U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

74–037 PDF 2012

GOVERNMENT 2.0: GAO UNVEILS NEW

DUPLICABLE PROGRAM REPORT

HEARING

BEFORE THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

FEBRUARY 28, 2012

Serial No. 112–131

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.fdsys.gov

http://www.house.gov/reform
(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

DARRELL E. ISSA, California, Chairman

DAN BURTON, Indiana

JOHN L. MICA, Florida

TODD RUSSELL PLATTS, Pennsylvania

MICHAEL R. TURNER, Ohio

PATRICK T. MCHENRY, North Carolina

JIM JORDAN, Ohio

JASON CHAFFETZ, Utah

CONNIE MACK, Florida

TIM WALBERG, Michigan

JAMES LANKFORD, Oklahoma

JUSTIN AMASH, Michigan

ANN MARIE BUERKLE, New York

PAUL A. GOSAR, Arizona

RAU ́ L R. LABRADOR, Idaho

PATRICK MEEHAN, Pennsylvania

SCOTT DESJARLAIS, Tennessee

JOE WALSH, Illinois

TREY GOWDY, South Carolina

DENNIS A. ROSS, Florida

FRANK C. GUINTA, New Hampshire

BLAKE FARENTHOLD, Texas

MIKE KELLY, Pennsylvania

ELIJAH E. CUMMINGS, Maryland, Ranking

Minority Member

EDOLPHUS TOWNS, New York

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, District of

Columbia

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

DANNY K. DAVIS, Illinois

BRUCE L. BRALEY, Iowa

PETER WELCH, Vermont

JOHN A. YARMUTH, Kentucky

CHRISTOPHER S. MURPHY, Connecticut

JACKIE SPEIER, California

LAWRENCE J. BRADY, Staff Director

JOHN D. CUADERES, Deputy Staff Director

ROBERT BORDEN, General Counsel

LINDA A. GOOD, Chief Clerk

DAVID RAPALLO, Minority Staff Director
(III)

C O N T E N T S

Page

Hearing held on February 28, 2012 ....................................................................... 1

Statement of:

Dodaro, Gene L., Comptroller General of the United States, U.S. Government Accountability Office, accompanied by Patricia Dalton, Chief Operating Officer, U.S. Government Accountability Office, and Janet St.

Laurent, Managing Director of Defense Capabilities and Management,

U.S. Government Accountability Office; and Hon. Tom Coburn, M.D.,

a U.S. Senator from the State of Oklahoma ............................................... 8

Dodaro, Gene L. ......................................................................................... 8

Coburn, Hon. Tom, M.D. ........................................................................... 75

Letters, statements, etc., submitted for the record by:

Coburn, Hon. Tom, M.D., a U.S. Senator from the State of Oklahoma,

prepared statement of ................................................................................... 77

Connolly, Hon. Gerald E., a Representative in Congress from the State

of Virginia, prepared statement of .............................................................. 114

Cummings, Hon. Elijah E., a Representative in Congress from the State

of Maryland, prepared statement of ............................................................ 5

Dodaro, Gene L., Comptroller General of the United States, U.S. Government Accountability Office, prepared statement of .................................... 11

(1)

GOVERNMENT 2.0: GAO UNVEILS NEW

DUPLICABLE PROGRAM REPORT

TUESDAY, FEBRUARY 28, 2012

HOUSE OF REPRESENTATIVES, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, DC.

The committee met, pursuant to notice, at 9:30 a.m., in room

2154, Rayburn House Office Building, Hon. Darrell E. Issa (chairman of the committee) presiding.

Present: Representatives Issa, McHenry, Jordan, Chaffetz,

Lankford, DesJarlais, Farenthold, Kelly, Cummings, Maloney, Norton, Kucinich, Tierney, Cooper, Connolly, Quigley, and Murphy.

Staff present: Ali Ahmad, communications advisor; Kurt

Bardella, senior policy advisor; Robert Borden, general counsel;

Lawrence J. Brady, staff director; John Cuaderes, deputy staff director; Adam P. Fromm, director of Member services and committee operations; Jennifer Hemingway, senior professional staff

member; Christopher Hixon, deputy chief counsel, oversight; Justin

LoFranco, press assistant; Mark D. Marin, director of oversight;

Tegan Millspaw, research analyst; Lisa Cody, minority investigator; Kevin Corbin, minority deputy clerk; Ashley Etienne, minority director of communications; Jennifer Hoffman, minority press

secretary; Carla Hultberg, minority chief clerk; Leah Perry, minority chief oversight counsel; Dave Rapallo, minority staff director;

and Mark Stephenson, minority senior policy advisor/legislative director.

Chairman ISSA. The Oversight Committee will come to order.

We exist for two fundamental purposes: first, Americans have a

right to know the money Washington takes from them is well spent

and, second, Americans deserve an efficient, effective government

that works for them. Our duty on the Oversight and Government

Reform Committee is to protect these rights.

Our solemn responsibility is to hold government accountable to

the taxpayers because taxpayers have a right to know what they

get from their government. It is our job to work tirelessly in partnership with citizen watchdogs to deliver the facts to the American

people and bring genuine reform to the Federal bureaucracy.

Today we are joined for just that purpose. The 2011 report from

the GAO identified 81 areas of duplication, overlap, and fragmentation throughout the government. This year the GAO has identified

51 new areas on top of the 81. Let’s make it very clear: we are

going the wrong direction, not the right direction.

This committee is well known for looking at the party in power,

the Office of the President, and calling strikes and balls. In this
2

case, the President has talked the talk; he hasn’t walked the walk.

But let me make it very clear here today: he is not the first president to talk about organizational efficiency and, at the end of his

administration, have less of it, not more of it.

In fact, this problem began long before President George W.

Bush and it will not end until some fundamental changes occur.

First of all, Congress is to blame. We create the stovepipes by

our very nature. We have divided the Congress along historic lines

for authorization and appropriation. That is all well and good to

have expertise, but at the end of the day we do not have a committee on consolidation; we do not have, if you will, a standing

Hoover Commission. As a result, fiefdoms build up here in the

House that in fact protect redundant programs because they are

under that authorization or under that cardinalship of appropriations.

Second, it is clear this President owns these 51 new areas, the

81 many of whom were not dealt with, and ultimately he owns the

fact that he asked for reorganizational authority and offered us but

a de minimis addition of a 23rd cabinet level position. We have to

think bigger than that. The President and this administration has

to be convinced to think much, much larger.

Ultimately, real savings, as we will hear today from Mr. Dodaro,

will come from major changes in government and how we think,

changes in the House and the Senate, changes in the executive

branch.

Last, if we are to have a 21st century success story of making

government as lean as it can be in the delivery of process, we are

going to have to call out, and I will in a future hearing, companies

like Lockheed Martin, Northrop Grumman, Boeing, Raytheon, General Dynamics, Booz Allen, and many, many more that we rely on

for government contracting. In fact, this entire hearing could end

before we could name the names of all the government contractors

America employs, because ultimately those contractors also have a

vested interest in the pot of money that they have or sometimes 4,

5, 6, 10 pots of money to do the same job for different parts of government.

As we explore whether in fact government gets a better deal by

the same contractor having five different contracts, five slightly different instructions, producing often different software with different details, or in fact whether contractors need to be part of the

solution in having a proactive responsibility to find existing programs at least within their own company and their partnerships.

That is just the beginning of the solution.

I will, in the days to come, upon conclusion of a number of additional hearings, be calling in no uncertain terms for a Hoover commission. I will be calling for a thorough reorganization of government. And let me go on record here today: the President’s request

for reorganizational authority is dead on arrival in this committee

unless the administration is willing to be much bigger in their

thought.

If the administration, instead of asking for authority, delivering

us virtually no facts and the facts they deliver showing a very

small reorg for the sake of saying there is a reorg, if they are not
3

willing to talk about attacking the very problems we will see here

today organizationally, then we have little to talk about.

My first question to the Honorable Gene Dodaro will in fact be,

what is the status of the now-famous Goldwater-Nichols? What are

the failures of it? What are the successes of it? And how can we

begin looking at that kind of cross-government thinking in a way

that will guaranty, if not next year, at least in years to come, these

lists will be smaller to begin with and will have taken care of far

more of their past sins?

With that, I recognize the ranking member for his opening statement.

Mr. CUMMINGS. Thank you very much, Mr. Chairman.

Thank you, Mr. Dodaro. We welcome you back. And I thank GAO

for testifying here today.

Because of our committee’s uniquely broad jurisdiction, we have

a tremendous opportunity to examine programs across the entire

Federal Government. Today GAO is issuing a report to help us determine the most promising ways to improve the effectiveness and

efficiency of these programs.

In my opinion, our committee does its best work when we are

guided by a sincere effort to get more value out of Federal programs on behalf of the American people. I hope we can do that

today.

For this reason, I hope we steer clear of politically charged rhetoric that condemns the entire government as being obese or bloated, and I hope we honor the millions of Federal workers who do

so much for this country on a daily basis.

One of the most compelling facts in the GAO report is that Congress has a much worse record than the administration in implementing GAO’s recommendations. Last year GAO identified 176

specific actions that Congress and the executive branch could take

to address duplication in government programs and enhance taxpayer revenues. This year GAO reports that the administration has

fully or partially implemented 76 percent of the recommendations

relating to executive branch actions. The Congress has fully or partially implemented only 38 percent of the recommendations for legislative reform.

For example, GAO has reported that oil and gas companies,

which are now making the highest profits of any industry in history, currently pay no royalties on some of their leases with the

U.S. Government in the Gulf of Mexico. Even Chairman Issa has

recognized this problem, estimating in a previous report that this

unintended loophole is costing the American people up to $80 billion in foregone revenue.

Although Democrats have offered legislation to address this fundamental injustice, House Republicans have repeatedly rejected it.

Although it is appropriate to examine the administration’s record

on these issues, I hope we will also look at our own record right

here in Congress.

With respect to the recommendations for the executive branch,

GAO reports that Federal agencies have taken substantial action

to address them. For example, the administration has taken steps

to reduce improper payments by the Federal Government. Agencies

have also achieved $1.5 billion in savings through the disposal of
4

excess or underutilized Federal buildings, as well as identifying additional savings opportunities.

In addition, the President has proposed reorganizing and consolidating a number of our Nation’s trade agencies into a single department to improve coordination and effectiveness, while saving

billions of dollars in the process.

Of course, GAO’s reports finds that many challenges still remain.

For example, the Departments of Defense and Veterans Affairs

need to improve integration of health care and case management

to reduce duplication and provide more effective assistance to our

service members, particularly as they leave active duty and transition into the VA system. This is something that our National Security Subcommittee has focused in on closely, and I know their efforts will continue.

So I look forward to today’s testimony from GAO, as well as the

testimony from Senator Coburn, who has also been very active on

these issues.

With that, Mr. Chairman, I yield back.

[The prepared statement of Hon. Elijah E. Cummings follows:]
5
6
7

Mr. QUIGLEY. Mr. Cummings, would the gentleman yield?

Mr. CUMMINGS. I yield.

Mr. QUIGLEY. Thank you to the ranking member and the chairman.

When I was a county commissioner I wrote eight reports about

this, about government efficiency and what we can do, and it reminded me of something very political, what the President said

when he accepted the nomination in Denver. He said, in the middle

of the speech, and it didn’t get a lot of attention, he said we’re not

the far right who thinks that government doesn’t matter and we

can’t be the far left that thinks we can tax and spend our way out

of all of our problems, because we need to meet in the middle,

streamline and consolidate our government and make it the most

efficient.

So, to me, that is what both the chairman and the ranking member were alluding to. We can do this on a bipartisan basis by asking ourselves just the following question, what should we do, who

should do it, and how should it be done, when we look at any government function, not because government doesn’t matter, but because the mission matters and we can operate it more efficiently.

Thank you.

Chairman ISSA. Thank you.

Would the ranking member further yield?

Mr. CUMMINGS. Definitely.

Chairman ISSA. You brought up in your opening statement, I

think it is noteworthy, even though it is a little off subject, the history of the MMS flawed contracts. That is an area in which we

have tried to operate on a bipartisan basis.

I would offer to the ranking member that if the pieces of legislation that have been offered, most of which that I have seen duplicate ones that were offered and went nowhere under the 4-years

of Speaker Pelosi, because this problem goes all the way back to

the Clinton administration; not to them personally, but to actions

of nonpolitical appointees during that time.

If you can in fact bring to the committee agreement by this staff

that we have a piece of legislation which can pass the contract

sanctity test, I am perfectly happy to hold a hearing on it and, if

we can reach that consensus, a markup. It has been vexing to us

on both sides. We pushed hard under President Bush to try to get

a solution prior to some of these companies being sold and so on.

But I stand with the ranking member that this is still an area

that if we can find something which we are not simply passing a

law that ultimately would be struck down in the court based on the

contract sanctity rule, I am there for you and would love to have

a further hearing on it.

Mr. CUMMINGS. With that, I appreciate it. We will work with you

to make that happen. Matter of fact, I welcome the bipartisanship.

Chairman ISSA. I thank the gentleman.

With that, having settled at least $60 billion to $80 billion worth

of past failures right here——

Mr. CUMMINGS. In 1 minute.

Chairman ISSA [continuing]. In 1 minute, we now recognize the

Honorable Gene Dodaro, Comptroller General of the United States,

returning here for, I should have it here, about the fifth or sixth
8

time in this role and, of course, several times before he had the job.

He is accompanied today by Ms. Patricia Dalton, who is Chief Operating Officer of the GAO. Additionally, Ms. Janet St. Laurent,

who is Managing Director of Defense Capabilities and Management

at the GAO.

I understand that Ms. Dalton and Ms. St. Laurent do not have

opening statements, but to make it clear that they could answer

questions directly or obviously advise the general. We will have all

of you sworn in.

Additionally, an additional witness is expected about halfway

through this process, and that would be our friend and colleague

on waste control, Senator Tom Coburn of Oklahoma.

So, with that, would you please rise to take the oath?

[Witnesses sworn.]

Chairman ISSA. Let the record indicate all three answered in the

affirmative.

Unlike some of our hearings, we are not taxed for time in the

time that you choose to begin the briefing. You are an experienced

witness who knows that if we, the Congress, want you to give a

prepared statement, you go ahead and give it. Take as much time

as you want. Quite frankly, I would love to get to questions quickly,

but at the same time this is all about your report and the message

you want to deliver to us.

The general is recognized.

STATEMENTS OF GENE L. DODARO, COMPTROLLER GENERAL

OF THE UNITED STATES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE, ACCOMPANIED BY PATRICIA DALTON,

CHIEF OPERATING OFFICER, U.S. GOVERNMENT ACCOUNTABILITY OFFICE, AND JANET ST. LAURENT, MANAGING DIRECTOR OF DEFENSE CAPABILITIES AND MANAGEMENT,

U.S. GOVERNMENT ACCOUNTABILITY OFFICE; AND HON.

TOM COBURN, M.D., A U.S. SENATOR FROM THE STATE OF

OKLAHOMA

STATEMENT OF GENE L. DODARO

Mr. DODARO. Thank you very much, Mr. Chairman. I am very

pleased to be here today before the committee, Ranking Member

Cummings, members of the committee, to talk about GAO’s body

of work on overlap, duplication, and fragmentation in the Federal

Government, and opportunities to achieve greater efficiencies and

effectiveness in Government. Our report this year, for 2012, like

the report last year, touches on many parts of the Federal Government, most civilian major departments and agencies, as well as the

Defense Department.

In Defense, for example, one of the areas we point out is unmanned aircraft systems, of which the Department plans to spend

over $37 billion over the next 4 years to purchase not only aircraft,

but payloads, which are operating systems, sensors, etc., as well as

ground control stations.

Now, we found that the service-centered requirements, rather

than an effective overall Department strategy, is causing a great

degree of overlap in this effort. For example, the Navy was unable

to provide us justification why it was going to develop an aircraft
9

similar to the Air Force Global Hawk aircraft, as opposed to buying

additional Global Hawk aircrafts. And also the Army and Navy are

separately pursuing software for cargo and surveillance technologies that are likely to produce similar requirements going forward.

So we have made a number of recommendations to strengthen

management of this program. There are huge opportunities for significant savings if the Department can better manage these programs and focus on commonality of requirements and making sure

that there is effective management of this program. This is especially important since, in the new defense strategy, there is going

to be greater reliance on unmanned aircraft systems. We point out

in our report the same things are true in the Department’s efforts

for electronic warfare and also countermeasures for improvised explosive devices.

Now, on the civilian front, one good example is in the housing

area, which is a new area for this year. We point out there are over

20 different entities managing over 160 different programs, tax expenditures and other activities to promote home ownership and to

provide rental support to Americans. One area that we have singled out this year for consolidation potential is in the areas involving the Agriculture Department and the Housing Department.

Now, in 2009 you have eight times as many single-family home

loans given to economically distressed rural communities by HUD

than you do by Agriculture. Conversely, Agriculture has given

many of its loans near urban areas. In fact, 56 percent of them in

2009 were given in metropolitan counties. So there are opportunities here. The administration has a task force they are putting together to look at the housing areas. We are looking more closely

at it. But I think that is one area that is very ripe for potential

consolidation and streamlining activities.

Also, there are many support operations of the Federal Government where there is a need for streamlining and efficiency. For example, we looked at the Department of Defense and Energy and

the Department of Homeland Security to look to see if they had duplicative IT investments and, indeed, we found 37 different areas

within Defense and Energy alone that were potentially duplicative

IT investments, and those investments represented over $1 billion

in funding for those areas. We didn’t find any on our own in the

Department of Homeland Security, but they found some on their

own that saved $41 million and identified other opportunities.

There are also opportunities we found in facility security assessments. Agencies were doing their own facility security investments

while also paying the Department of Homeland Security Federal

Protective Service for doing security assessments that they weren’t

doing, so there was duplication there.

The same thing is true in background investigations for security

clearances. We find a number of areas where agencies were standing up on their own case management and adjudication systems,

rather than a shared common system across the Federal Government, so that there was redundancies there and money spent that

did not have to be spent.

Now, like last year’s report, in addition to overlap, duplication,

and fragmentation, we highlight additional cost savings opportuni-
10

ties and opportunities for revenue enhancements. For example, in

cost savings, there are billions of dollars that could be saved

through wider use of information technology to deal with improper

payments in the Medicare and Medicaid areas.

There are also refinements that could be made in the process by

which there are adjustments made to the Medicare advantage payments based upon the diagnosis given beneficiaries and the differences between their coding systems and the fee-for-service system. We have estimated that could be between $1.2 billion and $2.7

billion right there.

On the revenue enhancement side, we point out many opportunities such as the potential for selling excess uranium inventories

that the Department of Defense have. There are user fees that

could be adjusted to be more contemporary for international travelers coming into the country that could take away from the need

to use general appropriations to pay for those activities.

And there are many opportunities for the Internal Revenue Service to deal with tax enforcement of what is now estimated to be a

$385 billion gap between taxes owed under the current system and

taxes paid. That is up from $290 billion the last time I appeared

before this committee. So we recommend a number of activities in

those areas.

In addition, we published a separate report, Mr. Chairman, as

you alluded to in your statement and Representative Cummings,

about progress from last year, and we found, of the 81 areas, 4 had

been fully addressed, 60 had been partially addressed, and 17 had

not been addressed.

So there are many opportunities. We think collectively, through

the opportunities pointed out in our report last year and the new

ones this year, there are tens of billions of dollars that could be

saved and, more importantly, more effective and streamlined government serving the American people.

So I look forward to answering your questions and I appreciate

the opportunity to be here today. So thank you very much.

[The prepared statement of Mr. Dodaro follows:]
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60

Chairman ISSA. Thank you. I now recognize myself for a few

questions.

General, you mentioned what the administration got, what they

closed, what they partially addressed. In your estimation, and I say

this because one of my predecessors, Mr. Waxman, held a hearing

just to ridicule the Bush administration for how many they had

been notified to, both IGs and GAO reports, and how many they

closed, and didn’t give much credit for the fact that the vast majority of them were from roughly the last year.

What would you say was reasonable with any president to have

closed, and how many more these that have been partially acted

on, the 60, would you expect to make further progress and be completed the following year? In other words, should we look at a 1-

year time line? And I want you to give us the 1-year time, but is

this a satisfactory direction on these other sub–81 where we are

looking at the final report at the end of 2 or 21⁄2 years would look

different?

Mr. DODARO. First, I would say last year’s report was an accumulation of issues we identified previously as well, so I think there

was more than 1 year opportunity to deal with some of those

issues.

Chairman ISSA. You mean you had to reiterate what hadn’t been

fixed either by this President or his predecessor.

Mr. DODARO. That is correct. Or actions that we had recommended to the Congress and they hadn’t taken action on. So this

year we are positing new ones, so the 1-year timeframe I would expect would be more reasonable as a benchmark, compared to what

you were talking about.

But I would hope that of the 60 areas that are partially addressed, that many of those areas can be closed within the next

year activities. I think it is within the grasp of the administration

and the Congress to do that and I would hope to see progress.

I was pleased that the administration required the agencies,

through their budget submission process, to address all the areas

that we identified in the report. So that was a good step. But there

needs to be more assertive action, particularly across government.

Many of the areas we identified transcend one department and

agency, so they really require OMB and the administration to take

a very active role in looking at these activities across government.

Chairman ISSA. I am going to go back to my opening statement

and what I alluded to. I have looked at the military both before

and after Goldwater-Nichols. Before Goldwater-Nichols, as an

Army officer, I thought Army, I bled Army, and all I really thought

about was beat Navy, because we didn’t care about those former

Army people known as the Air Force. So that changed to a great

extent with the requirement for senior officers, as part of their career, to have joint assignments, very often being trained in another

war college or another commanding general staff.

How is that going and is it a partial blueprint for a more governmentwide system, particularly with civil service? Do we need to

cross-pollinate in order to drive down this tendency to stovepipe

differences that may be of no purpose other than to facilitate additional cost?
61

Mr. DODARO. That clarification that you mentioned, of roles and

responsibility and the jointness and rotations and training programs, joint exercises, that part of the Goldwater-Nichols reform

has gone very well in our opinion, made a material difference and

greatly improved the ability of the Department to carry out operations.

On the side in terms of the management reforms under Goldwater-Nichols, the requirements part of the process, they introduced some joint processes. That is not going as well. In fact, many

of the areas that I mentioned in my opening statement and our report are because the management of those joint requirements

aren’t going as effectively as they could be.

Now, in terms of the lessons learned, on the jointness, as you

point out, I think there are tremendous opportunities to use that

in the rest of the Federal Government. In fact, we pointed out

where that could be expanded with the National Security agencies

to be more effective as well, but also with the civilian agencies I

think it is very important.

More and more problems are requiring a number of agencies to

work together to resolve those problems, whether we are talking

homeland security, food safety, or a number of other areas. So I

think that is an excellent course to pursue, Mr. Chairman, and we

would be happy to support you in your efforts in that arena.

Chairman ISSA. In my final 15 or so seconds, do you also support

the idea that reorganization of government would need to be done

much more in the Hoover Commission fashion, one in which we

start off with a much larger goal, much more jointness, if you will,

between Executive and, to be honest, your organization and a few

Members of Congress, to set much bigger goals, much longer, for

a long-term reorganization, including some of the things you are

presenting today?

Mr. DODARO. I think that has tremendous potential and I am in

favor of that. I think there is really no entity in the Federal Government focused on looking at organizational issues on a continual

basis and having strategic planning, being able to look to see if we

have the government that we need for the 21st century, and I

think having a commission, a Hoover type of commission is an excellent way to build consensus on that. Because if you are going to

have it work effectively, you need consensus, and a commission is

a good way to develop consensus and take a broad view of it, and

I think looking holistically makes a lot of sense so you don’t have

unintended consequences as well. And there is no magic one answer in these areas; you can reorganize a lot of different ways.

The commission could also focus on implementation plans. For

example, in creating the Department of Homeland Security, we

don’t think enough attention was made to the implementation

plans in that area. That could be rectified by a commission.

Chairman ISSA. Thank you.

Mr. Cummings.

Mr. CUMMINGS. Thank you very much, Mr. Chairman.

Mr. Dodaro, you testified last year about what you considered to

be some of the low-hanging fruit in these areas. You talked about

actions that could be taken in the short-term to generate large payoffs for the Federal Government in the long-term. One of these
62

areas was improper payments, where you estimated that the Federal Government might be losing as much as $125 billion. How is

the administration doing on that issue and have they taken significant steps toward addressing the problem?

Mr. DODARO. The administration has made that area a priority

area. I think they have made some progress. They have collected

over $1 billion in overpayments. The estimating process is still

going on. There are still numbers of departments and agencies that

haven’t made estimates yet; they have set ambitious goals; they are

focused on it.

One of the things that really needs to be done is that there are

categories of why the improper payments are being made and really need to get to root causes. So I think there is progress being

made there. There are still many, many issues that need to be resolved, but I think the administration is focused on it and I am

pleased with that.

Mr. CUMMINGS. Can you name maybe the top three that you

know of so far or is that information available? I know you said not

all the departments. It seems kind of difficult to address the issue

if you don’t know how much money we are talking about. Do you

have the reasons for $125 billion of improper payments?

Mr. DODARO. Well, half of the improper payments are in the

Medicare and Medicaid area, and there you have problems in terms

of providers that have been found not to be proper providers, so

there is an element of fraud in that area. There are systems that

have been tried to be put in place, we point out in our report, to

do post-payment claim reviews, but the administration hasn’t entered all the data in the systems yet from the Medicare program,

nor trained people on how to use the technologies to detect those

cases.

So the health care arena remains a big issue that needs to be

grappled with it, and it starts with the enrollment of proper providers to do pre-payment screening processes with predictive analytical technologies, to do post-payment claim reviews, to do recoveries of known overpayments. So we are looking at all phases of

that approach to make sure that we are making recommendations

that can help guide them as they tackle this very important issue.

Mr. CUMMINGS. Well, as you make these recommendations, are

these recommendations ongoing?

Mr. DODARO. Yes.

Mr. CUMMINGS. So, in other words, you don’t just come at one

point and say these are the recommendations, then you wait another year and then these are the recommendations?

Mr. DODARO. Right.

Mr. CUMMINGS. You are continuously making recommendations?

Mr. DODARO. Yes. Yes.

Mr. CUMMINGS. And how is that done? In other words, do you

run into situations where you see a problem and do you immediately let the administration know that?

Mr. DODARO. Yes. Once we have confidence that our analysis is

complete, yes, we do that. We provide all our reports to the agencies for comment and draft before we finalize them, but we have

ongoing dialog with them, so we share that on a continual basis.
63

Mr. CUMMINGS. Can you give us a sense of how many of the proposals put forward by the administration in the 2013 budget address GAO’s issue areas from the 2011 report? Do you have any

idea?

Mr. DODARO. There are some of them. Unfortunately, the timing

of our report was we had to close our field work before the President submitted his budget, so we weren’t able to reflect all those

in the report, but one we did mention is that the new requirement

for the administration to designate crosscutting priority goals because of the Government Performance and Results Modernization

Act of 2010, they identified 14 crosscutting goals, many of which

touch on the areas in our 2011 report and our 2012 report.

Mr. CUMMINGS. Now, is it also true that the progress made in

disposing of excess or underutilized property has there been

progress there?

Mr. DODARO. Yes, yes. Actually, when I testified before this committee last year on our high risk list, we mentioned we had narrowed the focus of the high risk list on real property because they

had made some progress in that area. It is also an area where they

have submitted a legislative proposal. This committee has acted

upon it, the House has; it is pending action in the Senate. So I

think there is steady progress being made in that area as well.

Mr. CUMMINGS. So are you satisfied with that progress? I know

it’s ongoing. I’m just curious.

Mr. DODARO. Right. Well, I think that it would be good for legislative action to be taken to be able to deal with some of these barriers that they face in disposing of those real properties, and I

think greater progress is possible and legislative action would provide an additional impetus and give the administration an additional tool to deal with that area. We are continually doing that.

Next year, when we testify before you, we will have a definitive

answer in our high risk list, but I am expecting more progress; I

think it is possible.

Mr. CUMMINGS. Thank you very much, Mr. Chairman.

Chairman ISSA. Thank you.

We now go to the gentleman from Tennessee, Mr. DesJarlais.

Mr. DESJARLAIS. Thank you, Mr. Chairman, and thank you all

for joining us today. Just a couple quick questions.

Mr. Dodaro, your testimony says that we could potentially save

tens of billions of dollars annually. What are the most important

areas we should focus on to realize these cost savings?

Mr. DODARO. There are a couple that are really important. I

mentioned one in my opening statement in terms of the adjustment

process. Congress mandated, in the Medicare advantage portion of

the Medicare program, that there be a comparison with the fee-forservice program. There is a greater advantage to people in coding

beneficiary diagnoses for Medicare advantage because they get paid

based upon those claims, where fee-for-service programs the diagnosis isn’t as important, if you will, going forward, to be as precise.

So they make an adjustment to the process. It was 3.41 percent

that was developed because of these coding errors. We think the

percentage is higher. So by refining CMS’s process, we think they

could save over $1 billion, up to $3 billion, and that is cumulative

going forward every year.
64

Also, there is an area of where the Federal Government does not

have enough information to offset pensions for Social Security, particularly spousal benefits from people who don’t participate in the

Social Security program, like State and local employees. The CBO

has estimated that could be between $2 and $3 billion in that

arena as well.

So those are a couple of really good examples that I think could

yield very significant savings.

Mr. DESJARLAIS. In addition to cost savings, what are the most

important advantages to reducing duplication in government?

Mr. DODARO. Well, I think there are many. I think you save administrative costs, you save program dollars, you can target more

efficiently to help people. I think it also, from a citizens perspective, makes it easier to figure out where to go to get services, to

get help, and improve the image and confidence in Government

that it is operating as efficiently and effectively, and are in the best

interest of the American taxpayers as people believe and deserve

the right that it does.

Mr. DESJARLAIS. Okay, thank you.

I would like to yield the balance of my time to the gentleman

from Utah, Mr. Chaffetz.

Mr. CHAFFETZ. Thank you. I appreciate it.

I appreciate all the work that you are doing. A question for you

about the Inspectors General. I have some concern about the lack

of appointments from the administration. We have vacancies at

State Department, DOD, USAID, SIGAR.

For a moment, talk about the role that they play. One of the

questions I have is long-term, organizationally, how should we

move forward? Are they in the best position to actually achieve

what they are supposed to achieve, or should we perhaps consider

a reorganization? I wonder if maybe they should be part of your organization. Give me your perspective, if you would, general.

Mr. DODARO. Yes, I will do that. I also would like Patricia Dalton

to comment on it. She was Deputy Inspector General at the Labor

Department and Acting IG there for a year, so she has a unique

perspective as well.

First, I too am concerned about the vacancies in those areas. It

is very important to have somebody there. I know first-hand. I was

acting for 21⁄2 years in this position before I was confirmed. It

makes a difference and it is important to have somebody in there

that can provide the right type of leadership. The IGs are well positioned with proper leadership, and they have the tools and they

have the legal authorities to be effective, and many of them carry

out important areas.

I think it is important for each department and agency to have

their own audit investigation shop there. It is hard for us to cover

the entire Federal Government, but there are many more resources

in the IG community than there is in the GAO across Government,

so we try to focus on cross-governmental, cross-agency type of

issues, which are very important.

So I think that if the proper leadership is there and the proper

staffing, they can be effective, and that needs to be the case across

government as well.
65

We work with them very carefully doing financial audits. They

arrange for them at the departments and agencies; we do the

consolidative financial statement. So I try to work effectively with

them, but I haven’t really thought about reorganization options. I

will give that some additional thought.

Pat.

Ms. DALTON. One thing I would add is just where they are positioned in their cabinet agencies. I think it is an important and valuable position in that they are within the departments so that they

can see close-up what is going on.

But the protection for them is that they also report to the Congress, so they do have dual reporting responsibilities, and it is very

important that the Inspector Generals take to heart those responsibilities and recognize that they report to the Congress, as well as

to working within the department. So I think it is very important.

There are some protections the way they are positioned, for example, for their budgets. The Congress is told exactly what they requested, it is not just what the administration passed through and

requested for them. So those are important protections that provide

some valuable insights to the Congress just by their position in the

agencies, that they can see what is going on within it.

Mr. DODARO. I might point out also, Congressman Chaffetz, they

have far more investigators to do criminal investigations than we

do at the GAO. That is another important difference between our

two organizations.

Mr. CHAFFETZ. Thank you.

My time has expired but, Mr. Chairman, I would hope that these

vacancies be a priority for this administration because to have four

of these major departments without an IG, one of them the State

Department for more than 3 years, I think is totally unacceptable.

It is vital to us to have the proper oversight within these departments.

I yield back.

Chairman ISSA. I share with the gentleman that feeling. I would

note that your very clever question of should $2 billion worth of

funding and 12,000 employees be added to the GAO was an excellent question. The general seemed to have ducked the answer of increasing his organization by that size.

With that, we go to the gentleman from Tennessee, Mr. Cooper.

Mr. COOPER. Thank you, Mr. Chairman.

If every politician were here who denounced waste, fraud, and

abuse, this hearing room would be packed. If the lobbying community took our efforts seriously, the audience would be packed. But

I am afraid what we are seeing here is a lot of political theater,

and it is not even very good theater.

The GAO has put together an excellent report. We all know in

our hearts that very few members of this committee will read it.

We may or may not have a new Hoover commission. But the title

of this committee is the Government Oversight and Reform Committee. It is our job to do this. I wish our colleague from the Senate, Senator Coburn, had been able to testify first, because his testimony highlights very clearly this is primarily a congressional responsibility that we have bungled. He also is very useful in reciting
66

the history of almost 100 years of congressional lip service to this

problem and very little action.

So how do we solve this? There are a lot of excellent examples

that have been brought forward in this committee, specific examples dealing with the details of government which, unless people

are personally affected back home, they really don’t care much

about; they just want the problem solved, and they wonder why we

take so long to solve it.

So I would like this committee to consider some procedural forums to encourage us to tackle these problems and take them more

seriously, because today the political reward system is such that we

are primarily benefited if we have good news speech material that

excites voters back home, something new and improved.

And to be honest with you, most of us don’t really care if it is

a duplicative program as long as it sounds good to kids or seniors

or veterans or whatever constituency we are appealing to. And it

has worked this way in American politics for a long, long time.

So how do we change that equation? How do we incent to this

committee or this body to read the report, to take it to heart, to

enact legislation, to curb duplicative programs? What is the reward

system in that?

In general, you know, the phrase in politics is friends come and

go, enemies accumulate. And most folks are worried that there is

going to be some group out there, and the pimento lobby was

against me at one point. Yes, the little red thing in the olive has

its own lobby, and somehow I was labeled as being anti-pimento.

I had no idea. I didn’t mean to be anti-pimento, but they care deeply about my pimento track record. So there are pimento lobbies all

over the country and they have a constitutional right to lobby. Free

speech is a great thing.

But we also have to manage this Government and we are doing

a terrible job today. So how do we clean house? How do we get rid

of obsolete laws? How do we stop duplicative programs? The same

old, same old isn’t going to do it. We can have all the commissions

in the world and won’t read that new report just like we won’t read

this report.

So, Mr. Chairman, we need to think of ways to get this committee to do its work.

I look forward to Senator Coburn’s remarks because he has been

one of the national leaders on this topic. Many people in both parties have tried to lead on this, but the same old approach will not

do it. So let’s put our heads together and think in some bipartisan

way of not just blaming the administration, not just thinking that

the cure-all for all of Congress’s problems will be switching party

leadership, because both parties are in cahoots on this and we have

both bungled it.

So I would ask the GAO, at least in your spare time, and you

already do an excellent job, we need help in creating a different

system so that we are not always seeking new speech material, not

always new and improved, without caring what is duplicative. In

some State legislatures they have proposed that you can’t pass a

new law until you get rid of two old ones. That is an interesting

approach to it.
67

Maybe if the media paid more attention to our overall record of

cosponsorships, how many folks have sponsored billions, trillions of

new ideas without looking at how much could be reduced, because

Government is obese and we have to figure out a better solution

than the current same old, same old or the blame game.

We are great at blaming the administration, we are great at

blaming the other party, but that is not getting the job done. That

is not solving the problem for folks back home.

So I look forward to talking with you, Mr. Chairman, about this

and the ranking member. There has to be a better approach than

what we are doing right now.

Chairman ISSA. Would the gentleman yield?

Mr. COOPER. I would be delighted.

Chairman ISSA. I couldn’t agree with you more that we do have

a long history of having hearings and then having a similar hearing a year later. One question you might ask the general, though,

is what is he doing to reduce costs at the GAO in light of an 11

percent cutback in his funding.

Mr. COOPER. Well, the gentleman has already asked the question.

Would the gentleman like to respond?

Mr. DODARO. Well, we have taken an approach to look at a lineby-line item of our budget and scrubbed it to be more efficient in

terms of cutting back on our administrative operations and really

making sure that they are operating effectively. We are experimenting with more telework in the field to reduce our rental cost

by 40 percent.

Unfortunately, all the actions that we have taken in order to improve the efficiency of our operations hasn’t been enough to absorb

the cuts. Since we are an agency of 80 percent personnel costs, we

have had to reduce the number of people at the GAO. This year

we will be 11 percent smaller, which is about 365 people, which

will be the lowest level in GAO staffing since 1935. So I have been

concerned about this.

I have testified before the House Appropriations Committee,

asked for a partial restoration of the staff support. I believe we

have good justification. Our recommendations, many of them are

adopted; many are not, they are still in process. But those that

have been adopted have returned $81 to the American taxpayer for

every dollar invested in GAO. So I look forward to continuing to

work with the Congress on this issue.

Chairman ISSA. Great question, Mr. Cooper.

With that, we go to Mr. Chaffetz for 5 minutes.

Mr. CHAFFETZ. Thank you.

I want to go to one of the sections in here that talks about the

lost revenue, if you will, from the IRS failing to collect some $385

billion. Can you expand on that a little bit? You know, a lot of discussion we have here in Congress is about should we increase

taxes, should we cut taxes, and here we have $385 billion? That is

an annual number from 2006, correct?

Mr. DODARO. Right. One of the things, Congressman, I am glad

you asked this question. First of all, IRS had not been doing regular estimates of the tax gaps, so we had made recommendations

to that issue. We had placed administration of the tax laws on our
68

high risk list many years ago, starting out with fraud in the earned

income tax credit, but we expanded it more broadly. There is a lot

of under-reporting of income in this area, but the first part was to

figure out how much and then where is it occurring.

So the IRS is continuing now to do active research in all those

areas and GAO is doing a lot of research. Some of the things that

we have recommended, for example, have been to have IRS use

third-party information more to check against the records. For

most wage earners, the taxes are deducted, but for many others

they are not. So that is an area.

In real estate, for example, real estate owners, for services that

are provided to corporations there could be third-party reporting.

The Joint Committee on Taxation, just from implementing those

two recommendations alone, estimates $5.9 billion that could be

collected over a 10 year period of time.

We have also recommended that they could perhaps do a better

job providing assistance to taxpayers to ensure greater voluntary

compliance through automating some of their responses as well.

We have recommended in the past, and now it is being implemented, that paid tax preparers, who many people use, have to

have certification and ongoing education requirements as well.

So it is really a multifaceted strategy that we have recommended, and we continue to do work in this area to try to do

it. We shouldn’t ask people to pay more if the people currently

aren’t carrying their share of the burden.

Mr. CHAFFETZ. And I guess that is the point, Mr. Chairman, that while there is talk about raising taxes again, here we have $385

billion not collected in just one 12-month period, and then you combine that with the tens of billions of dollars in waste, fraud, and

abuse. If we want to have an economic impact upon the financial

books of this country and our ability to have a government that is

limited, but also funded in a proper way, these are two things that

we cannot ignore, and that is why I am so excited about this committee and the work that we are doing here.

I have just less than 2 minutes here. I want to talk about the

border security, point number 47 in the report. We had spent an

unbelievable amount of money on SBInet, which basically doesn’t

work, but the Arizona Border of Surveillance Technology plan, you

are somewhat critical of that plan. Can you expand verbally on the

concerns that you have with the border security initiative that

Homeland Security is putting forward?

Mr. DODARO. Yes. We have concerns that it is unclear as to what

the benefits are going to achieve and how they are going to measure performance under the program, and also estimating the life

cycle costs of these activities.

Continually, when we look at these technology investments, it is

always not quite clear up front exactly what the benefit is that is

going to be achieved, how it is going to be achieved, how you are

going to measure whether you know that there is success there,

and do you have a realistic estimate of how much it is going to cost

before you start proceeding down the path and have well defined

requirements.

If you don’t have those things up front, it is a recipe for disaster

later on, and a lot of wasted resources and time and energy, so in
69

this case we are saying that those things ought to be well defined

up front. The Department agrees, I believe, with our recommendations and hopefully they will be able to provide these type of clarifications and additional analysis.

Mr. CHAFFETZ. And one thing that I would hope that the GAO

would look at is how the statistics are gathered on the border.

There is some concern that there has been an adjustment or a

change in how those statistics have initially come about. How are

we tracking the turn-back souths or the getaway categories? Here

we are trying to quantify things which, as you say, having the

metrics in place is imperative to coming to a proper decision, so I

would just encourage you look at that.

My time has expired. I yield back, Mr. Chairman.

Mr. DODARO. We are looking at that issue right now. We will

have a report soon.

Mr. CHAFFETZ. Thank you.

Chairman ISSA. I thank the gentleman.

We now go to the gentlelady from New York, Mrs. Maloney, for

5 minutes.

Mrs. MALONEY. Thank you so much.

Congratulations, Mr. Dodaro and your team, on this really excellent report. I would like to be associated with the comments of my

friend, Mr. Cooper. I am going to take this home, I am going to put

it by my bed, and I am going to read it every night before I go to

bed, because let me tell you, I think that saving taxpayers money

and making government work better is a really exciting goal and

something that we can both work together on all sides of the aisle

to make happen.

I understand before I got here there was an agreement on one

of your areas that you have highlighted for many years, the loophole for oil and gas companies, that they are literally leases to extract oil and gas from land owned by the American taxpayer and

absolutely nothing is coming in from it. You estimated $21 to $53

billion.

I believe the chairman or the Republican report had $80 billion,

so certainly whether it is $80 or $53 billion, it is a lot of money,

and I am thrilled that we are going to work together to close that

loophole and move forward; that could help our economy and help

pay down our deficit.

You also talked about management and improving management

of oil and gas resources as really an area we need to focus on.

Based on your report, you said we are not getting a fair return

from the leasing of Federal land that belongs to U.S. taxpayers. In

fact, you said we were absolutely 93rd in the world, to be exact,

in collecting revenue from oil and gas leases, and the only countries

doing worse than we are are Peru and Pakistan in collecting greater. That is not a very good record, is it? So we are going to have

to work on that.

In your report, you indicate that over the last year improved

management by the Interior of Federal oil and gas resources could

result in an additional revenue of $1.8 billion over 10 years. Can

you elaborate on what the Interior is doing, what steps we need to

take, and could you just point out more information in that area?
70

Mr. DODARO. Sure. I am going to ask Ms. Dalton to address that

issue; she was responsible for that work.

Mrs. MALONEY. Okay, great.

Ms. DALTON. Thank you.

There are a number of things that Interior can do, and in fact

they are starting to do that we have pointed out in our report. One

is to gather good data on what actually is coming out of the wells

to determine how much is being owed to the Federal Government.

It is important to have third-party information and not self-reported information.

It is also important to have quality information coming in so that

it is verified, again, so that we know exactly what is being owed.

I think those are two important things that will help in the Federal

Government receiving exactly what it——

Mrs. MALONEY. And Interior is working on this now?

Ms. DALTON. They are working on it. They have made some

progress, but there is more to be done. Interior is also working at

hiring additional people. They have gone through a reorganization.

They need to have the right people and the right skills to do the

important work that they are charged to do.

One thing Interior has done recently, which we pointed out in

your report and you mentioned in terms of where the Federal Government is as a resource owner in the amounts that we are charging, Interior has just completed a study of our royalty rates and

has made adjustments in those. There is one area that you allude

to in terms of non-producing lands. There is a request by the administration to provide an annual rental fee if a lease is not producing, that the lessor would be required to make a payment based

on the acreage leased, to which many resource owners do in fact

charge.

When we did our study, what we were doing was comparing

what we in the Federal Government do and the Department of Interior does with other resource owners, whether it is States, other

countries, private citizens that own valuable oil and gas resources

and other minerals.

Mrs. MALONEY. Well, my time is almost up. I would like to ask

each of you, you have worked hard on this report, if you could recommend one area, just one simple area that is not divisive, that

every American could agree on, that even Congress could agree on

and work together on to help improvement management that would

help the bottom line of our country, what would it be? Do you want

to start, Ms. Dalton?

Ms. DALTON. I think one of the things that I think is most important that crosses all of the areas is having good information on

what exactly are we getting. Are we matching the outcomes that

we are receiving? Because then we can start making decisions on

how we can be more efficient and more effective.

Mrs. MALONEY. Mr. Dodaro.

Mr. DODARO. I just would like to underline Pat’s comments, because the one thing that has really surprised me out of this whole

exercise that we have been doing for the past 2 years is how much

we do not know about the effectiveness of many of these programs.

They may have overlapping responsibilities, but in trying to figure

out how to handle this, you really don’t have a lot of good informa-
71

tion about what we are getting for the value of many of these programs and activities, and I think unless you have that it is very

important.

The other thing is I think we have to get better organized to deal

with the problems according to the comments that were made earlier by the chairman on this area. I don’t think we are organized

properly to be able to tackle these problems with the administration or within the Congress, so I think innovative approaches are

required.

Mrs. MALONEY. And Ms. St. Laurent.

Ms. ST. LAURENT. Thank you. I think both of our reports highlight a number of areas where just better attention to good management practices and good business practices would yield significant benefits.

Mrs. MALONEY. Such as?

Ms. ST. LAURENT. For example, we have several suggestions from

last year’s report regarding contracting, the need to get better competition in contracting, better manage the use of multiple award

contracts, etc., or interagency contracts. Also, the efforts that are

going on now to consolidate data centers I think are very important

and have potential for saving significant costs as well. So those are

a couple of examples.

Mrs. MALONEY. Thank you.

Chairman ISSA. I thank the gentlelady.

With that, we go to the gentleman from Pennsylvania, Mr. Kelly,

for 5 minutes.

Mr. KELLY. Thank you, Mr. Chairman.

General, good seeing you again.

My concern is more when we go to the auto bailouts. There was $62 billion spent, and when we talk about the Auto Recovery Office, part of the Department of Labor, I noticed in item 39 we are

talking about an office that spent, I think, roughly last year $1.2

million in travel expenses going to communities that were hardest

hit by plant closings and the effect that it is going to have. Can

you see any positive results from that?

I read your report. There seems to me that there is a great deal

of overlap with that Department, and maybe they have missed

their mark as far as what they were initially set to do.

Mr. DODARO. Basically, our fundamental point is right on your

question. We have asked them to provide justification for what they

think they have done in order to promote effectiveness, because

when we went out and talked to communities, many of them got

help, but pointed to other parts of the Federal Government that

they got assistance from.

So our fundamental question is either for the office to produce

some tangible concrete examples of exactly how they have improved their effectiveness or those funds could be better spent perhaps going to departments that are providing direct assistance to

the communities.

Mr. KELLY. Yes, because it seems to me there is an awful lot of

duplication there and a lot of just back and forth on things that

didn’t really accomplish anything. And I am greatly concerned now

because as we talk about the auto bailout somewhere, and I don’t

think this is a time to take a victory lap, I know and you know.
72

And after being in the automobile business all my life, I do know

that the cost of gasoline does kind of effect what the market is and

who can afford to buy a car and what they are going to continue

to do. So while we may think we have made some type of a dramatic recovery, and I just looked to this past weekend, if you add

all the manufacturers’ numbers together, you know what they are

projecting, the czar is, for this year? That is the annual sales rate;

$16.5 million. Now, that is their projection if you take each one individually.

I am a little skeptical of that ever coming to a reality, but the

dramatic impact of that is all of these projections go forward as to

what you are going to do as far as production is concerned; how you

are going to use your suppliers, what they are going to be asked

to provide for you. And we know from that last downturn, and I

went through it personally at the time, I was an automobile dealer

solely, I was not a Member of Congress. The market dropped 35 to

40 percent over a weekend.

Now, that also affected especially trucks and SUVs. When the

price of fuel goes up, those just fall off a cliff; I mean, they absolutely fall. The problem you have is that people owe so much more

on that vehicle, they can’t even trade it in; there is no way you can

bring it back.

Now, people say what the heck is he talking about, what does

that have to do with anything? If you are in a community that

builds trucks and SUVs, that has a dramatic effect and I am more

concerned. I know we have done a lot of things that we think are

going to ensure somehow a safe landing or some type of a parachute that is going to make it a little bit easier. I see what is going

on right now as absolutely a harbinger of what is to come. As much

as we may talk about it and have all kinds of studies about what

is best for those communities, there is nothing like a strong market

and a strong economy.

So no matter how many studies we do, and I know that people

talk about we need to have a better ROI on the studies that we

do, but the truth of the matter is the shareholders don’t have a

vote in this, the stakeholders don’t have a vote in this. We just tax

them and take their revenue; we decide where to spend it, as much

as we would like to see it spent better.

And I am not one that will stay up all night reading the report,

I read some parts of it that really affect me, but I tell you what,

you have done a wonderful job on it. I appreciate what you are

doing and I wish we could incorporate much more quickly those

ideas that you have and those fixes to it; it would certainly bode

well for the stakeholders and shareholders of this business, which

are the hardworking American taxpayers.

So I thank you for your time. I know that there is a lot of duplication in this office. While it doesn’t really hit high on the amount

of expenses, this is one of those times where $1.2 million sounds

like chump change, but when it comes out of your pocket after

working all week, it is a great deal of money. So thanks, keep up

the good work, and we will try to work with you and get to some

answers. But thank you for your time.

Chairman ISSA. Would the gentleman yield?
73

General Dodaro, specifically on the auto bailout effectiveness, I

think you have weighed in previously on that. Would you like to

give us an update on how successful those funds relocation, the effort has been?

Mr. DODARO. There are, and I comment on it both in terms of

the automakers, but also other parts of the TARP, there are still

a couple of key issues where the story isn’t completely written yet,

and one is whether or not Treasury decides when to divest in some

of these investments that have been made in the auto companies.

AIG, for example, we have made recommendations to make sure

that they have the right type of expertise to decide when to divest

and how to do it in order to make sure that the taxpayers are best

protected in that area. And I might also take the opportunity to

comment that another large part of the bailout activities is resolving the issues with Fannie Mae and Freddie Mac, and that is a big

issue. That will end up being one of the major costs incurred

through this financial bailout process.

Chairman ISSA. I thank the gentleman.

Mrs. MALONEY. Would the gentleman yield? May I ask a question? Would the gentleman yield?

Mr. KELLY. My time has expired.

Mrs. MALONEY. On this particular issue, on the TARP. I ask

unanimous consent to ask a question on TARP.

Chairman ISSA. If the gentlelady from Washington, DC, will forego, I would ask unanimous consent the gentlelady have 30 seconds

for a question. Without objection.

Mrs. MALONEY. This is a critical point and we really need more

information on it. We had a bill, a bipartisan bill passed in the last

Congress that would track everything TARP passed our House,

overwhelmingly died in the Senate.

I think I would like to request the chairman to request, since I

know I don’t have the power to request, a report on where we are

in TARP from the GAO. Where did all that money go? What is still

out there? What are these questions that you sort of lightly touched

that we could look at in a better way to figure out how to make

smart decisions on what is remaining to be done.

I still am fuzzy on where it was paid back, what time, in what

form, and I think that that would be a really helpful thing for the

economy and ways to manage in the future and manage what is

right before us right now.

I yield back. Thank you.

Chairman ISSA. I thank the gentlelady and I will take your request as an order to work with the GAO on bringing that to the

full committee.

With that, we recognize the gentlelady from the District of Columbia for 5 minutes.

Ms. NORTON. Thank you very much, Mr. Chairman.

And thank you, Mr. Dodaro, for this report. Actually, I want to

suggest one doesn’t have to stay up all night reading the report because that is not how it is organized. It is really organized so that

you can go in agency by agency and look at and extract the particular areas where you could really get some bang for whatever

buck it is you are looking for.
74

If you believe the Government does a great deal of good, as I

think the American people really do, you want it managed very

well, and every time something comes out, it is being poorly managed. There are those who will take advantage of that to say that

the whole thing ought to be sent up in smoke.

But essentially, Mr. Dodaro, this is a management responsibility.

When I chaired the EEOC, I reorganized the agency, but I didn’t

do it just to pull the programs from one place to another, enabled

me to go to a settlement strategy, for example, instead of litigating

everything. I can see the value of eliminating duplication. In order

to do it, I had to reorganize the entire agency.

Now, the closest thing we have to eliminating duplication, overlap, etc., is the President’s proposal on reorganization, so I have to

ask you about that, because we can talk about it as much as we

want to, but it is the administration, it is management that runs

the agency. So just to take one of the functions, the President

wants to do this in a way just like you have done it. He doesn’t

do the whole elephant and say throw it up and let’s get it all done;

he focuses in on agencies which suggest reorganization would save

money.

The trade functions, for example, where he says over 10 years you could save over $3 billion. You would think Congress would be

all over that as much as we want to save funds, but in light of your

own report on duplication, I would be most interested in your opinion of the President’s reorganization proposal.

Mr. DODARO. First, I would say there are a couple issues. One

is the request for the sort of fast-tracked authority for the Congress. I think that the real policy decision that the Congress is

going to have to wrestle with——

Ms. NORTON. Why do you think the President did that? Congress

will always have problems with that; that is the only way we have

to get into the struggle in the first place.

Mr. DODARO. Well, I am not sure, to be honest with you. I think

the Congress worked with the administration in the reorganization

for the Department of Homeland Security. Presidents have requested but we really haven’t had that fast-track authority since

President Reagan was given the authority for a brief period of time

many years ago.

Ms. NORTON. Did it work for President Reagan?

Mr. DODARO. Well, I don’t think that he made any proposals

through it because it was only given to him for a couple of weeks,

so there was a short window of opportunity there. But I think there

is a real deliberative process, and the question is one of the things

I think needs to be thought about is how the Congress needs to engage the administration in the development of these proposals so

that there is consensus so that they work effectively over time; and

that applies to any sort of proposal, because if you don’t have that

consensus, then people start trying to undo the——

Ms. NORTON. Mr. Dodaro, let me ask you this, then, because I

am not here to make the case for fast-track. I am much more interested in his reorganization proposals.

Mr. DODARO. Well, I think there are a couple of issues there that

need to be taken into consideration. One would be exactly what

problem they are trying to address. I think the issue about the U.S.
75

Trade Representative being included in the Department is one that

has to carefully be considered because of the prominence of that position in dealing internationally and also its special relationship

with the Congress and Congress’s authorities in the trade areas.

Some of the other opportunities for coordination I think have

merit and should be considered. There are different ways to get coordination, but I think they also have to go into this with the recognition that however they are reorganized in the trade areas, because of the wide areas of responsibility, coordination with other

departments and agencies will still be important over time. I think

there needs to be a good transition plan that has to be talked about

up front. I don’t think that was given enough consideration for the

Department of Homeland Security. So there are a lot of facets of

that activity. I think any reorganization proposal has merit to be

discussed and deliberated on, and to really take careful deliberative

action is appropriate.

Ms. NORTON. Thank you. Thank you very much.

Chairman ISSA. I thank the gentlelady.

We are now joined by Senator Coburn. Pursuant to our rules, active Members of the House and Senate are not sworn in, so I now

take great pleasure in recognizing the gentleman for roughly 5

minutes.

STATEMENT OF HON. TOM COBURN, M.D.

Senator COBURN. Well, thank you, Mr. Chairman, Ranking Member Cummings, and members of the committee. First of all, let me

applaud you for having this hearing. What is disappointing is so

few Members of your body are here, which identifies what the real

problem is in Congress. I also want to thank Gene Dodaro for being

here.

Chairman ISSA. Too many committee assignments like a markup

next door, I am afraid.

Senator COBURN. Sure. But the fact is that calls a lack of leadership in organization of Congress so that we pay attention to the

things that are really important. I don’t know what the markup is,

but the fact is that the country is drowning in debt. We have a $1.3

trillion deficit.

We have totally vanquished opportunity for our kids in the future, and we have brought to us by GAO some things that we as

Members of Congress on both sides of the aisle can do, and yet not

one major thing was done off their report last year, except what

Virginia Fox did in terms of consolidating some 35 work and job

training programs, which were recommended in last year’s study.

I would tell the delegate from D.C. that I applaud the administration’s proposal. I am supportive and I am working with them to

try to do it. But I would take issue with the point that we created

82 teacher training programs, the administration didn’t. We created 47 different job training programs. We created 56 different financial literacy programs. We created 100-plus transportation programs through seven different agencies. We created 209 different

science, technology, engineering, and mathematic education programs.

So it is true that the administration is leading in trying to consolidate this, and I applaud them and I am going to help them try
76

to move it through the Senate, but the responsibility lies on us because we in fact have created the mess. We have one department

in this Government that knows all their programs, only one. The

rest of them have no idea all their programs. We can’t even get a

bill through the Senate that says that agencies should give a list

of all their programs every year. Nobody on that panel knows all

the programs for all those different agencies.

Well, if nobody knows, how are we ever going to solve the problem? And we are not unless we as Members of Congress take the

initiative to start solving it.

What I would tell you today is this is a good first start. What

Gene Dodaro and his group have done has given us some areas

where we can make major changes that not only address the needs

that are out there that are not being met now, but can do it in an

economical and efficient way, and eliminate significant duplication

that by their own report, both last year and this year, says that

sometimes actually harms those people that we are trying to help.

So I think we have a great opportunity to try to fix things. They

put it on a platter for us and, unfortunately, we have done nothing

with it. And given the fact that our country is bankrupt, not going

bankrupt, we are bankrupt. If you add all the total unfunded liabilities, we are over $130 trillion, if you add $15, $16 trillion worth

of debt, there is no way we can fix our country unless we as Members of Congress start looking at what we are already doing.

The other thing that I would propose that you all ought to pass,

we have attempted it twice in the Senate; we got 64 votes once and

60 the second, is have CRS look at every bill before it goes through

for a vote to make sure it is not duplicating another program; in

other words, to give us the knowledge to say before you pass another bill, are you duplicating something that is already out there

so that we don’t keep digging the hole deeper. I think those are

things that we can do.

We put forward what we have done the last 7 years in a book

called Back in the Black. A lot of people won’t agree with all that

is in it, I understand that, but there is $9 trillion worth of savings

in this. If we could come to consensus on $3 or $4 trillion, we could

make a significant difference in the outlook and future for our

country and our kids.

So I would hope that you would look at that at some point in the

future and critique it. But we have to come together. I think we

have well earned our 15 percent approval rating for the American

people.

With that, I would be happy to answer any questions.

[The prepared statement of Senator Coburn follows:]
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97

Chairman ISSA. I thank the gentleman.

With that, we go to, oddly enough, the gentleman from Oklahoma, Mr. Lankford, next.

Mr. LANKFORD. Thank you, Mr. Chairman.

Thanks all of you for being here. Appreciated the testimonies of

both of you. I had to slip out for a moment to be able to come back

in, but I appreciate that.

Let’s talk about the why. Dr. Coburn, obviously, you know, as a

physician, very well, you can treat the symptoms all day long, but

you have to figure out what is causing it. What is causing all of

this duplication? While the GAO report is a terrific report of here

are the duplications, are there areas we can back up and fix and

let’s prevent it?

One of them you have already identified, the CRS reporting, to

get the possibility that in advance of a vote there is already a report out there that says this already exists. Do either of you have

ideas to say here is the why this is occurring?

Mr. DODARO. Well, I think that basically many of these programs

start out as well-intentioned perceptions of need, that there is always not a well documented case for that in the first place and

there is an accumulation over time. I mean, the 100 programs in

surface transportation developed over decades, and there is really

not a regular process, other than congressional oversight, to look

at whether or not these programs are working effectively.

I think in some cases part of our recommendations are to really

tie funding to outcomes, and not just there is a perception that providing money fixes problems, and that perception is not always——

Mr. LANKFORD. So you are saying just year after year Congress

has this perception we have a problem, we need to do something;

we didn’t necessarily evaluate what we did last year, we are really

not going to evaluate what we are going to do this year, but we

need to go back to the voters and say we did something?

Mr. DODARO. That is definitely part of the issue.

Mr. LANKFORD. Okay.

Dr. Coburn, any other ideas you have on that?

Senator COBURN. I think careerism has a lot to do with it. Elections have a lot to do with it. I will just give you a little anecdotal

example. Two years ago, in one of my committees, at two different

times in a 3-month period bills were brought before the committees

that identically duplicated programs that were already running. In

private, I suggested to the Members bringing forth those bills that

maybe they ought to look at what was already being done and, of

course, when they did, they withdrew the bills. The fact is that is

an accumulation of poor staff work.

But what it really reflects, and if you look at, we have actually

documented the amount of oversight hearings. It has gone precipitously down in Congress over the last 20 years. The number of

oversight hearings has gone precipitously down.

We, as Members of Congress, don’t know what is going on, and

in our desire to please and to meet compassionately a need, we do

try to act, but we act without knowledge because we haven’t done

the oversight. Treating pneumonia by treating the fever and the

cough, and not ever giving an antibiotic, doesn’t cure pneumonia.
98

Matter of fact, it leads ultimately to sepsis and death. But that is

what we do all the time.

So what I think we lack is leadership both in the Senate on both

sides of the aisle and in the House on both sides of the aisle, because if we are to get out of this, leadership ought to say every

committee is going to do the oversight of every program over the

next 2 years; you are going to look at what they are doing, how

they are doing it, how effective it is, which ones you can measure.

The one key thing, we don’t have any metrics on any of this. We

are looking at all the job training programs in Oklahoma. I have

had eight field reps doing this for a year, until they finally discovered we were looking at it; now the administration won’t cooperate.

And we are going to be issuing a report, and here is what the summary of the report is on job training programs in Oklahoma: job

training money from Washington is spent to keep the people employed in job training working, not training people for new jobs in

Oklahoma.

That is my consensus of what is happening in job training. It is

the most fragmented, illogical, stupid system I have ever seen in

my life. Some areas work well. On one program, the same program

doesn’t work well in another county. And the fact is that we have

created that mess, and in the background of that what we have

done is created a constituency of those that work in the job training program that value it, but have no metrics to prove that they

are effective in what they were assigned to do.

Mr. LANKFORD. The Taxpayer Right to Know Act that you mentioned in the Senate, basically asking every agency to define all the

programs, why is that stalling? What was the key thing that we

can get out of that, when it is said and done? And not blaming the

Senate, but saying just simply identifying here are the agencies,

identify all of your programs that you have.

Senator COBURN. The Department of Education puts out every

year a list of all their programs. They are the only one that knows

all their programs. And the book is this thick. It is difficult for

them to keep up with it. But the fact is is before you can fix anything, you have to know what the problem is and you have to know

the extent of it. We have great help from GAO, but not to the extent that we need.

Just a little history for a second. Gene’s predecessor didn’t want

to do what I asked to do in terms of bringing these studies forward.

When I asked the GAO to give me every program in the Federal

Government, they said it is impossible. I went to CRS and they

said it is impossible. So we made a mandate. We are two-thirds

through that, is that right, Gene? So we are two-thirds through

this. This is a 3-year program. By the end of next year the GAO

will have looked at all of the Federal Government.

The fact is even for GAO this has been a humongous task to get

their hands around it, and they still don’t really have their hands

around it; what they are doing is identifying components of it. We

have the power as Members of Congress to do the oversight to do

the oversight on each one of these programs if in fact we will invest

the time in it to find out.

Because if our goal is really to help American people with these

programs, we ought to be making sure that they are actually doing
99

what they are intended to do. And I would put forth that 50 to 60

percent of them don’t come close to any of the marks that we intended when we wrote the legislation that set them up in the first

place.

Chairman ISSA. I thank the gentleman.

We now go to the gentleman from Virginia, Mr. Connolly, for 5

minutes.

Mr. CONNOLLY. Thank you, Mr .Chairman. And thank you, Senator Coburn and other panelists for being here today. And I want

to thank the chairman for having this hearing.

Let me begin with the piggy-back question of the chairman to

our friend, Mr. Cooper, from Tennessee, the inference of which, if

I draw it correctly, I actually agree with the chairman. Mr. Dodaro,

you were asked how you are doing in implementing an 11 percent

cut to your agency, and one of the things you cited in response to

the chairman’s question was, if I heard you correctly, an 81 to 1

ratio of savings for dollar invested. Could you expand just a little

bit on that? I particularly want Senator Coburn to be able to hear

that as well.

Mr. DODARO. Yes. What we do is we track implementation of our

recommendations by the agencies and by the Congress and we get

third-party estimates of what the financial benefits were as a result of implementing our recommendations, and we regularly report that over time. But the concern that I have had is that, on

average, over the past 4 years, we have been averaging $91 for

every $1 invested in GAO, and this past year was 81, and the 11

percent reduction is of concern to me because I think that we are

missing opportunities to identify additional areas for the Congress

to take even more actions on our recommendations.

Mr. CONNOLLY. I was listening to Senator Coburn, and as somebody who helped run a big local government, it was music to my

ears what you were enumerating in terms of let’s move beyond the

aspirational when we pass legislation and look at efficacy. And can

we do that in a nonideological context? Because if we could remove

sort of the incendiary agendas on each side and actually just look

at the merits, there would be a lot of common ground around here

if we could get that done.

But I would suggest to the Senator that the problem is trust is

so badly broken here and so often we yield to the temptation actively for trying to get somebody politically that you burn trust on

one side or the other on the actual task at hand. And if we could

somehow detoxify some of the oversight we do in this Congress, I

think we could find a lot more common ground.

And you made the point, and so did you, general, that here we

are a year later and, frankly, we haven’t done much with the earlier report. And a lot of the recommendations you reported to us

a year ago are recommendations you are reporting to us again, and

it is Congress that hasn’t acted.

Senator.

Senator COBURN. Well, I think the problem is not partisanship;

I think the problem is elections. And I think it is the lack of courage and character in Members of Congress. They look more toward

fixing their party and themselves—and I am talking both sides of
100

the aisle—for the next election than they do the long-term interests

of the country.

I don’t think we have had a problem here; all you have to do is

look at our spending. Republicans and Democrats, whether Democrats have been in control or Republicans have been in control,

doesn’t matter who the President is, we doubled the size of the

Federal Government in the last 11 years. So the problem is we get

along too well when it comes to spending money we don’t have on

things we don’t absolutely need.

I would also like to comment I think what the budget ramifications for the GAO were obscene. When we cut them more than we

cut ourselves, when they are the number one tool, if you want to

find out something important in this Government and you want the

facts to back it up, the last place you ought to be cutting is the

GAO.

And yet our appropriators on both sides of the aisle really was

payback. I will make that claim. It was payback. They were embarrassed because they haven’t done their job on oversight, and here

GAO actually shows what is going on and the lack of effectiveness

of appropriation, whether it is Democrat or Republican running it.

They failed to do their job in terms of oversight and they are embarrassing them.

So what happens is their budget gets cut because they are actually showing things that they should have discovered with their

own oversight hearings.

Mr. CONNOLLY. And in the 39 seconds I have left, Senator, and

I agree with you, I just think it is very important that we move

beyond the mindless narrative that government is just big, bloated,

and fat, and we should cut it all, and differentiate between an invested dollar that has a return on it, such as a dollar invested at

GAO.

If we really are serious about debt reduction, here is a vehicle

for trying to get at savings. I mean, if it is 91 to 1, there aren’t

many other Federal programs where we can claim that kind of return, and it just seems to me I completely agree with the Senator;

it is penny wise and pound foolish to disinvest in the GAO.

With that, of course, I yield back. Thank you, Mr. Chairman.

Chairman ISSA. I thank the gentleman.

We now go to the gentleman from Texas, Mr. Farenthold, for 5

minutes.

Mr. FARENTHOLD. Thank you, Mr. Chairman. As I am sitting

here, we have pretty much knocked half the deficit off the board

just in our conversations with Senator Coburn’s $100 million estimate in duplication and the IRS not collecting almost well over

$300 billion a year. Of course, we can get around you can’t get

blood from a turnip with the IRS, but we are about halfway there

already. So we talk about what a struggle it is to get it under control. I am not sure it is that big a trouble if we just do our job.

I did want to follow up on a question Mr. Lankford had about

what did you think the causes for this were, and I am wondering

if part of it also isn’t the committee structure within Congress in

that everybody, I think, will agree jobs are the biggest issue, so

every committee wants to create a program to create jobs or to create training for jobs. I do think we have a unique opportunity with
101

the broad jurisdiction of this committee to come up with overviewing all of these programs and coming up with recommendations that go through even the existing committee structure to do

away with that.

Senator Coburn, would you like to comment on that?

Senator COBURN. Well, I am probably not still familiar enough

with the House’s committee structure to be able to comment on it.

I think this is a nature problem of politicians; you want to be liked,

you want to do the right thing. But it also has to do with an underlying tenant is we are on too many committees, we are not really

good at any one thing; we are fair at a lot of things. Most of us

don’t go to doctors that are that way; we want to go to a doctor that

is really good.

So I just think this report, whether you agree with it or not, is

based on 47 oversight hearings that I did in the Senate in 2 years.

Forty-seven. That was more than the whole Senate did combined

with every other committee. And the recommendations of this are

based on facts from GAO, IG, OMB, and CRS. So you can agree

with it or not, but the fact is if you agreed with a third of it we

could be $3 trillion over the next 10 years less.

Mr. FARENTHOLD. Thank you, Senator. I want to go back to the

GAO report. One of my colleagues suggested setting it by her bedside table for reading. I am going to take it with me to my town

halls, get everybody to scan the QR code on here and actually have

access to the report, because I think it is something the American

people need to know and they need to pressure us——

Chairman ISSA. If the gentleman would yield.

Mr. FARENTHOLD. Yes.

Chairman ISSA. Knowing how tech savvy you are, we have now

received the digital version of that for you to take on the plane.

Mr. FARENTHOLD. All right. I will download it to my iPad.

I did want to touch real quickly in the short time remaining, one

of the big issues in South Texas is issues with the VA, and I think

section 15 of the report deals with the VA and some of the problems they have both communicating within their own organization

and with the DOD for veterans coming out.

I know there is one instance mentioned in the report where there

were five case managers working on the same life insurance plan

for one single individual, and one of the complaints I hear both

from veterans who are trying to get the services that we promised

them and that we owed them is that it takes the VA forever to get

anything done. The VA in my neck of the woods is months behind

in paying doctors who have treated our veterans, in some cases

close to a year behind in paying.

With respect to the VA, can you comment? Is it a technology

problem? Is it just a tech phobia where they need to deal with technology? Is it a cultural issue? How do we fix what I think one of

the most critical problems we have?

Mr. DODARO. I think there are a number of facets to it. One is,

it is a large decentralized department and it needs more centralized direction and management. We have looked at their applications of technology over time and have had a lot of critiques that

they need to improve their ability to be able to do it. Some of the
102

procedures need to be streamlined. I mean, one of the classic cases

where they have difficulties is in handling disability claims.

And then there is an appeal process beyond that that could go

on for a period of time. The coordination issues between DOD and

VA can be greatly improved in electronic records and how they purchase drugs. There are a lot of opportunities for savings, but some

of the fundamental problems I think are cultural, not having applications of technology and to have more centralized leadership.

Mr. FARENTHOLD. I look forward to working with you all on that.

I see my time has expired. Thank you.

Chairman ISSA. I thank the gentleman.

We now go to my friend and colleague from Cleveland, Ohio, Mr.

Kucinich, for 5 minutes.

Mr. KUCINICH. Thank you very much. I want to thank the panel

and welcome Senator Coburn, who I had the privilege of serving

with in the House.

Senator, you published what you called a waste book, I think it

was in December, where you listed what you believe are the 100

most wasteful and low priority government spending programs in

2011, and in light of developments in this country with respect to

oil and gas, where they are making record profits, do you think

that these industries should continue to be rewarded with tax

breaks and other benefits?

There has been an argument that if you take away some of the

breaks, it would affect gas prices, contradicted by these tremendous

profits these companies are making, and the top five companies

earned alone over $30 billion in profits in one quarter, and the

American people are wondering how can this be and what about

these breaks that they are getting. They certainly seem to qualify

as a prosperous industry, and I would just like your comments on

that.

Senator COBURN. First of all, it is important to note that they get

no tax credits; they get accelerated depreciation through intangible

drilling costs. I think you have to look at it in two different groups:

the very large oil companies integrated. They could probably do

fine without the intangible drilling costs. What happens with those

programs is they actually pay the same amount of taxes; it is just

delayed, so the cost to the government is the time value of money,

which is zero right now. So it really doesn’t cost us anything.

I would also note that their average income tax that they pay is

41 percent. That is the big five. That is what they paid last year,

which is a good source for us and far above what the average tax

increase is.

I would be amenable to working on that. I think tax reform is

something that we need to do. I think we need to have a tax program that we quit picking winners and losers in.

Mr. KUCINICH. The Department of Energy had a report called

Cuts, oil and gas company tax preferences. There were eight proposals, one which has to do with repealing the expensing of the intangible drilling costs. And it seems that there would be a considerable amount of money that would be recovered by the Federal Government if they repealed that particular benefit, which I think

is——
103

Senator COBURN. Congressman, that is true in the short term,

but that is not true over a 7-year period. There would be exactly

the same amount of revenues going to the Federal Government.

Mr. KUCINICH. Well, on this one I would be happy to provide you

with what I am looking at here. It says that from 2013 to 2022,

the expensing of the intangible drilling costs would be worth about

$13.9 billion. I would be happy to show this to you.

Senator COBURN. And, again, that is the Department of Energy’s

numbers. If you go and look at CBO’s numbers or OMB’s records

or CRS’s numbers, I think they will show you something different.

The fact is that the average life of most of these wells is about——

Mr. KUCINICH. Well, I want to make sure that I——

Senator COBURN. I would be happy to look at it.

Mr. KUCINICH [continuing]. Correctly. This is the President’s

budget that I’m citing under the Department of Energy. So in the

President’s budget it also says that the percentage of depletion for

oil and natural gas wells would be another $11.4 billion if you repeal it from 2013 to 2022, and repealing the domestic manufacturing tax deduction for oil and natural gas companies over that

same period of time would be worth $11.6 billion. I wanted to point

that out to——

Senator COBURN. The third one, though, is you are going to treat

oil and gas different than you do every other manufacturer if you

decide to do that. So I don’t have any problem with a philosophical

difference.

What I will tell you, over a 10 year period of time, if in fact, as

an accountant—that is my first degree—as an accountant, if you

amortize an expense over a period of time versus taking it all up

front, the only thing that is going to happen is we will collect more

dollars up front, I agree with you. Over the long period of time we

won’t collect more dollars, but what you will do is for the lower capitalized oil and gas industry, the ones that are actually finding all

the natural gas now, the smaller companies, what you will do is

you will limit their capital availability and you will limit our exploration for oil and gas in this——

Mr. KUCINICH. Well, I could understand the sympathy that you

have; you represent the smaller developers very well, but my question is back home in Cleveland I have people who are looking at

$4 or $5 a gallon for gas and are wondering why are these oil companies getting these breaks, and the biggest breaks go to the biggest companies.

Senator COBURN. Well, I think you would be better off addressing

the speculation in the commodity markets, rather than try to—

right now there is greater supply than there is demand for oil.

What is happening? There is an international worry about Iran,

which is a significant factor. We can eliminate speculation in this

country, but you can’t eliminate speculation worldwide.

So the most important thing we can do if we want to address

that $4 to $5 a gallon gasoline is make sure we have a domestic

supply of energy, which we are capable of doing over the next 10

to 12 years in this country, that will make us impervious to the impression and vulnerability of Middle Eastern oil.

Mr. KUCINICH. Mr. Chairman, my time has expired, but could I

ask the witness, with unanimous consent, just ask the witness a
104

followup question? I appreciate that. Thank you, for the members

of the panel here.

Could you tell us how much the speculation in commodity markets, do you have any idea what kind of a factor that would be in

driving up the price of oil domestically?

Senator COBURN. It would be a guess. It is an educated guess, but I would imagine we have $15 to $18 worth of speculation in

the price of oil.

Mr. KUCINICH. Per barrel you are saying?

Senator COBURN. Per barrel right now.

Mr. KUCINICH. Mr. Chairman, I know Senator Coburn is one of

the most fluent people on these issues and I appreciate your presence here for that reason. This may be something that we want to

look a little bit more closely at. I want to thank you for that, because $15 to $18 a barrel, what are we at right now? It is over $100 a barrel.

Senator COBURN. It is $109.

Mr. KUCINICH. So that is quite significant. That is something

worth looking at.

Mr. Chairman, thank you for your indulgence.

Thank you, Senator Coburn.

Chairman ISSA. I thank the gentleman.

I will quickly recognize myself for a number of things.

Senator, first of all, we have had a rash of your colleagues coming over here and not only giving testimony, but taking questions,

so please tell your colleagues that it actually is a good thing.

I am just going to quickly go through some numbers. Number of

hearings held by this committee, starting with Mr. Davis: 2003,

145, these happen to be the first year of each Congress, 2005, 135,

downward trend. Waxman, his 2-year period, the first year, 112;

Towns, his 2-year period first year, 93; Issa, his first year, 122. I

am not back to where we were under Chairman Davis, but we are

heading in the right direction.

Number of letters, which are minor hearings, if you will, under

Mr. Towns, 122; last year under this committee, 748. We take seriously your point that we haven’t been doing enough oversight. It

has been a downward trend.

Senator COBURN. Mr. Chairman, if I may?

Chairman ISSA. Of course.

Senator COBURN. I think this committee does a great job, whether it is led by a Democrat or Republican. It has a great history, just

like the permanent Subcommittee on Investigation in the Senate.

The problem is not the Oversight Committee; the problem is

every other committee in Congress that isn’t doing their job, that

doesn’t know what they are doing, is not looking at what the agencies are doing and is not looking to see if what they planned in

terms of legislation is actually being carried out. So it is not the

oversight committees that I have a problem with, it is the fact that

every other committee is failing to live up to what is required of

them, which is to know what they are doing, and they don’t.

Chairman ISSA. I appreciate that. Certainly, this committee has

begun looking at the permanent Select Committee over in the Senate under McClelland, under both Republicans and Democrats for

the work that they have done back in the 1950’s.
105

General Dodaro, a couple of quick things. First of all, thank you

for delivering this in advance in paper, but digitally.

In your estimation from audits that you have done, wouldn’t it

be reasonable to assume that every cabinet position should be able

to deliver the vast majority of discovery or requests for FOIA in

digital format, meaning is there any longer a reason for either a

FOIA request or a congressional request, subpoena or not, to expect

boxes of paper to arrive? I know Senator Coburn sees them arrive

in his committee, just as I do.

In other words, we paid for a lot of computers, and it seems like

we get paper that was printed out of computers in response to discovery, and so to FOIA requests by the press.

Mr. DODARO. In consulting with our expert in this area, he informs me there is no reason that you shouldn’t be able to receive

virtually everything electronically.

Chairman ISSA. Which would save money because, both on the

sending and, of course, on the receiving, the data mining afterwards.

Mr. DODARO. That is correct.

Senator COBURN. Mr. Chairman.

Chairman ISSA. Yes, Senator.

Senator COBURN. Just a note. We spend $38 billion a year on IT, of which $20 billion is wasted every year. Where is our oversight

of that? The number one programs at risk that they have, the vast

majority of them, other than some Defense contracting, are IT programs. That is where we ought to be. If you want to save money,

let’s start buying some off-the-shelf programs and make us adjust

to them, rather than us design every new program, just like CMS

just spent $77 million on a program that is not effective in terms

of predictive payment.

Chairman ISSA. Thank you.

Mr. Dodaro, you also referenced, I think indirectly, the work of

the Recovery Board when you were talking about the potentials for

recovery if we changed our systems, if you will, for how we tracked

payments by both the payor and the recipient, and also the kind

of predictive modeling that I think pretty much you are looking at

the Recovery Board as the model for what we should be doing in

Medicare, Medicaid fraud and mispayments.

Mr. DODARO. Earlier, I was talking about recovery auditing that

is done after the fact, but as it relates to the Recovery Board, I

think that their operations are very good. I was over there recently

for an update on their Recovery Operations Center. I think there

are additional data bases that they could get access to. I am going

to try to do what I can to help them.

Chairman ISSA. And if you give us a list, we will do what we can

to open those up.

Mr. DODARO. And some of that may need some legislation, Mr.

Chairman. But I think that they have done a marvelous job and

I hope that there are ways to find out how to make their operations

more permanent once their temporary authority expires. I know

you have legislation to do ,that and we are supportive of that.

Chairman ISSA. I am going to submit this one for the record. We

have a series of whistleblowers who came in essentially making a

claim that the Department of Defense routinely hires contractors
106

and/or uniformed personnel, while not getting rid of or reassigning

DOD civilians simply because the DOD civilians tend to be inflexible and they can grab a contractor or some uniform personnel to

get something done quickly, rather than later.

So I am submitting that for the record because I don’t want a

full study, but I would like your observations calling on personnel

that are particularly familiar with that, because it seems like an

area that we may want to follow up on, but I don’t want to do it

without your comments.

Mr. DODARO. Yes. Let me ask Janet to comment on it; she is in

charge of our Defense work.

Ms. ST. LAURENT. The one comment I would make initially is

that the number of contractors, of course, associated with headquarters functions and money, entities of the Department of Defense, has increased and DOD does not have a very good handle

on that data. So then it makes it very difficult for them to make

informed decisions that also understand and reflect the cost implications of those decisions as they are deciding whether or not to

staff positions with a government employee or a contractor. So it

is an area we have done a lot of work on and we would be happy

to provide additional information.

Chairman ISSA. I appreciate that. I am just going to ask one

more because the Senator is here. This committee has continued to

sort of have this nagging proposal of simply scrapping the Department of Veterans Affairs, making it effectively part of DOD, making the uniformed relationship, from the day you raise your right

hand to the day you are buried at a military funeral, a single responsibility.

Obviously, a major portion is health care, a situation in which I

know you have done many reports showing us that essentially we

still keeping talking about having a single interoperable data base

and never get there so that a veteran might be treated or an active

duty person may be treated without knowledge of other work done

or other susceptibilities or problems. I know the Senator also has

unique expertise in that, so any comments you would have on that.

Senator COBURN. I am not sure I want to add anything to the

Defense Department, with the significant problems that it has

today. It does not deny the fact that the VA has problems.

What we ought to be doing for our veterans, we promised them

health care. Give them a card. They want to go the VA hospital,

let them go to the VA hospital. But give them a card to go wherever they want. That is real health care. Give them the ability to

seek the health care they want, rather than limit what they can

have.

You can do that in a very cost-effective way that would give them

better outcomes, better availability, and better timeliness for their

care. That is what we should be doing for our veterans. Let them

decide where they want to go, don’t funnel them in to someplace

that we say they are going to go. Give them the freedom that they

fought for.

Chairman ISSA. Thank you.

And, by the way, when I say scrap and consolidate, you can go

either direction; you can take all of health care in DOD and make
107

it a single system that is led by VA, which is actually some of the

suggestions we have had.

Mr. DODARO. Yes. I share the Senator’s concern about adding

anything to the Department. I think there is much more that could

be done with the current relationship if there was proper leadership and a will to make it happen, particularly in the electronic

records area, in looking at joint purchases for pharmacy issues, and

dealing with health care issues.

There may be organizational ways to get there differently, and

we should be open to those; we should look for better ways. But I

just think that there are many opportunities that could be focused

on right now that we could get quicker action on, as well as looking

for longer term reforms and of an organizational nature.

Chairman ISSA. Thank you. And I will not open up TriCare for

Life, because that would take longer than even two sessions.

Mr. Cummings, do you have another round?

Mr. CUMMINGS. I want to thank you, Senator, for being here. As

I listened to your testimony, I concluded that there is not one syllable that you stated that I disagree with. I think the frustrating

part about all of this is there was a song that said, you got me

going in circles, and it seems as if we are going in circles, and I

am trying to figure out how we get off the merry-go-round.

To your credit, you have asked Mr. Dodaro and GAO to look at

all of this information and gather this information, and I am just

wondering where you see that leading. I guess what you are doing

is saying, okay, let me present the information and it would be so

glaring that maybe it will cause the Congress to get away from the

privacy share, wherever we are in this circle, to do something.

But where do you see that leading? Because I just have this

thing about time and how you can go and do things over and over

and over again, and you can be talking about the same things 10

years from now; and we have a very limited amount of time to be

here. I don’t give a damn if it is 30 years or if it is 5 years. So how

do you see us getting off of that merry-go-round?

Senator COBURN. Well, first of all, I think if we don’t get off the

merry-go-round in the next couple of years, we are going to get off

the merry-go-round because the international financial community

is going to make us do it. And I would much rather negotiate with

you, Congressman Cummings, than I would the Chinese. I would

rather work with you to solve these problems rather than us working with the Chinese when they start telling us what we will do

and how we will do it, because that is where we are going.

If Willie Sutton were here, he would rob the bank, and the bank

is in duplication. And what has disappointed me, I am less disappointed with the House than I am the Senate. We have not done

one thing in the Senate based on last year’s report, not one single

substantive thing. At least the House has brought out of committee

a reform of job training program. That is $18.6 billion a year,

which we know we can get better job training, match skills better

to the needs of both the job offerers and those being trained for

about half as much money.

Well, that is $9 billion. Over 10 years it is 90. And what Mr.

Dodaro and his staff have done is give us another 50 banks to rob,

in other words, if we just do it.
108

So the real key is leadership, whether it is Speaker Boehner or

Leader Reid. If we want to solve it, we can solve these problems;

we don’t have to have a fight with the President. We can actually

solve these problems among ourselves if we decide that we are

going to solve the fiscal issues of our country. Not talking about it

in big terms, but talk about it in the detail terms.

Mr. CUMMINGS. I saw this when, on the Transportation Committee, I chaired the Subcommittee on the Coast Guard and Maritime Transportation, and I am sure you are familiar with the Deepwater Project, where we were literally buying boats that did not

float. As a matter of fact, they are sitting over in Baltimore right

now, in the harbor, and we were buying surveillance systems that

covered 180 degrees instead of 360, and buying radios that if they

got wet they didn’t work. I mean, I could go on and on.

But in a bipartisan way we were able to straighten that stuff out

in about 2 years, with no dissenting votes, because folks came together and worked together and resolved it. Now, I must admit the

Coast Guard came kicking and screaming, but in the end I think

they are a better organization because of it. A lot of it had to do

with acquisitions. They didn’t have people who were qualified to

even write the contract.

And I think the reason why we were able to do that is because

everybody kind of came together and said, you know what, we are

not going to have this. We are not going to be buying things that

we didn’t bargain for. We are not going to have equipment that is

going to hurt our people; we are going to buy equipment that our

people need to do their job.

Everybody came together in a very patriotic way and said let’s

do it. How do we get there, though?

Mr. DODARO. Well, again, I really think it is leadership. If you

and the chairman of this committee would take six or seven areas

which are real obvious, I mean, when I go around the country or

in Oklahoma and I say, there are 82 Federal programs designed for

teacher training, and they say what? Nobody with any common

sense would think we need 82 different teacher training programs.

Eighty-two run by 12 different agencies, not even out of the Department of Education.

So if you all would target seven or eight areas and have subcommittees and this committee say, okay, we want you all to become experts of this, how do we do it, and then send that information to the actual authorizing committees and then hold them accountable publicly for not fixing it, I think we can do it.

The problem is we are fast approaching a time we are passed the

tipping point, and we have a couple of years with which we can

make critical decisions that we can come together and clean up a

lot of this. All of it is well intentioned; none of this was not well

intentioned. The fact is we just didn’t know what we were doing

when we were doing it.

The other two things I think we ought to do is I think we ought

to put metrics on anything we pass, that as a requirement of any

program you have to have a metric associated with it to measure

its effectiveness; and number two is you ought to sunset everything

so that it forces you into reauthorizing, and when you reauthorize

you are going to have the hearings which, in effect, will be over-
109

sight hearings, to say whether it ought to be authorized. Did it

work?

We have tons of programs in this country that are well-meaning

that don’t help people, and some of them actually hurt people, and

yet we haven’t come together bipartisan to solve it.

Going back to leadership, we are all Americans. We are in deep

trouble financially. We have a significant problem with jobs. There

are 600,000 jobs out there right now waiting in manufacturing and

our job training programs haven’t educated the people for them.

Six hundred thousand that could be hired tomorrow. We have 47

job training programs spending almost $19 billion a year and we

didn’t meet that need? That tells you there is some real problem.

So we can do it as Americans, and that is what we need to focus

on because, quite frankly, our survival, our economic survival depends on us getting together.

Mr. CUMMINGS. Just one last question, Mr. Chairman.

You mentioned the Oklahoma job programs and I know we could

cite all kinds of programs like what you just cited. Does that call

for micro-managing, Senator? In other words, if you are going to

have the leadership making sure that each program was doing

what it is supposed to do, I guess there has to be a network of communication, too, so that if you do have any kind of duplication, it

makes, not duplication. But if you have programs doing similar

things, that it makes sense that people are communicating and

saying, okay, you are doing this piece, you are doing that piece. But

it seems like that that takes some real not only leadership, but

some getting down in the weeds type leadership.

Senator COBURN. Well, I think one of the defects with Congress

is too often we write bills with very good intentions that actually

are pretty good plans, and then we don’t instruct the bureaucracy

exactly what we intended, and then we let it flower from there. Oftentimes we know enough to get really specific about what we intend, and yet we fail to do that.

I don’t think we need to micro-manage anything, but you won’t

have to micro-manage if you take 47 job training programs and

convert it to 6, and you say there is going to be a one-stop shop,

Federal programs, then you can go to one place in your State in

every county and find every job training capability there. You

shouldn’t have to be bounced from program to program to program,

and that is exactly what is happening now. Some programs are

highly effective in some States and some programs, the same program, doesn’t work at all.

So it is not about micro-managing, it is about having a clear vision of what we intend, with clear instructions to the bureaucracy,

and consolidating programs that do work and taking the best of

those that do and making sure everywhere across the country, if

it is Federal dollars and it is really our roll, if it is our roll, then

making sure those dollars are spent well. That is oversight and

putting the parameters on so you have a metric of how many people did you get trained actually got trained in the job they got.

We found people being trained in Oklahoma for jobs that don’t

exist so they can collect the Federal bucks for the job training.

Well, that doesn’t help anybody.

Mr. CUMMINGS. Thank you, Mr. Chairman.
110

Chairman ISSA. Thank you.

We had intended on quitting at 11:30, but if there are any additional brief questions.

Ms. NORTON. Yes, there is an additional brief question.

Chairman ISSA. Ms. Norton.

Ms. NORTON. I thank you, Mr. Chairman.

Perhaps for you, Senator, and for Mr. Dodaro, it is rare that you

have the kind of agreement you have seen certainly in this committee. My own interest in issues like this is far more on how than

what, because when you say words like duplication, it is pretty

hard for people to raise their hands and be on the side of duplication, and yet it continues.

I was intrigued by the candor of the Senator when he said Congress did it, so essentially Congress should undo the damage. And

I am wondering the symmetry of that, though, Senator. The chairman cites lots of hearings and exposure is very important; that is

one of the tools that Congress does have. When Senator Coburn,

though mentions that it is not partisanship, it is elections, wow.

That does suggest that there are structural problems here.

And let me just cite the record. When Congress has found something important enough to have to meet it, look what it has done

for trade and military matters. We have this notion that any Member of Congress hates where you vote up or down. We have military

BRAC Base Realignment Closure Commissions and now we have

two bills. Two committees here in the House have considered civilian BRAC. One is going to the floor and we are about to take to

the floor the civilian BRAC bill of this committee, which tries to get

rid of failure to sell or consolidate Federal properties.

What else? Here is another example. When we created, and you

can have your issues with this creation, the Department of Homeland Security, where we did something really quite extraordinary,

which is bring a lot of agencies together, and look what you had

something that was unprecedented; you had a strike on our soil by

foreign parties.

There are over 500 Members of Congress. Once they get their

hands on an issue, they act like their constituents expect them to

act, and sometimes that is to protect programs that in fact are included in this duplication. I am trying to get out of the quagmire

and I would like you to speak more deeply on how we could, the

administration has thought of something to do; it comes up with

these up or down votes.

Congress hasn’t thought of anything like that to do. And if we

are to get from the what to the how, it does seem to me that Senator Coburn’s notion of we did it, we should undo it has to face the

notion that Congress seems unwilling to do it unless somehow we

were to do something structural ourself. Just like the administration did something structural to get this done, the Congress has

not done anything structural and it continues not to be done.

So I would just like to press you on, I accept entirely what you

say about oversight. I even believe that exposure works, certainly

on many issues. But I would like to press you on whether or not

there is something more structural Congress could do that would

grab hold of some of this duplication that we all agree is excessive

and get rid of it.
111

Senator COBURN. Well, this may shock you. I think we can all

quit and they can send real Americans up here to actually do what

common sense people——

Ms. NORTON. Short of that, Senator. Short of that, Senator.

Senator COBURN. Well, but the fact is that is what the American

people are repulsed by. Eighty-five percent of them know we are

not doing our job, and the fact is we make a political calculation

rather than a character calculation about the future of our country.

Mr. Dodaro has given 176 recommendations, specific recommendations Congress can do. What did we do? We did two or

three little bitty ones, nothing major. We didn’t make any significant impact on the budget last year.

Had we just reformed job training programs, one, we would have

met a need in our economy right now that we did not meet; we

would have saved $9 billion. How would that have added to your

numbers, Mr. Dodaro, in terms of the for every dollar spent if we

actually did that $9 billion revision and actually got a streamlined

program?

The fact is, it is not hard. What is hard is every program has a

constituency.

Ms. NORTON. Right.

Senator COBURN. And that constituency, as I have testified here

today in job training programs, is too often those in the program,

not those being trained by the program. So what we have to do is

pay attention to what our goal was originally. And when we are

more interested in the constituency of a program rather than the

benefactors of the program, we are the ones that got it wrong, the

American people don’t. And what I think is we lack courage and

we lack leadership to do what is in the best long-term interest.

The final point I will make is we are short-term thinkers, not

long-term, and we have created tons of problems because of that,

and that goes to the political side of it as well as the policy side

of it.

And if we will start thinking in the long term about what is the

best, right thing we can do for the country right now, what we will

do is we will be Willie Suttons, we will go to the bank. He has

given us 176 banks to rob, and we can come back on and actually

make a big difference which will actually benefit the very constituencies that the programs were designed to benefit, rather than protect the program, which has no right to be here if in fact it is not

effective in helping the constituency, the ultimate benefactor.

Chairman ISSA. Thank you.

Mr. Connolly, are you finished? The gentleman is recognized.

Mr. CONNOLLY. Thank you, Mr. Chairman.

Again I find myself in agreement with Senator Coburn. As somebody who ran one of the largest local governments in the United

States, to me, metrics are everything. Why do it if you can’t measure it? And I go back to this difference between the aspirational

and the efficacious. As somebody coming from a local government

background here to Congress, what I find is that many people who

have spent their entire careers in the legislative branch either at

the State level or here often think that by passing a bill, they have

solved the problem, and it is as you say, often with the best of intentions.
112

I will give you two examples of bills on a bipartisan basis that

passed that nonetheless were almost impossible to implement at

the local level. One was No Child Left Behind, full of good intentions, full of high aspirations, but very difficult to implement at the

local level, and in some cases unintentionally actually do harm.

And the other was the immigration reform bill that the previous

president, President Bush, actually endorsed, and Ted Kennedy, on

our side of the aisle, actively worked on with the President. Again,

full of good intentions, but had it passed, I believe it would have

been impossible to comply with; it was so complicated. I don’t know

how anyone thought that was going to solve the immigration problem, or even be easily implementable.

So if we don’t have metrics, I think all we can say it is good intentions, but they may or may not be working. And I completely

applaud your point of view. Everything we do should be subject to

metrics so that we know whether we are making the effect desired

or not.

Senator COBURN. Just a little point on that. When you put

metrics into a bill without teeth, let me tell you what you get: no

metrics. And my experience both in the House and the Senate is

when you want to put metrics in and put some teeth with it so that

they have to come about, you never get it. So I agree with you, but

unless you put a consequence to not developing the metrics on the

bureaucracy, you will not get the metrics, because they don’t want

to be measured.

Mr. CONNOLLY. Well, just a final observation. This committee has

had a hearing, for example, take cybersecurity. The metrics we encouraged unwittingly in the legislation was training and awareness

of the work force. So we had a series of hearings where agency

after agency said we met the metrics; 80 percent, 85 percent of our

work force has been trained in the threat of cybersecurity.

Well, the object is to deter cybersecurity attacks. That is a means

to an end. So we allowed sort of an easy out in that metric because

we picked the wrong metric.

Mr. Chairman, I yield back. Thank you.

Chairman ISSA. I thank the gentleman.

General Dodaro, Ms. Dalton, Ms. St. Laurent, you have done a

wonderful job. We haven’t asked you nearly enough questions, but

we have taken a great deal of your time.

Senator Coburn, I enjoyed the CPA exchange with the former

mayor of Cleveland. I might add for the record that I was in the

private sector when, in order to get NAFTA to meet some arithmetic need, they found some current revenue, which was that every

small business in America that used to send a check in quarterly

or periodically for their taxes was forced to wire transfer in every

payroll period their taxes so the Government would get it that few

weeks faster one time at a cost of hundreds of millions of dollars

forever, since the 1990’s.

And yet, just like taking away depreciation until the end, when

you can write off the whole end of the business cycle, we could

score a one-time event, and it would be countless billions of dollars,

no question at all.

But as you said so rightfully, when the cost of money to the Federal Government is a fraction of 1 percent right now, taking that
113

money out of the pockets by accelerating a little bit of contribution

to the Federal Treasury isn’t just penny-wise and pound-foolish, it

is trillions of dollars foolish to the people who need to amass capital in order to do the kind of work that they don’t just do in oil;

they do it in oil, they do it in manufacturing. And I would hate to

see us do further harm to the legitimate depreciation schedules of

everyone who brings wealth to America.

So I join with you in the frustration that I don’t think you have

successfully explained that. I think that some will not yet know

that depreciation is in fact real; it is money that is put out today

and you only get a small part of it back over time. And unless you

leverage that with debt, which is another problem in business that

we encourage, you just don’t get the kind of result you want for tax

purposes. So hopefully on the Senate side you can continue to try

to educate your colleagues. I will try to do the same.

I thank you again. We stand adjourned.

[Whereupon, at 11:45 a.m., the committee was adjourned.]

[The prepared statement of Hon. Gerald E. Connolly follows:]
114
115

Æ