the Budget 

Committee. 

STATEMENT OF HON. JOSEPH I. LIEBERMAN, A UNITED 

STATES SENATOR FROM THE STATE OF CONNECTICUT 

Senator LIEBERMAN. Thank you, Mr. Chairman. Thanks to the 

members of the Committee. I am honored to be here with Senator 

Voinovich, my cosponsor of the Securing America’s Future Economy 

Commission Act, the SAFE Commission Act, and Senators Feinstein and Bayh and Congressmen Cooper and Wolf. 

I thank you for convening this hearing. I thank you for your 

leadership on this issue. You and I have talked about this a lot. 

I am going to put my statement in the record, and I just want to 

add a few points. Just to say to you personally and to Senator 

Gregg in absentia, the two of you have given extraordinary service 

to our country, but I honestly believe that if you can lead the Senate to finally do something about our fiscally irresponsible ways 

and the skyrocketing national debt, you will have done the greatest 

service that anybody could do to our country today to protect our 

future, to protect the American dream, to make the country as full 

of opportunity for our children and grandchildren as it has been for 

us. 

When I hear you say that by 2019, I guess—maybe Senator Sessions said it—$800 billion in interest payments on the debt, I am 

thinking of my 21-year-old daughter, just got married, 10 years 

from now, 31, and she and her husband are going to have to pay 

their share of an $800 billion interest payment that will not buy 

78 

them anything—no service, no security, no better environment, no 

health care for those who cannot afford it. This is an outrage. You have made the statement of the problem: $12 trillion of debt today, commitments that are in law already that will add $9 trillion to that in the next 10 years, $21 trillion. It is, as we say, 

unsustainable. But what does it mean when we say unsustainable. 

To me it means that we have reached a tipping point, and if we 

don’t do something, America’s economy is going to go over the cliff. 

Unsustainable means that at some point we are going to have to 

raise interest rates higher and higher to get people to buy our 

notes. That is going to bring about in its wake inflation and then 

hyperinflation. We are going to start printing more dollars. And the 

value of a dollar will fall, perhaps even collapse. 

The overall effect of that will be that our country may be back 

in a recession or, worse, even deeper than the recession that we are 

now fighting our way out of. So we have to get together across 

party lines and do something to secure America’s future. 

Second, Senator Voinovich and I have introduced this proposal. 

It is very much like the proposal that Congressman Wolf and Congressman Cooper have introduced in the House and, frankly, not 

that different from the Conrad-Gregg proposal, and Senator Feinstein and Senator Bayh and all the others as well. The basic idea 

here is that we have proven ourselves as an institution—Congress, 

political leadership, President—incapable of dealing with this problem of stopping the indebtedness. Our incapability does not originate from bad intentions. Our intentions are very good. We simply 

are unwilling to pay the cost of our intentions. And if you needed 

any proof of it, you have it in the last couple of weeks here when 

all of a sudden we were being asked—and it looks like we will be 

asked again—to commit ourselves to over $200 billion, $250 billion 

in the so-called SGR, what we call the Doctor’s Fix program, that 

is a good idea to do. But if we cannot pay for it, we cannot do it. 

We have come to a time when in the interest of our future as 

a country, as a viable economy, we simply have to start saying no. 

And as an institution in our normal course and the regular order, 

we are not capable of it, I am afraid. That is what the record 

shows. 

So we need an extraordinary position. We need an irregular 

order, if I can put it that way, and all these commissions intend 

to do that, to take it out of the political process, to have mostly 

Members of Congress, maybe some executive branch people, pull 

them out of the process and set them on a mission that is as important as any that they have ever been asked to perform for their 

country, which is to get us out of hock and back toward fiscal balance, and not to have it—we are not trying to stack this commission so one side wins and the other side loses. We are trying to organize it so that in the end there has to be a bipartisan agreement 

of the commission members which will make it possible to have a 

bipartisan agreement on the floor and hopefully both chambers and 

hopefully by the President as well. 

I also feel very strongly that in the end we have to break out of 

the regular order and simply not allow the normal amendments to 

the process, because if this commission does its job and presents it 

to us, it is going to be very controversial. It is going to be unpopuVerDate Aug 31 2005 10:39 May 18, 2010 Jkt 000000 PO 00000 Frm 00084 Fmt 6601 Sfmt 6601 C:\DOCS\55507.TXT SBUD1 PsN: TISH
79 

lar with some interest groups. And the tendency will be for amendments to be introduced and passed which will take out the tough 

stuff, the restraint, and leave in the spending, and we will be back 

in the same tipping point to real problems. 

I think the public has hit a tipping point here, too. I think the 

American people get it, even though the debt is--the worst consequences of the debt are over the horizon, they see it coming now, 

and I think they have felt it with a particular intensity through 

this recession because so many middle-class families are tightening 

their belts. They are putting money in the bank that they normally 

spend because they are worried about the future. And then they 

look at Washington, and we just keep spending. And there is nothing in the bank. So I think they want us to act in this way, and 

they understand how important it is. 

I think this is going to be tough politically, and we have to, together, those of us who feel strongly about this, seize every opportunity that we have to try to make progress in exactly the way we 

are all talking about. 

I just want to indicate for the record, as you know, Mr. Chairman, on October 14th ten Members of the Senate—in this case, all 

members of the Democratic Caucus—wrote to Leader Reid and described the problem as you and I have described and said in conclusion, ‘‘We strongly believe, as part of the debate to increase the 

debt limit, Congress needs to put in place a special process that allows Congress and the administration to face up to our Nation’s 

long-term fiscal imbalances and allows for deliberation and a vote 

on a comprehensive package addressing these issues.’’ 

As we all know, we are going to have to increase the debt limit 

in December. I hope that is the moment where we also do something else we have to do, which is to create a commission such as 

you have described and Senator Voinovich and I would create 

under our bill that would restore fiscal balance and hope for a better economic future for this great country of ours. 

Thank you. 

Chairman CONRAD. Thank you, Senator Lieberman. Thank you 

for your leadership. We deeply appreciate the seriousness of purpose that you have brought to this task to be part of the group of 

ten that wrote that letter, and I joined—I did not sign that letter 

because it is supporting something that we are going to be talking 

about at this meeting. 

Senator LIEBERMAN. Understood. 

Chairman CONRAD. I completely agree with the contents of that 

letter, and I have told the group that any subsequent communication, now that we have had this hearing, I would feel free to sign 

as well. 

Senator LIEBERMAN. Thank you. 

Chairman CONRAD. With that, Senator Gregg has now joined us. 

Senator Gregg, would you like to make an opening statement now 

or would you prefer to go to Senator—— 

OPENING STATEMENT OF SENATOR GREGG 

Senator GREGG. Just a brief statement because I want to hear 

from the panel, and I think the fact that the membership of this 

panel is very strong and consists of experts that basically represent 

80 

a cross section of the Congress that it is a very good sign for this 

effort, which is absolutely critical, as the Chairman, I know, has 

outlined, but especially in the context of the health care bill, because of the fact that with this health care bill we are looking at 

a massive expansion in the size of the Government, which will potentially create a new entitlement of immense proportions, which 

will be unpaid for, I am sure, over time. 

It is necessary that we proceed now to face up to the long-term 

structural instability of our fiscal situation as a Nation, and if we 

do not do that, we will pass on to our children a country which 

gives them less of a standard of living than we have had. This will 

put them in a position where the debt will be so high and so 

unsustainable that they will not be able to bring it under control 

without either massive tax increases or significant inflation—neither one of which will lead to a better Nation. 

So this initiative is an attempt to try to address these concerns 

and to do it in a constructive, bipartisan way, and I think we all 

recognize that if we do not join together in a bipartisan and fair 

way, we will never get anything done, and the reason it has to be 

done in this manner is because we have proven that the regular 

legislative order does not work. 

I have further statements that I make, but I want to hear from 

the panel, and so, Mr. Chairman, I will yield back. 

Chairman CONRAD. Thank you. 

I would also turn to Senator Warner for any opening observations he might have, and then we will go to Senator Voinovich. 

Senator Warner? 

OPENING STATEMENT OF SENATOR WARNER 

Senator WARNER. Well, thank you, Mr. Chairman, and I am 

pleased to see your leadership and Senator Gregg’s leadership on 

this issue. 

Senator Lieberman mentioned the letter, and one of the things 

that was, I think, important about the letter was that of the ten 

Democrats, a number of us were new members. I am proud to be 

one of the signatories to that letter. And I think there is a real occasion here for a grand bargain with the American people that as 

we wrestle with health care, try to get it right, that at the same 

time taking on this issue of the deficit in this bipartisan fashion 

is terribly important, and I think at least from our side of the aisle, 

and I know some of our Republican colleagues, the newer members 

who may not have been as entwined in the system bring perhaps 

a fresh view. I came from a Governorship where we actually had 

to balance our budget each year, and we maintained that AAA 

bond rating, something that Congressman Wolf and I have worked 

together on in Virginia over the years. And I commend your efforts. 

I would simply say, you know, there are legitimate questions 

about the structure of this commission, and my only hope as a new 

member would be that we not only have it bipartisan but that 

those members, whether they are members or outsiders—this is so 

important—that they would have to come with an approach that 

everything truly is on the table, that no program is sacred; that, 

yes, they have to look at cuts; that we cannot rule out revenues; 

that all of this has to be up for grabs. And my only hope would be 

81 

that, you know, if we move down this path, people on both sides 

would not come with entrenched views about whether it is sacred 

cows on one side or ruling out revenues on the other side. That 

would defeat the purpose before we would even get started. 

So I thank the Chairman and the Ranking Member for their 

leadership on this, and there is an awful lot of new members from 

both sides of the aisle, but particularly on our side of the aisle, that 

want to be part of this effort and be supportive. 

Thank you. 

Chairman CONRAD. Thank you, Senator Warner, and thank you 

for your energy and vision on this issue and so many others that 

come before this Committee. 

Senator Voinovich has been as committed as any member to the 

need to deal with our long-term debt. And Senator Voinovich has 

not just talked about it. He has not only talked the talk, he has 

walked the walk, and he is before us, along with Senator 

Lieberman, with a specific proposal. And over and over and over, 

Senator Voinovich has demonstrated his commitment to doing 

something serious and significant to get our long-term debt under 

control. 

We especially welcome you, Senator Voinovich, before the Budget 

Committee. 

If I could just say that at 10 o’clock, we will, along with the rest 

of the Senate, observe a moment of silence for the victims at Fort 

Hood. So we have about 4 minutes before that, if you would proceed, but I just wanted to give you a heads up that at 10 o’clock 

we will observe the moment of silence. 

STATEMENT OF HON. GEORGE V. VOINOVICH, A UNITED 

STATES SENATOR FROM THE STATE OF OHIO 

Senator VOINOVICH. Thank you, Mr. Chairman, and thank you, 

Senator Gregg, for holding this hearing on the most important 

issue Congress and our Nation faces. The two of you have spoken 

eloquently over the years about the need to deal with the debt, the 

deficit, and tax reform. And I think it is really important that finally the American people are recognizing the fiscal crisis our Nation faces. 

As everyone in and out of Congress knows, our Federal spending 

is out of control, and as a result, our debt continues to skyrocket. 

We have projected deficits as far as the eye can see. It does not 

take an economist to realize our course is not sustainable. The Federal Government is the worst credit card abuser in the world, and 

we are putting everything on the tab of our children and grandchildren. At a time when American families are taking a close look 

at their own budgets and credit card statements, the Federal Government is turning a blind eye to the statements on our out-of-control Federal debt. And internationally our credit and credibility are 

on the line. 

Since 2006, I have introduced the Save America’s Future Economy Commission Act, the SAFE Act, to reform Social Security, 

Medicare, our Tax Code, and to provide a process for Congress’ expedited consideration of legislation proposed by the SAFE Act’s 

committee. I am pleased that Senator Lieberman and others have 

joined in this effort, and over on the House side we have—and both 

82 

of them are here today, who have worked very hard—Congressman 

Cooper and Congressman Wolf. 

Similar to the Base Realignment and Closure Commission, the 

SAFE Act would break that legislative logjam in Washington by 

creating a bipartisan, bicameral committee to draw up policy prescriptions for the Government’s long-term budget crisis that would 

go before Congress for an up-or-down vote. 

I know that some members question why Congress cannot pass 

the necessary legislation. Mr. Chairman, you pointed it out in your 

opening statement, and Senator Lieberman has been eloquent in 

pointing it out also. The fact of the matter is that Congress is not 

willing to take short-term pain for long-term gain, period. And that 

is why we need a commission to provide the solutions and the expedited procedure for an up-or-down vote so that reform proposals do 

not die in committee or become an exercise in political messaging, 

which we have too much of around here. 

While I believe the SAFE Commission is an example of bipartisan compromise when it comes to a productive process, I hope 

that this Committee and my colleagues do not make the mistake 

we too often make around here of letting the perfect get in the way 

of the good. In the 110th Congress, I was a cosponsor of your legislation with Senator Gregg, the Bipartisan Task Force for Fiscal Action Act, and frankly, I will support any reasonable bill that we can 

get bipartisan support from our Congress. 

I am pleased to say also that it appears like President Obama 

is finally starting to get it. In an interview with the Washington 

Post, the President endorsed the idea of creating a commission 

where, ‘‘what you end up having to do in terms of structural reforms realistically is you probably have to set up some sort of commission or mechanism that reports back with the prospect of 

maybe locking in a pledge for action.’’ 

Mr. Chairman, we must find a compromise, and we have to act 

now. I would hope that maybe this is one of the most important 

hearings that we have had in my 11 years in the U.S. Senate. 

Many people believe that this generation of Americans will be the 

first whose standard of living is less than those before them. Our 

failure to act now will guarantee that they are right. 

Thank you, Mr. Chairman. 

[The prepared statement of Senator Voinovich follows:] 

83 


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Chairman CONRAD. Thank you, Senator Voinovich. 

I am told that the Senate’s moment of silence will actually be at 

about 10:03. A staffer will come in once the moment of silence 

starts so that we can coordinate throughout the Senate family that 

moment of silence. 

Senator Feinstein, we are delighted that you are here. We very 

much appreciate the leadership you have provided. You were an 

early advocate of a special process working with Senator Domenici, 

the former distinguished Chairman of this Committee, and now 

you are working with Senator Cornyn, who is also a distinguished 

member of this Committee. We appreciate very much your willingness to testify. 

STATEMENT OF HON. DIANNE FEINSTEIN, A UNITED STATES 

SENATOR FROM THE STATE OF CALIFORNIA 

Senator FEINSTEIN. Well, thank you very much, Mr. Chairman 

and Ranking Member Gregg, Senator Warner, and Senator Sessions, with whom I work on Judiciary. I thank you for those comments. 

Senator Cornyn would be here would it not be for the ceremony 

at Fort Hood, and I know he would want everyone to know that. 

As you mentioned, this was introduced by Senator Domenici and 

me in February of 2007, and Senator Cornyn and I have reintroduced the bill this year. 

Perhaps because I am a mayor, I tend to look at things in terms 

of what is actually spent, and so outlays have become a critical criteria for me. So over the past, I guess, 10 to 12 years, I have been 


55507.058
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tracking outlays, and the entitlement outlays run between 50 percent and 56 percent of everything the Federal Government spends 

in a given year. 

The August 2009 figures are 50 percent. Now, they would have 

been higher except for the financial crisis numbers, which are 11 

percent so far of everything we send; interest, 5 percent; discretionary, defense 18 percent; and then everything else, all the things 

Senator Sessions spoke about—Transportation, Interior, Justice, 

Education—just 16 percent of what is actually outlaid. So the entitlement picture looms huge and, of course, that is Medicare, it is 

Medicaid, it is Social Security, it is veterans’ benefits. It is those 

things that you cannot control that just keep going year in, year 

out. 

So what we have put together is an entitlement commission. 

Now, this commission would be an authority. This commission 

would handle Social Security and Medicare, and it would do so in 

the mode of the Greenspan commission. We took that model of 15 

members, some members professional outside members, some 

members from the House, some members from the Senate, set up 

an appointment process and said they will have independent actuaries who will actuarially survey these two systems on an ongoing 

basis and will essentially send to the Congress every 5 years legislation with how to keep the system in balance. 

Now, this is ongoing. It is not just a temporary commission as 

the others. And the reason is, I believe, that the changes and 

tweaks that have to be made really are going to take time to do 

it. If you do it in one fell swoop, it is huge. So, actuarially, the system is surveyed and every 5 years a plan is sent to the Senate in 

the form of legislation. And I wanted to get it as close to BRAClike as possible. 

The problem comes if there are taxes of giving an independent 

commission the ability without the elected body of doing that. So 

we have it in an expedited—— 

Chairman CONRAD. If I can interrupt, Senator Feinstein. 

Senator FEINSTEIN. Of course. 

Chairman CONRAD. I am advised now that the Senate is observing the moment of silence for the victims at Fort Hood, and we 

would ask everyone to stand for the purposes of this observance. 

[A moment of silence.] 

Chairman CONRAD. We thank you all for this sign of respect for 

those who were the victims at Fort Hood. Our thoughts and prayers are with the families and the friends and the colleagues of 

those who were wounded and killed. 

I apologize to you, Senator Feinstein, for interrupting your testimony. 

Senator FEINSTEIN. That is quite all right. Thank you very much 

for doing that. 

Chairman CONRAD. Please proceed. 

Senator FEINSTEIN. I appreciate it. 

So the recommendations of the commission would be sent to the 

Congress every 5 years, and there would be an expedited procedure 

of 120 days. Only germane amendments are acceptable, and this is 

where I would prefer BRAC, a BRAC-like, vote it up, vote it down. 

To be honest with you, our bill at the present time does not have 

86 

that because there was concern about taxes being levied by people 

who are not elected. 

The commission would be made up of 15, including the Chairman 

and Ranking Member of the Senate Finance Committee and the 

Chairman and Ranking Member of the House Ways and Means 

Committee. Seven members of the commission would be chosen by 

the President to include three Democrats, three Republicans, and 

one independent. Eight members of the commission would be chosen by the Congress to include four selected by the Senate Majority 

and Minority Leaders, and they would concur. The process would 

be that they agree on who it is to prevent, you know, games or people from one particular venue, but basically we want people who 

are knowledgeable, and four selected by the Speaker and the House 

Minority Leader. 

As I say, independent actuaries and outside experts would be retained to continually review each entitlement program with the 

goal of bringing it into fiscal balance and preserving its viability for 

future generations. 

That is essentially it, Mr. Chairman. I feel, as does Senator 

Voinovich, I will vote for this. I will not vote for raising the debt 

limit without a vehicle to handle this. I agree that this is our moment. The only thing that I would implore is that this be an ongoing process and that we take it up every 5 years with a bill that 

hopefully a way can be found to accept it or reject it as in BRAC. 

It is painful, but I believe it has to be done. I also believe if the 

commission is only Members of Congress, they will be subject to so 

much importuning by various groups that—and they run for office—it will make it difficult. And that is why we have put this hybrid commission of independent people outside of the Congress 

with key Members of the Congress. 

I thank you for listening. 

Chairman CONRAD. Thank you, and thank you for your description. Very helpful to the Committee and we appreciate it. 

Senator FEINSTEIN. Thank you. 

Chairman CONRAD. Senator Bayh is the author of the letter that 

went to the Majority Leader. 

Senator GREGG. Very well written. 

Chairman CONRAD. It was very well written, very thoughtful. 

Senator BAYH. You said that with such surprise. 

[Laughter.] 

Chairman CONRAD. And very important. We are delighted that 

you are here, Senator Bayh. Please proceed. 

STATEMENT OF HON. EVAN BAYH, A UNITED STATES SENATOR 

FROM THE STATE OF INDIANA 

Senator BAYH. Thank you, Mr. Chairman, Ranking Member 

Gregg, Senator Warner. 

Mr. Chairman, there have been such eloquent statements made 

by everyone so far. I have a statement that I would like to submit 

for the record if that is acceptable to the Committee. 

Chairman CONRAD. Without objection. 

Senator BAYH. Just a few brief observations, Mr. Chairman. 

First, who would have thought that the Budget Committee would 

be the site for the beginning of an institutional insurrection, but 

87 

here we are. And looking around the witness table and the members of the Committee who are present today, many of us count 

ourselves as pragmatists not ideologues, as moderates not extremists. And yet here we are asking for a change in the way that business is done in Washington. I think that is pretty eloquent testimony in and of itself about the magnitude of the problem and the 

urgency that we must bring to doing something about this. 

And, George, you warmed my heart listening to you testify. That 

was a former Governor speaking here this morning. Dianne, you 

described yourself as a mayor. I know Senator Warner described 

himself as a Governor. You have your roots in State government. 

For those of us who have served in that capacity, we are no 

strangers—and Senator Gregg, of course, a former Governor. We 

are no strangers to having to make difficult decisions and to occasionally say no, even if it is not popular because it is in the longterm best interests of our State, our country, and those who put 

their responsibility in us. That is the kind of discipline we have to 

bring to the U.S. Congress in this important moment. 

The bottom line for me, Mr. Chairman, is that business as usual 

in Washington is not going to solve this problem. The path of least 

resistance which we have trod for so long now is the path to national weakness. We can no longer afford to continue on like this 

and must have a special process to help correct the problem. 

This to my mind has its roots in basic human psychology. Some 

in the Congress like to spend more than we can afford, and some 

like to cut taxes more than we can afford. The easy path is just 

to simply borrow until the credit markets will no longer allow that. 

Interest rates will go up. Economic growth will go down. Our children and grandchildren are left with the bill. 

This violates something fundamental in the American character. 

Every generation in our country, every single one, has been willing 

to do the difficult work and make the occasional sacrifices so that 

those who will follow can inherit a better way of life and a stronger 

country. We are putting that at risk if we are not willing to do the 

same. 

So now is the time. I agree with the comments my colleagues 

have made, particularly Senator Feinstein’s about raising the debt 

limit. I will not do this unless there is tangible evidence that we 

are beginning to head in a better direction. It would be deeply irresponsible. 

As you know, Mr. Chairman, there are rare moments of leverage 

in this institution where you can implement fundamental change. 

This is one of those moments. We must seize it. 

I would simply conclude by saying we are all aware that there 

are good people who will raise objections to this for reasons that 

are satisfactory to them. And that is why I have been for a slight 

modification of the Conrad-Gregg proposal. I would say to our colleagues who believe that regular order can produce a better result, 

give them an opportunity for 60 days. Put them to the test. But if 

they are simply, in spite of their best intentions, incapable of producing something that is in the national interest, then their parochial concerns must give way to doing what is in the best interest 

of this country. 

88 

So I salute you for your leadership, Senator Gregg, who is someone I have immense respect for, we must press on here and use 

this hearing as a catalyst for the kind of change that Washington 

needs and that future generations will thank us for. 

Thank you, Mr. Chairman. 

[The prepared statement of Senator Bayh follows:] 


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Chairman CONRAD. Thank you, Senator Bayh, for that eloquent 

statement, and I hope, I very much hope people are listening. I 

hope our colleagues are listening. I hope they are listening downtown. This is a critical moment, and you rarely do have the leverage to make a fundamental change, a fundamental break from the 

current trend. And that is really what is required here. 

We have had leaders not only in the Senate but leaders in the 

House, no two more dedicated than Representative Cooper and 

Representative Wolf who have for a long period of time advocated 


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a special process and gone to the hard work to produce an agreement about how one would be structured. Welcome to you both. We 

will begin with Representative Cooper. Welcome to the Senate 

Budget Committee. We very much appreciate your leadership and 

thoughtfulness on this issue, as on many others. Representative 

Cooper? 

STATEMENT OF HON. JIM COOPER, A REPRESENTATIVE IN 

CONGRESS FROM THE STATE OF TENNESSEE 

Mr. COOPER. Thank you very much, Chairman Conrad, Ranking 

Member Gregg, my friend and former classmate, Senator Warner. 

Speaking on such a panel of unlikely revolutionaries, it is very 

important that we seize this moment of opportunity, this moment 

of truth, to do the right thing for the country. I believe that there 

is no more important issue for the strength of our Nation than facing up to our long-term fiscal imbalance. And, sadly, the long term 

is not very far away anymore. 

In the 2008 fiscal year, the Treasury Department in its ‘‘Financial Report of the United States Government’’ reported that the 

present value of unfunded obligations for our United States is $56 

trillion, or almost four times the GDP of America. Now, this is a 

larger number than some of my colleagues have used because this 

is the present value using real accrual accounting. 

I think it is very important to use real numbers in Washington 

because the Federal Government is the only large entity left in 

America that gets away without using real numbers. Every forprofit and nonprofit entity of any size in this country, every State 

and local government, has to use real numbers, accrual accounting, 

except for the Federal Government. And, sadly, I have been looking 

for a long time. I still cannot find any major business group that 

will advocate that the Federal Government also use real accounting 

the way they have to use it. 

In 2009, we do not know what the report will indicate, but it is 

coming out in about a month, on December 15th. It is likely that 

the unfunded obligations of the U.S. will rise from $56 trillion to 

$60 trillion, a rate of worsening, a rate of sinking of about $11 billion a day. That is hard to wrap your mind around. But every citizen needs to do that. 

In my opinion, the result of all this is we have fiscal cancer, and 

it is metastasizing at the rate that very soon no surgery, no chemotherapy, no radiation will be able to cure the problem. 

Albert Einstein is supposed to have said that the greatest power 

on Earth is not nuclear power; it is compound interest. And if you 

are a debtor nation, that works against every citizen of this country. 

The President and Congress have acknowledged that the bulk of 

our budget problem lies in the health care, the area of health care 

entitlements. That is why both the House and Senate reform proposals make an effort to reduce the deficit now and in the future, 

and we need to make a stronger effort. But each of these bills contains what would be, if passed, the largest cut in mandatory spending that our Nation has ever seen, larger than the Balanced Budget Act of 1997—$100 billion larger—and that is a good start. 

91 

But in addition to reducing our long-term problems by facing 

health care reform, we need to face many of our other problems in 

order to truly lower the cost curve or bend it downward in the right 

direction. 

I am not satisfied that the House bill does enough in this regard, 

but I know that you, Senator Conrad in particular, have taken a 

long-time interest in this topic, and I am hoping that working with 

freshmen Senators and working with the Senate as a whole we can 

substantially improve this bill. There is much to be done. 

As you have said, put bluntly, the decisionmaking process in 

Congress is broken. It must be fixed. The first-choice solution, as 

Senator Bayh said, is give the folks who think that regular order 

will prevail a chance, another chance. They have had decades of 

chances. The basic message is stop us before we spend again. 

I resisted, to be honest with you, the commission idea because it 

is a second-choice proposal. But relying on my good friend and colleague Congressman Wolf, who finally persuaded me that this was 

absolutely necessary, and he is right, we need this decision-forcing 

mechanism to do the right thing for the country. 

Traditionally, you know, Congress has had to really face up to a 

crisis before we act, and I am hoping that this month or next, even 

the blindest partisan will see that we must act. 

Mr. Chairman, as you know, the whole world is watching us, particularly nations like the Chinese, who are getting tired of funding 

our lifestyles. A year or two ago, the leading rating agencies on 

Wall Street, Standard & Poor’s and Moody’s, already projected that 

the U.S. Treasury bond could lose its AAA rating as soon as 2012. 

They went on to project that the Treasury bond by 2015 could have 

the same credit rating as that of Estonia or Greece. This is not a 

future that we want for our country. We must change course and 

change course fast. 

As you know, Mr. Chairman, the Treasury bond is the anchor to 

the world’s global financial markets. If it is allowed to slip, we do 

not know what will happen, but it will not be good, and it could 

even make the current financial recession look like a sideshow. 

I am glad to announce that the vast majority of Blue Dogs, fiscally responsible Democrats in Congress, support the SAFE Commission proposal. We are looking to persuade other members to 

join us in this fight because it is absolutely vital for the future of 

our country. 

Family, in closing, Mr. Chairman, to quote the Nike slogan, because this issue is even more important for our young people than 

it is for anyone else, as the Nike slogan says, ‘‘Just do it.’’ 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Cooper follows:] 

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55507.060
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Chairman CONRAD. Thank you, Congressman Cooper, and thank 

you for your very powerful and persuasive testimony here today. 

Next we will go to Congressman Wolf, who has been a long-time 

leader in this effort, and, Senator Bayh, thank you again for being 

here. 

Congressman Wolf, welcome to the Senate Budget Committee. 

STATEMENT OF HON. FRANK WOLF, A REPRESENTATIVE IN 

CONGRESS FROM THE STATE OF VIRGINIA 

Mr. WOLF. Thank you, Mr. Chairman and the other Senators. I 

appreciate the opportunity for the hearing. 

I have never been more concerned about the future of our country. America is going broke. The Federal Government now owes 

more in debts and commitments than the total combined net worth 

of all Americans. The national debt is racing toward $12 trillion 

and growing at rates that have not been matched since World War 

II. 

In addition, we have amassed massive unfunded promises to 

guarantee future entitlement benefits that, when added with liabilities like the debt, total $57 trillion. Every man, woman, and child 

in America owes $184,000. 

The United States, as Jim said, will soon lose its AAA bond rating. The dollar appears to be losing its important status as the primary international reserve currency, meaning everything traded 

internationally, such as food and oil, will increase in price. 

And our biggest bankers are Japan and China and oil-exporting 

countries like Saudi Arabia. Is it really a good idea to be so indebted to countries like Saudi Arabia, the home of the 9/11 terrorists, and communist China, which is spying on us—my computer 

was compromised by the Chinese—where human rights are an 

afterthought, and Catholic bishops in jail, plundered Tibet, Protestant pastors in jail? 

Then the news we just got Friday: The unemployment rate has 

hit 10.2 percent. 

Can’t you feel it? Can’t you feel that something is just not right? 

There is no other way to deal with the problem. Congress is 

never going to tackle the growing cancer of overspending on its 

own. The system is broken. In my 29 years in Congress, I have 

never—and I was elected with Mr. Gregg; we were in the same 

class. I have never seen more partisanship and divisive Congress 

than I have today. 


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I often refer to an old Simon and Garfunkel song when I talk 

about this issue. It is called ‘‘The Boxer,’’ and you may recall the 

lyrics: ‘‘Man hears what he wants to hear and disregards the rest.’’ 

The Congress is disregarding the reality of where we are. That is 

what is happening. That is why we need a commission made up of 

men and women who care more about their country than they care 

about their party; who are not constantly looking over their shoulder worrying about how they voted on this issue or that issue. 

Simply put, a commission is the only way. Without it, we will 

have the same old tired process, drawing lines in the sand while 

the tsunami of debt comes crashing toward the shore. 

The commission Jim and I envision would hold public hearings 

across the country to hear from the American public. Listening will 

be the key. There has to be honest discussion with the American 

people about the choices. And as every other witness said, everything—and as Senator Warner said—everything, from entitlement 

spending to tax policy, would be on the table. This is the only way 

to deal with the issue. If we go in saying you cannot touch this or 

you cannot do that, it will not work. Nothing should be prejudged 

or preconceived. 

After listening to the American public, the commission would 

then develop a series of recommendations to improve our Nation’s 

financial health. And under the enacting legislation, Congress 

would be required to vote up or down. No avoiding the hard 

choices. 

More than 80 members of the House in both political parties are 

now on this. Public interest groups, business leaders, think tanks, 

syndicated columnists, and editorial pages across the country have 

all endorsed it. 

Let us face it. We are at a fork in the road, and we can no longer 

continue to kick the can down. We can continue down the same 

path if you want to do that, but that means that in 15 years every 

penny of the Federal budget will go toward entitlement spending 

and retiring our debt, or we can start making the hard choices 

now, knowing that it may be a little rocky to start, but would give 

us the ability to build and travel a road. 

Let me close with this one statement that was made by Norm 

Augustine, the former chairman and CEO of Lockheed Martin, at 

a press conference earlier this year—and Jim was there—unveiling 

a report from the well-respected Center for the Study of the Presidency and Congress titled ‘‘Saving America’ Future.’’ The report 

paints a stark and troubling picture of the Nation’s challenges. One 

of the recommendations is to create a panel a bipartisan panel to 

deal with the looming financial tsunami. 

Augustine, who was chairman of the group that prepared the report, best captured the situation when he said the following, and 

then I close. He said, ‘‘In the technology-driven economy in which 

we live, Americans have come to accept leadership as the natural 

and enduring state of affairs. But leadership is highly perishable. 

It must be constantly re-earned.’’ 

‘‘In the 16th century,’’ he said, ‘‘the citizens of Spain no doubt 

thought they would remain the world leader. In the 17th century 

it was France. In the 19th century, Great Britain. And in the 20th 

century it was the United States.’’ 

96 

And then he ended by saying, ‘‘Unless we do things 

dramatically‘‘—and I think Senator Warner was there—‘‘different, 

including strengthening our investments in research and education, 

the 21st century will belong to China and India.’’ 

I do not want my children and grandchildren to live in the China 

century. I want them to live in the American century. 

Thanks again for having the hearing. 

[The prepared statement of Mr. Wolf follows:] 


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Chairman CONRAD. Thank you, Congressman Wolf, for really 

outstanding testimony. 

I am delighted at the quality of this panel. I think the message 

that has been sent is as clear as it can be. Now is the time to move 

in a different direction, and we simply cannot rely on the traditional, standard regular order to try to take on a challenge of this 

magnitude. It simply will not work. 

And so what is require is a special process, and I think we have 

defined for us in the Budget Committee a series of alternatives. All 

of them have merit, and our job will be to try to sort out for the 

Senate side what proposal can advance. 


55507.042
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I want to thank you all. I deeply appreciate your testimony before the Committee this morning. 

We will call to the witness table the second panel: the Honorable 

David Walker, the President and CEO of the Peter Peterson Foundation; Douglas Holtz-Eakin, the President of DHE Consulting, the 

former head of the Congressional Budget Office; William Galston, 

a senior fellow at the Brookings Institution; and Maya 

MacGuineas, the President of the Committee for a Responsible 

Federal Budget. 

Thank you all for your willingness to testify here today. We very 

much appreciate your taking the time to do that. 

Senator GREGG. Can I make an addendum to my opening statement? 

Chairman CONRAD. Senator Gregg. 

Senator GREGG. Mr. Chairman, I apologize for being a little late. 

The plane from New Hampshire was a little late this morning. But 

I just wanted to reinforce the necessity that you have pointed out 

of doing this not by regular order—I do not mind giving regular 

order an opportunity, and I think we should, but we have had an 

opportunity for years—and why this structure that we have come 

up with, which is essentially Members of Congress and the administration, and a non-amendable event is a very important structure 

for the purposes of accomplishing our goals. 

The logic behind that is—with super majorities. The logic is very 

simple. You have to have the American people feel that this is an 

absolutely bipartisan and fair process, and for that you need super 

majorities, and you need a balanced commission. And, second, the 

commission has to have skin in the game. There has to be a belief 

by every member of this commission that they are basically involved in the process, and they have to understand the process. 

And, yes, outside folks make sense in many areas, but as a very 

practical matter, we have gone down the road on all these issues 

so many times that expert knowledge is always available to us, but 

it is not critical to the—what is critical to the process is having the 

people on the commission who are actually going to have to make 

the decisions. 

And the need for an up-or-down vote is, I think, the most important part of any commission because there is a tendency to hide in 

the corners of amendments around this place. Give somebody an 

amendment, even if it is just one amendment, and that gives somebody an excuse for not voting for final passage or voting against 

final passage. And as a result, an amendable vehicle inevitably has 

a fundamental flaw that it can be gamed in the political process 

and be used—and the amendment can be used as a way to make 

a political statement and thus avoid making the tough vote on the 

final passage. So that is why I think a non-amendable vehicle is 

so critical to this exercise. 

Chairman CONRAD. Thank you, Senator Gregg. 

Senator Warner? 

Senator WARNER. Thank you, Mr. Chairman. I just again want 

to commend you and Senator Gregg for being kind of at some point 

lone voices on this issue for a long time, and I know with some of 

the folks on the first panel. And I concur with Senator Gregg that 

there is an enormous need to have an up-or-down vote. 

99 

I am not as convinced on the issue that it needs to be all necessarily members. I can understand arguments on both sides. I 

guess the one—and I say this respectfully as a new member. You 

know, the one concern I do have—and I know you and Senator 

Gregg have spent an enormous amount of time thinking about this, 

but under the proposal you have laid out, if the right members 

were selected, I could see a very successful venture. But if partisan 

pressure led to members being selected that came in on either side 

of the aisle with either saying, you know, we cannot look at certain 

numbers of programs or we can never look at revenues or there are 

certain things off limits, you know, you could almost derail the 

process from day one. 

And I know you all have thought through this a long time, and 

I think I can say if both of you were on the commission I would 

have total confidence that you would come with that open mind. 

But I do hope that that part of the process can be something we 

can keep talking about, trying to make sure that whoever is selecting the members of the commission, they would select people that 

would not come with preconceived notions and truly coming with 

an open mind that everything needs to be on the table. 

Chairman CONRAD. Thank you. Again, Senator Warner, thank 

you for your courageous leadership. This is tough to take on—— 

Senator WARNER. As a new guy, this is being courageous? 

Chairman CONRAD. Yes, it is. And you know it is, because, you 

know, you are taking on the institutional structures here, and we 

all understand that. And we understand how strong they are and 

how resistant to any extraordinary process they are. 

Senator GREGG. Senator Bayh called it ‘‘institutional insurrection.’’ I thought that was a fairly good term for him to coin. 

Chairman CONRAD. We are going to turn now to David Walker, 

the former head of the General Accounting Office, somebody who 

has been a leading voice for a long time on the need for a special 

process and the need to face up to our long-term indebtedness. He 

has traveled the country as part of the Fiscal Wake-Up Tour and 

done incredibly important work to help prepare public opinion for 

what we know must be done. Mr. Walker? 

STATEMENT OF DAVID WALKER, PRESIDENT AND CHIEF EXECUTIVE OFFICER, PETER G. PETERSON FOUNDATION, AND 

FORMER COMPTROLLER GENERAL OF THE UNITED STATES 

Mr. WALKER. Thank you, Chairman Conrad, Senator Gregg, Senator Warner. First, I would like to thank you for the opportunity 

to be here and, second, commend the three of you as well as the 

members of the panel before this for their leadership on this critically important issue. 

I would like for my full statement to be included in the record, 

and I will move to summarize it now. 

Chairman CONRAD. Without objection. 

Mr. WALKER. Thank you. Our Federal deficit for fiscal year 2009 was $1.42 trillion or 

about 9.9 percent of the economy. That is almost nine times what 

it was just 2 years ago. This past weekend, the Federal debt passed the $12 trillion 

mark, which is almost 85 percent of GDP. Federal debt almost douVerDate Aug 31 2005 10:39 May 18, 2010 Jkt 000000 PO 00000 Frm 00105 Fmt 6601 Sfmt 6601 C:\DOCS\55507.TXT SBUD1 PsN: TISH
100 

bled during President George Walker Bush’s Presidency, Bush 43; 

it could double again in the next 10 years if we do not change 

course. 

Our Nation has become increasingly dependent on foreign lenders to finance our Federal deficits. Today over 50 percent of the Nation’s public debt is held by foreign lenders, and that percentage is 

growing. This compares essentially to no public debt at the end of 

World War II and only 19 percent in 1990. 

Our Federal Government faces a Federal financial sinkhole that 

is growing at a rapid rate. The $56.4 trillion number at the end of 

last year has already been mentioned, which is $184,000 per person, $483,000 per household—nine to ten times median household 

income. The new number I expect will be around $63 trillion plus, 

and we will not know it until the end of this year because we do 

not know the commitments and contingencies number. 

If you think the current deficit and debt levels are bad, you ain’t 

seen nothing yet. Our huge unfunded promises will translate to 

much larger deficits and debt burdens in the future absent real 

transformational reforms on both sides of the ledger. 

For example, absent such reforms, total Federal spending could 

exceed 40 percent of the economy by 2040. Interest alone will be 

the single largest line item in the Federal budget within 12 years, 

and we get nothing for it. 

In reality, we will never make it to 2040. And by the way, by 

that point in time, if we wanted to stop the bleeding, we would 

have to over double Federal taxes alone by that point in time. 

As I note below, we will face an economic crisis much bigger than 

the current one if we pass a tipping point and we do not start to 

put our act together pretty soon. 

The Congress is currently involved in a great debate over health 

care reform, and I would just like to specifically say that that has 

serious fiscal implications. I included in my testimony a suggestion 

of four criteria that should be met in order for health care reform 

to be deemed fiscally responsible. I am sad to say that right now 

none of the bills currently meet all four criteria. Hopefully that will 

change. 

Irrespective of how the current health care reform debate ends, 

we must recognize reality that the key factors that contributed to 

the recent mortgage-related subprime crisis also exist in connection 

with the Federal Government’s finances. There are, however, two 

big differences from the mortgage-related subprime crisis: First, 

the numbers and stakes in connection with the Federal Government’s finances are much greater; and, second, no one will bail out 

America. We must make tough choices and solve our own problems. 

We must take concrete steps to address our structural fiscal challenge before we face a possible super subprime crisis. This could result in foreign lenders lose confidence in our ability to put our Government’s financial house in order. We must recognize that if they 

lose confidence or if they otherwise decide to significantly reduce 

their appetite for financing our deficits, we could experience a dramatic decline in the dollar and a dramatic increase in interest 

rates. And, by the way, that single largest line item in 12 years assumes no significant increase in interest rates, which is an unrealistic assumption. This would have a devastating impact on America 

101 

and Americans. It could also result in a global depression, and we 

must take steps to avoid that. 

With all of this as background, let me comment on the primary 

subject of the hearing. Should Congress move to enact a special 

process to address this Nation’s large and growing fiscal challenge? 

My answer to this question is a resounding and unequivocal yes. 

Based on my experience in traveling to 46 States around America, 

meeting with hundreds of thousands of people in town hall meetings, business community leaders, editorial boards, as well as local 

media, it is now abundantly clear that a majority of Americans 

have grown tired of too much talk and not enough action in Washington. There is an increasing disconnect between the public and 

Washington, and that disconnect not only is resulting in a growing 

lack of confidence in the regular order, it is resulting in growing 

anger throughout the United States irrespective of political party. 

Importantly, based on a statistically valid survey funded by our 

foundation, we found out this past spring that the No. 2 issue of 

concern to Americans exceed only by the economy was escalating 

deficits and debt. Twenty points ahead of health care, climate 

change, Iraq and Afghanistan, moving jobs overseas, and other important issues to the Nation. Twenty points plus ahead. And, in 

fact, they were also very concerned about our increased reliance on 

foreign lenders. We have a new survey in the field now, and I 

would be happy to provide the results of that to you. I fully expect 

their concern will have increased. 

By the way, they also supported by roughly a 2:1 margin the 

need for a special commission. And, furthermore, they supported by 

roughly a 2:1 margin the need to have non-government experts on 

it as well, recognizing the pressures that are brought on elected officials. 

In my view, the Congress and the President should take action 

no later than early 2010 to be able to move to create a special commission. I would respectfully suggest that doing something as part 

of the debt ceiling limit is a good idea or even possibly doing something as part of health care reform if you cannot do it as part of 

the debt ceiling. But it is very important we do it in early 2010. 

We must put a credible process in place that would accomplish two 

key goals, and I think these are really important based upon 5 

years of being out on the front lines in America. 

First, to educate and engage a representative group of the American people—not the fringes, a representative group of the American people on the serious fiscal challenge that we face, the range 

of tough choices that need to be made, the pros and cons of various 

options, the prudence of acting sooner rather than later, and the 

potential consequences to our country and our families if we do not. 

Second, which all the bills contemplate, we must create a process 

that will set the table and provide needed political cover for one or 

more tough votes in Congress, where everything is on the table, literally everything. They should make recommendations in areas 

like needed statutory budget controls, social insurance program reforms, tax reforms, other spending, including defense, constraints, 

additional health care reform, because it is pretty clear that the 

tough decisions are not going to be made on health care to reduce 

102 

costs. We will need round two, round three, round four of health 

care reform even if something happens in other appropriate areas. 

In my view, the composition of the commission is critically important. Clearly, you need to have Members of Congress and you need 

to have representatives of the administration, and that representation should be balanced on both Houses and on both sides of the 

political aisle. I believe that it is strongly desirable to also have 

credible non-government experts as part of the commission. Why? 

Because the truth is when you go outside of Washington, people 

that have a strong D or R on their sleeve are discounted significantly and that people who are in elective office obviously face 

pressures that people who are not in elective office do not face. 

I respectfully suggest that we do not just need bipartisan solutions, we need nonpartisan solutions, because, after all, a plurality 

of Americans now consider themselves to be political independents. 

And, therefore, I think that it is important that with regard to any 

non-government experts, you do not just have people that are experts, but you have some that are viewed to be in form and substance independent. That is critically important for it to be credible. 

The parties who are not elected officials would bear a disproportionate share of the burden for stating the facts and speaking the 

truth to the American people outside the Beltway. It is going to 

take a lot of time. It is a major time commitment. Members and 

Cabinet officials just do not have time for that. 

In summary, we are at a critical crossroads in the history of our 

country. We are approaching a tipping point. We must avoid passing that tipping point because it could have catastrophic consequences for our country and our families. 

Some have said that the commission is not the right way to go, 

that we should go the regular order. That ignores the fact that the 

regular order is badly broken. 

Some have said that we also have a situation where this is something that Members of Congress should handle rather than some 

special commission. They ignore the fact that in the final analysis 

Members of Congress must vote, and the President must either 

sign or veto the bill. Therefore, the constitutional process is respected. But we must recognize this country’s future will not be 

better than its past unless w make tough choices soon. And this is 

the way to get it done. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Walker follows:] 

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Chairman CONRAD. Thank you, former GAO Director Walker, 

and now head of the Peterson Foundation, for really powerful testimony. I really do hope people are listening, paying close attention, 

because the stakes are very high here. 

We are also joined this morning by Doug Holtz-Eakin, the former 

head of CBO, somebody that developed real respect from colleagues 

on this Committee and throughout Congress for the way he conducted himself in that important position. Welcome, Doug. Good to 

have you back before the Committee. 

STATEMENT OF DOUGLAS HOLTZ-EAKIN, PRESIDENT, DHE 

CONSULTING, LLC, AND FORMER DIRECTOR, CONGRESSIONAL BUDGET OFFICE 

Mr. HOLTZ-EAKIN. Thank you, Mr. Chairman, Senator Gregg, 

Senator Warner. It is a privilege to be back at this table again, and 

I have had the opportunity in the past to discuss at length the dismal fiscal future, which has been outlined by many of the people 

preceding me, so I will not belabor that. I do have a statement for 

the record which I would like to submit. 

Chairman CONRAD. Without objection. 

Mr. HOLTZ-EAKIN. I would just make a couple of points that I 

think are the most important about the current budget outlook. 

No. 1 I think is simply the time scale and how rapidly it has 

shifted. What used to be a three-decade problem, which was, you 

know, well understood but not addressed, is now something that 

looks to be a one-decade problem, and that makes the challenge, 

I think, much, much harder. 

The second thing that I think is really quite important at the 

moment is the perception of international capital markets. One of 

the puzzles that has been around for a long, long time has been 

why it is that the Congressional Budget Office, the Government Accountability Office, private think tanks, regardless of the source, 

we have the same basic picture of the Federal Government’s future, 

which is spending lines that point ever northward and revenue 

lines that do not, and it simply just does not add up. And international capital markets have access to these reports, and the 

question is: Well, why are they comfortable buying U.S. debt to 

begin with? And the resolution of that has always been that they 

are implicitly counting on America solving its problems and that, 

true to our history, in a very pragmatic way we will ultimately 

make sure these lines come together and do not ever go apart. 

We now have one decade to do two things: No. 1, not disappoint 

them in that expectation or, No. 2, genuinely address the problem. 

And I think both of those are important issues at this time. 

One of my concerns that I outline in my testimony—I am not 

going to spend a lot of time on it—is that if we pass bills in the 

health care debate which are demonstrably unworthy of passage 

from a fiscal point of view, we will send the message to international capital markets not only that we are not prepared to fix 

our problem, but we are prepared to make it worse. And I cannot 

imagine a more dangerous thing to do at this moment in time. 

And so one of the things that I think it is useful to think about 

as we talk about processes to address this is how rapidly things are 

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going to have to be done and how important it is to send the right 

message to international lenders. 

So if you turn to the topic of the hearing, this notion of a task 

force or commission to deal with these problems, I just want to say 

at the outset I am a reluctant convert. I have always felt that this 

is Congress’ job and, quite frankly, it ought to just do it. And that 

attitude has earned me no friends and has gotten us no action. So 

I have come around to the point where I am in favor of something 

that is a special legislative procedure to get this legislation in front 

of Congress and passed, but in doing it, I think you should stay as 

close to the sort of traditions of the Congress as possible in designing it. So for that reason, I really believe strongly that it should 

be dominated by Members of Congress who will ultimately have to 

vote on this, who represent the committees of traditional jurisdiction where it will have to be ultimately sold at some level, and 

minimal participation, if any, from outside experts. I, for example, 

would be of no use in this, and I do not think that is the kind of 

people you want on a commission. You want people who were elected to come solve these problems, represented, and give them a better leverage in the process to actually accomplish that goal. 

I think a tougher call is whether you bring the administration in 

or not. I think the political problems get bigger as you bring the 

administration in, and so I would err on the side of keeping the political problems as small as possible and having it be a congressional effort. But I could be talked out of that. It certainly ought 

to be bipartisan in nature, both its composition and the rules for 

approval of whatever legislation comes out. 

Certainly this task force or commission should produce legislative language, something which goes straight to the floor for an upor-down vote, and it ought to be supported by a majority of both 

the minority and majority parties on the commission. I think it is 

imperative that you get that kind of a buy-in in any commission 

product before you send it out. 

One of the things that I think is the most difficult questions is 

the scope of the commission’s mandate. I have heard a lot today 

about the desire to have everything on the table, from budget process to budget presentation to policy decisions. And, quite frankly, 

I instinctively get nervous when I hear that, and I am not sure 

that is the best way to go, for two reasons. 

No. 1, I think that if you go for a single large commission as opposed to a commission dedicated to the tax problem, a commission 

dedicated to the Medicare, Medicaid, health problem, a commission 

dedicated to, say, Social Security, the large commission makes it 

potentially much harder to get the kind of outcome you want, 

which is an agreement on all of these moving pieces in a single 

piece of legislation. And since action is important, I think I would 

prefer less coordinated action by many committees to well-coordinated stasis which continues our problem. So I am sure others disagree with that, but it is a tough call, in my view. 

The second reason I am worried about the big commission is if 

this Congress were to put out a large commission populated by its 

members with the mandate to solve this problem and it were to 

fail, I think that would be a very damaging moment in the eyes of 

our international creditors. And to raise the political stakes that 

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high in this environment I think has some real risks associated 

with it. 

So in going forward, I think it is imperative, No. 1, that something like this happen. I concur with that. I think that it should 

be dominated by Members of Congress, but that its mandate 

should be thought about very carefully so as to maximize the odds 

that something actually get done and minimize the fallout of a 

large failure to address a clear and transparent problem. 

Thank you. 

[The prepared statement of Mr. Holtz-Eakin follows:] 

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Chairman CONRAD. Thank you, Mr. Holtz-Eakin. Thank you for 

very thoughtful testimony, as always. 

We are also joined this morning by Dr. Galston, senior fellow of 

the Brookings Institution, someone who has spent a great deal of 

time studying and analyzing the budget process and budget outcomes in this country. Welcome, Dr. Galston. Please proceed. 

STATEMENT OF WILLIAM A. GALSTON, THE EZRA K. ZILKHA 

CHAIR IN GOVERNANCE STUDIES AND SENIOR FELLOW, 

BROOKINGS INSTITUTION 

Mr. GALSTON. Well, thank you, Chairman Conrad, Ranking 

Member Gregg, members of the Committee. I very much appreciate 

the invitation to participate in this timely and important hearing. 

Let me emphasize at the outset, although, as you say, I am a senior fellow at the Brookings Institution as well as a member of the 

bipartisan Fiscal Seminar convened under the joint auspices of 

Brookings and the Heritage Foundation, I am here in my personal 

capacity, and unless otherwise noted, the views I express are mine 

alone. 

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less of party, ideology, or branch of Government, almost no one in 

possession of the facts believes that our current fiscal course is sustainable. The level of deficits, debt, and borrowing from abroad projected for the next decade alone threatens not only our economic 

prosperity but also our currency, our global leadership, and our national independence. As soon as our economy emerges from recession and the job market improves, we must adopt a new fiscal 

strategy, and the planning needed to craft and implement it should 

begin without delay. 

If these facts are clear, as I believe they are, then why have so 

many past efforts failed to yield major changes, and why is there 

so little evidence that we are preparing to make them now? While 

it is easy for partisans to point fingers at one another, it is more 

useful to examine the deeper problems that have thwarted action, 

and in my judgment, two are key. And we have already heard 

about them today. First, these issues are difficult, engaging them 

is risky, and in today’s intensely polarized national politics, no one 

wants to take the first step, especially alone. Second, ordinary 

budget procedures are not well designed to address problems that 

develop over not years but decades. While we need sharp distance 

vision, what we mostly have is institutional myopia. For these reasons, among others, business as usual is unlikely to produce better 

fiscal results in the next decade than it has in past decades. 

Fortunately, to come to the topic of today’s hearing, there is an 

alternative—namely, institutions specifically designed to address 

the problems of polarization and nearsightedness. In a paper released last June, the bipartisan Fiscal Seminar to which I referred 

earlier reviewed the century-long contribution that commissions 

have made to U.S. policymaking. From the establishment of the 

Federal Reserve Board and Social Security, from military base restructuring to the struggle against terrorism, the list of accomplishments is impressive. And the challenge of developing a sustainable 

fiscal policy offers the latest opportunity to put this institution to 

work. 

While it is not my purpose this morning to evaluate the relative 

merits of various commission proposals, I can, I think, list the criteria that experience suggests are essential to any commission’s effectiveness. 

First, the President and the congressional leaders of both political parties must fully support its establishment. If they cannot 

agree at the outset that the fiscal problem is too grave and urgent 

to defer, they are unlikely to support any solution the commission 

may propose. 

Second, its membership must be truly bipartisan, and its rules 

must ensure that it can take no action without substantial support 

across party lines. Whether it has to be majority support or substantial support we can argue about. Recommendations reflecting 

the views of only one party will simply replicate the polarization 

that has thwarted action up to now. 

Third—and here I echo all the testimony you have heard this 

morning—it must be empowered to discuss the fullest possible 

range of issues and options, with the fewest possible preconditions. 

Artificial limitations on the agenda will almost certainly tilt the deliberations toward a particular party or outcome and reduce the inVerDate Aug 31 2005 10:39 May 18, 2010 Jkt 000000 PO 00000 Frm 00125 Fmt 6601 Sfmt 6601 C:\DOCS\55507.TXT SBUD1 PsN: TISH
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centives of others to participate seriously. No deficit reduction commission can succeed if its purview does not include both spending 

and revenue. Nor should we focus on social insurance programs to 

the exclusion of our Tax Code. 

Finally—and here again I echo previous testimony—its recommendations must go before Congress under procedures that require expedited consideration and ensure an up-or-down vote. 

Rules permitting endless delay or amendments that could destabilize a balanced compromise are a formula for futility. 

Beyond these core elements, there is room for legitimate disagreement about the scope of a fiscal commission. Some experts believe that a single commission should address all the major issues 

simultaneously and seek to negotiate a ‘‘grand bargain.’’ We have 

heard some arguments to that effect this morning. Others think 

that breaking the problem up into more focused and discrete issues 

would prove more workable, and we have just heard that argument. 

There, of course, is no guarantee that a commission will succeed 

where ordinary procedures have failed. Because fiscal policy raises 

issues that go to the heart of partisan and ideological definition in 

our politics today, a commission could yield yet more gridlock. And 

there is a possibility that both Congress and the White House could 

use a commission to evade their own responsibilities and defer a 

debate that very much needs to occur. And so I echo my colleague 

Doug Holtz-Eakin. I am for that reason a convert but a reluctant 

convert to the idea of a commission. Nonetheless, at this juncture, 

in my judgment, the potential gains outweigh the possible costs. At 

the very least—and this is my conclusion—a commission would 

force both parties to focus on our fiscal challenges and send average Americans—whose concerns about deficits and debt have risen 

substantially during the past year—a credible signal that at long 

last their leaders are paying attention. 

[The prepared statement of Mr. Galston follows:] 

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Chairman CONRAD. Thank you, Dr. Galston, for that really excellent testimony. I appreciate very much your putting your powers 

of thought to this task. 

We are also joined by Maya MacGuineas, who is the President 

of the Committee for a Responsible Federal Budget. We appreciate 

very much your being here, and please proceed. 

STATEMENT OF MAYA MacGUINEAS, PRESIDENT, COMMITTEE 

FOR A RESPONSIBLE FEDERAL BUDGET 

Ms. MACGUINEAS. Thank you, Chairman Conrad, thank you, 

Senator Gregg, thank you, Senator Whitehouse. It really is a privilege to be here today. I am the President of the bipartisan Committee for a Responsible Federal Budget, and I also currently directing the Peterson-Pew Commission on budget process reform, on 

budget reform, and we will soon be making a number of recVerDate Aug 31 2005 10:39 May 18, 2010 Jkt 000000 PO 00000 Frm 00128 Fmt 6601 Sfmt 6601 C:\DOCS\55507.TXT SBUD1 PsN: TISH

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ommendations on budget process and dealing with the fiscal situation that we hope to work with members of this Committee on. I 

have a longer statement that I would like to submit for the record. 

Under reasonable assumptions, the debt will be growing as a 

share of the economy indefinitely, at some point creating a vicious 

debt spiral. Part of the trickiness of the situation, though, is that 

we do not know when. We do not even know exactly what that 

would look like—whether it would take the form of a precipitous 

plunge in economic activity, or a slow but damaging erosion of our 

standard of living. 

These long-term problems that we have all known about for quite 

some time are now at our doorstep. And whereas before the economic crisis, we could put off hard choices a little bit longer, we 

no longer have the luxury of time. At the same time, however, the 

economy is still in a delicate state, and if we were immediately to 

start aggressive deficit reduction, which I am not too worried we 

are about to, but were we, we could easily push the economy back 

into recession. So policymakers must chart a course where they reassure our creditors that the U.S. is not a risky place to continue 

lend, without destabilizing the recovery. The most prudent course 

of action, we believe, would be to immediately announce a credible 

plan for addressing the Nation’s budgetary challenges, while phasing in those policy changes more gradually while the economy is 

still recovering. So that brings me to how a commission could work. 

The potential benefits of a commission are many. 

One, a commission could send a credible reassuring signal to 

creditors and financial markets that the U.S. is indeed serious 

about tackling our fiscal challenges. 

Two, it could establish a shared fiscal goal, which I think is critical. 

Three, it creates a bipartisan forum where these issues can be 

discussed. 

Four, it establishes a process to ensure that the recommendations are considered. 

And, five, it lends political cover. 

Establishing the commission is one potential way to meet the 

twin goals of sending reassuring signals to markets that we are serious without implementing contractionary policies too quickly and 

harming the recovery. 

The second advantage about the commission could well be that 

we would create a shared fiscal goal. So the Peterson-Pew Commission—I do not want to give away what we are going to be focusing 

on, but we strongly believe that some kind of goal looking at stabilizing the debt at a reasonable share of the economy over a reasonable amount of time would be something that our debt trajectory 

right now argues for. In the absence of a single fiscal goal, it is too 

easy for lawmakers to oppose any set of hard choices without suggesting other alternatives. Related to the shared fiscal goal, any 

commission should not start with preconditions of taking things off 

the table. 

Third, while it seems simple, it is quite beneficial just to create 

an organized forum where the discussion of how best to achieve 

these fiscal goals can be hashed out between members of different 

parties. As a political independent and a member of a bipartisan 

124 

organization, I strongly believe that the benefits of creating safe 

environments for bipartisan discourse are very important and that 

they should be done away from cameras and pollsters. 

Fourth, there should be an expedited process. Everybody I think 

has talked about that. Otherwise, there are just too many opportunities for delay and diversion by those who do not want to face up 

to the tough choices that will be part of a realistic plan. 

Finally, a commission lends the political cover that will be necessary in actually passing a plan. Any plan that realistically tackles whichever challenge we choose to bite off with a commission 

will involve difficult choices: spending cuts, tax increases, probably 

both, and probably they will have to be large. No area of the budget will be exempt from consideration and probably reform. 

There is no way a politician or a political party that is understandably concerned about their own future can go out on a limb 

and do this on their own. The benefit of a commission, or any similar collaborative process, is that each member can support the total 

package while acknowledging that it may not have been their first 

choice. 

So let me conclude by saying I wish we did not need to consider 

a commission. I share that view of some of my other colleagues. 

When it comes to fixing the budget situation, we all wish that we 

could just do it. My preference would be to get started on these policy decisions immediately, with a bipartisan announcement that we 

would soon be phasing in a bipartisan policy plan. It is easy for me 

to say sitting here, however. I think due to the incredible political 

polarization and the types of policies that will be involved, we have 

seen that there is considerable resistance to doing it without a different mechanism. Thus, a fiscal commission may well be the best 

mechanism to jump-start the process and make the decisionmaking 

a little bit easier. 

There are many details to work out from the breadth of the mandate to the make-up of the commission to the specifics of the expedited process. I am happy to talk about any of these. From our perspective, it really comes down to whatever works. A commission 

will only work if it is backed by sufficient political will. Therefore, 

I think in crafting the specifics of a commission, it is most important that we include details supported broadly within Congress. 

Members need to buy into the process from the very beginning for 

it to be successful. 

Ultimately, a commission is the beginning of the process. It is 

not the end. The time is now to get started on this process for dealing with these challenges, and I look forward to any questions. 

Thank you. 

[The prepared statement of Ms. MacGuineas follows:] 

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Chairman CONRAD. Thank you. Again, really outstanding testimony, and we have come to expect that from you, Maya, and once 

again you delivered. We appreciate it very much. 

Let me just begin with questions, and I will be brief in my questioning round so that others have a chance, and we will go several 

rounds if need be, given the time. 

It seems to me there are broad areas of agreement that we have 

heard here this morning, that we absolutely need a special process 

focused on the debt. There is broad agreement that everything has 

got to be on the table, that it is bipartisan in nature, both in form 

and in substance, that it leads to an assured vote. Those are the 

areas where I hear broad agreement. On the question of everything 

on the table, maybe, Doug, you had a little bit of a difference there, 

but not dramatically so. 

Where I hear differences is on the question of outsider/insider. 

Should it all be members and representatives of the administration? Or should there be some outside, as one person described me, 

‘‘Big Foot’’ economists or business people who have national respect, who could help bring this out of partisan conflict and put a 

focus on national interest? 

One thing I have wondered is: Is there a possibility of some kind 

of compromise in that area? Senator Gregg and I have a proposal 

that includes all Members of Congress and the administration on 

the idea you need people with skin in the game. But in listening 

to Mr. Walker, he made a number of points that are very important. One is the ability to go around the country and listen and 

make the case to the American people as to the necessity. And 

Members of Congress, by definition, have limited time for that kind 

of enterprise. 

One thing I thought of as I listened to Mr. Walker is: Is there 

a potential for an advisory group to the commission that would 

have people of national reputation who could be engaged in this 

process to go around the country? Because at the end of the day, 

we are going to have to get votes here in Congress, and if we do 

not have the leaders of Congress—Maya, you made the point. If we 

do not have leaders of Congress of both parties bought into the 

process and deeply involved in the production of a product, my fear 

is you will not get a favorable vote. 

And so one thing that crossed my mind is: Is there a possibility 

of a working group or task force who has the responsibility, made 


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up of members, representatives of the administration, as Senator 

Gregg and I have designed it, but have an ancillary group that 

helps sell this to the American people? Mr. Walker, what would 

you think of that? 

Mr. WALKER. Mr. Chairman, first I think it is critically important that we have a commission that ends up meeting the criteria 

that lay out. Reasonable people can and will differ about what the 

composition ought to be. I think it is possible to come up with some 

type of a compromise. My view is that certain elements are essential. Whatever commission exists, there must be a super majority 

of elected representatives on it. Whether or not it is 100 percent, 

people can debate that. I think the administration must have representatives because, after all, the President has got to decide 

whether or not to sign the bill or not. So I think that is critically 

important. 

The reason that I think that it is desirable, strongly desirable to 

have some non-government representatives is based on two things: 

One, what do the American people think? The American people 

think by over a 60-percent margin that it should. Second, I have 

been to 46 States in the last 4 years, and I can tell you that there 

is a significant time commitment that is going to be required, and 

I can tell you that if somebody has a D or an R on their sleeve, 

they will be discounted dramatically, in addition to the fact that 

sitting Members of Congress and administration Cabinet Secretaries do not have time to participate. 

The third point would be if you are going to divide it to where 

you are going to have a certain group that is going to bear a disproportionate share of the burden for the public education and engagement, they have to have some official designation because, otherwise, I think it is going to undercut the credibility of that group. 

And I also think that it would be important that you have at least 

a couple of members of the commission attend each one of those in 

order to show that this is linked directly to the commission. That 

way you might be able to leverage the time commitment that otherwise—you know, spread around the time commitment and leverage 

appropriately to make sure you do have commission member participation, but recognizing there is a limit as to how much they are 

going to be able to do. 

The last thing. I cannot overstate the importance of the citizen 

education and engagement component of this commission. In my 

view, the Bush 43 Social Security reform effort was fundamentally 

flawed and had no chance of success from day one. Irrespective of 

what you think about their proposals, the process was fundamentally flawed. In my view, the current health care reform process 

has been fundamentally flawed with regard to citizen education 

and engagement. It is critically important that this one not be. And 

that means the time commitment and how you go about interacting 

with a representative group of Americans, leverage the Internet for 

public policy purposes in ways that it has never been leveraged, get 

media involvement in these things that are going to be critical to 

success, in my view. Thank you. 

Chairman CONRAD. Mr. Holtz-Eakin? 

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tion problem with Congress. I do not disagree with the insight that 

Americans are suspicious of people with R’s and D’s on their sleeve. 

But by addressing this widely understood threatening problem, you 

would, in fact, immediately address the concerns of the American 

people and the reason they are suspicious of made-in-Washington 

solutions. You know, solving a real problem is the best thing you 

can do at this point in time. 

So I think to structure it so that members solve the problem will, 

in fact, address the credibility issue, and, quite frankly, you know, 

legislation comes out of any such task force, goes through the Congress, gets signed by the President, we are going to have among 

the most dedicated salesmen you can imagine on the planet, which 

are Members of Congress running for re-election, explaining why 

they voted for this; the President of the United States, any President, we have noticed, does have the ability to reach the American 

people. 

So I do not see the need in this venue to supplement the ability 

to reach out to the American people. I think that gets taken care 

of automatically. The credibility is restored. The outreach is there. 

I think the harder question, as I said in my opening remarks, is 

about the composition and whether you bring the administration in 

or not. You know, the goal is to have a nice, level, bipartisan playing field within the commission so you can grapple with very tough 

problems. There is no bigger Big Foot than any President of the 

United States, and you will not have a level playing field if the administration is in the negotiations. The President belongs to a 

party. That party will be perceived as having a greater say and a 

greater stake. 

So I think that for the first attempt at this, it is better to err 

on the side of not taking that step, but I could be talked out of 

that. I think it is a hard call. 

Chairman CONRAD. All right. Mr. Galston? 

Mr. GALSTON. Well, this is not an easy question, but I will try 

to provide an answer. My point of departure is a problem I have 

been studying for a long time—namely, trust in Government. And, 

regrettably, trust in Government, particularly the Federal Government, is near an all-time low as we convene today. This is not a 

healthy situation for our Republic. 

And two things that are contributing to mistrust are excessive 

political polarization, which has developed over a period of decades 

in our Nation’s capital, and gridlock. And in my judgment, the 

most important way to begin to rebuild trust is for members of the 

two political parties to get together and actually accomplish tasks 

that the American people want them to accomplish. And any commission that contributes to that objective is an important step in 

the right direction for governance above and beyond the specific 

problem that it solves, whether it is a fiscal problem or military 

bases or whatever it may be. 

Family, I am totally persuaded by the argument that the commission should be dominated by people who have skin in the game, 

that is to say, Members of Congress and representatives of the administration. I do not think it should be one to the exclusion of the 

other. Whether the commission also includes one or two experts 

who do not fall into either of those categories is, I think, a detail 

133 

and not the most important detail. I could go in that direction or 

not. But the point is that the composition of the committee and the 

rules of the committee must ensure that people with political skin 

in the game from both sides of the aisle have to concur in the results. If that is the product of the rules and the composition of the 

committee, fine. If not, I think it will fail. 

Chairman CONRAD. All right. Maya, what would you say to that 

question? 

Ms. MACGUINEAS. I love the idea. I think it is a great idea. I 

have sat on the board of a number of organizations where we have 

had a board of directors and a board of advisers and they have 

played different roles. You have had the decisionmakers in one capacity and the advisers intimately involved in the discussion, but 

they at the end of the game were not the people who were responsible for making the decisions. 

I think when you look at outsiders and members, there are two 

different skill sets they bring. I think outsiders--and take no offense to this, but oftentimes can come up with better policy ideas 

because they are not politically realistic. I also think those ideas 

might not go very far because they are politically realistic. And I 

will tread where I probably should not. I will give an example that 

is close to home right now. But if you put a group of outsiders together on health care, we would all say part of the problem with 

health care costs is on the tax side, and we need to look at the employer-provided exclusion of health care. If you then put that to a 

bunch of politicians, they would say, ‘‘That is really hard. The farthest we can go is looking at taxing certain kinds of health care 

plans.’’ And in the end, it is the decisionmakers that allow the policies that are actually implementable to get put into the policies. 

They may not be the perfect solutions from an outsider’s perspective, but they are what can get done. 

So, again, for me the bottom line is whatever works, whatever 

the most colleagues in the Senate and the House think is the right 

way to proceed is what we should do. But I think having decisionmakers make up the panel is the right way to proceed. 

Chairman CONRAD. All right. Senator Gregg? 

Senator GREGG. Thank you. First off, your testimony was superb, 

but that decision was excellent. This whole issue of composition is 

critical to the effort. 

I guess my reaction is: Who would you choose to put on it besides 

Members of Congress? When you start choosing outside individuals, you immediately have to take care of so many different 

groups which have legitimate claims to participation, from the 

AARP to the Concord Coalition, from the unions to the chamber of 

commerce. I mean, you would end up with a very large group of 

people, and in the end it would be very hard to be assured that you 

had a bipartisan solution that was politically bipartisan, because at 

the essence of this, for this to work, the American people have to 

feel that both parties have joined hands and it is fair and it is bipartisan. That means the players who vote on it have to have that 

sort of risk. And that is, I guess, why I still stick with the member 

only approach and members of the administration. 

But the independent advisory group, assuming you—I think it is 

an excellent idea. I mean, I cannot imagine how there is any downVerDate Aug 31 2005 10:39 May 18, 2010 Jkt 000000 PO 00000 Frm 00139 Fmt 6601 Sfmt 6601 C:\DOCS\55507.TXT SBUD1 PsN: TISH
134 

side to that, especially if you can get people who are willing to do 

it knowing they did not have a vote, but who had the status to do 

it and give you the really good additional thought process which 

would come from that sort of group participation and the outreach 

issue. So it is a difficult question, but I do still come down on the 

side of members and the administration. 

I guess timing is an issue. Ms. MacGuineas, you made the point 

that this could affect the recovery. I am sort of of the view that if 

we were to actually put this in place, obviously a legislative event 

is not going to occur for a year, at a minimum, because this commission is going to take a year to act and then your legislative 

events, which would have to be legislated, then the actual action 

from the legislative events, because you are dealing with 50-to 75- 

year actuarial times frames here, would be very extended. I do not 

presume this group would come back with anything that was immediately precipitous in its proposals. I think what it would come 

back with is a series of decisions which put you on glide path to 

a much more solvent entitlement structure over 50 to 75 years. So 

that would be a phased-in event. So I don’t see this immediate recession, which is severe and difficult, being impacted—except that 

I think the value of the dollar might be impacted, and our capacity 

to sell debt might be impacted if we actually had a group like this 

that people took seriously. 

So I guess I would like to get your reaction on timing. Should the 

commission report be next year with action in the following year? 

Should the commission report be next year with action next year, 

recognizing next year is an election year? Should the commission 

report be action after the election—report after the election and action before this Congress adjourns, in other words, in the period 

from November to January being the legislative event? Do people 

have opinions on timing? David. 

Mr. WALKER. Yes, Senator. Let me answer that question first 

and then touch on a followup to what you said. 

I think you need to announce the agreement to create such a 

commission and hopefully enact it into law ASAP, no earlier than 

early 2010. 

Second, I think the—— 

Senator GREGG. No later? 

Mr. WALKER. I apologize. Thank you very much, Mr. Chairman. 

As soon as possible, no later than early 2010. 

Senator GREGG. That is the creation of the commission? 

Mr. WALKER. That is the creation of the commission. Announce 

the intent to do so, pass the legislation in early 2010, and people 

can debate what ‘‘early’’ is. That will send a signal that we are serious, we have a process in place. 

I think you begin the citizen education and engagement effort in 

2010. You then ask the commission to be able to potentially report 

on issues and installments, probably not reporting on the first 

issue until after the midterm elections. For example, it is possible 

to probably get more agreement on statutory budget controls that 

would be put into effect once we have turned the corner on the 

economy. It is probably easier to get agreement on a Social Security set of reforms. So the commission could report in installments 

on issues and then save some of the tougher things to the end. 

135 

For example, I think the toughest thing is going to be taxes and 

health care, and so I think set it up early in 2010, get the public 

education and engagement effort started. Do not have specific recommendations come until after the midterms, but think about reporting installments. 

Last thing. I think there is a difference if you talk about outside 

people for the commission versus the advisory group. For the commission, in my opinion, it should have nothing to do with the organization that they are with. You should be picking individuals 

based upon their knowledge, their credibility, their ability, and 

their willingness to dedicate the amount of time that would be necessary to do what needs to be done. On the other hand—by the 

way, that means formers. That means like former heads of—former 

members, former CEOs, former heads of AARP or Government 

agencies or whatever. That is the kind of people I think you would 

have to have. 

On the other hand, if you have an advisory group, you may face 

more pressure for groups to want to be represented, and I think 

you need to think about that. Ideally, your advisory group should 

also be based on individuals, not groups. But, on the other hand, 

if you have an advisory group, I think you are going to get a lot 

more pressure for current heads or current representatives of various advisory groups, some of which have very entrenched views 

and differing degrees of willingness to be able to state the facts, 

speak the truth, have everything on the table. You need to think 

about that. 

Senator GREGG. Does anyone else wish to comment? 

Mr. HOLTZ-EAKIN. I think the timing issues are tough. The easy 

ones are certainly set it up as quickly as possible, and I do not 

worry about the substantive economic impacts in any way impinging the recovery. They are just not going to happen fast enough, 

and then their nature will be so incremental that I do not think 

that is a serious issue. And, quite frankly, if you will allow the 

economy to be an excuse to not act, we will never deal with this 

because no one is ever going to see a good time to do it. 

The real tough one is if you report out, if you deliver it, say, during calendar 2010 and you report out legislation of some scope, I 

think the tradeoff is you are asking people to vote before the 2012 

election. That is going to be tough. But if you do not, then the 

members who actually put it together may not be around post-election, and so I think you have to recognize that the members have 

to be there to defend the product with their colleagues, and that 

does require that the vote come before the election. And that will 

be—you know you will hear about that. There is no question. 

Mr. GALSTON. There is an additional factor that I think has to 

be taken into account—namely, the proposition that I put on the 

table that in order to have a chance to succeed, this commission 

needs to be supported not only by bipartisan congressional leadership but also by the administration. There have been persistent rumors—I have no inside knowledge—that members of President 

Obama’s economic team are, in fact, considering the idea of including some kind of commission in their next budget submission. That 

would be important, if true, and that I think has a bearing on the 

136 

timing, on the timing at least of the proposal to establish the commission. 

As for the question of when the vote should occur, I think that 

trying to time the establishment and the reporting of the commission so that nobody has to take a vote until after November of 2012 

would not be the most responsible course of action. 

So if you are asking me, you know—it seems to me that a reasonable timetable would be to establish the commission, give it, say, 

a year to come up with a report, and then have serious consideration of a plan in, let us say, spring of 2011. That I think would 

be a reasonable timetable. 

Ms. MACGUINEAS. Senator Gregg, you actually made sort of my 

argument I think much better than I did. Clearly, I was not as 

clear as I meant to be. But I think the benefit of the commission 

is that it does signal to markets and to creditors that we are very 

serious about this and then buys us a little bit of time so that we 

do not have to phase in the policies immediately to create that reassurance, but instead we have time to consider them and phase 

them in more gradually. 

So I think that positive announcement effect is something we 

have actually seen. There are studies that the OECD has done 

about how you have seen that in other countries, and as long as 

the announcement is credible, believable, people really believe that 

this will be implemented, you see the positive effect immediately, 

very, very impressive experiences around the world with that. 

For the timing, I agree, like everybody else and all of you, that 

we should announce this commission as quickly as possible. Beyond 

that, I think the right time is to report the decision in 2010. I think 

a year—I think there are arguments for before the midterm and 

after. I do not have a very good political ear, so whatever people 

think is more likely to make it work. But, you know, in the 2010 

year is when the decision for the budget, whether it is just entitlements or everything, should be arrived at and agreed upon and 

committed to. 

I then think you phase in those policies more gradually. Some of 

them will be phased in quickly. Some of them will be phased in 

over time. For whatever plan to come out to really be effective beyond just the short term but the long term, it has to deal with the 

structural problems. That means it is going to deal a lot with entitlements, and those are not things that you can change abruptly. 

You cannot say today we are changing the entitlement program 

starting tomorrow. So you are going to stagger the phasing-in of 

the different parts of the plan. 

I also think the need to phase things in, how quickly or how 

slowly will depend to some extent on how many expiring policies 

are extended because that will greatly affect our debt situation. It 

will greatly affect how much stimulus there is in the economy. So 

you cannot kind of separate what goes on in the rest of the budget 

before 2010 and 2012, when things are phased in. But I look at announce it immediately, come to a decision in 2010, phase in the 

bulk of the policies beginning in probably around 2012, depending 

on the economy. 

Chairman CONRAD. Senator Whitehouse. 

137 

Senator WHITEHOUSE. Thank you, Chairman, and I thank the 

panel for being here. I have three observations, and I will fire them 

all off quickly and then ask you to react to whichever ones you care 

to. 

The first is that I think it is very important that whatever this 

process is, it be as broad and inclusive as possible. It is very easy 

to get a small number of people who agree with each other in a 

room together and then try to shove what they have decided down 

everybody else’s throats, but that will lead to, I think, a very violent kickback from those who are excluded from the process. So as 

appealing as it may seem on the way in to expedite things in this 

way, where you have a little group that makes all the deciding and 

everybody else gets told what to do in Congress, I think that the 

long-term hazard of that is far worse than the short-term gain. And 

I think we have seen examples of that very recently here in the 

Senate. 

The second point is that we have half—well, not half, but we 

have one of the two major parties that have made it apparently a 

categorical imperative to participate in this that no additional revenues be raised. To me, that is a non-starter. We have a country 

where 1 percent of the population controls more wealth than the 

lowest 50 percent, in which CEO salaries compared to regular pay 

have increased about 10 times. We have Warren Buffett saying 

that he is offended that his tax rates are so low. You have the 

hedge fund billionaire idling in his private Lear jet at O’Hare getting ready to jet off to his Caribbean vacation sipping champagne 

and paying a lower tax rate than the fellow who is standing outside 

in the rain with the orange flashlights waving the jet off. I mean, 

it is preposterous. 

So, to me, the idea that you cannot deal with revenues is almost 

beyond logic and sanity, and yet we are faced with that position 

from the other side. 

And the final thing is that I think that health care is different 

than everything else in our budget issues, and under the theory 

that the person who only has a hammer sees the solution to every 

project to require a nail, if you get fiscal people in who do not understand the extreme dysfunction of our health care system and do 

not have the patience or the knowledge to go in and pick that apart 

so that our health care system becomes more efficient, then you are 

going to end up bringing an axe to a patient who may only require 

an antibiotic. And whether you believe the President’s Council on 

Economic Advisers saying that there is $700 billion in annual 

waste and excess cost in our health care system, $700 billion with 

a‘‘B’’ annually, or the New England Health Care Institute that says 

it is $850 billion annually, or Lewin or Secretary O’Neill, who both 

agree that it is over $1 trillion annually, to just treat that as a fiscal problem to me completely eludes the real problem. And because 

it is the bulk of our fiscal problem, if you have not carved that off, 

you have a fiscal tail wagging a health care dog with no likelihood 

of a good answer because you have brought the wrong people into 

the room. 

And so those are my three concerns. I would love to have your 

reactions. 

138 

Mr. WALKER. First, Senator Whitehouse, I think it is critically 

important that you have an inclusive approach. I like the idea of 

the Chairman that you have first the commission and then you 

have an advisory group. I think you need to keep in mind that I 

think it would be desirable that the commission, the people on the 

commission are picked because of the individuals, again, balanced, 

super majority for Members of Congress, representatives of the administration, you may have others, but you are picking them because the individuals—it is broad, it is balanced. 

The advisory group could be a way to get organizations involved, 

a broad cross section of interest groups so that they are heard. On 

the other hand, they do not have a vote, and the reason being is 

because some of them are pretty entrenched in their position, 

whether it be do not raise taxes, do not modify social insurance 

programs. They need to be heard, but we need to have a process 

that has a chance of success. 

Second, on taxes. Taxes are going up. They are going up on a lot more people than those making $250,000 or more because of a very 

simple four-letter word: math. The power of compounding. And the 

longer that we wait in order to achieve a grand bargain, the higher 

they are gong, for three reasons: one, math; No. 2, demographics, 

more enfranchised in existing entitlement programs; and, No. 3, political activism. Not all segments of society are equally politically 

active, and the people who are paying the price and bearing the 

burden for today’s irresponsible and immoral behavior are too 

young to vote or are not born yet. And the third issue is health 

care. 

It is about more than money, no question, and, clearly, you know, 

you cannot be just focused on the money. I gave the annual lecture 

at the Institute of Medicine for the Rosenthal Lecture and talked 

about all the different dimensions. I would be happy to provide you 

a copy. But understand this: Congress is punting on the tough 

choices on health care. It is punting. None of the bills are dealing 

with the real drivers of health care and are coming up with actionable items to make sure that we bend the total health care cost 

curve as a percentage of the economy down rather than up. They 

all bend it up. And so, therefore, the idea that you would not have 

something with regard to health care as part of this, I think for the 

reason that you said, it’s the single largest driver, you would say, 

well, that is a huge omission. I think if you cannot even address 

the single largest driver, then, you know, we are not going to be 

able to get the job done. But it is about more than money, and you 

need to recognize that. 

Mr. HOLTZ-EAKIN. In terms of the broadness and inclusiveness, 

I think it is important to recognize that these approaches would require the Congress to pass a law and the President to sign it, and 

so there is a buy-in at the front end for the process that will deliver 

the legislation. And it will be far from the case that any such commission or task force would go into a black hole and come out. This 

would be a year-long effort. Members are accessible during that period, and people will be talking to them about what they thought 

they ought to be doing. I think that this has a good chance of being 

very successful in being broad and inclusive, you know, and the 

membership we have discussed at length. 

139 

In terms of what is on the table, I think, you know, there is 

broad concurrence you have to have everything on the table. There 

is no question about that. 

And I would echo what David said about health care. Health care 

is different. The great promise of health care reform was the opportunity to deliver the quality of care comparable to what we have 

now or better at lower cost. There is bipartisan research and evidence that that is where we should be going, and that is not what 

the bills in Congress are doing. And so there would be an enormous 

amount of opportunity for a commission to take up that work. 

Mr. GALSTON. Well, Senator Whitehouse, I am really glad that 

you put your three propositions on the table. They are challenging. 

I have not had the privilege of meeting you, but I think it may be 

useful for you to understand where I am coming from in this discussion. 

I am a lifelong Democrat. I was Walter Mondale’s issues director 

during his Presidential campaign. I served in Bill Clinton’s White 

House, and I went down with the Good Ship Gore not once, but 

twice. A privilege few can claim. 

And, you know, I believe in universal health insurance. I believe 

in robust programs of social insurance. My fear is that we are not 

now on a track that will enable us to sustain those commitments, 

which I think are important moral commitments. That is what 

brings me to this table. 

With regard to your specific points—— 

Senator WHITEHOUSE. I agree with you there, by the way. Go 

ahead. 

Mr. GALSTON. With regard to your specific points, taxes are going 

to have to go up. The idea that the Government of the United 

States is not going to expand as a share of gross domestic product 

over the next 10 years is in my judgment a denial not only of reality but of necessity. We are now on track, I think, to have a Government that consumes, say, 24 to 25 percent of gross domestic 

product, which is a step up from average of previous decades. I see 

no way of avoiding that, and so one question that is on the table 

is how we can finance that in a responsible way so that the budget 

objective that Maya MacGuineas put on the table earlier of stabilizing over time the ratio of debt to our gross domestic product can 

be achieved in a way that is consistent with all of the other commitments that we want to maintain. 

My belief is that as we think—it would be a mistake to think 

only about the total size of the revenue piece. We also have to 

think about its shape and composition. I think that the Tax Code 

that we have is antiquated, distorted, and riddled with unfairness, 

both horizontal and vertical. We need fundamental tax reform that 

asks questions about a 21st century tax system that promotes economic growth and raises revenue in a fair and sustainable way. All 

of that has to be on the table for discussion, and in my judgment, 

the sooner the better. 

With regard to health care, yes, health care is different. Unfortunately, it is part of the economy, and so one of the dimensions of 

the discussion must be the economic dimension. And I say with regret, but consistent with a very important article on the front page 

of today’s New York Times, that of the two objectives that people 

140 

had going into health care reform—namely, expanding access and 

controlling costs—we are on track to do a pretty good job on No. 

1 and a very poor job on No. 2. And so if we do not do No. 2 in 

this bill, we are going to have to come back and do it in some subsequent bill because it is not sustainable to expand access and to 

do nothing about cost. It is just as simple as that. I am interested 

in sustainable moral commitments. 

Finally, with regard to broad and inclusive processes, well, you 

know, it is very difficult, at least as a declaratory position, to say 

I am in favor of a narrow and exclusionary process, right? I am immediately at a disadvantage. I would say this: that regular order 

in the Congress of the United States has not produced terrific results on the fiscal front in the past decade, and I see no reason to 

believe that regular order will produce a better result in the next 

decade. And, therefore, reluctantly, I have come to the conclusion 

that we need what James Madison called auxiliary devices, of 

which a commission is one. 

Ms. MACGUINEAS. Senator Whitehouse, thank you for your really 

important questions. 

On the first, the question of buy-in, it is a tricky one because you 

cannot have a group that is so large that it becomes unmanageable. 

And then, on the other hand, you cannot have a group that is so 

small that there just is not that broad buy-in from people. It is 

going to be a tension. there is no perfect solution. 

I think one of the problems I have with people sort of standing 

outside saying, ‘‘Well, I wanted to be included,’’ is that so few people have been willing to put forward policies that would actually 

move us in the right direction on this issue. And I can kind of predict that the people who are on the sidelines saying, ‘‘Well, I want 

to be a part of this, and how come I wasn’t?’’ will not be the same 

ones who are all along coming up with tax ideas and entitlement 

ideas and budgetary ideas to help move the process forward. I certainly hope that all of those folks will be included. But I think you 

are right that the perfect size is—there is no perfect size. 

On taxes, taxes should be on the table, and beyond that I completely agree with what David Walker said. Taxes are going up, 

and they are going up for people who are making less than 

$250,000. We just have to be realistic about this. 

I just spent a couple months trying to do an exercise of just a 

simulation of what it would take to stabilize the debt at a reasonable level. We are going to have a lot of policy choices that we are 

going to have to put out there, and they are tough, and there is 

no way that you can realistically do this on one side of the budget 

alone. So I hope that everybody who is involved will be able to 

make that an easier decision for people to back away from some 

of the promises that have been made that we can no longer keep. 

The economy and the budget have changed. 

In terms of health care, for quite some time now we have heard 

the narrative that the budget problem, that the fiscal problem is 

really a health care problem. We have recently spent months and 

months focused almost 100 percent on health care reform, and, unfortunately, where we are is that health care reform alone, at least 

what we have now, is not going to come close to fixing the budgetary problems. We are going to have to do a whole lot more. 

141 

That does not mean—and I think that those of us who care about 

fiscal issues are also kind of often painted with a brush of, you 

know, you just want the numbers to add up, you do not care about 

the policies. That does not mean we can do this in a non-thoughtful 

way. When we are dealing with basically the entire Government, 

we have to think about fundamental tax reform, how to do health 

care better, how to improve the lack of Government investments. 

We have a real shortage in some areas of the budget. This is not 

just cut, cut, cut, and increase taxes. There are some areas that 

have to be funded better and differently. 

I know in the think tank where I work, when I walk by my colleagues all think, ‘‘Oh, here she comes again. She is going to want 

us to pay for our new ideas.’’ It is not a popular position to be kind 

of the person who is concerned about the budget. It should be part 

of the task to do it well, is to make sure that the numbers add up. 

Chairman CONRAD. Can I just interrupt you and say I have that 

experience almost every day around here. ‘‘There he comes again.’’ 

Senator Alexander? 

Senator ALEXANDER. Thank you, Mr. Chairman. 

I want to thank the Chairman and the Ranking Member for their 

consistent leadership on this issue. They have been terrific. And I 

want to thank the four witnesses. I have enjoyed your testimony, 

and I appreciate your candor. 

If I could make three or four observations and then ask a single 

question. One is on the sense of urgency, you pretty well stated it. 

The President was off in the right direction. I went to the White 

House fiscal responsibility summit, and he said to be sustainable 

we will have to address health care. And then at the White House 

health reform summit, he even said if we do not address health 

care, we will run out of money. We will be bankrupt, and the State 

governments will be bankrupt. So he started out right. 

The Republican leader, Mitch McConnell, gave his first address 

this year to the National Press Club and offered to the President: 

if you would like to go to work on making Social Security solvent, 

I am ready to go work on that, and you will get more support from 

Republicans than the last President got from Democrats. I think 

that turned out to be a missed opportunity. Nothing happened 

there, so far as I know. And I think all of you have said that the 

health care bill may have many good parts to it, but it is not solving the cost problem. It is even so obvious that Katherine Seelye 

in her Sunday article in the New York Times talking about Americans going overseas to get cheaper health care started out this way: 

‘‘No matter what Congress does with health care legislation in the 

next few weeks, one thing is already clear. The result will not do 

much to control the climbing costs of medical care in the United 

States.’’ So there we are. 

Adding to the sense of urgency is that some of the bills shift to 

the States some of the costs, and as a former Governor, it is startling to me, the amount of it. The Democratic Governor of Tennessee, Governor Bredesen, estimated over the weekend that the 

Medicaid shifts to the State of Tennessee would be about $1.4 billion over 5 years, and as a former Governor, I think that either 

means creating a new income tax for the State or seriously damaging higher education, or both. So that is sort of a back-door way 

142 

of avoiding dealing with our problems up here, just sending some 

of the bill to the States. 

Now on the points that you have raised, what about the President? It seems to me the President has to be involved in a big-time 

way sooner or later in this process. He may not have to start it out. 

I know about separation of powers, but this group should basically 

see itself as coming up with a way to help the President solve the 

problem. The President is the leader of the country. He is the agenda setter. He sees the urgent problem. He comes out with a solution, and it is up to him to persuade at least half of us that he is 

right. No one else can come close to doing that. We cannot do that 

here. We are legislators. 

So the President has to be involved and if he wants to persuade 

at least half the country he is right, he is probably going to have 

to get the former Presidents involved in a bipartisan way to persuade the country he is right. 

In terms of timing, another point, you cannot avoid politics on 

this. You have to stick it right into the middle of politics. This is 

not the Soviet Union. This is de Tocqueville’s democracy. We have 

to solve our own problems by our own votes. 

In June 1992, Ross Perot was leading the Presidential race 

against an incumbent President and a future President. In June 

1992, he was ahead in the polls. Now, he was not prepared for the 

Presidency, and he made some mistakes. But what was he running 

on? He was running on a fiscal platform. So this process should be 

done in such a way to stick it right in the faces of the Presidential 

race and make everybody deal with it. Otherwise, it will be an exercise in irrelevancy. 

So here is my question: I left a budget meeting in my second year 

as a Senator. I was so discouraged sitting here listening to Senators Conrad and Gregg that I went down to the National Academy 

of Sciences and asked them a specific question about U.S. 

comptetitiveness. My feeling was that we are going to just squeeze 

everything out of the budget that counts, and we are going to 

spend all our money on war, welfare, Social Security, health care, 

and debt. We are not going to have anything, for example, for the 

investments in science and technology that are big contributors to 

our standard of living. 

So I went down to the National Academy of Sciences, and I said, 

‘‘Could you tell us exactly the ten things we ought to do, the first 

ten steps we ought to take to make us competitive in the future?’’ 

And they formed a commission, which Norm Augustine chaired. 

They made 20 recommendations to us, and we worked 2 years and 

passed most of the recommendations. We have that done. 

My point is that we do not do comprehensive well in the Congress. Look at immigration. We had our best Senators working on 

that, and by the time it got to the floor, it just sunk of its own 

weight. Look at health care. We have a lot of good people working 

on that. It is having a very hard time, and the number of pages 

in the bill is growing faster than the debt. It is 2,000 pages now. 

It is incomprehensible, what is going on. 

Then look at economy-wide cap-and-trade legislation. It sounds 

great, but it is full of mandates, surprises, and taxes for something 

143 

that instead we might do with three or four steps in the right direction knowing what they cost. 

My question is this: Shouldn’t we say that we do not do comprehensive well, that we should be skeptics about anyone who 

comes forward and says, ‘‘I have a grand plan for a big problem to 

impose on a country this big and complicated’’ and expect that this 

commission’s report will provide, as I asked the National Academy 

of Science, the ten steps that we ought to take in the right direction and that the members of the commission ought to all be Members of Congress—there should not be any advisers? You should not 

be having to worry about the politics of advisers. Ask them what 

you think if you want. Members of Congress and the President are 

elected to have the responsibility to act, and if the President has 

10 steps to move in the right direction, or 20 or 15, then he can 

pick the ones he thinks he can pass. He can sit down the way Lyndon Johnson used to do with Everett Dirksen or the way Mitch 

McConnell invited President Obama to do with him on Social Security and say to us, ‘‘We are going to do these four steps first, and 

when we get these four done, we are going to do these two steps, 

and then we are going to do these three steps, and this is the biggest problem facing our country.’’ 

So I am asking you: Isn’t a step-by-step approach in the right direction better than some big, grand, comprehensive thing that is 

just doomed to fall of its own weight? Mr. Walker, you mentioned 

60 percent support for solving this problem. It will not be 60 percent if we all go out there and everybody says it will take Medicare 

cuts and higher taxes. That will drop fast. So picking the steps you 

take, moving in the right direction, I wonder if that is not a more 

likely way to get where we want to go. 

Mr. WALKER. That is a lot, Senator. First, we have a dysfunctional democracy. Congress does not do transformational change 

well in any area. 

Third, the historical way of doing things through, you know, 

trust me, inside the Beltway, Andrews Air Force Base commissions, 

are over. They will not work anymore. The level of trust and confidence in Government has plummeted. It is not just the partisan 

battles. It is the ideological divides, the fact that too many people 

say we cannot raise taxes, we cannot renegotiate the social insurance contract, et cetera, et cetera. 

We are going to have to have an extraordinary process. You are 

going to have to have either an advisory way or in as members 

some non-elected officials and members of the administration involved who can go out, spend the time, state the facts, tell the 

truth to the American people, and who are not viewed as being 

part of the problem, who are viewed as being part of the solution, 

and who can state it straight. 

On health care, four tests for fiscally responsible health care: 

must pay for itself over 10 years; must not add to deficits beyond 

10 years, because the country is going to last more than 10 years 

and the future is more than 10 years; No. 3, should result in a significant reduction in the tens of trillions in unfunded promises we 

already have for health care; and, No. 4, should bend total health 

care cost curve as a percentage of the economy down, not up. No 

bill meets that. Some do not come close to meeting it. Otherwise, 

144 

you are adding a wing to a house that is headed for condemnation 

and bankruptcy, or foreclosure in today’s terms. 

Last, the President has to lead. Only the President has the bully 

pulpit. The President is CEO in addition to commander in chief. 

The President also has a veto pen. And, therefore, he has got the 

lead. He has got to buy in. And I would respectfully suggest that 

George Herbert Walker Bush, 41, and William Jefferson Clinton 

should be part of this, because those were two Presidents that were 

very fiscally responsible. They did the following things: One, they 

broke campaign promises, which this President is going to have to 

do, too. They broke campaign promises on taxes. Second, they supported the imposition of tough statutory budget controls. No. 3, 

they did not expand entitlements. And I could go on. But they were 

fiscally responsible. They need to be recognized, and they could be 

part of this process, I think. 

Thank you. 

Mr. HOLTZ-EAKIN. Well, I think in your question you gave a 

much more articulate description of the problems with the one big 

commission than I was able to. And one of the reasons that I worry 

about just having a single commission with a large mandate is the 

notion of the large unintended consequences that are historically 

parts of comprehensive approaches to reform and the skepticism 

that this brings to members and the public, and as a result, the 

difficulty of actually getting action if you take that as the sole route 

forward. 

So, you know, as I said in my testimony, I see merit in thinking 

hard about breaking this into compartmentalized pieces that add 

up to a solution but which do not attempt to do it all in one fell 

swoop. 

Mr. GALSTON. Well, Senator Alexander, you have said a whole lot 

that I agree with and some things that I need to comment on. 

First of all, I think you are absolutely right to say that this has 

to involve the President and the White House. This is not just a 

congressional issue. You know, given the design of our Constitution, there are some things that Members of Congress are better 

at doing than Presidents and vice versa. And more to the point, if 

the President and the leaders of both political parties in Congress 

are not in on the take-off of this commission, or whatever it turns 

out to be, they will almost certainly not be present at the landing. 

And so I commented—I do not know whether you were in the 

room or not—that there has been some discussion among the President’s economic team of actually including some sort of commission 

in the next budget submission. That would be, I believe, an important step forward toward the kind of institutional guarantee of future Presidential leadership in this area, and I think that would 

be a very positive step were it to occur. 

The second thing that needs comment, because I agree and, 

therefore, I will agree vehemently, is the proposition that there is 

no way of taking fiscal issues out of politics. That is absolutely 

right. And these are issues that go to the heart not only of public 

policy in this country but the way the political parties define themselves and distinguished themselves from one another. There is no 

way of evading that. And the commission is not intended as an evaVerDate Aug 31 2005 10:39 May 18, 2010 Jkt 000000 PO 00000 Frm 00150 Fmt 6601 Sfmt 6601 C:\DOCS\55507.TXT SBUD1 PsN: TISH
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sion of politics. It is intended to organize a discussion and tee up 

decisions in ways that facilitate the political process. 

And if there is not substantial support among members of both 

political parties, No. 1, no recommendations will emerge from an 

appropriately designed commission. No. 2, the recommendations 

will not pass Congress. And, No. 3, the President will not sign the 

bill. 

So this is political through and through, and it is partisan, it is 

ideological, but it is more than that. And so the task of the commission is to try to organize politics for effective decisionmaking in a 

way that, regrettably, regular order has not proven capable of accomplishing, at least in recent decades. 

Finally—actually, two finals. First of all, your reference to the 

National Academy and the investment agenda I think puts a very, 

very important piece of the overall problem on the table—namely, 

that if we keep on going down this road, we are going to have a 

harder and harder time sustaining the level of future-oriented investments, whether it is in science, technology, medical research, 

higher education, you name it. And that will occur at both the Federal level and, as you pointed out, at the State level, that we will 

squeeze out our capacity to respond effectively and to invest effectively in those areas. 

Finally, with regard to the incremental approach, yes, with the 

following caveat: In order to succeed in dealing either with the 

grand problem or with a particular piece of it, be it Social Security 

or fundamental tax reform or health insurance, health care, and 

health security, there is going to have to be a balance of proposals 

reflecting the range of opinions and the kinds of divisions that now 

define our Nation’s politics. And an ‘‘incremental approach’’ that is 

not broadly balanced at the same time is not going to succeed. 

And so whether you are talking about a commission that addresses the grand bargain or a commission that, say, addresses Social Security, there is going to have to be an element of grandeur, 

if I may put it that way, in the deliberations because, otherwise, 

they will be one-sided and doomed to failure. So I would sort of 

split the difference that way. 

Ms. MACGUINEAS. Senator, I agree with you that we just do not 

do comprehensive well, and it may in part be a result of how we 

all organize ourselves. The committee structure is organized in a 

compartmentalized manner, kind of the policy world is organized in 

a compartmentalized manner, and we certainly need to find ways 

to have more cross-sectional discussions. 

That said—and I could go either way on this—I think the comprehensive is a better way to think about the kinds of budget reforms that we have to deal with because budgeting really is about 

tradeoffs and priorities. And if we were able to do it well, the best 

approach in my mind would be to take a comprehensive look at the 

budget, with every single piece of it, and be able to weigh what are 

our priorities, how do we rank them, are we willing to fund them. 

If we are not willing to fund them, are we willing to eliminate 

them? 

And there may also be an advantage to this is going to be such 

a difficult task, a more complex negotiation which actually has 

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lows the job to get done more quickly. But for me, I just come back 

to my bottom line of whatever works. If we want to do a Social Security commission or a Social Security working group and a tax 

commission and the rest of the budget, fine. If we want to do a 

comprehensive approach and we can do it well, I think probably 

even better. But whatever works. 

And then just finally to your point about, you know, it is going 

to be hard to get support if it is just about cutting Medicare and 

raising taxes, one of the problems is we keep giving our sweeteners 

away. If we proceed by creating a prescription drug plan without 

reforming Medicare or patching the AMT without reforming taxes 

or raising the debt ceiling without linking it to some kind of reform, we keep giving our sweeteners away, so it is going to be even 

harder to put together a package that is politically viable. 

Chairman CONRAD. Put me in the MacGuineas camp. Really, you 

know, Senator Gregg and I have spent, I do not know, over the last 

2 years, how many hours talking about all of these issues, but it 

is probably in the hundreds of hours that we have discussed this. 

And my own conclusion is that you got tradeoffs that have to be 

made. This is a budget exercise. And, yes, there are things—as 

Senator Whitehouse said, health care is beyond a dollar issue, but 

it is also a dollar issue. Medicare is going to go broke in 8 years. 

That is reality. It is cash negative now. Social Security is cash negative now. Now, we hope it is going to go cash positive in a couple 

of years, but it will not be for long. 

And so these are very real issues that are going to affect whether 

or not these programs continue to exist or not or whether they face 

dramatic and draconian reductions because of a meltdown in the 

global financial system. 

I just had a friend call me who had just been in China meeting 

with top government leaders, and one of the things said to him was 

that they have concluded that we are so dysfunctional in our politics that we are unable to face up to the debt load that is on this 

country that is growing. And they are increasingly convinced that 

we are headed towards second-class status. And the things that we 

have had that have maintained our greatness and power as a Nation are in jeopardy. 

I do not know how anybody can look at these trend lines and not 

conclude that it is true that our position of economic strength is at 

risk. And so something must be done. 

I also have concluded, after I have served here 23 years, that the 

regular order is not going to produce the result that is necessary. 

If anybody believes that it was going to, all you have to do is look 

at the health care reform exercise, which I have been deeply involved in. And I would say the Finance Committee plan comes the 

closest to facing up to it, because it is paid for over 10 years. According to CBO, it does reduce the deficit over the second year by 

a quarter to one-half percent of GDP, which is big numbers. But 

as a share of the overall challenge, it is modest. It does not solve 

the problem. And we have been at this for 2 years, and the President gave a charge to Congress to deal with the cost side of this 

equation in order to prevent the 800-pound gorilla of deficit and 

debt creation from swamping the boat. And what has happened? 

We have made, again, the Finance Committee bill makes things a 

147 

little bit better. But does it solve the problem? No. It does not come 

close. 

So the regular order, I mean, the natural tendency in the regular 

order is both sides get in their crouch, Democrats in theirs, Republicans in theirs. And you cannot convince colleagues to have something that really represents significant deficit and debt reduction, 

because it becomes largely a partisan exercise, and nobody wants 

to pay the price. 

Senator Voinovich said it so well in his testimony. Nobody wants 

to experience the short-term pain to deal with long-term gain, because that is not our political system. People are going to face election next year. 

So it is so clear to me, it is beyond question to me that you have 

to have a special process. History demonstrates it. We have reconfirmed it this year with health care reform. But you look back, Social Security, special process; the deficit and debt circumstance we 

faced in the 1990’s, special process. 

Senator GREGG. BRAC. 

Chairman CONRAD. They are the only things that have actually 

succeeded is when you had a special process. Senator Gregg raises 

BRAC as well. 

Anybody that thinks the regular order is going to deal with these 

things, as Leon Panetta, former head of OMB, former chief of staff 

to a President, told us—not head of OMB—well, head of OMB, 

chief of staff, also Budget Committee Chairman, said anybody that 

thinks the regular order is going to deal with this, no way. It is 

not. Here we had the Majority Leader in the House of Representatives here in a hearing before this Committee, Steny Hoyer, who 

said, Dr. Galston, much like you, that he reluctantly concluded— 

reluctantly—that it is not going to happen, we are not going to face 

up to this debt bomb absent some special process. 

And let me just say with respect to the comprehensiveness or the 

incremental approach, if it is not comprehensive, you do not have 

the natural tradeoffs that will lead to the grand compromise that 

is necessary, because people who do not want any reductions in social programs—I do not. I do not want reductions in social programs. But I recognize there is no alternative. I do not want to 

raise additional revenue, but there is no alternative if we are going 

to get this country back on track. And there are a lot of ways to 

do it—let us just take the revenue piece of it—to make our country 

more competitive and have the revenue system be more fair and 

more efficient. My calculation is our revenue system is only collecting about 76 percent of what is actually owed. Now, those are 

not the numbers you are going to get from the IRS. We have done 

our own internal calculations about what is really going on—tax 

gap, offshore tax havens, abusive tax shelters. And it is very dramatic what has to be confronted here on behalf of the country. 

Senator Gregg, any final comment? 

Senator GREGG. Let me associate myself with your passion, Mr. 

Chairman. I agree with you. 

Chairman CONRAD. I want to thank—— 

Senator WHITEHOUSE. Mr. Chairman, may I say two final things 

before we go that I do not want to leave unsaid? 

Chairman CONRAD. Yes. 

148 

Senator WHITEHOUSE. One is that I would hope that the witnesses do not buy into the 2,000-page bill problem/concern. If you 

actually take a look at the bill, it is written in real big type so that 

elderly Senators can read it. If you do an actual word count, it is 

not much longer than a Harry Potter novel. When you are adjusting a sixth of the economy, to devote a Harry Potter novel’s worth 

of words to it isn’t saying much, particularly when about half of the 

language is plumbing language that connects the operative language into the existing code. So if you are looking at this from a 

point of view of finding a reason to dislike this bill, find some, but 

do not buy into the 2,000 pages as a serious criticism of the bill. 

It is nonsense. 

The second thing is I will dispute what appears to be the unanimous view of the experts, which I am reluctant to do, but I think 

the problem with cost in health care in this legislation is slightly 

different than to simply say that the bills are inadequate on that 

subject. 

We had Elmendorf here, and his testimony was that in those key 

areas that we need to transform in order to bring down the cost 

of our health care system, electronic health records, quality improvement to save costs, wellness and prevention investment, increased value transparency, and payment strategies that reward 

outcomes rather than more work, more procedures. We do not really know very well yet what we are doing. We know that those principles work, but there is going to need to be a lot of fine-tuning and 

further experimentation done before we get there. And that is very 

largely an executive function. 

The challenge to him was: Why didn’t you cost out any of this? 

He said, ‘‘Well, there is a lot of great stuff in there, and there is 

the potential for significant cost savings.’’ But how it gets administered by the executive branch is going to make the difference. And, 

unfortunately, because it has been left to us so far, I mean, I think 

it is a decision one can debate one way or the other, the Obama 

administration has not yet taken a hard and firm position on what 

its goals are going to be implementing the tools that we give them. 

We can give them a lot of tools, but they have to implement them. 

And so far it has been pretty vapid, frankly, in terms of their pickup on that. But it is also early in the process. They do not even 

have a final bill yet to evaluate and to work with. 

So I would contend that the situation on health care costs with 

respect to this legislation is not that it is a failure, because I think 

to make it more prescriptive in those areas risks hardening up directions that experimentation will find were not the right ones. But 

it does shift an enormous burden to the executive branch to take 

those tools and deploy them rapidly and effectively and interactively so that we get the result that we achieve. 

That is my take on it. I think it is consistent with Elmendorf’s 

take on it. And it is inconsistent with the view of the panel, so I 

just wanted to not be viewed as agreeing by silence with that view. 

I wanted to state again where I think we are on that. 

I appreciate the Chairman’s courtesy in indulging me to do that. 

Chairman CONRAD. Let me just say on the cost question, there 

are real differences between the five bills that are out there, very 

dramatic differences. Some of them make the situation on the cost 

149 

front worse. That is a reality. That is the direct testimony of Doug 

Elmendorf before this Committee. 

Some of the proposals do improve the cost outlook, although not 

enough to rescue our long-term situation. I think that is also the 

fact and also the considered judgment of Mr. Elmendorf, the head 

of CBO, after many discussions with him on that front. 

But the process has not ended. There are more opportunities to 

face up to the cost challenge, and it is going to be critically important that we succeed in this debate on that issue. That does not 

take away for 1 minute from the overall need for a much larger effort, because it is very clear now, from any perspective, that we are 

not going to have dealt with the underlying cost issues sufficiently. 

So what is being done still has the prospect of being necessary but 

not sufficient. We are going to have to do much, much more, and 

it deals with Social Security, it deals with the health accounts, it 

deals with the revenue side of the equation. All of those things 

have to be brought before our colleagues, and we simply have to 

do better. The consequence of failure from almost any economic 

perspective is an extraordinary deterioration in the position of the 

United States of America. None of us want to see that. None of us 

want to leave here having been enablers for a policy that weakened 

our country. 

Senator Gregg? 

Senator GREGG. Mr. Chairman, I just think it is important to 

quantify this problem because the health care bills, as they are 

pending, do not in any way significantly impact the fact that we 

are facing a $60 trillion unfunded liability in our entitlement accounts. In fact, they create a new entitlement—two of them create 

a massive new entitlement which we know will not be paid for in 

the long run and which will aggravate that number. And, second, 

the size of this Government will have to grow radically in order to 

bear the burden of the entitlement accounts which we already have 

in place because we are doubling the recipients as a result of the 

retirement of the baby-boom generation. 

These are demographic facts, these are fiscal facts which just 

cannot be denied, and that is why we are going to have to do something much more significant than what is presently being proposed 

in the area of righting our fiscal house and our ship here as we go 

forward, or else, as everyone has said, our kids get a country which 

may be second class. Hopefully it will not be, but it will certainly 

make the quality of life for them to be dramatically less than what 

it was for us. 

Thank you. 

Chairman CONRAD. Thank you, Senator Gregg. Thanks to all of 

the colleagues for their participation. A special thanks to the witnesses. I think you were absolutely outstanding. I enjoyed very 

much the thoughtfulness, the wisdom of this panel, just exceptional. The Committee is very much appreciative of your assistance 

to us. 

With that, we will stand adjourned. 

[Whereupon, at 12:14 p.m., the Committee was adjourned.] 

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(153) 

DATA-DRIVEN PERFORMANCE: USING 

TECHNOLOGY TO DELIVER RESULTS 

THURSDAY, DECEMBER 10, 2009 

U.S. SENATE, 

COMMITTEE ON THE BUDGET, 

Washington, DC. 

The Committee met, pursuant to notice, at 10 a.m. in room 2SD– 

608, Dirksen Senate Office Building, Hon. Mark Warner, presiding. 

Present: Senators Warner. 

[presiding], Cardin, and Whitehouse. 

OPENING STATEMENT OF SENATOR WARNER 

Senator WARNER. Thank you all for being here today to discuss 

the importance of Data-Driven Performance and Technology’s Impact on Results. 

I want to start my comments this morning by again thanking 

Chairman Conrad and Ranking Member Gregg for starting this 

Senate Budget Committee Task Force on Government Performance. 

This task force is will be taking a broad look at how we can improve the effectiveness of new and existing programs within the 

Federal Government. As part of that charge, our first hearing—and 

I’m glad to see a few folks back—examined our current performance information base and we concluded that we need more meaningful outcome data from across the government agencies and programs. If we’re going to make sure we are collecting and assembling the right information, how do we make sure that we really 

get that important data and do we have the technology in place to 

deliver that information in a way that’s user-friendly to all of our 

constituencies, we the Congress, the American people, and our Federal work force? 

Today’s hearing will examine the government’s information management challenges and factors that inhibit the ability to get valuable performance information, and I want to say at the outset 

we’ve got two great panels. 

Our first panel, we’ll hear from President Obama’s two chief 

technology leaders, both good friends, Aneesh Chopra, the Federal 

Chief Technology Officer, and Vivek Kundra, the Federal Chief Information Officer. 

They will share information about their new plans to increase 

availability and use of data and particularly in light of the new 

Open Government Directive that was issued by OBM Director 

Peter Orszag earlier this week. 

154 

We’ll also hear from two leading practitioners—folks who are trying to get it right within the technology sector. Mr. Roger Baker, 

the CIO from Veterans Affairs, who recently halted 45 IT projects 

at the VA and is making progress toward increasing the use of 

data to improve IT organizations. 

Nothing sends a shock wave across the system more than actually bringing some projects to a halt, to try to say hold on here, 

let’s see what’s working and what’s not. And someone who is delivering more effective service at the state level. 

I do think there are things we can learn at the state level. As 

a former Governor, I clearly feel that way Mr. Brad Douglas, Commissioner of Administrative Services from the State of Georgia, 

who will discuss his work using data to transform the state and 

how he got the right people, processes, and technology in place to 

get results. 

But before we hear from our witnesses, I’d like to again take a 

few minutes to talk about our task force’s progress since our last 

hearing. I want to particularly thank all of our staff who’s been 

kind of a small band of metric-focused system-delivery-focused program-saving activists who hopefully will, while small in number, 

will be able to do some good things in the coming months and 

years. 

A couple reports. One, we continued our investigation into the 

Federal Performance Reporting Requirements and are developing 

recommendations on what to eliminate and what data is needed. 

One of the things we really want to do in this effort is not simply 

add, from the congressional standpoint, a whole lot of new reporting requirements without first perhaps giving some relief to the 

Federal work force by saying, maybe there is some of this that we 

don’t really need. Let’s focus on what we truly need, not just simply 

volume, quality over volume. 

In fact, we want to get some additional thoughts on that subject 

and in the spirit of Tuesday’s news from the White House about 

Open Government, I’ve actually developed a new feature on my 

Senate website that will collect suggestions from Federal employees 

and the public on how to reduce and improve our existing reporting 

requirements. So we want to hear from our constituency, the Federal work force and from the public itself in terms of what data we 

should be collecting and how it can be more user-friendly. 

I hope this new site will open up a dialog with the public and 

the Federal work force on what they want and need in terms of 

how government is performing. 

The task force also has a separate challenge and one that I know 

Senator Bunning raised at our first hearing. How do we make sure 

that we’re actually trying to find some savings? We have been reviewing the OMB’s Terminations, Reductions, or Savings List. 

155 

We’ve been looking at this list not only from President Obama’s 

budget cycle but also from President Bush’s cycle. President Bush, 

actually OMB under President Bush, proposed a 190 programs for 

termination, reduction, or savings. President Obama had proposed 

a 120. 

The problem with this, my thought has been, that OMB kind of 

takes these programs out of context, puts them either in the terminations, reductions or savings category, but there’s no relationship 

between what that program actually does in relation to other programs in the same policy goal area. 

One of the things we talked about at our last hearing is that we 

were taking a couple of broad policy areas, such as Food Safety, 

higher education, and work force training for one. We’re looking at 

how we’re doing some program mapping to identify the overlap 

amongst these various programs. 

Generally speaking, and Senator Bunning raised this at the last 

hearing, OMB puts out this list each year and then Congress, for 

the most part, proceeds to basically ignore the list. Again, one of 

the reasons why, I think, is because there’s not that relationship 

of which programs should be terminated or reduced or there might 

be great savings from in placing them in the context of other programs in the policy area. The other thing is we thought we would 

try is to zero in on those programs where there’s been overlap between both President Bush and President Obama, so there’s no 

question about partisanship or particular president’s agenda item. 

We have found that there are 29 programs that overlap between 

the Bush list and the Obama list and we really want to zero in at 

those and see if we might be able to secure some savings. 


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Additionally, and this might be a bit more of a sensitive subject 

to our first panel of witnesses, I’ve been looking at the recovery.gov 

reporting and talking with Earl Devaney, the head of the Recovery 

Accountability and Transparency Board, to learn from his experiences about the quality and transparency of Federal data. 

I know there’s been some efforts to get out the Recovery Act information and it’s had some fits and starts. Mr. Devaney has been 

talking about the challenges he’s seen as a result of different reporting requirements, different time periods, and varying data definitions. 

For example, usaspending.gov and the Federal Procurement 

Data System both provide reporting on essentially the same system 

and now we’re talking in terms of Federal contracting and this is 

a big universe. 

Amy. Just to give you a sense of the scope here, there are about 

600,000 registered vendors that create more than seven million 

transactions and the spend is over $500 billion. 

So we’re talking about a huge universe here of Federal spend 

across the whole state government and with these two sites basically reporting the same information but in different formats, 

measuring different time periods, it really causes, I think, confusion amongst the public, the work force, and great sometimes fodder for the press. 

So we’ve got to have a better system and why do we need two 

sites, which one is more accurate. We have to look at ways to 

standardize this so we’ve got a common reference point where we 

can all at least start to debate from. 


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I’ve also been looking at our current IT operational structure and 

planning capacity. It appears that we need a stronger governmentwide technology infrastructure to support the growing demands for 

a more open and transparent government. This is subject matter 

that both Aneesh and Vivek are very familiar with because this is 

an effort that we took on in Virginia where we tried to consolidate 

our more than 93 separate CIOs, where we had literally hundreds 

of different systems that were not interoperable and we tried to 

bring them under a single source of contracting oversight. And 

while I’m anxious to hear from our colleague from Georgia, I know 

that it’s a great plan in theory, it is hard to implement. As we still 

continue to have some bumps in Virginia, but that doesn’t mean we 

don’t need to go down that path, and to my understanding, I’m 

anxious to hear from Aneesh and Vivek to make sure my understanding is correct. 

Agencies have primary authority for IT planning and acquisition 

and OMB’s role is to provide overall oversight and I know there is 

an Interagency CIO Council led by the OMB to promote cross-agency collaboration. Some of the questions I have: does the CIO Council offer enough governmentwide planning capacity or do we need 

to strengthen planning for governmentwide IT investments? Do we 

make sure that we’re going to have systems that are interoperable, 

that are truly cutting edge, and to make sure that we approach 

this from a whole enterprise-wide basis rather than agency by 

agency? 

I’m also curious, and to that point, about the overlap between 

agency investments and how can we leverage savings by consolidating some of this spending? Again, bulk purchasing is a common 

factor and common use that most businesses and most households 

use. Can we do a better job on the Federal IT side by leveraging 

our purchasing power across all these systems? 

And is there a system for tracking what agencies spend on IT 

software and hardware, and are there cost controls in place? 

I know our witnesses today will share more about how we improve the availability of governmentwide data, how we provide examples of how we can actually use this data for better performance, how we can measure and use this data to look at these program overlaps in some of these areas, for example, that OMB has 

already pointed out for savings reduction or termination. We really 

would like to show some tangible early results. I know both Aneesh 

and Vivek would, as well. 

Senator Bunning is not with us yet. So why don’t we go ahead 

and go to the testimony. 

First, we’ll hear from Aneesh Chopra and it’s great to have 

Aneesh here. He’s been a good friend and colleague for many years. 

Mr. Chopra is the Federal Chief Technology Officer for the United 

States. He previously served as Virginia’s fourth Secretary of Technology. 

Prior to his government service, Mr. Chopra was Managing Director for the Advisory Board Company, a healthcare think tank for 

hospitals and healthcare systems. 

And then we’ll hear from Vivek Kundra, the Federal Chief Information Officer and the Administrator the Office of eGovernment 

and Information at the Office of Management and Budget. 

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Mr. Kundra formerly served in the Mayor Fenty’s Cabinet as the 

Chief Technology Officer for the District of Columbia, responsible 

for Technology and Operations and Strategy for 86 agencies. Perhaps more importantly, at least in my eyes, Mr. Kundra came to 

the District because he served previously as Assistant Secretary of 

Commerce and Technology for the Commonwealth of Virginia. 

I want to thank you both for being here. I want to thank you for 

your commitment to not only this Administration but for taking on 

this very challenging prospect of how we get technology usage 

right, correct, and in a more efficient and effective way. 

So we’ll start with Mr. Chopra, Aneesh. 

STATEMENT OF THE HONORABLE ANEESH CHOPRA, ASSISTANT TO THE PRESIDENT AND CHIEF TECHNOLOGY OFFICER, ASSOCIATE DIRECTOR FOR TECHNOLOGY, OFFICE OF 

SCIENCE AND TECHNOLOGY POLICY 

Mr. CHOPRA. Thank you, Chairman Warner. It is indeed an 

honor to—let me push the button here. I have to get the technology 

right, Chairman Warner. 

Senator WARNER. Got to get the technology right. Where’s the IT 

guy? 

Mr. CHOPRA. Mr. Chairman, it is an honor to be here this morning and, frankly, to thank you for your leadership on this very, 

very important topic. It goes without saying that we look forward 

to working with you in the weeks and months ahead on this very, 

very important topic. 

Just as a reminder, President Obama has focused on the importance of technology and innovation in the effective and efficient delivery of government services and no better to reflect that commitment than the fact that on the same day he announced his intent 

to nominate a chief technology officer and chief performance officer, 

it was during an Internet address back on April 18th in 2009 that 

actually had been focused on reforming spending and reducing 

waste. 

He asked that we work closely with the Chief Information Officer 

Vivek and he directed us, and I quote, ‘‘to give all Americans a 

voice in their government and ensure that they know exactly how 

we’re spending their money and can hold us accountable for the results.’’ 

It is indeed my honor and privilege to serve as an Assistant to 

the President in this capacity as Chief Technology Officer where 

I’m mostly focused on harnessing the power and potential of technology and innovation, to execute on the President’s vision for a 

21st Century economy, one where we see jobs more plentiful, American firms more competitive, communications more affordable, 

broadband more abundant, families more connected, and Americans more safe and secure. 

I will reserve a great deal of our testimony for the record, but 

instead in this hearing would like to highlight three themes that 

directly relate to the question at hand. 

The first is the role of technology to promote open government, 

the second is how technology interfaces with government performance, and, third, how this aligns with the President’s strategy for 

American innovation. 

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First, in the area of technology for open government, just last 

Friday in my capacity as the chair of the National Science and 

Technology Council’s Committee on Technology, alongside my cochair Vivek Kundra, we organized over 20 agency technology leaders who are squarely focused on the President’s vision with particular emphasis on improving government performance through 

openness. 

We have primarily focused on the Directive that you alluded to 

in your opening remarks that is the foundation upon this set of activities. To remind those who have not been privy to that Directive, 

just on Tuesday of this week, Peter Orszag published a document 

to hardwire accountability, access, and public participation into 

government operations. 

This activity reflects a set of recommendations that my office had 

culled directly from the American people during the summer of 

2009. We had conducted a month-long pilot initiative to demonstrate the benefits of emerging technologies, like wikis, blogs, 

and crowd-sourcing ideas platforms, which in turn attracted over a 

thousand-plus ideas, blog posts, and others that I’m pleased to report were directly linked to the output. 

We focused on three key deliverables in the Directive. First, instructions to the agencies that they provide information in open, 

accessible, and machine-readable formats. The machine-readable 

aspect of this may sound a little bit like an odd requirement but 

we view it as an essential criterion to enable third party application development at very low marginal cost. 

Agencies are required to develop a timeline for publishing new 

high-value information that we believe will increase agency accountability and responsiveness, improve public knowledge of the 

agency’s operations themselves, furthering the core mission of the 

agency, spurring economic opportunity, and to be responsive to 

public need and demand through the processes of open consultation. 

Second, we believe this Directive will focus on the key principles 

of the President’s commitment to open government and those being 

transparency, increasing participatory democracy, and ensuring 

greater collaboration across all sectors, public, private, and nonprofit. 

This Directive calls on each agency to develop a very unique 

roadmap that fits the needs of the agency itself, but to do so in consultation with the American people as well as those involved in the 

open government community, so that we don’t have a one-size-fitsall but rather a custom- tailored fit open government plan for each 

agency, which, by the way, will be available at each agency’s 

website, www.agencyname.gov/open. 

Third, and perhaps more importantly, the President directs myself and the Chief Information Officer, along with the Chief Performance Officer, who you had testify earlier in this hearing proceedings, to review all governmentwide information policies that 

might need updating or clarifying, as well as to instruct a series 

of initiatives on the use of challenges and other tools to promote 

innovation in government. 

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I’ll ask my colleague, the CIO, to speak directly to the information quality issue that you raised as it is directly addressed in the 

Open Government Directive. 

Now a word about what I’ve seen in my short tenure as Chief 

Technology Officer. Briefly, given the time constraints, I wanted to 

highlight three key case studies that I will leave to my testimony 

for further review that demonstrate the power of innovation to 

drive open and efficient government. 

The first, how we can move research and development to deployment. The case study here is of the Centers of Disease Control’s 

initiative demonstration project to allow a grassroots voluntary network of local health departments and state health departments to 

share information on syndromic surveillance. 

In light of the H1N1 challenge earlier this year, we turned to 

this demonstration project for production to help us dramatically 

accelerate the rate at which we can incorporate public information 

about the challenges of H1N1. 

I’m pleased to report that this proof of concept that we’ve now 

moved into maturity, this RND project, has tripled the number of 

emergency departments who are now providing syndromic surveillance, from roughly 570 hospital emergency rooms in the earlier 

version to well over 1,500, and that it did so at dramatically lower 

costs and with unprecedented public transparency. You can see 27 

out of 30 jurisdictions were voluntarily participating, publishing 

statistics on H1N1 at isdsdistribute.org. 

Second, I wanted to highlight the role of open standards to promote government as a platform. Here, I’d like to highlight the announcement Secretary Napolitano made yesterday promoting a new 

platform called Virtual USA that has as its basic condition that we 

are better off as a nation if we can share information at the grassroots level to improve our response times in case of a disaster, to 

improve more public safety cooperation and collaboration. 

I’m pleased to report that Virtual USA, at virtually no cost to the 

taxpayer by promoting open standards, has already demonstrated 

value. In the Commonwealth of Virginia, we’ve seen a 70 percent 

improvement in response times in preparations for disaster exercises related to a nuclear power exercise, and cost effectively because they’ve shared more data, they’re able to staff their augmentation activities have fallen by 50 percent because they’ve had 

more access to information than they had previously. 

Last but not least, I thought I’d highlight this notion of prizes 

and competitions to spur innovation toward national priorities, and 

I’ll highlight the case study of DARPA’s Network Challenge that 

was just recently conducted highlighting the role of social networking strategies to dramatically improve a particular outcome 

and here I’ll simply say the following. 

DARPA wanted to test a very basic hypothesis. How quickly can 

we mobilize the American people? In this case, it was a competition 

to find 10 red balloons that would randomly be located throughout 

the United States and within 9 hours, an MIT team, using the 

power of social networking, spurred by the role of incentives, enabled about 4,600 volunteers to share information to quickly identify the latitude and longitude of each of those balloons. Imagine 

the implications of this in helping us to find criminals, helping us 

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to identify missing children, or any one of a number of topics where 

taking advantage of the collective knowledge and expertise of the 

American people would add value. 

I’ve exceeded my time in this testimony, Mr. Chairman, but I 

look forward to following up on any particular questions or concerns that you may have. 

Thank you. 

[The prepared statement of Mr. Chopra follows:] 

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Senator WARNER. Mr. Kundra. 

STATEMENT OF MR. VIVEK KUNDRA, FEDERAL CHIEF INFORMATION OFFICER, ADMINISTRATOR FOR ELECTRONIC GOVERNMENT AND INFORMATION TECHNOLOGY, OFFICE OF 

MANAGEMENT AND BUDGET 

Mr. KUNDRA. Good morning, Mr. Chairman, and thank you for 

inviting me to testify on how the Federal Government can use information technology to drive performance. 


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The American people deserve and expect a government that is 

accountable and fully worthy of their trust, and the Administration 

is committed to leveraging the power of technology to drive results. 

In the private sector, the competitive pressure powered by technology has unleashed innovation, improved service delivery, and 

generated savings. Data can be collected, analyzed, and used to 

make decisions on a real- time basis. 

For example, the way goods move around the world has been 

transformed through technology. People can now track packages 

with a click of a button and companies, like UPS, are using route 

planning technology to eliminate millions of miles when it comes 

to travel and save millions of dollars in fuel costs. 

Customer feedback and performance data arms buyers with information to make better decisions and compels sellers to perform 

or face extinction. Unfortunately, the public sector has lagged in 

using information technology to drive performance. For example, 

the closed, secretive, and compliance-based management approach 

to overseeing more than $70 billion in IT investments has not 

served taxpayers well. 

Investments identified as poorly-planned or managed are placed 

on a management watch list, which is nothing more than a static 

pdf document. This approach presumed that the government has a 

monopoly on the best ideas and the debate was confined to the four 

walls of Washington. 

The Administration believes that an engaged and informed public is a foundation for a government that works for the people. On 

his first full day in office, the President issued a memorandum directing Federal agencies to break down barriers to transparency, 

participation and collaboration with the Federal Government and 

the people it serves. 

This week, the Administration issued the Open Government Directive that you referred to, which will hardwire accountability and 

instruct agencies to open its doors and data to the American people. On June 30th, we launched the IT Dashboard to provide transparency into the performance of Federal IT investments. The Dashboard enables the public to see how IT projects are performing and 

provide feedback directly to agency CIOs. 

To lower the reporting burden on agencies and to support better 

decisionmaking, we also re-engineered the IT Capital Planning 

Process. We significantly reduced the reporting burden by eliminating data elements that were collected by 50 percent and also 

using data feeds instead of paper-based reports on a monthly basis. 

The Dashboard is beginning to change the way agencies manage 

information technology investments. In July, the Department of 

Veterans Affairs, under the leadership of Secretary Shinseki and 

Roger Baker, announced that it was temporarily halting 45 IT 

projects that were either behind schedule or over budget. Last 

week, the department canceled 12 of these poorly performing 

projects. 

Moving forward, we need to adopt an evidence-based approach of 

governance by employing platforms like the IT Dashboard across 

other functional areas of government. 

We’re beginning to do this by making sure that we’re leveraging 

this in the Open Government Directive and Aneesh and I are going 

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to be jointly launching a dashboard that will make sure we’re held 

accountable for the performance of the Open Government Directive. 

Dashboards can help us report, analyze, monitor, and also predict performance. The Administration is making high-value 

datasets available to promote national priorities and improve the 

every-day lives of Americans through data.gov. When the Department of Agriculture makes nutrition information available, families 

can make smarter eating choices. When the Department of Education makes key information available about colleges and universities, students make better informed decisions about the quality 

and cost of their education. When the Department of Labor makes 

safety information available, employers can better protect their 

workers. 

The transformative power of technology to improve performance 

is evident in our every-day lives. We can track packages, monitor 

flights, and evaluate the health of our personal portfolios on a realtime basis. Similarly, the American people should be able to track 

the status of the student aid applications, monitor product recalls 

before making a purchase and evaluate how their taxpayer dollars 

are performing. 

To change the way Washington works, leaders across the government must establish a culture of openness and accountability. The 

Chief Performance Officer, Jeff Zients, outlines five key principles 

for successful performance management program: buy-in from senior leaders, strategic alignment, outcome-oriented targets, relentless review, and transparency. 

Technology can support these principles, but technology will not 

magically translate them into reality. The Open Government Directive demonstrates the Administration’s commitment to hardwire 

accountability and drive performance to restore the American people’s confidence in their government. 

Through initiatives like the IT Dashboard and data.gov, we’re 

laying a new foundation that changes the default setting of the 

government from that of being closed, secretive, and opaque, to 

open, transparent, and participatory. 

Thank you for the opportunity to testify, and I look forward to 

your questions. 

[The prepared statement of Mr. Kundra follows:] 

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Senator WARNER. Well, thank you, Mr. Kundra. Thank you, Mr. 

Chopra. 

I appreciate your comments. I appreciate the good work you’ve 

been doing so far. 

I’ve got a lot of questions, and I want to—I know we’re going to 

hear from Mr. Baker a little bit later. I’m going to circle around 

to how we make sure the experience at the VA could be taking 

place across a series of other agencies and we actually kind of 

shake things up. 


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I want to start, though, with Mr. Chopra. Aneesh, you mentioned 

a couple of examples that were good. I wanted you to come back 

to something we’ve discussed before, though, because I think it’s 

important, and Vivek mentioned this, as well, how we get some 

early wins that have an appeal that is broadly based and how we 

make sure that, if we’ve got this tool, that we communicate it so 

again our customers, the American citizens, can use it. 

One of the things we talked about, that I think every Member 

of Congress hears from folks regularly on, is really the opaqueness 

of the INS in terms of if you deal with Immigration issues, what 

the status of your request might be, kind of getting through Customs and Immigration. 

You’ve talked a little bit about an ability that you started to see 

if we could get some real-time ability for somebody who’s got an application before the INS to check on the status of their process. 

Could you speak to that and see if there are any other kind of 

early wins and if you’ve got an early wind, what’s your thoughts 

on how we get it out to something broader than just the kind of 

folks who follow this day in and day out? 

Mr. CHOPRA. Mr. Chairman, thank you very much for the question, and you’re absolutely right. 

This came up in June of 2009. President Obama had been meeting with Senator McCain and a few other folks on the Hill talking 

about near-term strategies as we prepared for comprehensive immigration reform. 

Following that meeting, the President addressed the press and a 

few others that had convened and issued a challenge to Secretary 

Napolitano, directing her that we fundamentally improve the customer service experience for those applying within the U.S. CIS 

and asked that she work closely with the Chief Information Office, 

myself, and the Chief Performance Officer. By the way, we did so 

with no increase in the budget and we did so with no change in 

any legal framework or regulations. 

We quickly identified three areas that we thought, to your language, would be early wins. The first, we wanted to bring greater 

transparency to what happens when an application actually enters 

the agency. The systems were not designed to track, like Vivek 

said, a package ala FedEx internal to the agency. So we quickly 

uncovered in this first category how might we organize in a more 

customer- friendly way the key moments when your application is 

migrating through the system and the agency identified seven 

steps. 

Some of those steps would require more information from the applicant, others would reflect on challenges about data-sharing inside the Administration. So we created a transparent approach to 

each of those seven steps by letting the American people, the applicants, know where they stood in the queue. 

Second insight was we reversed the communication path of traditionally relying on inbound requests, whether they be through a 

lawyer or through some other means, and actually flipped it to be 

more open and push oriented. 

So to your point, Mr. Chairman, we introduced text message 

alerts as a free alternative. So that if your application moved from 

Step 1 to 2 or 2 to 3, you’d be instantly notified and I believe less 

179 

than a month or so into the system, 25,000 applicants had registered for the new free text messaging service. 

The third pillar spoke more to the issue of performance improvement across the board and what we had done in that regard was 

to acknowledge that the processes take place when you apply 

through New York versus Chicago versus, say, Dallas would have 

different average turnaround times for the application. 

So we created a transparency initiative around the average turnaround times by application type that would be made available to 

the American people and in machine- readable format so that accountability watchdog groups could sort of report on the fluctuations in performance against national goals as well as to compare 

New York against Chicago and Dallas. 

I’m pleased to report that all three of those principles took place 

and were part of a launch that happened to the day 90 days after 

the President’s call. So by September, I believe it was, 21st or 

22nd, this site went live. The implication, I believe, Mr. Chairman, 

is that, as we look to these customer-facing experiences, we can 

take a lot of lessons learned from that storyline and apply them, 

as we are, in conversations across the various agencies. 

One final observation, Mr. Chairman. Now that the Directive has 

been put in place, we have moved from a series of pilot initiatives, 

which has been largely the demarcation of where we were for the 

last many months, to one where we will have now a more structured management coordinated approach to these issues. So those 

kinds of early wins will now be part of the dialog across the agencies. 

Senator WARNER. Vivek, do you want to add anything? I have a 

couple followup questions. 

Mr. KUNDRA. Yes, sir, I do. The other thing about the launch of 

the U.S. CIS solution that’s different is that it was part of a trajectory that was supposed to go live within a 5-year timeframe and 

what this shows is the classical approach to technology investments 

across the Federal Government where everybody believes you’ve 

got to have this big bang approach. Five years later, you’ll have 

some type of innovation. 

One of the things that Aneesh and I did, working with the U.S. 

CIS, was to sit down and disaggregate the complexities and talk 

about how we create value today for the people that need to know 

where their applications are in the process, Number 1, and, Number 2, how we make sure by putting up this public-facing dashboard we create the right pressures for U.S. CIS to actually perform and improve the processing times. Also, we engage the public 

in terms of looking at the Dashboard itself and the interface to improve it rather than just doing it with government employees in 

Washington who imagine what people may want. So we actually 

engage the public in the development of the solution itself. 

Senator WARNER. Well, a couple of questions. One, and let me 

get them all so you can then respond, either one of you, one, I 

thought it was pretty cool, this notion of the competition between 

offices. You know, if one office is doing better than the others and 

if that was launched in September, you know, we’re now a few 

months later, are we seeing any improvement by the laggards? 

Number 1. 

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Second is when you first shared this with me, I thought it was 

a pretty interesting win or progress being made, I don’t want to 

overstate it, progress being made. Two, why don’t more folks know 

about it because I still got a lot of folks knocking on my Senate office door saying, you know, we’re in the midst of kind of this 

opaque area in the Immigration Service? 

Three, how do you roll out that to make sure it’s aware and, for 

example, have you shared this with the Immigration caseworkers 

and with every Member of Congress? 

Mr. CHOPRA. Great questions, all three. Maybe I can take the 

first stab and Vivek can go there. 

We have essentially played this strategy with the VA, and Roger 

Baker can speak a little bit about that, with our processing capabilities on the G.I. Bill across the four centers that are managing 

that activity and we’re seeing tremendous improvements in productivity in just the time in which we’ve launched that initiative 

where we’re a little bit more active in the near term seeing the results. 

I have not spoken to the U.S. CIS on the actual wait times since 

the feedback has come out in October, but my presumption is that 

we’re seeing similar, but that same strategy of—— 

Senator WARNER. You will get back, and—— 

Mr. CHOPRA. Absolutely. 

Senator WARNER [continuing]. I know it’s still early, but if 

we’re—— 

Mr. CHOPRA. No, no, no. 

Senator WARNER [continuing]. Three months in now,—— 

Mr. CHOPRA. No. We will absolutely—— 

Senator WARNER [continuing]. We will compare that wait time, 

Dallas versus New York versus Chicago, but I’d like to see, now 

that this information is out into the public, have the laggard offices 

picked up that, has that seen any improvement? 

Mr. CHOPRA. Absolutely. We will get that to you. But I am confident that this same strategy of having the offices see each other’s 

productivity and drive to performance, that model has worked and 

I’m pleased to report that. 

The second aspect about telling folks about it, we had a press 

conference with Secretary Napolitano to announce this to the key 

stakeholders in September and there was a consistent outreach effort by U.S. CIS to stakeholder groups. More can be done and, 

given your feedback, more will be done. 

Third, I believe we did a briefing for Hill staffers on how we can 

improve feedback from them about this system as well as awareness. If that has—perhaps we could do a round two of that Hill 

briefing and I’ll convey that message to the U.S. CIS. 

Vivek, any feedback? 

Mr. KUNDRA. The other thing to add is that the performance improvements, if you look at internally, also, what the U.S. CIS is 

doing, is looking at resource allocation against the backlogs or the 

processing times. 

We’ll be happy to come back and get you details on what’s happening as far as reallocating resources where you have the longest 

wait times. It’s also giving us business intelligence in terms of the 

181 

operations of U.S. CIS beyond just making the processing times 

transparent. 

Senator WARNER. So what’s next in the queue? If you’ve got CIS, 

and I know you’ve also received some attention on the G.I. Bill, but 

are there other areas that we can expect to see soon? 

Mr. CHOPRA. The answer is yes. I don’t know if we’re seeing such 

more right now. 

Mr. KUNDRA. We’re working across the board. The committee 

that Aneesh and I jointly launched, is going through a number of 

initiatives where we can look at performance improvements. 

For example, in January, the IRS and the Department of Education are going to be launching a new improved student aid application. It used to be that to fill out the student aid application, individuals would have to input so much data that is repetitive data 

that the IRS already had. And with the new approach the two of 

them got together and now an individual will get their own tax 

data with one click, and they’re going to be eliminating over 21 web 

screens that they had to fill out. It was more complicated to fill out 

the student aid application than the 1040 form. 

So there are a number of innovations that we’re looking at in 

terms of information-sharing, and optimizing how we use technology, whether it has to do with education or whether we’re looking at U.S. CIS. 

Senator WARNER. All right. Well, so that was a softball question. 

Now we’re going to go to the other side. You know, let’s go to where 

perhaps we don’t have quite as good of information reporting. 

I mean, clearly, the first round of reporting on the Recovery Act, 

to say the least, caused some consternation. I didn’t realize, for example, that Virginia had a 12th Congressional District. To my 

knowledge, it still doesn’t. You know, how do we make sure we do 

a better job on the Recovery Act reporting? 

I go back again to some of the overlap. I mean, I appreciate the 

fact that you’ve each mentioned a couple of new sites and new initiatives and I commend the OMB for the Open Government, but at 

some point, do we end up, we being our customers and our citizens, 

more confused because again we’re just creating so many more 

sites and we may have a kind of technology cognizente who follows 

each of these, but for the average citizen or, for the matter, the average member, how do we have a little more clarity here? How do 

we not have a repeat of the kind of mistakes made in the first 

round of Recovery reporting? 

I go back again to my comments on the procurement side with 

usaspending.gov and Federal Procurement Data Systems both putting out different—you know, supposedly the same data but because it’s different timing, different formats, you know, you leave 

Congress and the American citizens with a very confused picture. 

How do you rectify that? 

So take either the duplication, the Recovery Act, and then specifically in terms of procurement. 

Mr. CHOPRA. Let me take the broad themes and then I’ll defer 

to Vivek on the areas that he has responsibility for. 

This is the reason, Mr. Chairman, why we’ve focused on the machine-readable formats topic because the notion that people have to 

know a government website or to think about visiting a governVerDate Aug 31 2005 10:39 May 18, 2010 Jkt 000000 PO 00000 Frm 00187 Fmt 6601 Sfmt 6601 C:\DOCS\55507.TXT SBUD1 PsN: TISH
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ment website is, we believe, the wrong posture. We hope that these 

key sources of data, by making them available in machine-readable 

format, will enable a whole panoply of sites that will be customtailored to meet your needs. 

You might be pleased to know that, while the overall reporting 

that you referenced might have been a challenge, the American 

Academy of Sciences launched a portal focusing on the science recovery investments that’s very easy and accessible so that researchers can now collaborate and share on what other studies are being 

done that are in their general sphere so they can promote more collaboration. 

Those capabilities are born because those external sites can consume the raw information and then present that in a more customer-friendly way to meet the needs of that constituency. 

I would also point out that’s why we’re pleased that the , we consider to be the newspaper of the Federal Government, is now available in machine-readable format. 

The notion that we need to have a really robust and fancy-looking .gov site is the wrong question. What we want to do is actually 

make those component parts available so that if you happen to be 

interested in the healthcare set of issues, that you can have compiled for you by some third party who’s willing to do that work the 

quick and easy kind of news clipping service for what health-related clips are in the that meet your needs. 

So, philosophically, our focus is mostly on producing the data out 

and encouraging those to consume it and then create this broader 

ecosystem so that the American people can get that information in 

ways that they may not know originally came out of a website in 

Washington because, frankly, a very, very small number of Americans know to visit those particular sites.. 

Now your point about the data quality is why in the Directive 

we put a very explicit statement about data quality and I think 

that’s the right place to hand it off to Vivek. 

Mr. KUNDRA. Sure. So before I jump into the data quality itself, 

you’re absolutely right when you talk about the explosion of the 

number of websites across the Federal Government and that’s one 

of the areas we’re looking at in terms of rationalizing and moving 

much more toward a service-centric approach instead of just 

webifying our brick and mortar institutions and creating yet another website. 

There are over 24,000 websites across the Federal Government. 

That’s one of the reasons there is usa.gov which is supposed to 

serve as the single point of entry, a platform, for the American people to engage online with their government and the strategy that 

we’re using is to move toward a service-oriented architecture so we 

get more and more of the services in that one place. 

On data quality, that’s a persistent problem and there’s a technology component of it and then there’s a business side of it. From 

a business perspective, the procurement community has spent a 

decade in terms of defining what a contract means, defining what 

it means as far as a data element, so it’s consistent across the Federal Government community. 

If you look at the grants community, for example, that hasn’t 

happened. There isn’t consistency in terms of definitions across the 

183 

board and part of what’s happening in these communities is, as 

they move forward in defining their requirements and defining the 

data definitions, then comes in the technology. 

In the example of FPDS, which is the Procurement Data System 

and USA Spending, FPDS is limited to tracking only the procurement expenditures. So you’re looking at the $500+ billion that we 

spend on contracting—whereas USA Spending is responsible for 

tracking the entire expenditures of the U.S. Government, from 

grants to contracts to loans, across the board—part of the challenge 

that we’re seeing is that because you’ve got data available now in 

its raw format, you can slice and dice it in many, many different 

ways and that’s one of the reasons Aneesh referred to the Directive 

itself. 

The OMB Directive directs every single agency to ensure they 

have an accountable official for data quality because it’s not enough 

to just put the data out there, we need to make sure that the data 

is timely, it’s comprehensive, and that it’s reliable. As we look at 

USA Spending right now, we’re in the process of rationalizing the 

information between USA Spending and what’s happening on the 

FPDS data base among the multitude of other data bases that 

power various communities, whether they be grants communities 

or they’re the procurement community. 

Senator WARNER. I’ve been joined by my colleague Senator 

Whitehouse. I’m going to ask one more question, then I’ll turn it 

over. 

I do think there is still—I get the fact that we’re going to try to 

make this data available in a machine- readable form so people can 

slice and dice as they want. I do think, though, as long as we have 

these literally now thousands of websites, we do need some kind 

of more user- friendly front-end so that we don’t have the confusion 

we saw with USA Spends and FPDS in terms of, you know, I know 

they’re different measurements and I don’t know how we get there. 

I know you’re working through that. The sooner the better, 

though, because we can’t have a repeat, and I know this is a whole 

different set of problems with the first round on Recovery Act reporting, but I can assure you with questions about the Recovery 

Act, particularly from some of our colleagues on the other side, we 

can’t have another round of imaginary congressional districts appearing on the next round of reporting. 

I’m going to ask one more last question, then I’ll turn it to Senator Whitehouse, and particularly as there’s an enormous amount 

of interest on the procurement issues, and this goes to Vivek in 

terms of the management within the overall Federal Government 

of IT projects. 

We’re anxious on the second panel to hear from Mr. Baker and 

we’re anxious to hear from our colleague from Georgia in terms of, 

you know, how we get an overall management structure for IT system procurement and project management. I think it’s very important and I think it’s great that we can celebrate the VA’s efforts. 

I want to make sure we end up with a system, and I don’t 

know—you know, we don’t need just a few brave CIOs out there. 

We’ve got to have this with a system-wide approach and this notion 

that you’re opening up to the public and more of an open system 

184 

in terms of how the Federal Government does its IT procurement, 

I actually commend. 

But let’s go back to the overall governing structure. Is the CIO 

Council and leaving the agencies with the IT procurement process 

with just advice from OMB and advice from the CIO Council the 

right system, Number 1, and, Number 2, how do we do a better job 

of leveraging our purchasing power within the IT sector so we’re 

getting the best value for the dollar, and, Number 3, how do we put 

in place tripwires on IT projects that are running behind? 

And my sense from my exposure from the Governor’s side is that 

the common practice, which is to—and we’ll come to this more with 

Mr. Baker, where the government contracts with an IT firm to do 

a relatively narrow scope project. You have an original contract and 

that contract constantly expands and that the average cost of an 

original contract doubles or triples by the time because there’s no 

kind of oversight over the—as the government adds more bells and 

whistles to their IT requests, obviously the private sector contractor’s happy to agree to that, but you end up with what appears on 

the front end to be a small contract ballooning into a large contract. We’re not sure if we’re really getting value for the dollar. 

How do you put better oversight there? So those three questions 

and then I’ll turn to Senator Whitehouse. 

Mr. KUNDRA. Sure. So a couple things. One, on the approach to 

IT management, the challenge for far too long has been that the 

CIOs, unfortunately, in a lot of agencies were not directly communicating well with the business leaders, and business owners. 

If you look at what happened at the Census Bureau in when a 

handheld was developed for their 2010 Census, yet we’ve reverted 

back to a paperless project, part of the problem was the CIO wasn’t 

even in the conversations when they’re deliberating and making 

those decisions. 

And if you look at the Cohen Act, under statute, the CIO is ultimately responsible at the agency level to make sure that they’re 

driving the investments and management across the agency itself. 

The Federal CIO Council—— 

Senator WARNER. Let me just interrupt you for a moment. Senator Whitehouse has got another session coming up. I do want to 

hear the balance of your answer and I want to get to the second 

panel, but I really appreciate this whole initiative was actually 

Senator Whitehouse’s idea to start this Performance Review Panel. 

I appreciate him being here on a very busy day. 

So please. 

Senator WHITEHOUSE. I’m very happy to be here, Senator Warner, and I’m sorry that I’m on two committees that are actually 

marking up legislation and require quorums. So I’ve got anxious 

chairmen needing me to appear in order that their legislation can 

move forward. So I’m delighted to take a few minutes, though. 

In terms of general overview, I would, first of all, take out health 

IT for a moment because I think that’s sort of a beast unto itself 

that requires its own attention. 

On the IT side, if you’d indulge me in sort of carving the question 

into the how effectively the government uses information technology to support its customer relations versus how effectively government uses information technology to improve and make more efVerDate Aug 31 2005 10:39 May 18, 2010 Jkt 000000 PO 00000 Frm 00190 Fmt 6601 Sfmt 6601 C:\DOCS\55507.TXT SBUD1 PsN: TISH
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ficient back office administration, and then the third question, 

which I see as lesser than those two, somewhat peripheral, how it 

participates as a purchaser in the IT market., I’d love to hear your 

views on where you think the best practices are in the country. 

Are there industries that are particularly adept that have taken 

these different areas to a very high level of expertise? And measured against that benchmark, where does government stand, and 

are there better or worse areas of government that stand out as 

being comparable to, competitive with, better than the private sector or lagging behind, kind of just a private sector-government sector benchmarking across those areas? 

Mr. CHOPRA. 

Mr. CHOPRA. Well, thank you, Senator. Great set of questions. I 

might take an angle on this and then I’ll pass the bulk of it to my 

colleague. 

On the issue of customer service, I think the Open Government 

Directive has opened the door for a healthier dialog about how we 

engage the American people in the work of the Administration not 

only in policymaking but in the execution and in the delivery of 

services. I believe our greater attention to this issue will strengthen an area that I believe has been a lesser-performing asset. 

In the area of best practices, I happen to be a strong believer in 

customer experience design as a field of art that is a critical component of large-scale IT projects. We do a fairly exhaustive list of requirements in the back office for these multibillion dollar IT 

projects, but I believe we do a relatively poor job of understanding 

customer need, not just in the narrow sense of what the computer 

screen should look like when we move from green screen to a more 

modern platform but actually what is the citizen’s experience, almost an anthropological question. 

Senator WHITEHOUSE. Mm-hmm. 

Mr. CHOPRA. I turn to Proctor and Gamble’s service delivery and 

innovation capability as one of my favorites from a best practices 

standpoint. I’ve been honored to have Chief Technology Officer 

Bruce Brown as one of our advisors to think through this notion 

of customer experience design. 

I believe that, through the Open Government Initiative, as we 

now have very explicit milestones with the agencies on putting together plans and engaging the American people, we will surface 

more opportunities. This is the distinction, Senator Whitehouse, between what I would consider to be the back office world view of IT 

and the front office new product development opportunities that IT 

can enable. 

If you look across the globe, it was techies in Finland that had 

commissioned a study on customer experience design, a government agency, I believe it was in Finland, that had commissioned 

a U.S. best practices study on how did the Enterprise Rental Car 

improve the customer experience, how did Bank of America come 

up with Keep the Change Program improve the customer experience, what are the lessons learned. All of those ideas are powered 

by technology, but you wouldn’t normally think of them as a CIO 

activity. 

That’s why, as part of this Directive, having a senior agency official reporting to the Cabinet Secretary focusing on these issues in 

186 

Open Government will create a new locus of thinking around that 

customer question. 

Mr. KUNDRA. And on the procurement space, one of the biggest 

problems with the Federal Government is that we don’t act like the 

$76 billion enterprise that spends money on information technology. We spend over $76 billion annually. 

Now there are pockets of success. For example, there’s a Smart 

Buy Program at GSA which took, for example, DSSA from an 

antivirus software program that was listed for $40 to $2 because 

they were able to pull an aggregate demand and that was a purchase for over five million licenses that they were looking at. 

So part of what we’re trying to do is figure out how do we aggregate more and more demand and using the Smart Buy approach 

and, second, how do we lower the threshold and make it a lot easier for agencies to actually procure technology that’s enterprise in 

nature? That’s one of the reasons the Administration launched 

apps.gov, so that when agencies are procuring applications online, 

we can actually monitor demand, aggregate it, and make sure that 

we’re saving money instead of just buying technology for technology’s sake. 

And in terms of the back office in government operations, one of 

the big challenges is, if you think about the public sector itself, it 

used to be that people would go to work to get access to the greatest technology. Now it’s the opposite. Most of us have better technology at home than we do when we come to the office to work. 

Part of what we’re trying to do is figure out how do we introduce 

consumer technologies within the public sector so we’re not reinventing processes, we’re not spending billions of dollars recreating 

and innovating in space that has already been innovated on and 

there’s significant, significant savings because of the pressures that 

are applied in the consumer space. 

Senator WHITEHOUSE. Could I, because my time has expired, 

could I ask as a question for the record for you to get back to us 

in writing on both the extent to which you think that there could 

be savings in the $76 billion acquisition portfolio that you mentioned, Mr. Kundra, and to the extent you’re capable of putting a 

number to that, fine, and to the extent that you need to qualify 

that number with some level of certainty or uncertainty, but I 

would like whatever your statement is as to where you think that 

number could be if we were operating optimally and ditto looking 

at it not as an IT procurement question but as an IT efficiency 

gains question, what are the larger structural budgetary gains that 

you see as possible or within the realm of reason? 

I invite you to couch your answer in whatever way you are comfortable and if you need to couch it in rather uncertain terms because that’s just the way it is, that’s fine, too, but I would like to 

try to arrive at a number, however qualified, as to what potential 

budgetary impact, positive budgetary impact there could be from 

optimal IT investment utilization. 

Thank you. 

Mr. CHOPRA. Thank you for the questions. 

Senator WARNER. Thank you, Senator Whitehouse. Briefly, 

Vivek, because we want to get to the second panel, if you could just 

again comment or finish your answer on do we have the right CIO 

187 

management structure in terms of being able to aggregate purchasing power in place or do you need something that strengthens 

the CIO Council so that you don’t have a rogue agency off here, 

going off purchasing on its own? 

And then, quickly as well, so we can get to the second panel, the 

issue of the kinds of problems we have in IT contracting where you 

come in with a small price, a low- risk price, and then you end up 

with three or four X because there’s no management of all the addons, and how, if we don’t have quality CIOs like Mr. Baker of Veterans Affairs, how do we make sure that process is better managed 

and that there is some look-back and accountability in terms of 

CIOs, not simply adding on to these projects? 

Mr. KUNDRA. On the first question, I think it’s less about the 

structure and more about the leadership. If you look at what the 

President has done by appointing his CIO and CTO, he’s made it 

clear how important technology is to this Administration and he’s 

leading the way. 

Across the board, what’s happening is that agencies central to 

this Administration’s agenda are leveraging the power of technology on how we reform government, how we drive savings, and, 

more importantly, how we deliver better quality services to the 

American people. 

The challenge for CIOs for far too long has been that they 

haven’t been engaged and when IT projects fail, it’s either when 

you have very high level of engagement from the business community but no technology engagement or very high level of engagement from the technology community and no engagement from the 

business side. 

And one of the things we’re doing with the CIO Council, too, is 

sharing these best practices and the first step was launching the 

IT Dashboard. Part of the reason we did that was to unlock and 

lift the veil on how these decisions are being made. 

To your second question around contracting and what we could 

do in that space, the challenge there is some of these contracts 

where you have a billion dollars for one milestone makes no sense. 

What we need to start doing is breaking down these contracts into 

smaller chunks and moving more toward fixed price contracts so 

that we clearly define requirements, clearly define scope, and hold 

vendors accountable to make sure that they are delivering. When 

they’re not delivering, we need to make sure that we’re divesting 

from technology initiatives that don’t produce dividends. 

Senator WARNER. And I would hope that might include, and I 

know we’ve had some offline conversations on this, some process 

where there has to be perhaps a higher hurdle for that internal 

government CIO to go back and further expand the original contract, some oversight in that process, so a look-back in that process, 

so again we don’t end up with what has become the norm, unfortunately, of contract that starts with X price and ends up three or 

four or five X at the end of the day with add-ons that may or may 

not have been necessary or, if we better scope the project on the 

front end and hold that CIO accountable for the appropriate 

scoping in the first place in terms of his or her ultimate performance review, that would be something we’d like to look at, as well. 

188 

I want to thank the panel. I have one other comment, Senator 

Whitehouse. I did not get a chance to see it, but my understanding 

is, in light of the Open Government announcement earlier this 

week, that both Mr. Chopra and Mr. Kundra were the subjects of 

Jon Stewart last night. I’m anxious to see the video. There was 

some great expose about the Open Government boys here and I’m 

sorry we don’t have that clip, but I hope to have it, and I’m sure 

we’ll get a chance to share it with you. 

Senator WHITEHOUSE. Without objection, perhaps we could make 

it a matter of record. 

[Laughter.] 

Senator WHITEHOUSE. I seem to be hearing an objection, so hold 

that request. 

Senator WARNER. Thank you, Senator Whitehouse, for being 

here. Thank you, both, gentlemen. 

Mr. CHOPRA. Thank you very much. 

Mr. KUNDRA. Thank you. 

Mr. CHOPRA. Our pleasure. 

Senator WARNER. We’ll now, in moving along, bring up the second panel, and we’re now going to move from kind of the macro 

level down to two specific wins at the state level and a real-time/ 

real-life example of the kind of better contract management that I 

think we’d like to see in the Federal Government. Both our witnesses have been at the front-line of government reform, particularly in the IT area. 

First, we’re going to hear from Mr. Roger Baker, who we’ve made 

a number of comments about already, the Assistant Secretary of 

Information Technology and Chief Information Officer at the Department of Veterans Affairs. 

Mr. Baker manages over 6,500 IT professionals and oversees an 

IT budget of $2.5 billion. We’re going to particularly—one of the 

things Mr. Baker has done recently is he recently put a hold on 45 

IT contracts within VA, something that was, I think, perhaps 

shocked the community a bit and actually eliminated some of those 

contracts because they were not being as well managed and perhaps went to some of this contract growth that we want to hear 

back from. 

And then we’ll hear from Mr. Brad Douglas, the Commissioner 

of Administrative Services for the State of Georgia. Since 2006, Mr. 

Douglas has been leading an effort to transform state operations 

with new procurement processes, technology and skills, and we’ve 

asked him to share the results of his lessons from his work. 

Mr. Douglas brings not only his experience working in Governor 

Perdue’s Administration but also major experience in the private 

sector. 

So Mr. Baker and then Mr. Douglas. 

Senator WHITEHOUSE. If I might before you speak, I believe both 

Senator Warner and I have read your testimony. So to recite it 

back to us is not necessary. If you could focus on the high points 

and we can embark on a discussion, that would be helpful. 

Mr. BAKER. I will adhere to that. 

189 

STATEMENT OF THE HONORABLE ROGER W. BAKER, ASSISTANT SECRETARY FOR INFORMATION AND TECHNOLOGY 

AND CHIEF INFORMATION OFFICER, U.S. DEPARTMENT OF 

VETERANS AFFAIRS 

Mr. BAKER. So thank you for inviting me, Chairman Warner, 

Senator Whitehouse. I request that the full testimony be accepted 

for the record. 

Mr. Chairman, as a fellow Virginian, it’s a pleasure to be invited 

to testify about one of my real passions which is effectively managing government IT technology, and you mentioned that we might 

be a little geeky in this, so we seem to have that as a passion. 

In the past 6 months, VA Office of Information Technology has 

made substantial progress toward becoming a well-managed IT organization. We’ve established strong customer service focus, introduced program management accountability system or PMAS, as 

you’ll hear me refer to it, paused 45 of our most problematic 

projects, and successfully restarted 30 of them. I think that’s important. 

We’ve prioritized over a thousand spend items within IT and 

made hard choices with our customers about which items can be 

accomplished and which can’t. We’ve begun tying together planning, budgeting, spending, all the way down to quantifiable results 

for every dollar we spend, and we will know who’s responsible for 

producing those results on each of those dollars, and we’ve been 

tracking and reporting the operational metrics of our field organization. 

There are three causal factors to this progress. The first is consolidation of all IT resources into a single organization under the 

CIO. The second is a senior management team from Secretary 

Shinseki on down, who understands the importance of technology 

to organizational effectiveness. The third is attracting a CIO with 

an understanding and an expectation level of what can be achieved 

in an effective, well-managed IT organization. 

Because VA is unique among Federal departments at having all 

IT spending and staff under the CIO, it’s effectively a pilot program. Over the next several years, our efforts at VA will demonstrate whether consolidation of IT resources under a single CIO 

at a Federal department can have a substantial positive impact. I 

believe we will succeed and VA’s consolidated IT budget and management support we receive are what attracted me to this job and 

convinced me we can substantially improve the results of VA’s IT 

investments, despite the challenges of the bureaucracy. 

I’ll spend just a couple minutes describing three of the program 

management techniques we’ve introduced. First is the Program 

Management Accountability System. As Albert Einstein once said, 

‘‘The definition of insanity is doing the same thing over and over 

again and expecting different results.’’ 

So the Program Management Accountability System ensures substantial change in failing projects. We established PMAS in June 

of this year and followed up by pausing 45 of our most problematic 

development projects in July, following the release of the IT Dashboard by the White House. Although pausing 45 projects garnered 

most of the popular press attention, the greatest satisfaction has 

been in seeing many of those projects restart with an increased 

190 

probability of success. After all, the real goal of the Program Management Accountability System isn’t to stop projects, it’s to reliably 

complete the development of the new systems our customers require. 

To date, the greatest challenge with the Program Management 

Accountability System has been working through all of the program contractual issues involved with stopping projects. Although 

it’s counterintuitive to me, it turns out to be much harder to stop 

an ongoing project than to start a new one. 

Despite hard work by many people in our Development and Acquisition Organizations, we still have work to do to finish thoroughly stopping the 12 projects in the original 45 that we have decided will not continue. However, I’m confident that we will achieve 

our original goal of having all VA IT projects managed under 

PMAS within 1 year. 

Second, and I believe even more transformative in VA, is 

prioritization. In implementing PMAS, we quickly found that many 

of the projects failed to meet expectations because they were underresourced and they started out destined to fail. 

To address the issue, we recently ranked all of our IT spend 

items, probably more than a thousand at this point, from most to 

least important. We obtained buy-in for the decisions and have decided to cut spending on those projects that were not above the priority line, as well. So based on that, last week I ordered the stoppage of any ongoing spending item that was not above the cut line 

on the priority list. 

I expect that will generate substantial discussion inside the 

agency as they understand what prioritization really means. 

Third is operational metrics. In my experience, well-managed IT 

organizations are heavily oriented toward tracking their operational metrics. The real scorecard items in IT are system availability, system response, customer service volumes, and customer 

service response. 

By focusing on operational metrics, IT organization quickly determines how well it’s serving its customers, where it’s weak, what it 

needs to do to provide better services. 

Now our IT Operations staff, over 6,000 people at hospitals, regional offices, and cemeteries around the country, does a great job 

of ensuring that critical systems are up and available to our customers at VHA, VBA, and NCA. 

Just one thing I want to point out from my testimony for folks 

to hear. As an example, the Vista Electronic Health Record System 

that runs a 153 hospitals around the country is up in excess of 

99.95 percent of the time. That’s an average that rivals anything 

in the private sector for a system that wasn’t designed for 100 percent availability. Those folks do a very, very good job and I’m very 

proud of the work that they do. 

Mr. Chairman, based on your private sector experience, each of 

these items may seem obvious and I certainly agree, but without 

a consolidated IT budget, they weren’t happening at VA and they 

don’t happen in many other Federal organizations. 

In closing, I’d like to thank you again for your continued support, 

the opportunity to testify before this committee on the important 

work we’re undertaking. 

191 

Our unwavering goal is achieving Secretary Shinseki’s and President Obama’s vision of a 21st Century department committed to 

serving those who have selflessly served our nation. 

I’ll take any questions you’d like to ask. Thank you. 

[The prepared statement of Mr. Baker follows:] 


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Senator WHITEHOUSE. Director Baker, a question for the record 

and that is what information you can give this committee about 

what you think the savings potential is of the best practices that 

you are engaged in. If you could provide us that number, both within VA and as again couched however carefully you want to in terms 

of recognizing that there’s going to be some uncertainty around 

what you say, if it were applied governmentwide at the level of performance that you appear to be demonstrating in VA, what sort of 

orders of magnitude we’re talking about. 

Mr. BAKER. We’ll do that. 


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Senator WHITEHOUSE. The other question has to do with less the 

financial side than the performance side of the VA program, particularly the Electronic Health Records Program. 

VA has really distinguished itself, I think, as the early leader in 

this area. It has had a closed system and so has been able to capture the value of the investment in information technology which 

is different than the general healthcare market where the hospital 

or the practice has to make the investment in information technology, but it doesn’t capture the value of it. The value of it goes 

to the payers, the insurance companies, to the Federal Government, to other people. 

So we have sort of a systemic failure in terms of the risk/reward 

loop for investment in health IT in the general market, but the VA 

has not had that problem and has taken advantage of that to be 

very effective. 

The two concerns that I’ve heard on numerous occasions, and 

again measured against what is a very distinguished track record, 

one is that it got too bureaucratic and too centralized and local 

changes to the programs became delayed so much through the Central Information Office manager that it sort of plugged up the system and made it far less robust and vibrant than it was when, at 

the more local and hospital level, people were experimenting with 

program changes and therefore developing and working their way 

through glitches and that that was accelerating the program forward and that the centralization of that actually sort of compressed 

that energy and pushed it back and has resulted in lowered rates 

of improvement. 

The second has to do with the initiatives to reach the system outside of its current boundaries so that, for instance, a veteran who 

is hit by a bus in Providence and is rushed to the Rhode Island 

Hospital Emergency Room, at the Rhode Island Hospital Emergency Room, they have a link and they can dial up the electronic 

health record for that veteran and it’s no longer constrained. It follows the veteran wherever they go rather than having its line of 

demarcation be the bureaucratic structure of the Veterans Administration. 

I know there are some pilot projects on that. That seems to be 

a really high potential value return area and I’d like to hear your 

assessment of how energetically those pilots are being pursued and 

how rapidly we can see the value of the Electronic Health Record 

VA Program expanded to include the full medical reach of the veteran and not just his contacts or her contacts with the VA bureaucracy. 

Mr. BAKER. Senator, thank you. I’ll answer both those questions, 

but I’m so excited about the answer to the second one, I’d like to 

take that one first. 

The President’s vision of a virtual lifetime electronic record really 

goes exactly to the question you’re asking. When we looked at the 

President’s direction, we took the approach of let’s also look at 

what he didn’t say. He did not say for some veterans, he did not 

say for just inside the government. He said I want this information 

available on service members and veterans for use throughout their 

lifetime, and in our view that includes the private sector. 

200 

We have already demonstrated that work. We have a pilot going 

with Kaiser Permanente in San Diego. We have exchanged patients 

and exchanged information on those patients in a live setting. Interestingly, with the first two patients we did that with, on both 

sides, the doctors saw information from the other record that was 

not present in the record at the place they were being seen, information about drug allergies and other prescriptions that were important to the care that that veteran received. So we’ve already 

seen the benefit of that. 

In January, we will be live with a pilot with Kaiser Permanente. 

We have solicited 1,500 veterans to opt into that pilot so that they 

can be seen at a new place and all their information is available. 

All this is being done through a national standard. Most important 

to us is we are working with HHS and DOD and other organizations to develop a national standard, the Nationwide Health Information Network, that will allow us to build, to exchange with Kaiser Permanente, but then when other organizations, like Humana 

and others, come to that standard, we will automatically be exchanging information with them on the veterans. 

Again, our focus is on great care for veterans wherever they go. 

We believe they get it when they come to the VA. We know they’re 

also seen at lots of other places and the President, when he laid 

out the vision of a virtual lifetime electronic record, it was for all 

service members, all veterans, throughout their lifetime wherever 

they’re seen. 

This is a very exciting program and we are—it is absolutely one 

of the few top priorities in the Secretary’s view. 

Senator WHITEHOUSE. I’m delighted to hear you say that. I’m delighted to see the animation with which you say it and the sooner 

you can get it to Providence where we have a very energetic Rhode 

Island Quality Institute developing with Number 1 or 2 state prescribing in the country and the medical community is very engaged 

in a health information exchange structure. So the sooner you get 

to Providence, you’ll be participating in a very active community on 

that and so God speed. 

Mr. BAKER. Thank you. 

Senator WHITEHOUSE. And the other question? 

Mr. BAKER. About a month and a half ago, I introduced the concept of utilizing an open source approach to the Vista software for 

exactly the reason that you enunciated, which is the system, 

through a variety of, I think, management changes made at VA 

over the last 10 years, has begun to stagnate. Some of that is a 

focus on what is the next generation. 

Frankly, we have a great system right now and while we need 

to be looking toward the next generation, we can’t ignore the current system as we look at that next generation. 

The second is, as you pointed out, a lot of the work happens 

throughout the country, not just in our development labs but also 

in our field organizations. That, while it has many benefits, from 

a computer science and a software person standpoint, it can become 

a nightmare to maintain and we have to balance between those two 

things. We have to have a system that can be made available over 

99.9 percent of the time but also moves innovation forward at the 

201 

same time. That’s a difficult balancing act and we have to manage 

that as we go through. 

So the purpose with moving toward open source is to get much 

more of the community available, first, and, second, to potentially 

make the Vista System available to many more hospitals throughout the country and throughout the world than are currently using 

it right now. 

A little-talked-about fact is that there are more than 50 hospitals 

throughout the world outside the VA system that have adopted the 

Vista Electronic Health Record System through open source methods through companies that are providing that. 

I think there’s real opportunity there to both aid the VA, which 

is my first goal, in moving that system forward and keeping it the 

best electronic health record system in the world and, second of all, 

helping electronic health records expand throughout both the country and the world. 

Again, the quality of care is the key focus here and that’s what 

Vista really brings is that increase in quality and care in those hospitals. 

Senator WHITEHOUSE. Well, I appreciate it. Let me thank Chairman Warner for his courtesy in allowing me to interrupt with the 

questions. 

Mr. Douglas, I’m sorry I’m not able to stay longer, but I’m grateful to you for coming in and sharing your wisdom with us in this 

area and again if, in terms of questions for the record, in addition 

to answering the question I asked Director Baker, if you have any 

numbers that you are aware of and can cite to us or that you would 

be prepared to assert to some degree of certainty, you can choose 

your level of certainty, but this is ultimately a budget-setting interest that we are embarked on and to the extent you can give us 

some quantification of where you think various savings might lead, 

I would ask that as a question for the record as I depart. 

Senator WARNER. Thank you, Senator Whitehouse. Mr. Douglas, 

please. As somebody who I think has been down a fairly similar 

path in Virginia, I’m very anxious to hear your testimony. Please. 

STATEMENT OF MR. BRAD DOUGLAS, COMMISSIONER, DEPARTMENT OF ADMINISTRATIVE SERVICES, STATE OF 

GEORGIA 

Mr. DOUGLAS. Well, thank you, Chairman Warner, and certainly 

to Senator Whitehouse, we will certainly put forth any information 

along those lines that we can. 

Chairman Warner, we’re certainly very appreciative of the opportunity to appear before you and during your time as Governor of 

Virginia, obviously we worked very closely with your team down 

there and Ron Bell and the folks in General Services in particular. 

Quite a brotherhood there between Georgia and Virginia. 

We’re honored to represent the great State of Georgia here today 

and hopeful that some of the lessons learned in Georgia can be applied on the Federal level. We applaud the creation of the committee that you’re chairing and we’re very eager to share some of 

the successes experienced in Georgia. 

Early on in Governor Sonny Perdue’s Administration, beginning 

in 2003, the idea of tapping into the private sector for innovative 

202 

and proven ideas that could be applied in the public sector really 

took hold. One of the first things that Governor Perdue did was to 

create the Commission for A New Georgia and this was a group 

that asked several private industry executives and even consulting 

companies on a pro bono basis to come in and take a look at government operations, the back office operations of government, the 

inner workings, if you will, and to ensure that those studies didn’t 

gather dust, as many studies do in government and elsewhere, the 

Governor created his Office of Implementation. 

This group was charged with making sure the rubber meets the 

road, if you will, that the studies actually took life and that things 

were implemented, measured, and tangible results occurred from 

those. 

Those results have been many. For instance, the Department of 

Driver Services, while waiting in line to renew or get a new driver’s 

license, waits more than 2 hours were common before. Now those 

waits average less than 10 minutes. The state really didn’t have an 

idea of capital assets that it had, how many buildings it had, how 

many vehicles it had, how many aircraft it has, and today we manage those on an active basis with data bases of these state assets, 

and so, in addition to that, agencies operated as they do here on 

the Federal level, in silos somewhat, very decentralized, without a 

tremendous amount of collaboration, and so to address those issues 

and many others, several task forces were created by the Commission for A New Georgia and one of those initial task forces was a 

task force to review the state’s procurement function. 

In the state of Georgia, the procurement teams handle about $4 

billion in spend. Obviously that’s a subset of what the Fed spends 

but still to the state that’s obviously an area that presents a tremendous amount of opportunity. 

At the time the state Purchasing Division was composed of what 

I would say are transaction-focused workers or staff. To be quite 

honest, they were paper pushers adding little, if any, value to the 

process. If someone told them what to do, they might do it, but 

there really wasn’t a lot of strategic value in terms of what made 

up the marketplace and some of the drivers of the procurement 

market. 

The state Purchasing Unit, as a central unit, is charged with establishing statewide contracts, much like you’re seeking here, to 

where the leverage of the entire government, the entire enterprise, 

could be brought together but yet the collaboration between agencies and even the state universities, of which we have 35, was virtually nonexistent and so therefore the tremendous opportunity 

that was there just simply wasn’t being realized. 

Purchasing processes and procedures were misaligned. There 

was inconsistency rampant throughout the agencies as to how purchasing was even conducted and in fact the state found itself in 

court numerous times where aggrieved suppliers were claiming 

that the state had not undergone a fair and level procurement operation and in fact supplier challenges to our purchasing solicitations, they were untracked. We had no idea how many we had. We 

had no idea how long they were taking, who was resolving them, 

had we lost any, and yet that’s a customer service facet, if you will, 

203 

to both the end user who’s waiting as well as the supplier who feels 

aggrieved. 

And beyond that, procurement technology was literally nonexistent. There was a homegrown system that allowed the state to 

post its procurement solicitations to the Web, but the state had no 

idea how much it was spending on products or services and so the 

Procurement Task Force recommended numerous changes, nearly 

all of which have been implemented now. 

Legislation was passed drastically revising the Procurement 

Code in the state. A lot more authority was given to our agency, 

the Department of Administrative Services, to be able to aggregate 

the spend, to even set the skill sets and the compensation levels 

of procurement staffs in the various agencies and universities, to 

raise them to the current level. 

I know Peter Orszag wrote a letter this summer that raising the 

acquisition skill set throughout Federal Government was a key initiative and the same thing in our state. 

And the next step was to recruit a classically trained procurement professional to come in and oversee this procurement transformation and to also engage and manage a very large consulting 

firm. In our case, it was A.T. Kearney who was brought in to sort 

of serve as our transformation partner, if you will, set the organization, take a look at processes and procedures and then perform a 

fit-gap analysis for the correct technology that needed to be put in 

place. 

And to begin the process of revamping the state’s procurement 

function, the state decided that the proper course of action was to 

focus specifically in this order: people, processes, and then technology, technology being the last that we focused on because, quite 

honestly, if we’re automating a flawed process, then all we’ve done 

is automate a flawed process. We haven’t improved anything. 

We’ve just hung something on someone, if you will. 

And so a new organization structure was defined. Commodity 

teams were put in place to develop resident expertise among different commodities for the products and services, the key products 

and services that the state purchased throughout the enterprise, 

and based on that, we also took a look at job descriptions and rewrote those. We benchmarked the compensation levels of the procurement staff against both the public and the private sector to 

make sure that we had the proper job descriptions and then the 

requisite skill sets defined as well as the compensation levels. That 

allowed us to attract the best and brightest procurement professionals in the country back to our state, the State of Georgia. 

Our Assistant Commissioner of Procurement we hired from the 

University of Notre Dame, for instance. Our Director of Strategic 

Sourcing, we went to a major Fortune 500 company and hired from 

Microsoft, and those folks who had a focus on strategic sourcing 

and for those who are not initiated, strategic sourcing is having a 

vast knowledge of all the market drivers, having high-level negotiating skills, and really being able to form a modern procurement 

shop by attracting some of those folks by revising the organizational structure and then the skill sets required to perform the 

function. 

204 

And obviously a complete revamping of the purchasing policies 

and procedures from top to bottom, eliminating delays, eliminating 

inefficiencies in that process, and just really streamlining overall. 

I mentioned the supplier challenges. When we first started measuring those, it was nearly a 60-day delay for suppliers to have their 

challenges to a state procurement be adjudicated. Those supplier 

challenges are now down to an average of 14 days and so that is 

really a tell-tale sign, if you will, of the focus on efficiency and then 

again the customer service aspect, a very tangible result, and in 

that process we found that only one and a half percent of our procurements were being challenged anyway and so very valuable information for us. 

Again, only when we put the right staff and the processes in 

place did we try to automate the process and we did so and the result was our new eProcurement platform known as Team Georgia 

Marketplace. It’s a combination of different software packages that 

had the interoperability that you spoke of earlier and since that 

time, nearly $800 million in state spend has come through that system. 

Now that system deployed January 20th this year. On January 

19th, I didn’t have any idea about any details on $800 million of 

purchases. Sitting here on December 10th, I can tell you just about 

anything you’d want to know about those $800 million in purchases 

from various agencies and it’s only a subset of the agencies in the 

state because we’re having an agency by agency rollout throughout 

the state as we implement this program. We didn’t try to bite off 

too large of a chunk, if you will. 

That project, talking about IT implementation, had a very formal 

governance oversight to it, if you will. We had a Critical Projects 

Review Council to oversee the project. We are a People Soft Financial house, if you will, so we have a PeopleSoft Governance Council 

and that’s chaired by the state COO, CFO, CIO, the state Accounting Officer, I sit in on those meetings as well as Procurement. 

You have all of the requisite functions that are needed to sit in 

and provide oversight on state IT projects that meet a certain level, 

if you will, of magnitude and importance to the state and that’s 

made a real difference in the way the state has managed its IT 

projects. 

As a result of that system and another system that subsequently 

we have partnered with the Pew Center of the state and again with 

A.T. Kearney to develop a Spend Cube and that takes disparate 

data sources from across the state, whether it be a university that 

doesn’t use our core PeopleSoft System, purchasing cards, supplier 

sales data. It aggregates, normalizes that data, and allows us to 

make better sense, if you will, of what the state is purchasing, be 

it products, services, or anything else it might be buying. That allows us to target enterprise-wide contracts that could perhaps be 

put into place. 

A couple of examples, in closing, that we have experienced in the 

state of Georgia, document imaging, just copying and printing of 

various documents, a 9 to 42 percent savings over the previous contract by going through the strategic sourcing principles that we 

have employed for black and white copying, Mr. Chairman, for 

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color copying and printing, a 67 to 87 percent decrease in price over 

the previous contract. 

Passenger vehicles that all state government workers need virtually, a new contract covering four classes of sedans, a hybrid 

sedan, pickup trucks, vans, SUVs, the average is 22.4 percent 

below dealer invoice, great time to be purchasing cars right now. 

The state stepped in and took advantage of that. 

Background checks to make sure that we’re mitigating our risk 

when hiring employees, background checks now, they used to be 

$45, now $16, a savings of 65 percent. Different reports now range 

20 to 65 percent less than they used to be. Those are just a few 

of the examples that we’ve cited, more in our written testimony. 

We’ve recently established a national contract for tires and also 

are looking to establish one for buses that the Federal Government 

could participate in, other states can participate in, as I think of 

the collective leverage of states and the Federal Government together, we also reach even down into the municipalities within the 

state, to try to create that purchasing leverage that you’ve been 

speaking about and go to the marketplace, if you will, as the big 

gun in the market and that’s created a tremendous benefit for us. 

To sustain this, we’re trying to train the rest of the purchasing 

staff throughout the state. Thus far, dozens of classes have been 

put into place, 7,000 students have been trained, 3,500 certifications have been handed out, and you only get the certification if 

you test out that you retained the knowledge and that you have the 

knowledge the training delivered to you. 

In closing, there’s three key elements that have made this successful in the state of Georgia. One, top-down leadership. Two, the 

necessary legislative changes required to carry out these changes. 

Third, obviously the budget to do so, but certainly the budget has 

been paid back with the savings that have been generated thus far 

and that investment has been very, very fruitful for the state of 

Georgia. 

We think that for years to come, this will have a profound effect 

on the state. We certainly appreciate the opportunity to come in 

today and present some of the lessons learned in the state of Georgia and hopefully again the Fed can take some of the lessons 

learned there and apply here. 

[The prepared statement of Mr. Douglas follows:] 

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Senator WARNER. Thank you, Mr. Douglas. We really appreciate 

your testimony. 

You cited a couple of examples around cars and printing. I would 

always go around and talk about the fact of using the same tools. 

We lowered the price of light bulbs from 30–32 cents to 23 cents 

and it didn’t close a $6 billion budget gap that we had but we buy 

an awful lot of light bulbs in the Commonwealth of Virginia. So I’m 

very, very anxious to talk. I’ve got very specific questions for both 

of you, but recognizing that Senator Cardin and Senator 

Whitehouse are on the same committee that’s doing a mark-up, I’m 

going to let Senator Cardin go first. 

I appreciate him coming by and happy to have his questions. 

Senator CARDIN. Well, thank you very much, Mr. Chairman. 

You’re correct. Senator Whitehouse and I are dealing with the 

Press Shield Issue in the Judiciary Committee. So we wanted to be 

here because of the importance of the subject but we also wanted 

to get away from the Press Shield for a little while. So thank you 

for giving us a reason. 

Let me thank Senator Warner first for his leadership on this 

issue and because I want to come back to that, the need for leadership if we’re going to be able to make progress on this subject. He 

brings not only a commitment to efficiency in government but he 

brings the experience of a Governor, an effective Governor, in dealing with budgetary issues, and this brings me to the testimonies 

that both of you bring here. 

Mr. Baker, you mentioned the importance of prioritizing projects 

at the VA and I think that’s critical. If you are not selective you 

start to say, we’re going to be efficient in everything, and it becomes an impossible task. You really need to prioritize and inforVerDate Aug 31 2005 10:39 May 18, 2010 Jkt 000000 PO 00000 Frm 00219 Fmt 6601 Sfmt 6601 C:\DOCS\55507.TXT SBUD1 PsN: TISH

55507.097
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mation technology is an area in which we can make significant 

progress, and I applaud the VA for doing that. 

With regard to Georgia, Mr. Douglas, let me make this observation as it relates to the last point you made about top-down leadership being absolutely critical. 

I use the example of Baltimore’s CityStat program implemented 

by Mayor O’Malley. Agencies had to report to the mayor, who was 

going to check statistics with you, and it caused the bureaucracy 

to understand that the chief was interested in their progress and 

it made a huge difference. 

Now, of course, Mayor O’Malley is now Governor O’Malley, and 

he is using that same type of personal accountability, developing a 

program that I know Senator Warner is interested in, BayStats, 

where people are held accountable for results in cleaning up the 

Chesapeake Bay. 

That to me is top-down leadership, where a commitment exists 

to alter a pattern of how contracts have always been awarded, and 

ensuing that the initiative is identified as coming from the leadership. That’s why I think it’s very, very important that Congress 

shows that this is not just another hearing to be followed by a couple more years of inaction before we raise the issue again. We need 

a continued focus on how to develop a workable strategy to bring 

about results. 

You’ve shown when you do that, you do bring about savings, you 

do bring about results, and, yes, you need the legislation aand you 

need the budget to support that, no question about it. 

So my question to you is, looking at the VA and at Georgia, what 

is the toughest hurdle to overcome to get these programs moving 

forward? 

Some of this seems like common sense: you know these savings 

are there, but what’s the toughest hurdle, what’s the most important thing that Congress can do to encourage more programs such 

as the VA has done with IT and what Georgia has done in its efforts? State efficiency is going to save the taxpayers of this country 

money. So we’re interested in how we can work together on this. 

Any suggestions? 

Mr. DOUGLAS. Mr. Baker, I’ll take that question, if you don’t 

mind, initially. 

I think there are a couple things and, Senator Cardin, you really 

hit upon it. It is that top-down leadership that is key. In Georgia, 

one of the things that we discovered early on is that the procurement team would sort of sit in an ivory closet, if you will, and 

dream up ideas for specific contracts. There really was no collaboration with the user base, the different agencies. The collaboration 

simply wasn’t there. 

Whenever a statewide or enterprise-wide contract is put into 

place, there’s a sourcing team made up of both agencies and universities. The Federal Government is absolutely huge. Down in the 

state of Georgia, we think the state of Georgia is huge in terms of 

the size of the enterprise, with 120 different agencies, 35 universities. From mere absolute numbers, that is large, even larger here 

on a scale of magnitude in the Federal Government. 

What I would tell you is that there are a core number of agencies 

that form the vast majority of your spend. That’s where the focus 

215 

needs to be. No one has a mouth big enough to take a bite of this 

entire chunk of business that is here. We need to hone in on where 

can we move the needle and the needle has to be moved incrementally. 

In Georgia, it’s the top eight agencies that generate 80 percent 

of the executive branch spend, seven of the universities generate 80 

percent of their spend. We put those together, that’s 15 entities 

that we focus on for most of what we do. We don’t ignore the others 

but yet we focus on that core group. 

Senator CARDIN. I think that’s good advice. 

Mr. DOUGLAS. And that allows us to move the needle very much. 

The second thing that we do is the accountability and celebrating 

victories and so we celebrate with those sourcing teams when we 

put these types of contracts in place. By having those sourcing 

teams, you create the upfront buy-in that this is a good contract, 

that my needs were met, and in other cases where you find the 

spend, if you will, the purchasing volume isolated to, say, a single 

agency or a couple of agencies, we employ what we call the natural 

ownership model and we would advise them, as they go about putting a contract in place, that that needs to reside with them versus 

being an enterprise-wide contract to where they feel like they lose 

control of it. 

Senator CARDIN. I think the points you’re raising are extremely 

important. It seems to me that if the reward for doing a job right 

is getting a smaller budget, that’s not necessarily going to encourage positive results. You’ve got to be able to provide incentives for 

the savings that are being achieved and that needs to be reinforced. Human nature being what it is, if it’s not, agencies are 

going to go back and do things as they did before. 

Mr. DOUGLAS. And that’s why our Governor, the first time that 

we generated savings, he allowed the agencies to choose how to redirect the funding to program areas that needed funding and that’s 

a challenge with our legislature, to be quite honest, and in fact 

they wanted to come and sweep those savings. 

Really, in our group, you noticed the way that I presented the 

contract pricing deltas is on a percentage basis because it’s very 

difficult for us to know what is on agency planning? If they’ve just 

refreshed their PC hardware last year, that has a three-or-fouryear life cycle. That won’t be replaced again this year. 

So to take last year’s spend data and try to apply savings to that 

and say that will reoccur this year, you could run afoul if you 

aren’t aware of the cycle time or what that agency’s planning to do. 

I really think the Federal Government needs some type of oversight and it may be very much more than OMB can employ, but 

I know, for instance, the State of Tennessee sort of has an internal 

swat team, if you will, an internal group of consultants and that 

seems to be a very, very effective way. If I know, for instance, that 

our tire contract has been decreased by 22 percent in price, then 

I can start to make some estimate as to, well, what might that purchasing activity be agency by agency just for those key agencies 

who have the majority of the volume and it makes it manageable 

that way. 

Senator CARDIN. Mr. Baker, were you rewarded for the good job 

you did on IT or not? 

216 

Mr. BAKER. Absolutely. As an Assistant Secretary, I get a $153,200 a year. It’s a great reward. I’m sorry to be a little flip, 

sir. 

Senator CARDIN. No. We appreciate that. We are rewarded in 

many ways, including our compensation, but again I see this happen frequently, that those who develop with ways of streamlining 

are rewarded with smaller budgets. It’s redirected outside of the 

savings that you’ve achieved or people come up to you and say, you 

know, you should have padded the budget so we could have kept 

it in the future. 

Mr. BAKER. I haven’t found anything that indicates that anyone’s 

looking to cut our budget as the result of the savings generated. I 

think there are a lot of things we can do for veterans with the dollars that we’re spending and spend them better. 

We have a great mission. I’ve gotten no—if you’ll note in our 

2010 budget as that rolls forward, it looks like we will see a substantial increase in technology for 2010 as a result of some work 

that the Senate and the House and the Secretary and the President 

have done to put that together. 

The major thing, I think, is it makes our budget much more defensible when we can point out here’s where we’re spending the 

dollars. We know exactly what results we’re getting. I’m hoping 

that, as we roll into the 2012 budget cycle, my life is very, very 

easy when it comes to budgeting because I can take all of my thick 

spreadsheets and information about where all the dollars are going 

and lay them out to OMB and to the appropriators and have them 

be confident that a dollar spent with VA is a dollar invested well 

in improving the life of veterans. 

Senator CARDIN. I’d be interested in that; if you’ve gone to OMB, 

you’d be one of the first people ever to tell us that they were reasonable. So it’d be interesting to see that reaction. I know they are 

trying. I have talked to people in your position who tell us that 

they’re not rewarded by the OMB process. So we’d be interested in 

making sure that there is a reward in the system for efficiency and 

ways in which, when you come up with these ways in which you 

can get better value, that—yes, we want savings for the taxpayer, 

we do, we want to be able to bring the budget much better into balance, but we also want to reward efficiency. 

So congratulations for a job well done. Thank you, Mr. Chairman. 

Senator WARNER. Thank you, Senator Cardin. And I’ve got to 

head out in about eight or 9 minutes. So I’ve got a couple questions 

for both of you, but I really appreciate Senator Cardin coming by 

and asking, I think, very important questions. 

I’ve got a ton of questions. I’ll put them in for the record, but I’ve 

got a couple very specific ones. Let me start with you, Mr. Baker. 

I’ve got three specific questions. 

One was I’m very interested in your comment that you said, as 

you tried to stop some of these contracts how much more difficult 

it was to stop a contract than start a contract. I think we would 

be very interested in lessons learned from this experience and are 

there—should there be some new standard contract language 

across all our IT projects that allow for the government to exit an 

in the project if it’s not performing? So this ongoing lesson you’re 

217 

learning right now as you stop these 12, we’d really love to get 

that. 

Second, I am also interested, if you could comment briefly, on 

what you’re doing about contract creep, how do you make sure that 

you’ve got a system that has your initial contract officer scope the 

contract appropriately, and then, you know, what kind of reward 

or penalty again is the contract officer given if he doesn’t have the 

kind of IT contract creep. 

And third, you know, I think one of the comments you made at 

the outset was that you, in effect, are a huge agency here. You, in 

effect, really are a chief CIO and you’ve got that direct responsibility for all procurement and oversight. 

I’d love to see if we could—how we could replicate that throughout other agencies and how important that is to making sure you 

get your job done, and then I’ve got some questions for you, Mr. 

Douglas. 

Mr. BAKER. Let me take those a little bit in reverse order because it’s interesting, Senator Cardin’s point, about what was the 

hardest part of this. For VA, and I think it would be for any Federal organization, making the decision to consolidate IT into a single organization was tremendously painful. It took a lot of pressure 

from the Hill and it took, frankly, a nearly catastrophic failure of 

losing the laptop with 26 million veterans’ information on it to 

make it happen. 

Senator WARNER. I’ve still got some scars from the effort we did 

in Virginia, I can assure you. 

Mr. BAKER. Yeah. 

Senator WARNER. I understand. 

Mr. BAKER. So that is by far the hardest piece of it. Lessons 

learned. It’s interesting because what you find as you look to stop 

some of these contracts is that sometimes the way the contract is 

written, it can cost you more to stop it than to just let it keep 

going. That certainly has issues around it. 

We found that we were very intertwined in our contracts. Multiple projects using the same contract, multiple contracts on individual projects and that made things difficult as we negotiated 

with the vendors to stop them. 

So I think there are lessons learned in this. I certainly have 

learned a number of lessons. When we started in July with stopping 45 projects, my expectation was that by the end of September, 

we would have them sorted out, done and moved on to the next 

tranche of things. It’s been three additional months and working 

through all the contractual items. On the program management 

side, we were ready to go at the end of September with the rest 

of our IT projects, but until we got to the point where we understood exactly how to handle every project we decided to stop from 

our contractual standpoint, it caused us to pause in pausing our 

projects, if you will, at that point. We’ve got it figured out. 

On contract creep,—— 

Senator WARNER. And on that subject, I would like, I think, our 

staff would like to see if there is a specific lesson learned or language that should be added to future IT contracts, not just within 

the VA but on a broader basis, so that if we see your very good 

efforts replicated elsewhere in the Federal Government, and anVerDate Aug 31 2005 10:39 May 18, 2010 Jkt 000000 PO 00000 Frm 00223 Fmt 6601 Sfmt 6601 C:\DOCS\55507.TXT SBUD1 PsN: TISH
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other agency tries to go through this process, they don’t run into 

the same hurdles. 

Mr. BAKER. Absolutely. I think we probably need a conversation 

with the staff on that whole topic. 

Contract creep really is going to be managed by the incremental 

nature of what we’re doing at VA. The biggest change is, as Vivek 

Kundra mentioned, getting away from big bang contracts where 

they go for 5 years before they deliver anything and, in general, if 

you look at the trends, that means they’re never going to deliver 

anything that the customer really wants. 

We’ve moved to saying that all of our IT projects have to have 

deliverables at least every 6 months and those deliverables have to 

go to the customer. So it’s not a document. It’s actual software. 

What that ensures is that we’re getting value. We’re getting released software that the customer can look at and determine 

whether we’re getting value on it. 

I’m not positive that’s going to keep our contracts from expanding in scope. What it will do is keep our contracts from expanding 

in scope without something, without the equivalent result being delivered for the additional dollars. 

One of the things to recognize is that our business changes all 

the time. Starting a project 1 year and expecting the requirements 

to stay the same for the next 3 years is impossible. So as those requirements change, the needs of the contract are going to change 

slightly. We’re going to find new things that we want to do. So 

from that perspective, you build a contract that anticipates the fact 

that you’re going to have additional things that you want to do. 

The issue is when you put in place the contract where you expect it to cost a $100 million for a certain set of requirements and at 

the end you’ve spent your $100 million and you haven’t got any of 

those requirements fulfilled or it costs you $300 million for those 

same set of requirements to get fulfilled, I think that’s where the 

real problem comes in in this. 

So it takes flexibility if you’re going to move to an incremental 

environment to work with the contractor and make certain that 

you’re getting what that end customer inside of the organization 

wants, but I think it’s going to be difficult to say that contracts are 

only at a certain value because the customer wants more things as 

it goes along and if we’re getting good value, if we’re getting good 

results for the dollars we’re spending, that may well be OK. 

Senator WARNER. Again, I have to apologize. I’m getting the hook 

from my staff. I’ve got Secretary Geithner waiting down the hall. 

You know, I still think we could use some more work on better 

rewarding contract officers for scoping the contract better on the 

front end so we have a better expectation. 

I want to thank Mr. Douglas for coming up from Georgia and I 

can assure you I’d like to continue offline on this conversation, 

share some war stories. Our procurement system was called EVA 

and I don’t know, I would imagine we found some of our most reluctant participants were our universities and I also know that 

some of our legislators who talked the most about savings were the 

most resistant when you actually stopped making the local contract 

in their hometown and you actually took that purchasing up to the 

state level and leveraged purchasing power. 

219 

But I commend the job that you’ve done for Georgia and under 

the leadership of Governor Perdue and we’d like to kind of take 

some of those lessons learned and see how we can bring them in, 

working with our first panel, with Aneesh and Vivek, to bring 

those lessons to a broader implementation across the whole Federal 

Government. 

I thank you both. This is—I know again we’ve lost some of our 

members. I think these are fascinating topics. I appreciate what 

you’re doing. It doesn’t always get a lot of attention, but, boy oh 

boy, in terms of value for the taxpayer at the state level or the Federal level, it’s terribly important. 

Mr. BAKER. Thank you. 

Mr. DOUGLAS. Thank you. 

[Whereupon, at 11:5 a.m., the hearing was adjourned.] 

220 


55507.114
221 


55507.115
222 


55507.116
223 


55507.117 55507.118
224 


55507.119
225 


55507.120
226 


55507.121
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55507.122
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55507.123
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55507.124
230 


55507.125
231 


55507.126 55507.127
232 

Æ 


55507.128