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Tuesday,

February 1, 2000

GAO/T-AIMD-00-73

BUDGET ISSUES

Effective Oversight and

Budget Discipline Are

Essential--Even in a Time

of Surplus

Statement of David M. Walker

Comptroller General of the United States

Testimony

Before the Committee on the Budget, U.S. Senate

United States General Accounting Office

GAO

Page 1 GAO/T-AIMD-00-73

Mr. Chairman, Senator Lautenberg, and Members of the Committee:

I appreciate the opportunity to be here this morning to discuss the unique

budget and oversight challenges that face you and other Members of the

Congress at this time. Let me commend you for taking on this important

but not glamorous task of oversight. Seriously reviewing current laws and

programs is hard work, but it can yield important outcomes; thinking

about whether existing programs work or are still needed is critical to

maximizing the government’s performance and accountability.

We stand at an important crossroads. After nearly 30 years of deficits, the

combination of hard choices and remarkable economic growth has led to a

budget surplus. We appear—at least for the near future—to have slain the

deficit dragon. In their most recent projections, the Congressional Budget

Office (CBO) shows both unified and on-budget surpluses throughout the

next 10 years. While this is good news, it does not mean that hard choices

are a thing of the past. First, it is important to recognize that by their very

nature projections are uncertain. This is especially true today because, as

CBO notes, it is too soon to tell whether recent boosts in revenue reflect a

major structural change in the economy or a more temporary divergence

from historical trends. Indeed, CBO points out that assuming a return to

historical trends and slightly faster growth in Medicare would change the

on-budget surplus to a growing deficit. This means we should treat surplus

predictions with caution.

However, even if the budget surplus continues, it does not signal the end

of fiscal challenges. Nor does it eliminate the need for prudent

stewardship of our national economy. Projected surpluses do not absolve

government of its responsibility to make good use of taxpayer dollars.

Rather, the surpluses provide an opportunity to rise out of the 1-, 3-, or 5-

year budget horizon of recent deficit debates and to focus on longer-term

challenges as we move into the 21st century. We move into this new

century relatively free of the immediate security threats and fiscal

constraints of the recent past, but we must recognize the challenges that

will shape the United States and its place in the future: globalization,

technology, demographic shifts, quality of life issues, changing security

threats, and rising expectations for government performance and

accountability.

I have testified before on the importance of preparing for the demographic

tidal wave facing both the United States and much of the industrialized
Page 2 GAO/T-AIMD-00-73

world.1 Without changes in Social Security and Medicare, these programs

will consume an ever-larger share of the economy—producing a serious

squeeze on the resources available for other national needs. Further, while

Social Security and Medicare are the obvious fiscal time bombs, they are

not the only long-term cost pressures we face. Bills will also come due for

a variety of other commitments and contingencies, such as federal

insurance programs and cleanup costs from federal operations known to

result in hazardous waste, including defense facilities and weapons

systems. To help prepare our nation for the burdens these commitments

will impose on future taxpayers, we should continue to devote a

significant portion of our surplus to pay down the federal debt. Reducing

interest payments on the debt—now our third largest “program”—is

critical to providing the fiscal flexibility to address future needs and

commitments.

Today, however, I would like to focus beyond these compelling fiscal

pressures and talk about the need for serious debate about what the

government does, how it does it, and who benefits from these activities.

After a decade of focusing on deficit reduction, we know there are pent-up

demands for using the projected budget surpluses. However, if careful

scrutiny is given only to proposed new spending or new tax preferences,

policymakers will have missed a golden opportunity to shape the

government for the next century. A body of laws enacted during the last

decade—including the Government Performance and Results Act, the

Chief Financial Officers Act, and the Clinger-Cohen Act—has sought to

provide more complete and consistent information on the fiscal, program,

and management performance of federal agencies, programs, and

activities.2 Now—freed from the exclusive focus on deficit reduction but

facing the demands of the future—policymakers have an opportunity to

use that information in new and important ways.

As we enter a new century, we have been reminded about how much

things change. To get some perspective on change in the last 20 years, it is

useful to recall that students who started college this fall were 11 when the

Soviet Union broke apart and have no memory of the Cold War; their

lifetimes have always known microcomputers and AIDS. Yet many of our

programs—their goals, organizations, and processes—were designed long

before those students were born. It shouldn’t be insulting or threatening to

any federal program or activity to question its relevance or “fit” in today’s

1Medicare and Budget Surpluses: GAO’s Perspective on the President’s Proposal and the Need for

Reform (GAO/T-AIMD/HEHS-99-113, Mar. 18, 1999) and Social Security Reform: What the President’s

Proposal Does and Does Not Do (GAO/T-AIMD/HEHS-99-76, Feb. 9, 1999).

2Managing for Results: The Statutory Framework for Performance-based Management and

Accountability (GAO/GGD/AIMD-98-52, Jan. 28, 1998).
Page 3 GAO/T-AIMD-00-73

world. Examining the legacy of existing activities and programs can yield

several important benefits. First, we can create much-needed flexibility to

address emerging needs by weeding out programs that have proven to be

outdated and no longer relevant to our changing society. Second, we can

update and modernize those activities that remain relevant by improving

their targeting and efficiency through such actions as redesigning

formulas, enhancing cost sharing by beneficiaries, consolidating facilities

and programs, and streamlining and reengineering operations and

activities.

In my testimony today, I will talk about selected performance challenges

within federal agencies and programs and about possible changes to

congressional oversight models to help address such problems. In this

testimony, I draw on the breadth of our work at GAO and provide

examples based on the key findings and issues developed in our audits and

evaluations. These examples are organized within the following five

thematic questions on which you asked us to focus.

• What federal services could be better provided by the private sector?

• What federal subsidies to individuals, business, or states and local

governments are no longer needed or are poorly targeted?

• What overlapping or fragmented programs could be consolidated or

better coordinated?

• What federal facilities or locations are outmoded, ineffective, or excess

to requirement?

• In what areas could major federal capital investments be more costeffective?

I will then conclude my statement by turning to some ideas that may be of

use to you in thinking about new congressional oversight models and

processes as we enter this new period in our nation’s history. I will draw

on some of our work on how other countries have dealt with their budget

surpluses. I will also talk about how the Congress might use the new

statutory framework for results-based management and accountability to

provide for more systematic examination of current and proposed federal

programs.
Page 4 GAO/T-AIMD-00-73

One of the lessons drawn from the history of deficit reduction efforts

during the 1990s is that reconsidering federal programs and activities

individually is less likely to lead to change than basing reform initiatives

on broad policy rationales or themes. A consistent, clear, and complete set

of overarching themes can be an effective means to formulate and package

oversight and re-examination of federal agencies and programs. With this

in mind, I now turn to the thematic questions I mentioned above and

provide illustrative examples of candidates that could be considered

within each area.

Many federal programs and activities were created to address real or

perceived failures of private sector markets to provide specific goods or

services. However, in some cases market conditions have evolved to the

point where factors prompting federal intervention may no longer be valid;

in other cases, private sector markets may have developed to the point

that they can provide the good or service more cost effectively than the

public sector. The following examples from GAO work illustrate federal

programs or activities that could be considered for reform, reduction, or

termination because of fundamental changes in underlying rationale.

• The federal government began to market electricity following the

construction of dams and major water projects primarily from the 1930s

to the 1960s. However, the restructured and increasingly competitive

electricity industry, and the relatively small contribution made by

federal power marketing administrations (PMAs), suggests that

reassessment of roles and missions is needed. We reported in 1998 that

divesting or corporatizing three PMAs—Southeastern, Southwestern,

and Western—could produce significant budgetary savings.3 These

PMAs provide a small percentage of the total power consumed in a

state, and most customers would see little or no rate increase if

commercial market rates were charged.4 For fiscal years 1992 through

1996, the federal government incurred a net cost of $1.5 billion from its

involvement in the electricity-related activities of these PMAs. Divesting

the PMAs and federal power assets would eliminate the government’s

presence in a commercial activity and, depending on a divestiture’s

terms and conditions and the price obtained, could produce both a net

gain and a future stream of tax payments to the Treasury.

3Federal Power: Options for Selected Power Marketing Administrations’ Role in a Changing Electricity

Industry (GAO/RCED-98-43, Mar. 6, 1998).

4Federal Power: PMA Rate Impacts by Service Area (GAO/RCED-99-55, Jan. 28, 1999).

Addressing

Performance Problems

in Existing Government

Programs and

Operations

What Federal Services

Could Be Better Provided

by the Private Sector?
Page 5 GAO/T-AIMD-00-73

• The Market Access Program, operated by the U.S. Department of

Agriculture (USDA), subsidizes the promotion of U.S. agricultural

products in overseas markets. Despite changes made to the program

between 1993 and 1998, uncertainties continue regarding the results of

the program. Our work5 has noted several questions—including whether

the program generates a positive economic impact, results in increased

exports that would not have occurred without the program, and

supplements rather than supplants private sector spending—that the

Congress could consider in determining whether to terminate or

significantly reduce the program.

• USDA’s Rural Utilities Service (RUS) finances the construction,

improvement, and repair of electrical, telecommunications, water, and

waste disposal systems through direct loans and repayment guarantees

on loans made by other lenders. Given demographic changes, the

operating environment of today’s utilities industry, and weaknesses in

RUS loan management operations, the Congress could reconsider the

role of RUS in the development of the utility infrastructure for the

nation’s rural areas. We have identified various steps RUS could take to

increase the effectiveness and reduce the costs of its loan programs.

From a financial standpoint, RUS has successfully operated the

telecommunications loan program, but the agency has had, and

continues to have, significant financial problems with the electricity

loan program. For example, during fiscal years 1994 through July 31,

1997, RUS wrote off debt totaling more than $1.7 billion for five

electricity loan borrowers. Since then, the agency has written off

$0.3 billion and is in the process of writing off an additional $3.0 billion;

it is probable that the agency will continue to incur losses in the future.6

• Cargo preference laws require that certain government-owned or

-financed cargo shipped internationally be carried on U.S.-flagged

vessels. The laws were intended to guarantee a minimum amount of

business for the U.S.-flagged vessels that are crewed by U.S. mariners,

generally built in U.S. shipyards, and are encouraged to be maintained

and repaired in U.S. shipyards. The effect of cargo preference laws has

been mixed. Although the laws appear to have had a substantial impact

on the U.S. merchant marine industry by providing an incentive for

vessels to remain in the U.S. fleet, cargo preference laws have increased

the government’s transportation costs because U.S.-flagged vessels

5Agricultural Trade: Changes Made to Market Access Program, but Questions Remain on Economic

Impact (GAO/NSIAD-99-38, Apr. 5, 1999).

6Rural Utilities Service: Opportunities to Operate Electricity and Telecommunications Loan Programs

More Effectively (GAO/RCED-98-42, Jan. 21, 1998).
Page 6 GAO/T-AIMD-00-73

often charge higher rates to transport cargo than foreign-flagged

vessels. Cargo preference laws increased federal agencies’

transportation costs by an estimated $578 million per year in fiscal years

1989 through 1993 over the cost of using foreign-flagged vessels.7

• The United States broadcasts over 2,000 hours of radio programming in

over 60 languages and at least 200 hours of television in several

languages weekly to support U.S. foreign policy objectives.8 Given

changing world conditions—including the fall of the Soviet Union–and

the development of commercial international broadcasting services, the

Congress could reconsider the need for and benefits derived from these

programs. In fiscal year 1999, $397.6 million of the U.S. Information

Agency’s budget supported the Voice of America (53 languages), Radio

Free Europe/Radio Liberty (26 languages), Radio and TV Marti

broadcasts to Cuba, Radio Free Asia (9 languages), Worldnet television

broadcasts, and capital improvements. Although international

broadcasting funding has declined considerably since 1994, very few

services have been terminated.

• The Medicare Incentive Payment program provides a bonus payment for

Medicare services provided in areas identified as having a shortage of

primary care physicians. The bonus payments, amounting to over

$90 million in 1997, do not appear to have a significant impact on

physician recruitment and retention, and most of the program’s

payments are going to specialists in more urban areas rather than to

primary care physicians in medically underserved areas. Moreover,

recent beneficiary survey information indicates that access problems

arise for reasons other than the unavailability of physicians.9

• The Government Printing Office (GPO), which receives over

$100 million in annual appropriations, effectively has a statutory

monopoly over printing for the federal government.10 GPO’s monopolylike role in providing printing services perpetuates inefficiency because

it permits GPO to be insulated from market forces and does not provide

incentives to improve operations and processes that will ensure quality

7Maritime Industry: Cargo Preference Laws—Estimated Costs and Effects (GAO/RCED-95-34,

Nov. 30, 1994).

8U.S. Information Agency: Options for Addressing Possible Budget Reductions (GAO/NSIAD-96-179,

Sept. 23, 1996).

9Physician Shortage Areas: Medicare Incentive Payment Not an Effective Approach to Improve Access

(GAO/HEHS-99-36, Feb. 26, 1999).

10Government Printing: Legal and Regulatory Framework Is Outdated for New Technological

Environment (GAO/NSIAD-94-157, Apr. 15, 1994).
Page 7 GAO/T-AIMD-00-73

services at competitive prices. Federal agencies could be given the

authority to make their own printing policies, requiring GPO to compete

with private sector printing service providers. If GPO is unable to

provide quality service at competitive prices, the need for retaining a

government printing office could then be re-examined.

• The Uniformed Services University of the Health Sciences (USUHS) is a

medical school operated by the Department of Defense (DOD). Those

who propose closing the university assert that DOD’s need for

physicians could be met at a lower cost using physicians educated at

civilian medical schools under the DOD scholarship program. USUHS is

a more costly source of military physicians on a per graduate basis

when DOD’s and total federal costs are considered. With DOD

education and retention costs of about $3.3 million over the course of a

physician’s career, the cost of a USUHS graduate is more than 2 times

greater than the $1.5 million cost for a DOD scholarship program

graduate.11

The Congress originally defines the intended beneficiaries for any federal

program or service based on certain perceptions of eligibility and/or need.

Periodic oversight can be an effective means to ensure that limited

resources remain properly targeted in light of changing conditions, current

program operations, and overall congressional priorities. The following

examples based on GAO work illustrate where specific subsidies could be

reexamined.

• Many federal grant programs with formula-based distributions of funds

to state and local governments are not well targeted to jurisdictions

with high programmatic needs but comparatively low funding capacity.

As a result, it is not uncommon that program recipients in areas with

greater wealth and relatively lower needs enjoy a higher level of funding

than that which is available in harder pressed areas. For example, under

the Community Development Block Grant (CDBG), Greenwich,

Connecticut received five times more funding per person in poverty in

1995 than that provided to Camden, New Jersey, even though

Greenwich, with per capita income six times greater than Camden,

could more easily afford to fund its own community development

needs. Better targeting of formula-based grant awards offers a strategy

to bring down federal outlays by concentrating reductions in wealthier

communities with comparatively fewer needs and greater capacity to

11Military Physicians: DOD’s Medical School and Scholarship Program (GAO/HEHS-95-244,

Sept. 29, 1995).

What Federal Subsidies to

Individuals, Businesses, or

State and Local

Governments Are No

Longer Needed or Are

Poorly Targeted?
Page 8 GAO/T-AIMD-00-73

absorb cuts, while holding harmless harder pressed areas that are most

vulnerable. For programs such as Medicaid, Foster Care, and Adoption

Assistance, which base reimbursements on the per capita income of the

state, the minimum federal share could be reduced or the formula could

be revised to better reflect relative need, geographic differences in the

cost of services, and state tax bases. For other formula-based grant

programs, such as Federal Aid Highways or the CDBG, the formula

could be revised to reflect the differential fiscal capacities of states.12

• The Federal Emergency Management Agency’s (FEMA) Public

Assistance Program helps pay state and local governments’ costs of

repairing and replacing eligible public facilities and equipment damaged

by disasters. In a May 1996 report, we presented a number of options

identified by FEMA’s regional program officials that, if implemented,

could reduce program costs. Among the options discussed was

eliminating eligibility for private nonprofit organizations, many of which

operate revenue-generating facilities such as utilities and hospitals, and

publicly owned recreational facilities, which generate a portion of their

operational revenue through user fees or admissions charges. Many of

these types of facilities could have alternate sources of income

sufficient to meet disaster-related costs.13

• Repetitive flood loss is one of the major factors contributing to the

financial difficulties facing the National Flood Insurance Program. The

Congress and FEMA could consider eliminating flood insurance and

emphasizing mitigation for certain repeatedly flooded properties,

removing what some argue is now an incentive to locate in harm’s way.

Approximately 43,000 buildings currently insured under the National

Flood Insurance Program have been flooded on more than one

occasion. These repetitive losses account for about 36 percent of all

program claims historically (currently about $200 million annually) even

though repetitive-loss structures make up a very small portion of the

total number of insured properties—at any one time between 1 to 2

percent. The cost to the program of these multiple-loss properties over

the years has been about $2 billion.14

12Formula Grants: Effects of Adjusted Population Counts on Federal Funding to States

(GAO/HEHS-99-69, Feb. 26, 1999) and Federal Grants: Design Improvements Could Help Federal

Resources Go Further (GAO/AIMD-97-7, Dec. 18, 1996).

13Disaster Assistance: Information on Federal Costs and Approaches for Reducing Them

(GAO/T-RCED-98-139, Mar. 26, 1998) and Disaster Assistance: Improvements Needed in Determining

Eligibility for Public Assistance (GAO/RCED-96-113, May 23, 1996).

14Flood Insurance: Information on Financial Aspects of the National Flood Insurance Program

(GAO/T-RCED-99-280, Aug. 25, 1999).
Page 9 GAO/T-AIMD-00-73

• We have reported in the past on this nation’s practice of compensating

veterans for medical conditions, such as diabetes, chronic obstructive

pulmonary disease, arteriosclerotic heart disease, and multiple

sclerosis, that were probably neither caused nor aggravated by military

service.15 In 1996, the Congressional Budget Office (CBO) reported that

about 230,000 veterans were receiving about $1.1 billion in disability

compensation payments annually for diseases neither caused nor

aggravated by military service. Other foreign countries we reviewed

require that a disability be closely related to the performance of military

duty to qualify for disability benefits; no such link is required in the

United States. The Congress may wish to reconsider whether diseases

neither caused nor aggravated by military service should be

compensated as service-connected disabilities.

• The current tax treatment of health insurance—amounting to revenue

losses of over $70 billion dollars in 1999—gives few incentives to

workers to economize on consuming health insurance. Employer

contributions for employee health protection are considered deductible,

ordinary business expenses and are not included in an employee’s

taxable income. Some analysts have argued that the tax-preferred status

of these benefits, which accrue disproportionately to those in high tax

brackets who also have above average incomes, has contributed to the

overuse of health care services and large increases in our nation’s

health care costs. The Congress may wish to reconsider the tax

treatment of health insurance premiums to improve tax equity and

provide incentives to control unneeded health care usage.16

• The Mining Law of 1872 allows holders of economically minable claims

on federal lands to obtain all rights and interests to both the land and

the hardrock minerals by patenting the claims for $2.50 or $5.00 an

acre—amounts that fall well short of today’s market value for such

lands. Furthermore, miners do not pay royalties to the government on

hardrock minerals they extract from federal lands. For example, in 1990

hardrock minerals worth at least $1.2 billion were extracted from

federal lands, while known and economically recoverable reserves of

hardrock minerals remaining on federal lands were estimated to be

worth almost $65 billion. The Congress could consider revising the law

15Disabled Veterans Programs: U.S. Eligibility and Benefit Types Compared to Five Other Countries

(GAO/HRD-94-6, Nov. 24, 1993).

16Tax Policy: Effects of Changing Tax Treatment of Fringe Benefits (GAO/GGD-92-43, Apr. 7, 1992).
Page 10 GAO/T-AIMD-00-73

to require the payment of fair market value for a patent and to impose

royalty payments on hardrock minerals extracted from federal lands.17

• Currently, of the $1.6 billion spent annually to inspect, test, grade, and

approve agricultural commodities and products, USDA recovers only

about $400 million through user fees paid by the beneficiaries of foodrelated inspection and testing services. USDA’s appropriations fund the

remaining 75 percent of its expenses. USDA generally does not charge

user fees for (1) compliance inspections of meat, poultry, domestic

foods, and processing facilities to ensure adherence to safety

regulations, (2) import inspections and export certifications to ensure

that food products in international trade meet specified standards, and

(3) standards-setting and other support services essential to these

functions. Congress could consider requiring USDA to charge user fees

to meat and poultry slaughter and processing plants that gain

substantial benefit from USDA’s food safety inspection and testing

services.18

• In 1997, the Congress created Medicare+Choice to encourage wider

availability of health maintenance organizations and to permit other

types of health plans to participate in Medicare. This law used 1997

payment rates as the foundation for rates in 1998 and future years.

However, according to actuaries from the Health Care Financing

Administration (HCFA), a forecast error caused the 1997 rates to be an

estimated 4.2 percent too high. Consequently, aggregate plan payments

in 1998 were $1.3 billion too high, and excess payments resulting from

this forecast error will increase over time as managed care enrollment

rises. Current law permits HCFA to correct forecasts in future years but

does not include a provision to allow a correction of its 1997 forecast.

HCFA maintains that the agency needs statutory authority to correct the

1997 forecast error.19

17Mineral Royalties: Royalties in the Western States and in Major Mineral-Producing Countries

(GAO/RCED-93-109, Mar. 29, 1993) and Federal Land Management: The Mining Law of 1892 Needs

Revision (GAO/RCED-89-72, Mar. 10, 1989).

18Food-Related Services: Opportunities Exist to Recover Costs by Charging Beneficiaries

(GAO/RCED-97-57, Mar. 20, 1997).

19Medicare+Choice: Reforms Have Reduced, but Likely Not Eliminated, Excess Plan Payments

(GAO/HEHS-99-144, June 18, 1999).
Page 11 GAO/T-AIMD-00-73

Virtually all of the results that the federal government strives to achieve

require the concerted and coordinated efforts of two or more federal

agencies. Yet our work has repeatedly shown that mission fragmentation

and program overlap are widespread and that crosscutting federal

program efforts are not well coordinated. In program area after program

area, we have found that unfocused and uncoordinated crosscutting

programs waste scarce resources, confuse and frustrate taxpayers and

program beneficiaries, and limit overall program effectiveness.20 The

following examples provide illustrations of overlapping and fragmented

federal missions and programs.

• The federal system to ensure the safety and quality of the nation’s food

is inefficient and outdated. Within USDA, the Food Safety and

Inspection Service (FSIS) is responsible for the safety of meat, poultry,

and some eggs and egg products, while the Food and Drug

Administration (FDA) is responsible for the safety of most other foods.

FSIS, FDA, and 10 other federal agencies administer over 35 different

laws that oversee food safety. The current food safety system suffers

from overlapping and duplicative inspections, poor coordination, and

inefficient allocation of resources. The Congress may wish to consider

consolidating federal food safety agencies and activities under a single,

risk-based food safety inspection agency with a uniform set of food

safety laws.21

• Duplication and overlap in federal land management could be reduced

and operations streamlined through a collaborative federal land

management strategy. The four major federal land management

agencies—the National Park Service, the Bureau of Land Management

(BLM), and the Fish and Wildlife Service within the Department of

Interior, and the Forest Service within USDA—have grown increasingly

similar over time, while federal land management missions have

become more complex. Budgetary constraints and better understanding

of natural ecosystems, whose boundaries are often not consistent with

existing jurisdictional and administrative boundaries of the separate

agencies, demand that the agencies find ways to refocus, combine, or

eliminate certain functions, systems, programs, activities, and field

locations. To improve the efficiency and effectiveness of federal land

management, the Congress may wish to either reorganize the current

20For a summary discussion and many other examples, see Managing for Results: Using the Results

Act to Address Mission Fragmentation and Program Overlap (GAO/AIMD-97-146, Aug. 29, 1997).

21Food Safety: U.S. Needs a Single Agency to Administer a Unified, Risk-Based Inspection System

(GAO/T-RCED-99-256, Aug. 4, 1999).

What Overlapping or

Fragmented Programs

Could Be Consolidated or

Better Coordinated?
Page 12 GAO/T-AIMD-00-73

organizational structures or streamline the existing structures by

integrating and coordinating current functions and programs.22

• Federal water programs intended to promote the efficient use of finite

water resources for the nation’s agricultural and rural water systems

have developed inconsistencies that may cause the programs to work at

cross-purposes. In 1995, we reported that as many as eight different

federal agencies administered 17 different programs just in the area of

rural water and wastewater systems. In the area of irrigation, the

multiplicity of programs and approaches has allowed for

inconsistencies and potentially counterproductive outcomes. The

Congress could consider several options to address these

inconsistencies, including collecting the full costs of subsidized water

for large farms and phasing out double subsidies for both water and

crops.23

• Numerous federal assistance programs—grants, loans, loan guarantees,

and other forms of assistance—are directed at local economic

development.24 One option to address this fragmentation of agencies

and programs, and to more tightly focus federal contributions on local

economic development efforts, is to consolidate or eliminate similar

programs, such as those managed by the Department of Housing and

Urban Development, the Economic Development Administration within

the Department of Commerce, and the Appalachian Regional

Commission. Another option is to reassess the economic effects

attributed to these programs and determine if the federal government

should more closely target economic development assistance or even

provide it at all.

Our work has often found that agencies’ effectiveness has been

undermined by outmoded organizational and program structures.

Agencies such as USDA and DOD have recently begun to redefine their

structures and processes and have demonstrated that benefits can be

achieved, but more needs to be done within these agencies and in other

federal agencies. For example, in DOD, the base realignment and closure

process (BRAC) is credited with producing substantial savings while

22Federal Land Management: Streamlining and Reorganization Issues (GAO/T-RCED-96-209,

June 27, 1996).

23Rural Development: Patchwork of Federal Water and Sewer Programs Is Difficult to Use

(GAO/RCED-95-160BR, Apr. 13, 1995).

24Community Development: Challenges Face Comprehensive Approaches to Address Needs of

Distressed Neighborhoods (GAO/T-RCED-95-262, Aug. 3, 1995) and Economic Development Programs

(GAO/RCED-95-251R, July 28, 1995).

What Federal Facilities or

Locations Are Outmoded,

Ineffective or Excess to

Requirements?
Page 13 GAO/T-AIMD-00-73

mitigating long-term effects on military operational readiness and

economic disruption to local communities.25 In many cases, the

organizational and program structures of civilian agencies have remained

unchanged for decades, despite technological advances and demographic

shifts, suggesting the possible relevance of a “civilian BRAC.” Illustrations

based on our work include the following.

• DOD’s efforts at streamlining, consolidating, and possibly privatizing

infrastructure activities should continue to be encouraged. For fiscal

year 1998, DOD estimated that about $147 billion, or 58 percent of its

budget, was spent for infrastructure requirements. Recognizing that it

must make better use of its scarce resources, DOD announced the

Defense Reform Initiative (DRI) in November 1997. Through this

program, DOD hoped to create a revolution in business affairs that

would streamline and substantially improve the economy and efficiency

of its business operations. A major thrust of the DRI was to reduce

unneeded infrastructure, primarily through a number of initiatives

designed to reduce the cost of DOD’s operations and support activities.

Included in these initiatives were (1) demolishing and disposing 80

million square feet of excess space at military facilities,

(2) reducing the number of Defense Information System Agency major

data processing centers from 16 to 6, (3) reducing the number of

Defense Finance and Accounting Service operating locations from 19 to

11, (4) closing unneeded research, development, and test facilities, and

(5) avoiding hundreds of millions of dollars in future capital

expenditures by privatizing utility systems (electric, natural gas, water,

and sewer) at military bases. The results of DOD’s efforts in reducing

infrastructure are mixed, but continued progress on this initiative can

help DOD save significant amounts of operations and support money.26

• The Department of Veterans Affairs (VA) owns 4,700 buildings and

18,000 acres of land, which it uses to operate 181 major health care

delivery locations. VA spends about $1 out of every $4 of its $18.4 billion

budget to operate, maintain, and improve its delivery locations—in

effect, the cost of its asset ownership. VA’s delivery locations operate in

106 health care markets, and in 40 of these markets multiple VA

facilities compete with each other to serve veterans—for example, 4

major VA facilities are located in the Chicago market. However, all VA

delivery locations project a declining veteran population base, and twothirds expect declines greater than 33 percent in the next 20 years.

25Military Bases: Review of DOD’s 1998 Report on Base Realignment and Closure

(GAO/NSIAD-99-17, Nov. 13, 1998).

26Defense Reform Initiative: Organization, Status, and Challenges (GAO/NSIAD-99-87, Apr. 21, 1999).
Page 14 GAO/T-AIMD-00-73

Without major restructuring over the next several years, billions of

dollars will be used to operate hundreds of unneeded VA buildings. For

example, a VA study projected annual savings ranging from $132 million

to $189 million by consolidating medical and administrative services at

its major delivery locations in the Chicago area. VA needs to develop

and implement realignment plans for all of its health care markets, and

the Congress could consider a variety of options, such as greater

reliance on community-based, integrated networks of VA and non-VA

providers, to meet the health care needs of veterans in the most costeffective manner.27

• The Department of State maintains a physical presence—embassies,

consulates, and other offices in the capital and other cities—in over 160

countries. About 18,000 direct-hire employees—over 6,400 from State

and the rest from at least 27 other federal agencies—and over 35,000

locally hired and contract staff work overseas at a total of more than

250 diplomatic posts. It costs over $200,000 annually to station an

American overseas, which is about two times as much as for

Washington-based staff. In November 1999, the Overseas Presence

Advisory Panel, established by the Secretary of State to review how the

United States carries out its overseas activities, concluded that there is

no process in place to “rightsize” posts as missions change. Although

the panel did not specify the amount of savings that could be achieved

through streamlining posts, it expressed the belief that the savings

would be substantial and recommended the formation of an interagency

committee to review and restructure every overseas post. State has not

said how it will respond to the panel’s recommendations. Security and

diplomacy requirements are directly linked to the size of the overseas

workforce, and the Congress should be involved in any significant

restructuring.28

• Since 1982, seven major panels, commissions, and task forces, and

several GAO studies have addressed how the Department of Energy

(DOE) could achieve operational efficiencies in its research and

development facilities. Recommendations have included focusing

unclear missions, aligning laboratory activities with DOE goals,

consolidating facilities, and replacing cumbersome, inefficient

management structures. In particular, with the end of the Cold War,

DOE may no longer need to maintain three nuclear weapons

27VA Health Care: Challenges Facing VA in Developing an Asset Realignment Process

(GAO/T-HEHS-99-173, July 22, 1999).

28State Department: Major Management Challenges and Program Risks (GAO/T-NSIAD/AIMD-99-99,

Mar. 4, 1999) and Overseas Presence: Staffing at U.S. Diplomatic Posts (GAO/NSIAD-95-50FS,

Dec. 28, 1994).
Page 15 GAO/T-AIMD-00-73

laboratories. DOE officials estimate that transferring most of Lawrence

Livermore’s nuclear weapons functions to Los Alamos could eventually

save about $200 million in annual operating costs. A DOE-chartered task

force—the 1995 Task Force on Alternative Futures for the Department

of Energy National Laboratories—reported that DOE’s entire laboratory

system could be reduced productively by eliminating obsolete and

redundant missions and support infrastructure. Because such

consolidations have not occurred, science budgets are increasingly

being spent on maintenance of obsolete and inappropriate

infrastructure, rather than innovative research and development.29

• Closing, consolidating or privatizing Coast Guard training and operating

facilities could provide significant budgetary savings. In fiscal year 1996,

we reported that the Coast Guard could save $6 million by closing or

consolidating over 20 small boat stations. Also in 1996, we

recommended that the Coast Guard consider other alternatives—such

as privatization—to operate its vessel traffic service centers, which cost

about $20 million in fiscal year 1999 to operate. In fiscal year 1995, we

recommended that the Coast Guard close one of its large training

centers in Petaluma, California, at a savings of $9 million annually. The

Coast Guard has faced, however, significant opposition to closing

facilities.30

The federal government annually makes large investments in major new

capital projects and equipment. Targeted and well-chosen investments in

our country’s infrastructure, human capital, and research and

development activities can enhance future long-term economic growth.

Similarly, carefully selected investments by federal agencies in human

capital and financial and information management systems can yield

important dividends and improve the effectiveness of federal programs.

However, as we discuss in a forthcoming report on U.S. infrastructure,

better information is needed to permit decisionmakers to sort through

claims and to distinguish the infinite variety of “wants” from those

investments that promise to effectively address critical “needs.”

Unfortunately, recent experiences ranging from information technology

projects to major weapon systems illustrate that our return on such

investments has been disappointing. Poorly conceived projects based on

incomplete or inaccurate information and performance projections have

29Department of Energy: Need to Address Longstanding Management Weaknesses

(GAO/T-RCED-99-255, July 13, 1999) and Department of Energy: A Framework for Restructuring DOE

and Its Missions (GAO/RCED-95-197, Aug. 21, 1995).

30Coast Guard: Review of Administrative and Support Functions (GAO/RCED-99-62R, Mar. 10, 1999)

and Coast Guard: Challenges for Addressing Budget Constraints (GAO/RCED-97-110, May 14, 1997).

In What Areas Could Major

Federal Capital

Investments Be More

Cost-effective?
Page 16 GAO/T-AIMD-00-73

led to projects with huge cost overruns and limited performance

improvements. Although constructive change is occurring,31 our work

demonstrates the need to improve the basis for information technology

investments, in particular, and capital investments, in general.

• The National Aeronautics and Space Administration (NASA) has

estimated that the annual cost to operate the International Space

Station (ISS) will average $1.3 billion, or $13 billion over a 10-year

mission life. However, this estimate does not include risks associated

with international partner commitments or other funding requirements,

such as (1) costs associated with necessary upgrades due to component

obsolescence, (2) end-of-mission costs to either extend or

decommission the ISS, and (3) a variety of support costs (space shuttle

flights, personnel, space communications, etc.) that are currently shown

in other portions of NASA’s budget.32 Although assembly of the ISS is

well under way, congressional oversight is vital to ensure that NASA’s

other priorities are not sacrificed in the agency’s annual budget request

to primarily fund ISS operations.

• The Congress may wish to reassess the costs and benefits of continuing

the Army’s Comanche helicopter program, given real and probable

development cost increases, questions about its role compared to other

affordable and capable Army helicopters, deferral of the production

decision, and current Army aviation budgets. In 1983, the Army began

the Comanche helicopter program with the intent of replacing the

Vietnam-era scout helicopter, but the Comanche has changed over time

to a high-technology attack and reconnaissance helicopter. Since 1983,

the program has been restructured five times and is still in development.

The first four restructurings addressed concerns over affordability and

changing requirements and led to reduced planned procurement

quantities, delayed development and production decisions, and

increased unit costs. As the Army’s concept for the Comanche changed

over time, program costs increased. Total program cost is now

estimated at $48 billion, with an estimated unit cost of about $37 million

as of April 1999. Other unresolved technical risks indicate that future

cost growth is likely.33

• The Army plans to invest over $13 billion dollars to develop and procure

the Crusader self-propelled howitzer and its resupply vehicle to be used

31Executive Guide: Leading Practices in Capital Decision-Making (GAO/AIMD-99-32, Dec. 1999).

32Space Station: Cost to Operate After Assembly is Uncertain (GAO/NSIAD-99-177, Aug. 6, 1999).

33Defense Acquisitions: Comanche Program Cost, Schedule, and Performance Status

(GAO/NSIAD-99-146, Aug. 24, 1999).
Page 17 GAO/T-AIMD-00-73

by the Army’s rapidly deployable and forward-deployed forces. The

Crusader program has experienced a number of problems that have

delayed its development by 12 to 18 months, and a number of technical

uncertainties remain. The Army has recently proposed changes to the

Crusader artillery system to make it more affordable and relevant to

future war plans. The new program reduces the planned procurement

quantity, changes the armor, and cuts the system’s weight to about 90

tons. Such changes, however, will likely reduce some of the Crusader’s

originally planned capabilities. Given the Crusader program’s high

acquisition costs and uncertain capabilities and requirements, other less

costly alternatives—such as upgrading the Army’s current Paladin

system or procuring the German PzH 2000 self-propelled howitzer—

could be investigated.34

• The Coast Guard needs to develop a realistic estimate of needs based on

the capabilities of its current fleet of ships and aircraft for its Deepwater

Project, the largest acquisition project in the agency’s history. The initial

justification did not accurately or fully depict the need to replace or

modernize its fleet of deepwater ships and aircraft. The agency’s initial

estimate that the project may cost $9.8 billion, or about $500 million

annually over 20 years, would consume more than the agency now

spends for all capital projects and leave little funding for other critical

capital needs.35

• DOD plans to develop and procure several aircraft, including the F/A18E/F, the F-22, and the multi-service Joint Strike Fighter, to replace

various types of tactical fighter and ground attack aircraft. As the nation

proceeds to the next century with the prospect of a flat defense budget,

DOD’s plan to modernize its tactical aircraft fleet will be a significant

issue confronting the Congress. DOD’s planned investment in these

aircraft, estimated by the Congressional Budget Office to exceed

$350 billion, is likely to be significantly greater than probable future

budgets. Moreover, questions have been raised about the need for, and

cost-benefit of, all these systems given likely threats. The traditional

practices of approving all requested programs and then reducing

procurement quantities within each program lowers acquisition costs

but exacerbates the problem of aging equipment and associated

operating and support costs. The Congress and DOD will need to

carefully consider tactical aircraft investment options to ensure balance

34Army Armored Systems: Meeting Crusader Requirements Will Be a Technical Challenge

(GAO/NSIAD-97-121, June 6, 1997).

35Coast Guard’s Acquisition Management: Deepwater Project’s Justification and Affordability Need to

Be Addressed More Thoroughly (GAO/RCED-99-6, Oct. 26, 1998).
Page 18 GAO/T-AIMD-00-73

among bona fide national security needs based on realistic threat

assessments, the desires of individual services, and what can be

afforded given likely future budgets.36

All of the above examples offer illustrations where congressional oversight

can be fruitful and effective. But I am not unmindful of the challenges and

difficulties this can present. Addressing these issues calls for hard choices

and persistency. While there may be some examples of “low hanging fruit”

on this list, real improvement in performance and management calls for a

disciplined and determined process, jointly entered into by the Congress

and executive departments and agencies. Many of the examples discussed

above involve previously made choices that need to be reconsidered.

Others address long-standing weaknesses in organizational and

management structures and processes that will require persistent attention

over a sustained period of time and may, in fact, call for targeted

investments.

We in GAO are pleased to support the Congress in fulfilling its oversight

responsibilities. Typically, we assist this Committee and the other

Committees of the Congress by performing hundreds of specific reviews

and audits of individual agencies and programs. We also look for

opportunities to summarize or compile this large body of work to provide

a more comprehensive picture of federal government performance and

management. Last year, for example, we summarized much of our work in

a series of reports that discussed the governmentwide and agency-specific

challenges that must be addressed to improve performance, management,

and accountability; we intend to update this series at the beginning of each

Congress.37 We also issued last year to this Committee the fifth in a series

of reports on the budgetary implications of selected program reforms

discussed in our work but not yet implemented or enacted;38 we plan to

publish the fiscal year 2000 update to this report next month. We

completed last year our second annual audit of the consolidated financial

statements of the federal government, which has helped to disclose

significant financial management weaknesses and deficiencies in internal

controls;39 we will issue our report on the fiscal year 1999 statements in

36Fiscal Year 2000 Budget: DOD’s Procurement and RDT&E Programs (GAO/NSIAD-99-233R,

Sept. 23, 1999).

37Performance and Accountability Series: Major Management Challenges and Program Risks

(GAO/OCG-99-22SET, January 1999).

38Budget Issues: Budgetary Implications of Selected GAO Work for Fiscal Year 2000 (GAO/OCG-99-26,

Apr. 16, 1999).

39Financial Audit: 1998 Financial Report of the United States Government (GAO/AIMD-99-130,

Mar. 31, 1999).

Developing a

Congressional Oversight

Model for the

21st Century
Page 19 GAO/T-AIMD-00-73

March. And finally, we provided an update last year to a special effort

begun in the last decade to identify federal activities and functions that

were particularly vulnerable to waste, fraud, abuse, or mismanagement.40

Since 1990, six of our high-risk designations have been removed as a result

of sustained, tangible improvements by the affected agencies; at the end of

the decade, however, 26 high-risk areas remain. In these areas, more needs

to be done to achieve real and sustained improvements, and in a number

of cases it will take time to fully resolve these high-risk areas because they

reflect deep-rooted, difficult problems in very large programs and

organizations.

In this context, it is appropriate to think about changes not only to specific

programs and activities within the broad oversight questions discussed in

this statement, but also to reconsider the fiscal and performance models,

structures, and processes that the Congress uses to fulfill its oversight

responsibilities. I would like to conclude my statement by offering our

observations on what those oversight mechanisms might look like.

Clearly, projected surpluses—not only within the unified budget, but now

also in the non-Social Security portion of federal spending—present

unique challenges. The pressures to use these surpluses either to meet

current demands for new spending or to meet calls for tax cuts will be

substantial. As I have emphasized in previous testimonies before the

Congress, we must be mindful that today’s fiscal decisions have important

consequences for the kind of society and economy we hand to the next

generations of American citizens. I firmly believe that we need to develop

a new fiscal paradigm that prompts a clearer focus on and attention to the

long-term implications of current decisions.

We have reported that under current policies the fiscal flexibility of future

generations will erode as the costs of paying for Social Security and health

care consume ever-greater shares of available budgetary resources.41

These known commitments do not include likely substantial costs

associated with many other potential liabilities, such as environmental

cleanup costs and federal insurance commitments. We can use this current

surplus period to help future generations better afford these commitments

and recapture their fiscal flexibility to address new priorities and needs.

Specifically, continued debt reduction and entitlement reforms are both

critical to promoting a more sustainable budget and economy for the

longer term. More importantly, failure to do so will consign the nation to a

40High-Risk Series: An Update (GAO/HR-99-1, Jan. 1999).

41 GAO/T-AIMD/HEHS-99-113, Mar. 18, 1999, and GAO/T-AIMD/HEHS-99-76, Feb. 9, 1999.

Developing a New Fiscal

Paradigm
Page 20 GAO/T-AIMD-00-73

long-term future where, at current revenue levels, the federal government

may be able to afford little more than paying for retirement checks and

health care for the elderly.

Our recent work discussing how other countries are dealing with current

surpluses can be informative about the character of a new fiscal paradigm

for our nation. For example, some countries have recognized that using

fiscal targets such as debt-to-GDP ratios can be useful to guide decisionmaking in a world where achieving a current year balance is no longer

sufficient as a fiscal compass. We reported that several foreign countries,

including New Zealand and Norway, have succeeded in saving at least a

portion of their surpluses for several years, partly by adopting a broader

framework for budgetary decision-making guided by explicit fiscal and

economic goals that provided a compelling rationale for continued

restraint.42

In addition, other nations have discovered that greater transparency about

the future cost of commitments can be a useful method to prompt a timely

debate about current and future affordability. Some foreign governments

are attempting to achieve this transparency by incorporating accrual

measures of longer term consequences in budget documents and

presentations. The federal government also could consider where and to

what extent greater disclosure of the future costs of today’s

commitments—possibly including accrual measures for appropriate areas

of our budget such as pensions, federal insurance, and federal retirees’

health care costs—might enhance congressional oversight.

Just as there is a need to rethink congressional approaches to fiscal

decision-making models with the advent of projected surpluses, so also

there is a need to consider changes to congressional oversight of the

performance and management of the federal government. As a result of

recent reform efforts, the Congress will soon begin receiving more

consistent and complete information about the costs, efficiency, and

effectiveness of federal programs and activities. However, to be fully

useful, this information must become a routine component of

congressional authorization, oversight, and appropriations processes.

As we enter the next century, the government is about to see the benefits

of a framework of recently enacted management reform legislation,

including the Government Performance and Results Act; financial

42Budget Surpluses: Experiences of Other Nations and Implications for the United States

(GAO/AIMD-00-23, Nov. 2, 1999).

Developing a New

Performance Paradigm
Page 21 GAO/T-AIMD-00-73

management reforms, such as the Chief Financial Officers Act; and

information resources management improvements, such as the ClingerCohen Act.43 Implemented together, these laws provide a powerful

framework for developing and fully integrating information about

(1) agencies’ missions and strategic priorities, (2) the results-oriented

performance goals that flow from those priorities, (3) the actual level of

goal achievement, (4) the relationship of technology and other

investments to the achievement of goals, and (5) the reliability of financial

information on the costs of achieving mission results. This framework

should support and promote more results-oriented management and

decision-making processes within the Congress and the executive branch.

Although this reform framework is in place, key elements of it are in the

early stages of implementation and how best to integrate implementation

remains a work in progress.44 For example, individual authorization and

oversight committees are well suited to address performance or financial

issues affecting individual agencies or programs, but many of the key

performance questions are not confined to, and cannot be addressed

effectively on, an agency-by-agency or committee-by-committee basis.

Many federal mission areas—from low-income housing assistance to food

safety to counterterrorism—are addressed by a wide range of mandatory

and discretionary spending programs, tax expenditures, and regulatory

approaches that cut across federal agencies and committee jurisdictions.45

Similarly, while budgetary choices should be more clearly informed by

performance considerations and a full understanding of associated costs,

the capacity to align and relate this information to existing appropriations

structures and presentations is complicated and very much in the early

stages of development.46

Given this environment, the Congress should also consider the need for

mechanisms that allow it to more systematically focus its oversight on

problems with the most serious and systemic weaknesses and risks.

Today, the President is required by the Government Performance and

Results Act to prepare and submit to the Congress as part of the annual

budget submission a governmentwide performance plan that provides a

“single cohesive picture of the annual performance goals for the fiscal

43GAO/GGD/AIMD-98-52, Jan. 28, 1998.

44Managing for Results: Opportunities for Continued Improvements in Agencies’ Performance Plans

(GAO/GGD/AIMD-99-215, July 20, 1999).

45GAO/AIMD-97-146, Aug. 29, 1997.

46Performance Budgeting: Fiscal Year 2000 Progress in Linking Plans with Budgets

(GAO/AIMD-99-239R, July 30, 1999) and Performance Budgeting: Initial Experiences Under the Results

Act in Linking Plans with Budgets (GAO/AIMD/GGD-99-67, Apr. 12, 1999).
Page 22 GAO/T-AIMD-00-73

year.” First submitted with the fiscal year 1999 budget, the

governmentwide performance plan includes fiscal, management, and

program performance expectations; the plan provides a means to present

performance goals for the varied missions of government and to identify

the relative contributions of a wide range of agencies, programs, and

strategies to address those mission-based performance goals.47 At present,

the Congress has no direct mechanism to respond to and provide a

congressional perspective upon the President’s governmentwide

performance plan. For example, the Congress has no established

mechanism to articulate performance goals for the broad missions of

government, to assess alternative strategies that offer the most promise

for achieving these goals, or to define an oversight agenda targeted on the

most pressing crosscutting performance and management issues.

In many respects, this current environment mirrors that of 30 years ago. At

that time, the Congress recognized that it had no effective mechanism to

respond to and provide a congressional perspective upon governmentwide

fiscal maters addressed in the President’s annual budget submission.

Federal spending and taxing questions were dispersed among

appropriations subcommittees and various authorizing committees dealing

with mandatory spending and revenue matters. The response to that

environment was the Congressional Budget Act of 1974, which, among

other things, created the Budget Committees and the congressional budget

resolution. The Budget Committees were established to perform a role—

coordinating the budgetary activities of congressional committees—that is

analogous to that of the Office of Management and Budget in the executive

branch. The budget resolution, although not having the force of statute,

was designed to provide an overall statement of congressional intent

regarding federal fiscal policy—the receipts, budget authority, outlays and

the resulting surplus or deficit for the fiscal year—as a response to the

President’s budget submission.

The Congress might consider whether a more structured oversight

mechanism is needed to permit a coordinated congressional perspective

on governmentwide performance matters. One possible approach would

involve modifying the current budget resolution prepared by this

Committee. Already organized by budget function, similar to the program

performance section of the President’s governmentwide performance plan,

the resolution could be adapted to permit the Congress to respond to, and

present a coordinated congressional perspective on, the President’s

governmentwide performance plan, as it currently responds to the

47The Results Act: Assessment of the Governmentwide Performance Plan for Fiscal Year 1999

(GAO/AIMD/GGD-98-159, Sept. 8, 1998).
Page 23 GAO/T-AIMD-00-73

President’s proposed budget. Initially, this may involve collecting the

“views and estimates” of authorization and appropriation committees on

priority performance issues for programs under their jurisdiction and

working with the Governmental Affairs Committee and others to identify

crosscutting performance concerns that will receive priority congressional

attention. Obviously, a “congressional performance resolution” linked to

the budget resolution is only one approach to achieve the objective of

enhancing congressional oversight, but the Congress should assess

whether its current structures and processes are adequate to take full

advantage of the benefits arising from the reform agenda under way in the

executive branch. Ultimately, what is important is not the specific

approach or process, but rather the intended result of helping the

Congress better promote improved fiscal, management, and program

performance through broad and comprehensive oversight and

deliberation.

In summary, Mr. Chairman, you and I have discussed the importance of

congressional oversight in the past, and I believe that is very timely to

refocus our efforts on this subject as we enter a very unique period in our

nation’s history. Broad and periodic reexamination of federal government

priorities, programs, and activities is an important responsibility of the

Congress to maintain the public’s confidence in government and to ensure

our capacity to meet current and emerging needs. However, good

oversight is difficult work. It requires taking a hard look at existing

programs and carefully reconsidering the goals those programs were

intended to address—and whether those goals are still valid. It involves

analyzing the effectiveness of programs and seeking out the reasons for

success or failure. It involves sorting through the maze of federal programs

and activities, in which multiple agencies often operate many different

programs to address often common or complementary objectives.

However, revising and reforming current programs and activities that may

no longer be needed or that do not perform well is fraught with difficulties

and leads to real “winners” and “losers.” Notwithstanding demonstrated

weaknesses in program design and shortfalls in program results, there

often seems to be little “low hanging fruit” in the federal budget. In fact,

some argue that because some programs are already “in the base” in

budgetary terms, they have an advantage over new initiatives and new

demands.

This is an opportune time for the Congress to carefully consider how this

Committee and all of the Committees of the Congress will take advantage

of and leverage the new information and perspectives coming from the

reform agenda underway in the executive branch. Prudent stewardship of
Page 24 GAO/T-AIMD-00-73

our nation’s resources—whether in time of deficit or surplus—is essential

not only to meet today’s needs but also tomorrow’s commitments and

demands.

This concludes my prepared statement. I would be pleased to answer any

questions you or the other members of the Committee may have at this

time.

For future contacts regarding this testimony, please contact Paul L.

Posner, Director for Budget Issues, at (202) 512-9573. Individuals making

key contributions to this testimony included Michael J. Curro, Hannah R.

Laufe, and Toni J. Wehman.

(935348)

Contact and

Acknowledgement