Hearing of Committee on Homeland Security Nomination of Hon. Michael Chertoff to be Secretary of Homeland Security
OPENING STATEMENT OF CHAIRMAN COLLINS
Chairman Collins. The Committee will come to order. Good morning.
This Committee often holds hearings exposing wasteful or even fraudulent government spending as part of its oversight
responsibility.
Today, however, we are taking a broader look at what government should do and how government should deliver services
in the 21st Century.
As the title of this hearing--Transforming Government for the 21st Century--indicates, we are not here to look at where
we are or where we have been. This is about where we need to go and how to get there. It is about questioning the very premises of programs that have often changed very little from when they were first launched decades ago. It is about Accountability and effectiveness.
All of us here can easily remember a time not very long ago when mention of the 21st Century evoked images of a future that was either dazzling or depressing. Now that we are in the 21st Century, we find that it is neither the Jetsons nor the Matrix.
The great changes we must deal with, the new threats that have emerged with the end of the cold war, the globalized
economy, demographic trends, and the advancement of technology were underway long before Y2K.
The key to this hearing then is not the phrase 21st Century but the word ``transforming,'' one of the most dynamic words in
our language. The great changes of recent decades and the myriad other changes they draw in their wake have been accumulating and accelerating over many years. In response, government has all too often moved at what can charitably be
described as the speed of government.
The GAO report we will discuss today is an excellent place to begin this transformation and I want to commend the
Comptroller General and his staff for embarking upon this study. Like this Committee, the GAO is going beyond its
customary role by opening this important discussion.
The title of the GAO report that we are releasing today is ``21st Century Questions: Reexamining the Base of Government.''
1 This report is not an exercise in imagining the future. It is the direct result of the GAO's fiscal oversight duties and
the sobering realization that our government's current fiscal policies on both the spending and the revenue sides of the
ledger cannot be sustained in the future we have entered.---------------------------------------------------------------------------
1 A copy of the report, ``21st Century Challenges: Reexamining the Base of the Federal Government,'' GAO-05-325SP, February 2005, is retained in the files of the Committee, or may be obtained through the U.S. Government Accountability Office.
---------------------------------------------------------------------------
Baby boomers' retirement, health care, homeland security, national defense, environmental protection and the increasing
demands in such areas as energy, transportation, and education are but a sampling of the forces that are relentlessly leading
our Nation to mounting deficits.
As this report observes, the concern is not with deficits that result from extraordinary events such as terrorist attacks
or short-term economic downturns. The concern is with long-term escalating and persistent deficits that will diminish the
standard of living and the security of Americans for generations to come.
This report is presented in the form of questions. They cover virtually every function of the Federal Government. They
range from broad policy objectives to specific inquiries. For example, how best to allocate resources across our increasingly
integrated yet still discrete Armed Forces? Can transportation grant programs be restructured and consolidated to encourage
the creation of efficient intermodal systems? Given the great advances in communications, are regional offices still the best
way for Federal agencies to serve the public? Is having 44 job training programs spread across 9 agencies the best way to help our workers adapt to the changing economy? These are just some of the questions that GAO raises.
This question format is appropriate because it is Congress and the administration that must provide the answers. There are
more than 200 questions and they cover a lot of territory. But the overall issues can be summed up by these three questions:
First, what kind of government would we create if we were starting from scratch today? Second, since we cannot ignore
existing obligations, needs, programs and systems, how can we transform government without disrupting its ongoing functions?
And third, and perhaps the most perplexing question of all, how can we change government in spite of the entrenched interests that are committed to resisting any change?
All of this sounds daunting. We should be encouraged, however, because we have done it before. The structure of our
military today could not have been imagined during World War II and yet it has been transformed dramatically. Program
reexamination and restructuring are nothing new, Social Security in 1983, tax reform in 1986, and welfare reform in
1996 are just a few examples. In the aftermath of September 11, we consolidated 22 Federal agencies into the Department of
Homeland Security. And more recently, enacted sweeping intelligence reforms.
It is time we applied our proven ability to innovate and our knowledge of transferring the government to the entire spectrum of government itself.
If you type the words ``challenges of the 21st Century'' into an Internet search engine, you will get tens of thousands of results. From hospitals to the hospitality industry, from the news media to art museums, from the governments of great economic powers to rural school boards. It seems that every organization is reexamining what it does and how it does it in the light of this new millennium.
Look a little closer and it is clear that there is nothing intrinsic about the dawn of the 21st Century that makes reexamination necessary. The striking new look our calendars took on 5 years ago was merely a reminder to many that a reexamination is long past due.
One of the great thinkers on the subject of organization and management is Peter Drucker, a Presidential Medal of
Freedom recipient in 2002. His pre-millennium book, ``Management Challenges of the 21st Century,'' includes a chapter entitled ``Creating Change: The Leader's Task.'' Here is a quote from that: ``Innovation,'' he said, ``is not a flash of genius. It is hard work.''
So today we are embarking on the hard work of the innovation and transformation. This hearing and this report will get us started. And again, I want to commend the Comptroller General for undertaking this vitally important task.
BREAK IN TRANSCRIPT
Chairman Collins. Thank you very much.
I think we should address you as Dr. Coburn in addition to Senator Coburn. I was just saying to Senator Lieberman that I
founded the Diabetes Caucus in the Senate several years ago. And at that point, one out of four Medicare dollars were being
spent treating diabetes. I remember bringing up that issue at Tommy Thompson's confirmation hearing because an initiative in
that area would clearly translate not only in improved human health and lives but a substantial reduction in health care
dollars. So I appreciate knowing of your interest in that area.
BREAK IN TRANSCRIPT
Chairman Collins. Thank you.
I would now like to welcome our distinguished witness to the hearing. David M. Walker became the seventh Comptroller
General of the United States and began his 15 year term on November 9, 1998.
As all of my colleagues have indicated, we have worked very closely on this Committee with the Comptroller General. He has done an outstanding job in leading the Government Accountability Office and in producing fact-based, nonpartisan
reviews of government programs and operations. So we very much look forward to hearing your testimony today.
BREAK IN TRANSCRIPT
Chairman Collins. Thank you so much for an excellent statement and overview.
I think most Members of Congress are keenly aware of the fiscal challenges that you describe, although when you see the
charts, it is even more startling in the out years. And in many ways, we are like a person who knows that he needs to go on a
diet and yet just cannot seem to start.
That makes me wonder whether we need changes in the budget process to help us exercise the kinds of fiscal discipline and make the hard choices that need to be made.
Could you comment on whether or not there are some specific changes to the budget process that GAO believes would help impose the kind of fiscal discipline that is lacking now?
Mr. Walker. Yes, I can. And I think that is an excellent point. Many of the controls and safeguards that existed in the
budget process have now expired. Some of the things that we believe that the Congress needs to consider include reasonable
spending caps, PAYGO rules that apply on both sides of the ledger, meaning on the spending side and the tax side.
Realistically, if you are trying to address the bottom line, you should not exempt one side of the ledger.
Having also some type of triggers for mandatory spending programs. Being able to get a better handle on the total
commitments that we have already. For example, I mentioned to you the $43 trillion number. That is the estimated total
liabilities and commitments as of September 30, 2004. Let me compare that number to another number that might shock you. The total estimated net worth of every American, Bill Gates down, including home equity is $47 trillion. And we currently have
total liabilities and commitments of $43 trillion in current dollar terms.
We are obviously not going to be able to deliver on all of our current promises. We are going to have to restructure.
We need to think about the discounted present value cost of major spending and tax proposals before they are enacted into law. And as a supplement to or a substitute for the cash flow items that we get right now for 1 year, 5 years, and 10 years.
We also need to try to get a sense as to what the Intergenerational impact of some of these burdens might be. As
you know, right now there are a lot of things in the budget, a lot of things in the law right now whose costs escalate right
beyond the 5 or 10 year horizon on both the spending side and the tax side. And because of known demographic trends, we need to think about the longer-term affordability and sustainability of existing policies and programs.
There are other things that I think should be considered, as well. Some people have advocated biennial budgeting. That is
not a panacea by any means. Some people believe that if you had biennial budgeting, that you would spend more time on
oversight. I would like to think that is the case, but I would not want to bet a whole lot of money on it.
Frankly, we have been doing supplementals every year, and are likely to do supplementals for the foreseeable future. So
that provides a safety valve to be able to deal with issues if you go to biannual budgeting.
So these are some of the areas, but I absolutely agree, Madam Chairman, that we absolutely have to do something with
regard to the budget process. It is fundamentally broken.
Chairman Collins. I want to switch to one of the specific issues that you have highlighted in your report and that is the
fractured approach that the Federal Government applies to job training programs. I believe GAO indicated that there are some
44 job training programs spread across nine different agencies. This matters to a State like mine, which has lost a lot of
manufacturing jobs in the past decade. I know there has been some frustration about the delivery of job training programs in
my State.
On the other hand, we passed the Workforce Investment Act to try to coordinate those programs. Did that not work? What is your assessment?
Mr. Walker. I think that was a positive step in the right direction but I think there is more work that needs to be done.
Candidly, job training is just a subset of a much bigger challenge. For example, you properly point out that we have
noted that there are 44 different programs among a number of different agencies. I recently found out, for example, there
are over 20 Federal agencies involved in financial literacy. We recently had a related forum over at GAO. We invited a number
of people. Many of them did not even know they were in the business.
One of the things that we have to do is we have to get better visibility horizontally. In other words, take particular
areas, job training, food safety, financial literacy, you name it. How many different players do we have on the field? What
are they doing? Why do we need this many? Are they doing things consistently and in a nonduplicative and integrated fashion?
I think one of the things that we look forward to working with this Committee and others on is how can we start looking
at things not just vertically, which government has done for years and always will, but also horizontally?
Chairman Collins. Let me just quickly ask you one final question for this round.
As I read your report and the 200 questions, it is almost overwhelming to know where to begin to tackle the programs and
policies that you outlined. Your report is a great help in giving us the overview. But as a follow up, I wondered if GAO would be willing to apply the reexamination criteria that is set out in Table 1 of your report to the programs within the Federal Government and respond back to us with a list of programs that you believe should be reexamined first? If you could help us narrow the universe of programs that might be most fruitful for us to examine in-depth. Would that be a project that GAO would be willing to undertake?
Mr. Walker. I would be happy, along with the other GAO professionals, to work out something with your staff that can
be done within a reasonable amount of time. As you might imagine, trying to apply those criteria to all Federal programs
is something that would take years to do.
So I think what we might be able to do is to take particular areas that you and other Members might have particular interest, like homeland security information sharing. To what extent do we have multiple programs across government dealing with the same type of issue? What about regions? Do we need as many regions as we have? And other topics, and to try to come back with something for your consideration.
BREAK IN TRANSCRIPT
Chairman Collins. Thank you.
Mr. Walker, the OMB has put forth a number of proposals to encourage Congress to evaluate Federal programs, and if they
are ineffective to terminate them. For example, there already is the OMB Program Assessment Rating Tool, the PART program.
Last year, Congress funded all but one of the 13 programs that OMB concluded were either ineffective or had results not
demonstrated.
I think the PART program may not be the best tool for evaluating the worthiness of programs, but I think OMB has a
point about how difficult it is to terminate programs once they have been enacted.
This year, the administration has proposed a Results Commission and a Sunset Commission to try to put into place some sort of action forcing mechanism to force Congress to make affirmative decisions to extend programs that the commission may have found are ineffective.
What is your general view on the PART program and on the administration's proposals for these two commissions?
Mr. Walker. I think the PART program, the Program Assessment Rating Tool, has conceptual merit. It is basically the administration's recognition that you need to review the base of government and to try to ascertain whether and to what
extent programs are achieving real outcome-based results. And if not, why not? And the ones that are more successful,
hopefully, would receive better treatment, at least as it relates to the President's proposal. And the ones that are not
demonstrating results, then presumably they would not receive as favorable treatment through the President's proposed budget.
I believe that PART is a step in the right direction. By no means is it perfect. I think you also have to recognize, as you
do I'm sure, that any administration is associated with a particular president and a particular party and therefore is not necessarily viewed with the same degree of merit on both sides of the aisle. And that there could be some skepticism, no
matter which administration it is, as to what their proposals might be.
And so I think it is important to have GAO and others, as appropriate, doing evaluations that are professional, objective, fact-based, nonpartisan, nonideological, and hopefully fair and balanced as a supplement to what the administration might do
.
I also believe that there needs to be more consultation. I believe the administration has done some good things, but their
consultation with key stakeholders has not always been very effective. And working in partnership over a period of time
would significantly increase the likelihood of success. Reasonable people can and will differ in these areas. No doubt
about it, especially with all the vested interests. But I think there needs to be significant process improvement.
As far as the Results Commission and the Sunset Commission, I have not seen the details. As you know, Senator, titles of
things can be misleading. Therefore, I will reserve judgment on what they are proposing until I see the details.
Chairman Collins. Let me do just a follow-up, knowing that you would want to get back to us on that issue.
As I understand the administration's proposal for the Sunset Commission, it would review some 1,200 government
programs over a 10-year period. So that the concept is that a program's managers would have to justify its continued existence once every 10 years, or at least once every 10 years.
From what you are saying, however, if we take that kind of approach we should look at the other side of the ledger. We
should be looking at tax preferences and whether they should be continued. Is that a fair judgment?
Mr. Walker. Absolutely. I think we have to look at mandatory spending, including entitlement programs, discretionary spending and tax policy, including tax preferences. The gap is too great to grow our way out of the problem. You are not going to solve the problem just by looking at one dimension. We need to look at all three.
Chairman Collins. Let me ask you one final question today, and that is in the area of health care. If you look at your
charts, the fastest-growing part of the Federal budget is the Medicaid and Medicare programs. It is going to be a tremendous
challenge for government to tame the cost.
What should Congress and the administration begin to tackle in what is the fastest-growing part of our budget?
Mr. Walker. First, one of the things I was pleased to see, although not without controversy, is the President's Budget
incorporates a number of GAO recommendations. One example is that there is some gaming going on with regard to Medicaid
reimbursements. There has also been some practices that have been engaged in by various other parties where the government, we believe, is paying more than it should and more than was intended. So that is a positive step.
Second, with regard to Medicare, I think some of the things we are going to have to look at is such things as, in the
short-term, is there an opportunity to be able to develop some standards of practice that would improve quality, reduce costs,
enhance consistency, improve equity, also potentially reduce litigation risk?
Third, is there an opportunity to engage in large case management practices? A significant percentage of Medicare's
cost, and Medicaid's too, are incurred by a relatively small percentage of the covered population. In the private sector and
even some State and local governments, there are large case management practices that are being engaged in to try to get a
better handle as to what people are doing and what the costs are. Sometimes you find yourself, you have people taking 16
prescription drugs, which is dangerous, or they are working counter to each other. That is another example.
A fourth one might be how can you leverage the government's considerable purchasing power?
But in the final analysis, Senator, Medicare by itself is eight times greater than Social Security. Medicaid is on top of
that. It is going to take fundamental reform on an installment basis over many years, not just of these programs but also the
entire health care system.
And that is why I think it is important that the Congress consider moving now rather than later on Social Security reform. The reason being is that while Social Security is only $3.7 trillion of that $43 trillion problem, you have an opportunity to reform Social Security in a way that will exceed the expectations of every generation of Americans--and I will be happy to comment on that if you want. You can get a win and improve credibility in the markets, improve confidence within the public and within the Congress to be able to deal with issues before they reach crisis proportions because quite frankly the heavy lifting is going to take a lot more time and you are not going to exceed the expectations of any generation of Americans, I would respectfully suggest.
BREAK IN TRANSCRIPT
Chairman Collins. Thank you very much, Senator Lieberman, for your participation in this important hearing.
Mr. Walker, thank you so much for the great work that GAO is doing in this area.
Mr. Walker, I think this is extraordinarily important work, as your first comments implied to us. We look forward to continuing this process with you, in helping us identify more precisely where we should begin focusing and tackling some of these issues.
And also, on the possible budget reforms, which I really think could be key in getting control and imposing fiscal discipline.
The hearing record will be held open for 15 days for the submission of questions and additional materials.
I again want to thank you and your staff, and I want to thank our Committee staff for their hard work.
This Committee is now adjourned.
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_senate_hearings&docid=20173.wais