GAO-09-609CG

KEY CHALLENGES FACING 

GOVERNMENT MANAGERS

Interagency Resources 

Management Conference

Cambridge, MD

April 21, 2009

By Gene L. Dodaro

Acting Comptroller General
GAO-09-609CG

Outline

• Economic Recovery and Financial Markets• Transition – New President and Congress• Long-Term Fiscal Outlook and Risks
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American Recovery & Reinvestme

• Signed February 17, 2009• Purpose:

• preserve and create jobs and promote recover• assist those most impacted by the recession• invest in science and health-care technology • invest in infrastructure• stabilize state and local government budgets

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

$580 billion in additional spending (CBO Estimate)
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American Recovery & Reinvestment A

• Inspectors General review federal program and 

implementation 

• Recovery Accountability and Transparency Boa• GAO responsibilities include:

• conducting bimonthly reviews of selected sta

localities 

• commenting on the estimates of the number • reviewing areas such as trade adjustment 

assistance, new education incentive grants, efforts to increase small business lending
GAO-09-609CG

American Recovery & Reinvestment A
GAO-09-609CG

American Recovery & Reinvestment A

Challenges for the federal, state and local officials:

• Expectations for “an unprecedented level of transparenc

accountability” 

• Qualified personnel need to implement proper controls a

accountability at all levels of government

• Close federal, state, and local government coordination • Experience has shown that the risk for fraud and abuse 

when billions of dollars are going out quickly, eligibility rare being established or changed, and new programs acreated
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Financial Institutions and Mark

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

Government Financial Statements

• Financial Regulatory System
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Financial Institutions and Mark

• Emergency Economic Stabilization Act of 2008 cre

billion TARP in October 2008 

• GAO given statutory oversight role• GAO’s TARP reports recommendations follow 3 th

• Monitoring the use of funds to meet the Act’s o• Articulating a better communication strategy• Ensuring effective Treasury management struc
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Modernizing The U.S. Financ

Regulatory System

Financial Regulation: A Framework for Crafting and As

Proposals to Modernize the Outdated U.S. Financial Regulatory System (GAO-09-216, Jan. 8, 2009)

• Explains the origins of the current financial 

regulatory system

• Describes market developments and chang

pose challenges to the current system

• Presents an evaluation framework that Con

and others can use to craft or evaluate poteregulatory reform efforts
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Regulatory System Outdate

Risks Posed By:• Emergence of large, complex, and interconnec

financial conglomerates

• Less-regulated entities are playing increasingly 

roles in the financial system

• New and complex products pose challenges to 

stability and consumer protection
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Crafting or Assessing Regulatory Reform Pr

GAO Framework—9 Essential Character

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

authority, and accountability

• Consistent financial oversight• Minimal taxpayer exposure
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Transition: Assisting The Ne

Administration & The New Cong
GAO-09-609CG
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Other Urgent Issues:

Timely Action Critical 

• U.S. Efforts in Iraq, Afghanistan, and Pakistan• Defense Readiness, Spending, and Care for Service M• Protecting the Homeland and Preparing for Public Healt

Emergencies

• Improving U.S. Image Abroad• Food Safety • Transition to Digital TV
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Long-Term Challenges

• Today’s focus—understandably—is on:

• Dealing with financial system stress • Addressing the economic downturn

• BUT.... Underlying issues still need to be addresse

• Long-term fiscal challenge• Sustaining progress on federal financial manag
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Long-Term Fiscal Challenge

-20-15-10

-5

05

2005 2010 2015 2020 2025 2030 2035 2040 

Fiscal year

Percent of GDP

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

Federa

Surplus/De

Combined 

Surplus/Deficit
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Long-Term Fiscal Challenge 

Driven by Health Care Spendin

05

1015202530

2008 2020 2030 2040 2050 2060 2070 

Social Security

Medicaid

Medicare

Source: GAO analysis of data from the Office of the Chief Actuary, Social Security Administration, Office of the Actuary, Centers 

Services, and the Congressional Budget Office.Note: Social Security and Medicare projections based on the intermediate assumptions of the 2008 Trustees’ Reports. Medicaid CBO’s January 2009 short-term Medicaid estimates and CBO’s December 2007 long-term Medicaid projections adjusted to refleconsistent with the 2008 Trustees intermediate assumptions.

Percent of GDP
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Federal Financial Manageme

Need to Continue Progress

• Significant improvements in federal financial mana

but still a long way to go

• Information for decision-making must be reliable
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Federal Financial Manageme

Key Challenges

• Improve internal control—greater accountability and fewer imp

payments

• Obtain clean opinion on U.S. government’s consolidated finan

statements

• Improve extent and reliability of cost information for evaluating 

program operations

• Implement more effective federal financial management syste• Improve federal grant accountability• Streamline and enhance relevance and effectiveness of fede

accountability requirements and practices 
GAO-09-609CG

2009 HIGH-RISK LIST

30 items grouped into four categories:

• Broad-Based Transformation Challenges

(e.g., Strategic Human Capital Management, Protecting the Federal Government’s InformatSystems and the Nation’s Critical Infrastructur

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

(e.g., Medicare, Medicaid, PBGC, flood insura
GAO-09-609CG

Latest High-Risk List Addition

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

Products

• Transforming EPA’s Processes for Assessing and Co

Toxic Chemicals
GAO-09-609CG

On the Web

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

Contact

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

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

Copyright

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