The next Congress and new administration will confront a set of pressing issues that will demand urgent attention and continuing oversight to ensure the nation’s security and well-being. The goal of our transition planning is to look across the work we have done and across the scope and breadth of the federal government’s responsibilities to offer insights into areas needing immediate attention. A few examples follow: Oversight of financial institutions and markets: As events over the past few weeks have underscored, oversight over the U.S. housing and financial markets will certainly be among the priority matters commanding the attention of the new administration and the 111th Congress. These sectors of our economy have been going through a period of significant instability and turmoil and government support is being provided to a growing number of troubled financial institutions. Congress has taken a number of steps to address some of the immediate effects of the market turmoil including enactment of the Federal Housing Finance Regulatory Reform Act of 2008, which, among other things, strengthens regulation of the housing government-sponsored enterprises (GSE) and provides authority to the Treasury to purchase any amount of Fannie Mae and Freddie Mac securities. We are closely monitoring a range of implications of the current market turmoil including the financial condition of the GSEs and the potential exposures from federal insurance and credit programs and possible bailouts. In addition, recent bank failures and growing numbers of banks on the “Watchlist” raise questions about the impact on the banking system and future federal exposures as well as on the bank insurance fund. We have a larger body of work that involves auditing the Federal Deposit Insurance Corporation, the newly created Federal Housing Finance Agency, and the consolidated financial statements of the U.S. government, as well as evaluating ongoing developments in the housing and financial markets. We will draw on this work to provide observations and advice, as appropriate. While these serious disruptions require immediate attention and careful monitoring, ongoing turmoil in the housing and financial markets has renewed concerns about whether the current system for overseeing and regulating financial institutions and markets is best suited to meet the nation’s evolving needs and 21st century challenges. Later this year we plan to issue a report describing the evolution of the current regulatory structure and how market developments and changes have introduced challenges for the current system. We believe this reassessment is needed to ensure that these types of serious disruptions can be minimized in the future. As part of this work, we are also developing a framework to assist Congress in evaluating alternative regulatory reform proposals. U.S. efforts in Iraq, Afghanistan, and Pakistan: Policy and implementation challenges to achieve U.S. objectives for these countries remain on the horizon. Hundreds of billions of dollars have been provided to the Department of Defense (DOD) for military operations in Iraq, Afghanistan, and Pakistan as well as to the State Department and United States Agency for International Development (USAID) to help address security, stabilization and reconstruction, and capacity-building efforts in Iraq and Afghanistan. Some efforts include developing domestic security forces, rebuilding critical infrastructure, and enhancing the countries’ capacity to govern. Since 2003, we have issued more than 170 reports on Iraq, Afghanistan, and Pakistan, covering topics that ranged from the readiness of U.S. forces, to the logistical implications related to reposturing U.S. forces deployed in Iraq, to planning for counterterrorism programs, to progress in building roads and oil pipelines. Our transition work will highlight the major implementation issues that need to be addressed to ensure the development of comprehensive integrated strategies, accountability over resources provided, and ongoing assessments of progress, regardless of what policies are pursued in the future. DOD’s readiness and capabilities: Extended operations in Iraq, Afghanistan, and elsewhere have had significant consequences for military readiness, particularly with regard to the Army and Marine Corps. Current operations have required the military to operate at a persistently high tempo with the added stress of lengthy and repeated deployments. In addition, because of the significant wear and tear on equipment, refocusing of training on counterinsurgency operations, and other factors, rebuilding readiness of U.S. forces is a major challenge for DOD. At the same time, DOD faces competing demands for resources given broad- based initiatives to grow, modernize, and transform its forces. We will offer our perspective on the competing demands DOD faces and the need to develop sound plans to guide investment decisions, as it reassesses the condition, size, composition, and organization of its total force, including contractor support, to protect the country from current, emerging, and future conventional and unconventional security threats. Protection at home: DHS must remain prepared and vigilant with respect to securing the homeland, particularly during the transition period when the nation can be viewed as being particularly vulnerable. In doing so, it is important that the new administration address key issues that, as we reported, have impacted and will continue to impact the nation’s security and preparedness, including better securing our borders, enforcing immigration laws, and serving those applying for immigration benefits; defining key preparedness and response capabilities and building and maintaining those capabilities through effective governmental and external partnerships; and further strengthening the security and resiliency of critical infrastructure to acts of terrorism. In achieving its critical mission, we found that DHS needs to more fully integrate and strengthen its management functions, including acquisition and human capital management; more fully adopt risk-based principles in allocating resources to the areas of greatest need; and enhance the effectiveness of information sharing among federal agencies and with state and local governments and the private sector. The decennial census: Soon after taking office, the new administration will face decisions that will shape the outcome of the 2010 decennial census. Next spring the first nationwide field operation—address canvassing—of the census will begin. During address canvassing, the Census Bureau will rely, for the first time, on hand-held computers to verify address and map information. A complete and accurate address list is the cornerstone of a successful census. Earlier this year, we designated the decennial census as a high-risk area, in part, because of ongoing challenges in managing information technology—including hand-held computers—and uncertainty over the total cost of the decennial census and the Bureau’s plans for rehearsing its field operations. The Bureau has taken some important steps to get the census back on track but did not rehearse its largest and most costly field operation—non-response follow- up—and has little time for further course correction as it prepares to carry out the national head count. The results of the 2010 census are central to apportionment, redistricting congressional boundaries, and distributing hundreds of billions of dollars in federal aid. Retirement of the space shuttle: A decision that must be made before the year is out is whether to retire the space shuttle in 2010, as currently planned, or to extend its life in view of limited options for supporting the International Space Station. Already, shuttle contracts are being phased out and shuttle facilities are being closed or transferred to contracts supporting new development efforts. A decision in favor of extending the shuttle may offer the best course for the future of the International Space Station, as (1) the recent conflict between Russian and the Georgian Republic has called into question the wisdom of relying on Russian space vehicles to ferry U.S. crew and cargo to and from the station during a 5- year gap in U.S. human spaceflight capability and (2) it still appears that other vehicles being developed to support the station—including those from commercial suppliers as well as NASA—may not be ready when anticipated. However, extending the shuttle could also have significant consequences on the future direction of human spaceflight for the U.S. Specifically, NASA is counting on the retirement of the shuttle to free up resources to pursue a new generation of space flight vehicles for exploration, which are anticipated to come on-line in 2015. According to NASA, reversing current plans and keeping the shuttle flying past 2010 would cost $2.5 billion to $4 billion per year. In addition, extending the shuttle will likely be logistically difficult, particularly since it would require restarting production lines and possibly recertifying suppliers as well as the shuttle vehicles. While facing pressing issues, the next Congress and new administration also inherit the federal government’s serious long-term fiscal challenge— driven on the spending side by rising health care costs and changing demographics. This challenge is complicated by the need to timely address developments such as the recent economic pressures and troubles in the housing and financial markets. Ultimately, however, the new administration and Congress will need to develop a strategy to address the federal government’s long-term unsustainable fiscal path. Planning for the transition will necessarily need to address the fact that achieving meaningful national results in many policy and program areas requires some combination of coordinated efforts among various actors across federal agencies, often with other governments (for example, internationally and at state and local levels), non-government organizations (NGO), for-profit and not for-profit contractors, and the private sector. In recognition of this fact, recent years have seen the adoption of a range of national plans and strategies to bring together decision makers and stakeholders from different locations, types of organizations, and levels of government. For example, the National Response Plan is intended to be an all-discipline, all-hazards plan that establishes a single, comprehensive framework for managing domestic incidents where involvement is necessary among many levels of government, the private sector, and nonprofit organizations. The response and recovery efforts after 9/11 and natural disasters, the nation’s preparations for a possible influenza pandemic, and the need to address global food insecurity are some of the many public issues that vividly underscore the critical importance of employing broad governance perspectives to meet global and national needs. Our transition work will highlight challenges the new Congress and next administration face in devising integrated solutions to such multi-dimensional problems.