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United States Government Accountability Office: 

Improving Performance, Accountability, Transparency In The Federal 
Government: 

The Honorable David M. Walker: 
Comptroller General of the United States: 

The Government Performance Summit: 
The Center for Government Performance and the Performance Institute: 
January 29, 2007: 

Composition of Federal Spending: 

[See PDF for image] - graphic text 

3 pie charts with 5 items each. 

1966: 
Defense: 43.0%; 
Social Security: 15.0%; 
Medicare & Medicaid: 1.0%; 
Net interest: 7.0%; 
All other spending: 34.0%. 

1986: 
Defense: 28.0%; 
Social Security: 20.0%; 
Medicare & Medicaid: 10.0%; 
Net interest: 14.0%; 
All other spending: 29.0%. 

2006*: 
Defense: 20.0%; 
Social Security: 21.0%; 
Medicare & Medicaid: 19.0%; 
Net interest: 9.0%; 
All other spending: 32.0%. 

*Preliminary

Source: Office of Management and Budget and the Department of the 
Treasury. 

Note: Numbers may not add to 100 percent due to rounding. 

[End of Figure]

Surplus or Deficit as a Share of GDP Fiscal Years 1962-2006: 

[See PDF for image] - graphic text: 
	
Line/Stacked Bar combo chart with 1 line (Unified) and 43 bars. 

Fiscal year: 1962; 
On-budget: -1%; 
Off-budget: -0.2%; 
Unified: -1.3%. 

Fiscal year: 1963; 
On-budget: -0.7%; 
Off-budget: -0.1%; 
Unified: -0.8%. 

Fiscal year: 1964; 
On-budget: -1%; 
Off-budget: 0.1%; 
Unified: -0.9%. 

Fiscal year: 1965; 
On-budget: -0.2%; 
Off-budget: No data; 
Unified: -0.2%. 

Fiscal year: 1966; 
On-budget: -0.4%; 
Off-budget: -0.1%; 
Unified: -0.5%. 

Fiscal year: 1967; 
On-budget: -1.6%; 
Off-budget: 0.5%; 
Unified: -1.1%. 

Fiscal year: 1968; 
On-budget: -3.2%; 
Off-budget: 0.3%; 
Unified: -2.9%. 

Fiscal year: 1969; 
On-budget: -0.1%; 
Off-budget: 0.4%; 
Unified: 0.3%. 

Fiscal year: 1970; 
On-budget: -0.9%; 
Off-budget: 0.6%; 
Unified: -0.3%. 

Fiscal year: 1971; 
On-budget: -2.4%; 
Off-budget: 0.3%; 
Unified: -2.1%. 

Fiscal year: 1972; 
On-budget: -2.2%; 
Off-budget: 0.3%; 
Unified: -2%. 

Fiscal year: 1973; 
On-budget: -1.2%; 
Off-budget: No data; 
Unified: -1.1%. 

Fiscal year: 1974; 
On-budget: -0.6%; 
Off-budget: 0.1%; 
Unified: -0.4%. 

Fiscal year: 1975; 
On-budget: -3.5%; 
Off-budget: 0.1%; 
Unified: -3.4%. 

Fiscal year: 1976; 
On-budget: -4.1%; 
Off-budget: -0.2%; 
Unified: -4.2%. 

Fiscal year: 1977; 
On-budget: -2.5%; 
Off-budget: -0.2%; 
Unified: -2.7%. 

Fiscal year: 1978; 
On-budget: -2.5%; 
Off-budget: -0.2%; 
Unified: -2.7%. 

Fiscal year: 1979; 
On-budget: -1.5%; 
Off-budget: -0.1%; 
Unified: -1.6%. 

Fiscal year: 1980; 
On-budget: -2.7%; 
Off-budget: No data; 
Unified: -2.7%. 

Fiscal year: 1981; 
On-budget: -2.4%; 
Off-budget: -0.2%; 
Unified: -2.6%. 

Fiscal year: 1982; 
On-budget: -3.7%; 
Off-budget: -0.2%; 
Unified: -4%. 

Fiscal year: 1983; 
On-budget: -6%; 
Off-budget: No data; 
Unified: -6%. 

Fiscal year: 1984; 
On-budget: -4.8%; 
Off-budget: No data; 
Unified: -4.8%. 

Fiscal year: 1985; 
On-budget: -5.3%; 
Off-budget: 0.2%; 
Unified: -5.1%. 

Fiscal year: 1986; 
On-budget: -5.4%; 
Off-budget: 0.4%; 
Unified: -5%. 

Fiscal year: 1987; 
On-budget: -3.6%; 
Off-budget: 0.4%; 
Unified: -3.2%. 

Fiscal year: 1988; 
On-budget: -3.9%; 
Off-budget: 0.8%; 
Unified: -3.1%. 

Fiscal year: 1989; 
On-budget: -3.8%; 
Off-budget: 1%; 
Unified: -2.8%. 

Fiscal year: 1990; 
On-budget: -4.8%; 
Off-budget: 1%; 
Unified: -3.9%. 

Fiscal year: 1991; 
On-budget: -5.4%; 
Off-budget: 0.9%; 
Unified: -4.5%. 

Fiscal year: 1992; 
On-budget: -5.5%; 
Off-budget: 0.8%; 
Unified: -4.7%. 

Fiscal year: 1993; 
On-budget: -4.6%; 
Off-budget: 0.7%; 
Unified: -3.9%. 

Fiscal year: 1994; 
On-budget: -3.7%; 
Off-budget: 0.8%; 
Unified: -2.9%. 

Fiscal year: 1995; 
On-budget: -3.1%; 
Off-budget: 0.9%; 
Unified: -2.2%. 

Fiscal year: 1996; 
On-budget: -2.3%; 
Off-budget: 0.9%; 
Unified: -1.4%. 

Fiscal year: 1997; 
On-budget: -1.3%; 
Off-budget: 1%; 
Unified: -0.3%. 

Fiscal year: 1998; 
On-budget: -0.3%; 
Off-budget: 1.1%; 
Unified: 0.8%. 

Fiscal year: 1999; 
On-budget: No data; 
Off-budget: 1.4%; 
Unified: 1.4%. 

Fiscal year: 2000; 
On-budget: 0.9%; 
Off-budget: 1.5%; 
Unified: 2.4%. 

Fiscal year: 2001; 
On-budget: -0.3%; 
Off-budget: 1.6%; 
Unified: 1.3%. 

Fiscal year: 2002; 
On-budget: -3.1%; 
Off-budget: 1.5%; 
Unified: -1.5%. 

Fiscal year: 2003; 
On-budget: -4.9%; 
Off-budget: 1.5%; 
Unified: -3.5%. 

Fiscal year: 2004; 
On-budget: -4.9%; 
Off-budget: 1.3%; 
Unified: -3.6%. 

Fiscal year: 2005; 
On-budget: -4%; 
Off-budget: 1.4%; 
Unified: -2.6%. 

Fiscal year: 2006; 
On-Budget: -3.3; 
Off-budget: 1.4; 
Unified: -1.9.

Source: Office of Management and Budget, Department of the Treasury, 
and Congressional Budget Office. 

[End of figure] 

Fiscal Year 2005 and 2006 Deficits and Net Operating Costs: 

Dollars in billions. 
	
On-Budget Deficit[A]; 
Fiscal Year 2005: ($494); 
Fiscal Year 2006: ($434). 

Unified Deficit; 
Fiscal Year 2005: ($318); 
Fiscal Year 2006: ($248). 

Net Operating Cost[B]; 
Fiscal Year 2005: ($760); 
Fiscal Year 2006: (450).  

Sources: The Office of Management and Budget and the Department of the 
Treasury. 

[A] Includes $173 billion in Social Security surpluses for fiscal year 
2005 and $185 billion for fiscal year 2006; $2 billion in Postal 
Service surpluses for fiscal year 2005 and $1 billion for fiscal year 
2006. 

[B] Fiscal year 2005 and 2006 net operating cost figures reflect 
significant but opposite changes in certain actuarial costs. For 
example, changes in interest rates and other assumptions used to 
estimate future veterans' compensation benefits increased net operating 
cost by $228 billion in 2005 and reduced net operating cost by $167 
billion in 2006. 

[End of Figure]

Major Reported Long-Term Fiscal Exposures ($ trillions): 

Explicit liabilities (Publicly held debt, military & civilian pensions 
& retiree health, other); 	
2000: $6.9; 
2006: $10.4; 
Percent Increase: 52%. 

Commitments & Contingencies: e.g., PBGC, undelivered orders; 
2000: $0.5; 
2006: $1.3; 
Percent Increase: 140%. 

Implicit exposures; 
2000: $13.0; 
2006: $38.8; 
Percent Increase: 197%.

Implicit exposures: Future Social Security benefits; 
2000: $3.8; 
2006: $6.4; 
Percent Increase: [Empty]. 

Implicit exposures: Future Medicare Part A benefits; 
2000: $2.7; 
2006: $11.3; 
Percent Increase: [Empty]. 

Implicit exposures: Medicare Part B benefits; 
2000: $6.5; 
2006: $13.1; 
Percent Increase: [Empty]. 

Implicit exposures: Medicare Part D benefits; 
2006: $7.9; 
Percent Increase: [Empty]. 

Total; 
2000: $20.4; 
2006: $50.5; 
Percent Increase: 147%. 

Source: 2000 and 2006 Financial Report of the United States Government. 

Note: Estimates for Social Security and Medicare are at present value 
as of January 1 of each year and all other data are as of September 30. 
Totals may not add due to rounding. Percentage increases are based on 
actual data and may differ from increases calculated from rounded data 
shown in table. 

[End of table] 

Understanding the Size of Major Reported Fiscal Exposures: 

Our fiscal burden can be translated and compared as follows: 
	
Major reported fiscal exposures: 
2006: $50.5 trillion; 
Total household net worth: 
2006: $53.3 trillion: 
* Ratio of fiscal exposures to net worth: 95 percent. 

Burden: 
Per person: $170,000; 
Per full-time worker: $400,000; 
Per household: $440,000. 

Income: 
Median household income: $46,326; 
Disposable personal income per capita: $31,519. 

Ratio of household burden to median income: 9.5. 

Sources: GAO analysis of data from the Department of the Treasury, 
Federal Reserve Board, U.S. Census Bureau and Bureau of Economic 
Analysis: 

[End of table] 

Composition of Spending as a Share of GDP Under Baseline Extended 
(January 2001): 

[See PDF for image] - graphic text: 

Line/Stacked Bar combo chart with 4 groups, 1 line (Revenue) and 4 bars 
per group. 

2005; 
Net interest: 0.8%; 
Social Security: 4.3%; 
Medicare & Medicaid: 3.7%; 
All other spending: 8.0%; 
Revenue: 20.3%. 

2015[A]; 
Net interest: 0%; 
Social Security: 5.1%; 
Medicare & Medicaid: 4.9%; 
All other spending: 5.6%; 
Revenue: 20.4%. 

2030[A]; 
Net interest: 0%; 
Social Security: 6.6%; 
Medicare & Medicaid: 9.4%; 
All other spending: 4.0%; 
Revenue: 20.4%. 

2040[A]; 
Net interest: 0%; 
Social Security: 6.7%; 
Medicare & Medicaid: 9.0%; 
All other spending: 4.4%; 
Revenue: 20.4%.

Source: GAO's January 2001 analysis. 

[A] All other spending is net of offsetting interest receipts. 

[End of figure] 

Composition of Spending as a Share of GDP: Assuming Discretionary 
Spending Grows with GDP After 2006 and All Expiring Tax Provisions are 
Extended: 

[See PDF for image] - graphic text: 
	
Line/Stacked Bar combo chart with 4 groups, 1 line (Revenue) and 4 bars 
per group. 	
	
2005; 
Net interest: 1.5%; 
Social Security: 4.2%; 
Medicare & Medicaid: 3.9%; 
All other spending: 10.5%; 
Revenue: 17.5% 

2015; 
Net interest: 2.5%; 
Social Security: 4.5%; 
Medicare & Medicaid: 5.3%; 
All other spending: 9.8%; 
Revenue: 17.5% 

2030; 
Net interest: 7%; 
Social Security: 6.7%; 
Medicare & Medicaid: 8.5%; 
All other spending: 9.8%; 
Revenue: 17.6% 

2040; 
Net interest: 14%; 
Social Security: 7.6%; 
Medicare & Medicaid: 10.3%; 
All other spending: 9.8%; 
Revenue: 17.6%

Source: GAO's August 2006 analysis. 

[End of figure] 

Social Security, Medicare, and Medicaid Spending as a Percent of GDP: 

[See PDF for image] - graphic text: 

Area graph with 81 Groups and 3 items per Group. 

Percent of GDP: 

Year: 2000; 
Social Security: 4.23%; 
Medicaid: 1.20%; 
Medicare: 2.29%. 

Year: 2001; 
Social Security: 4.33%; 
Medicaid: 1.30%; 
Medicare: 2.44%. 

Year: 2002; 
Social Security: 4.40%; 
Medicaid: 1.40%; 
Medicare: 2.53%. 

Year: 2003; 
Social Security: 4.35%; 
Medicaid: 1.50%; 
Medicare: 2.57%. 

Year: 2004; 
Social Security: 4.27%; 
Medicaid: 1.50%; 
Medicare: 2.63%. 

Year: 2005; 
Social Security: 4.26%; 
Medicaid: 1.48%; 
Medicare: 2.69%. 

Year: 2006; 
Social Security: 4.21%; 
Medicaid: 1.46%; 
Medicare: 3.33%. 

Year: 2007; 
Social Security: 4.19%; 
Medicaid: 1.47%; 
Medicare: 3.36%. 

Year: 2008; 
Social Security: 4.20%; 
Medicaid: 1.52%; 
Medicare: 3.41%. 

Year: 2009; 
Social Security: 4.24%; 
Medicaid: 1.57%; 
Medicare: 3.45%. 

Year: 2010; 
Social Security: 4.28%; 
Medicaid: 1.62%; 
Medicare: 3.50%. 

Year: 2011; 
Social Security: 4.34%; 
Medicaid: 1.67%; 
Medicare: 3.56%. 

Year: 2012; 
Social Security: 4.42%; 
Medicaid: 1.73%; 
Medicare: 3.67%. 

Year: 2013; 
Social Security: 4.51%; 
Medicaid: 1.79%; 
Medicare: 3.81%. 

Year: 2014; 
Social Security: 4.61%; 
Medicaid: 1.86%; 
Medicare: 3.96%. 

Year: 2015; 
Social Security: 4.71%; 
Medicaid: 1.93%; 
Medicare: 4.12%. 

Year: 2016; 
Social Security: 4.81%; 
Medicaid: 2.01%; 
Medicare: 4.29%. 

Year: 2017; 
Social Security: 4.92%; 
Medicaid: 2.10%; 
Medicare: 4.44%. 

Year: 2018; 
Social Security: 5.02%; 
Medicaid: 2.20%; 
Medicare: 4.61%. 

Year: 2019; 
Social Security: 5.13%; 
Medicaid: 2.20%; 
Medicare: 4.78%. 

Year: 2020; 
Social Security: 5.24%; 
Medicaid: 2.30%; 
Medicare: 4.96%. 

Year: 2021; 
Social Security: 5.35%; 
Medicaid: 2.30%; 
Medicare: 5.14%. 

Year: 2022; 
Social Security: 5.45%; 
Medicaid: 2.40%; 
Medicare: 5.33%. 

Year: 2023; 
Social Security: 5.55%; 
Medicaid: 2.40%; 
Medicare: 5.51%. 

Year: 2024; 
Social Security: 5.65%; 
Medicaid: 2.50%; 
Medicare: 5.71%. 

Year: 2025; 
Social Security: 5.75%; 
Medicaid: 2.60%; 
Medicare: 5.90%. 

Year: 2026; 
Social Security: 5.85%; 
Medicaid: 2.60%; 
Medicare: 6.08%. 

Year: 2027; 
Social Security: 5.93%; 
Medicaid: 2.70%; 
Medicare: 6.26%. 

Year: 2028; 
Social Security: 6.01%; 
Medicaid: 2.70%; 
Medicare: 6.43%. 

Year: 2029; 
Social Security: 6.08%; 
Medicaid: 2.80%; 
Medicare: 6.60%. 

Year: 2030; 
Social Security: 6.14%; 
Medicaid: 2.80%; 
Medicare: 6.77%. 

Year: 2031; 
Social Security: 6.19%; 
Medicaid: 2.90%; 
Medicare: 6.93%. 

Year: 2032; 
Social Security: 6.24%; 
Medicaid: 2.90%; 
Medicare: 7.08%. 

Year: 2033; 
Social Security: 6.27%; 
Medicaid: 3.00%; 
Medicare: 7.22%. 

Year: 2034; 
Social Security: 6.29%; 
Medicaid: 3.10%; 
Medicare: 7.37%. 

Year: 2035; 
Social Security: 6.31%; 
Medicaid: 3.10%; 
Medicare: 7.52%. 

Year: 2036; 
Social Security: 6.32%; 
Medicaid: 3.20%; 
Medicare: 7.67%. 

Year: 2037; 
Social Security: 6.33%; 
Medicaid: 3.30%; 
Medicare: 7.80%. 

Year: 2038; 
Social Security: 6.32%; 
Medicaid: 3.30%; 
Medicare: 7.92%. 

Year: 2039; 
Social Security: 6.32%; 
Medicaid: 3.40%; 
Medicare: 8.03%. 

Year: 2040; 
Social Security: 6.31%; 
Medicaid: 3.40%; 
Medicare: 8.14%. 

Year: 2041; 
Social Security: 6.30%; 
Medicaid: 3.50%; 
Medicare: 8.25%. 

Year: 2042; 
Social Security: 6.29%; 
Medicaid: 3.60%; 
Medicare: 8.36%. 

Year: 2043; 
Social Security: 6.28%; 
Medicaid: 3.60%; 
Medicare: 8.46%. 

Year: 2044; 
Social Security: 6.27%; 
Medicaid: 3.70%; 
Medicare: 8.58%. 

Year: 2045; 
Social Security: 6.26%; 
Medicaid: 3.70%; 
Medicare: 8.70%. 

Year: 2046; 
Social Security: 6.26%; 
Medicaid: 3.80%; 
Medicare: 8.82%. 

Year: 2047; 
Social Security: 6.25%; 
Medicaid: 3.80%; 
Medicare: 8.93%. 

Year: 2048; 
Social Security: 6.25%; 
Medicaid: 3.90%; 
Medicare: 9.03%. 

Year: 2049; 
Social Security: 6.24%; 
Medicaid: 3.90%; 
Medicare: 9.14%. 

Year: 2050; 
Social Security: 6.24%; 
Medicaid: 4.00%; 
Medicare: 9.25%. 

Year: 2051; 
Social Security: 6.24%; 
Medicaid: 4.06%; 
Medicare: 9.36%. 

Year: 2052; 
Social Security: 6.24%; 
Medicaid: 4.13%; 
Medicare: 9.47%. 

Year: 2053; 
Social Security: 6.24%; 
Medicaid: 4.19%; 
Medicare: 9.59%. 

Year: 2054; 
Social Security: 6.25%; 
Medicaid: 4.26%; 
Medicare: 9.71%. 

Year: 2055; 
Social Security: 6.25%; 
Medicaid: 4.33%; 
Medicare: 9.84%. 

Year: 2056; 
Social Security: 6.26%; 
Medicaid: 4.39%; 
Medicare: 9.98%. 

Year: 2057; 
Social Security: 6.27%; 
Medicaid: 4.46%; 
Medicare: 10.12%. 

Year: 2058; 
Social Security: 6.27%; 
Medicaid: 4.53%; 
Medicare: 10.26%. 

Year: 2059; 
Social Security: 6.28%; 
Medicaid: 4.60%; 
Medicare: 10.40%. 

Year: 2060; 
Social Security: 6.29%; 
Medicaid: 4.68%; 
Medicare: 10.55%. 

Year: 2061; 
Social Security: 6.29%; 
Medicaid: 4.75%; 
Medicare: 10.70%. 

Year: 2062; 
Social Security: 6.30%; 
Medicaid: 4.83%; 
Medicare: 10.84%. 

Year: 2063; 
Social Security: 6.31%; 
Medicaid: 4.90%; 
Medicare: 10.99%. 

Year: 2064; 
Social Security: 6.32%; 
Medicaid: 4.98%; 
Medicare: 11.14%. 

Year: 2065; 
Social Security: 6.33%; 
Medicaid: 5.06%; 
Medicare: 11.30%. 

Year: 2066; 
Social Security: 6.34%; 
Medicaid: 5.14%; 
Medicare: 11.47%. 

Year: 2067; 
Social Security: 6.35%; 
Medicaid: 5.22%; 
Medicare: 11.64%. 

Year: 2068; 
Social Security: 6.35%; 
Medicaid: 5.30%; 
Medicare: 11.81%. 

Year: 2069; 
Social Security: 6.36%; 
Medicaid: 5.38%; 
Medicare: 11.96%. 

Year: 2070; 
Social Security: 6.36%; 
Medicaid: 5.47%; 
Medicare: 12.12%. 

Year: 2071; 
Social Security: 6.37%; 
Medicaid: 5.55%; 
Medicare: 12.28%. 

Year: 2072; 
Social Security: 6.37%; 
Medicaid: 5.64%; 
Medicare: 12.44%. 

Year: 2073; 
Social Security: 6.37%; 
Medicaid: 5.73%; 
Medicare: 12.60%. 

Year: 2074; 
Social Security: 6.38%; 
Medicaid: 5.82%; 
Medicare: 12.75%. 

Year: 2075; 
Social Security: 6.38%; 
Medicaid: 5.91%; 
Medicare: 12.92%. 

Year: 2076; 
Social Security: 6.38%; 
Medicaid: 6.01%; 
Medicare: 13.08%. 

Year: 2077; 
Social Security: 6.39%; 
Medicaid: 6.10%; 
Medicare: 13.25%. 

Year: 2078; 
Social Security: 6.39%; 
Medicaid: 6.20%; 
Medicare: 13.41%. 

Year: 2079; 
Social Security: 6.39%; 
Medicaid: 6.29%; 
Medicare: 13.58%. 

Year: 2080; 
Social Security: 6.39%; 
Medicaid: 6.39%; 
Medicare: 13.75%.

Source: GAO analysis based on data from the Office of the Chief 
Actuary, Social Security Administration, Office of the Actuary, Centers 
for Medicare and Medicaid Services, and the Congressional Budget 
Office. 

Notes: Social Security and Medicare projections based on the 
intermediate assumptions of the 2006 Trustees' Reports. Medicaid 
projections based on CBO's August 2006 short-term Medicaid estimates 
and CBO's December 2005 long-term Medicaid projections under mid-range 
assumptions. 

[End of figure] 

Federal Tax Expenditures Exceeded Discretionary Spending for Half of 
the Last Decade: 

Federal Tax Expenditures Exceeded Discretionary Spending for Half of 
the Last Decade: 
	
Dollars in billions (in real 2005 dollars) 1400: 

[See PDF for Image] - graphic text: 

Fiscal year: 1982; 
Mandatory spending: $601.60; 
Sum of tax expenditure revenue loss estimates: $463.30; 
Discretionary spending: $585.80. 

Fiscal year: 1983;  
Mandatory spending: $628.50; 
Sum of tax expenditure revenue loss estimates: $499.60; 
Discretionary spending: $608.00. 

Fiscal year: 1984;  
Mandatory spending: $599.60; 
Sum of tax expenditure revenue loss estimates: $529.70; 
Discretionary spending: $629.70. 

Fiscal year: 1985; 
Mandatory spending: $644.80; 
Sum of tax expenditure revenue loss estimates: $568.70; 
Discretionary spending: $688.40. 

Fiscal year: 1986; 
Mandatory spending: $653.40; 
Sum of tax expenditure revenue loss estimates: $618.80; 
Discretionary spending: $688.90. 

Fiscal year: 1987; 
Mandatory spending: $645.00; 
Sum of tax expenditure revenue loss estimates: $577.10; 
Discretionary spending: $680.10. 

Fiscal year: 1988;  
Mandatory spending: $665.30; 
Sum of tax expenditure revenue loss estimates: $448.10; 
Discretionary spending: $689.30. 

Fiscal year: 1989;  
Mandatory spending: $694.40; 
Sum of tax expenditure revenue loss estimates: $474.50; 
Discretionary spending: $698.40. 

Fiscal year: 1990;  
Mandatory spending: $782.80; 
Sum of tax expenditure revenue loss estimates: $480.10; 
Discretionary spending: $689.60. 

Fiscal year: 1991; 
Mandatory spending: $792.10; 
Sum of tax expenditure revenue loss estimates: $472.00; 
Discretionary spending: $708.10. 

Fiscal year: 1992; 
Mandatory spending: $839.90; 
Sum of tax expenditure revenue loss estimates: $488.20; 
Discretionary spending: $691.40. 

Fiscal year: 1993; 
Mandatory spending: $850.30; 
Sum of tax expenditure revenue loss estimates: $494.80; 
Discretionary spending: $683.10. 

Fiscal year: 1994; 
Mandatory spending: $889.70; 
Sum of tax expenditure revenue loss estimates: $520.20; 
Discretionary spending: $671.20. 

Fiscal year: 1995; 
Mandatory spending: $897.20; 
Sum of tax expenditure revenue loss estimates: $538.80; 
Discretionary spending: $661.60. 

Fiscal year: 1996; 
Mandatory spending: $937.40; 
Sum of tax expenditure revenue loss estimates: $541.70; 
Discretionary spending: $634.60. 

Fiscal year: 1997; 
Mandatory spending: $948.60; 
Sum of tax expenditure revenue loss estimates: $565.70; 
Discretionary spending: $640.70. 

Fiscal year: 1998; 
Mandatory spending: $994.40; 
Sum of tax expenditure revenue loss estimates: $640.10; 
Discretionary spending: $638.70. 

Fiscal year: 1999; 
Mandatory spending: $1028.10; 
Sum of tax expenditure revenue loss estimates: $688.60; 
Discretionary spending: $653.20. 

Fiscal year: 2000; 
Mandatory spending: $1064.90; 
Sum of tax expenditure revenue loss estimates: $720.10; 
Discretionary spending: $688.10. 

Fiscal year: 2001; 
Mandatory spending: $1101.90; 
Sum of tax expenditure revenue loss estimates: $780.90; 
Discretionary spending: $710.00. 

Fiscal year: 2002; 
Mandatory spending: $1186.60; 
Sum of tax expenditure revenue loss estimates: $808.80; 
Discretionary spending: $787.90. 

Fiscal year: 2003; 
Mandatory spending: $1243.20; 
Sum of tax expenditure revenue loss estimates: $775.90; 
Discretionary spending: $868.50. 

Fiscal year: 2004; 
Mandatory spending: $1271.40; 
Sum of tax expenditure revenue loss estimates: $748.20; 
Discretionary spending: $920.20. 

Fiscal year: 2005; 
Mandatory spending: $1319.80; 
Sum of tax expenditure revenue loss estimates: $775.70; 
Discretionary spending: $968.50. 

Source: GAO analysis of OMB budget reports on tax expenditures, fiscal 
years 1976-2007. 

Note: Summing tax expenditure estimates does not take into account 
interactions between individual provisions. Outlays associated with 
refundable tax credits are included in mandatory spending. 

[End of Figure]

Health Care Is the Nation's Top Tax Expenditure in Fiscal Year 2005: 

[See PDF for image]  graphic text: 
	
Bar graph with five items. 

Estimated dollars in billions. 

Exclusion of employer contributions for insurance premiums and medical 
care: $118.4[A]; 
Deductibility of mortgage interest on owner-occupied dwellings: $62.2; 
Exclusion of pension contributions and earnings: employer-sponsored 
defined benefit plans: $50.6; 
Child tax credit: $41.8[B]; 
Exclusion of pension contributions and earnings: employer-sponsored 
401(K) plans: $37.4. 
Sources: Office of Management and Budget (OMB), Analytical 
Perspectives, Budget of the United States Government, Fiscal Year 2007. 

Note: "Tax expenditures" refers to the special tax provisions that are 
contained in the federal income taxes on individuals and corporations. 
OMB does not include forgone revenue from other federal taxes such as 
Social Security and Medicare payroll taxes. 

[A] If the payroll tax exclusion were also counted here, the total tax 
expenditure for employer contributions for health insurance premiums 
would be about 50 percent higher or $177.6 billion. 

[B] This is the revenue loss and does not include associated outlays of 
$14.6 billion. 

[End of figure]  

Current Fiscal Policy Is Unsustainable: 

The "Status Quo" is Not an Option: 

* We face large and growing structural deficits largely due to known 
demographic trends and rising health care costs. 

* GAO's simulations show that balancing the budget in 2040 could 
require actions as large as: 

- Cutting total federal spending by 60 percent or: 

- Raising federal taxes to 2 times today's level: 

Faster Economic Growth Can Help, but It Cannot Solve the Problem: 

* Closing the current long-term fiscal gap based on reasonable 
assumptions would require real average annual economic growth in the 
double digit range every year for the next 75 years. 

* During the 1990s, the economy grew at an average 3.2 percent per 
year. 

* As a result, we cannot simply grow our way out of this problem. Tough 
choices will be required. 

The Way Forward: A Three-Pronged Approach: 

1. Improve Financial Reporting, Public Education, and Performance 
Metrics: 

2. Strengthen Budget and Legislative Processes and Controls: 

3. Fundamental Reexamination & Transformation for the 21 st Century 
(i.e., entitlement programs, other spending, and tax policy): 

Solutions Require Active Involvement from both the Executive and 
Legislative Branches: 

The Way Forward: Improve Financial Reporting, Public Education, and 
Performance Metrics: 

Improve transparency & completeness of President's budget proposal: 

* Return to 10-year estimates in budget both for current policies and 
programs and for policy proposals: 

* Include in the budget estimates of long-term cost of policy proposals 
& impact on total fiscal exposures. 

* Improve transparency of tax expenditures: 

Consider requiring President's budget to specify & explain a fiscal 
goal and a path to that goal within 10-year window--or justify an 
alternative deadline: 

Require annual OMB report on existing fiscal exposures [liabilities, 
obligations, explicit & implied commitments] 

Require enhanced financial statement presentation and preparation of 
summary annual report that is both useful and used: 

Increase information on long-range fiscal sustainability issues in 
Congressional Budget Resolution & Budget Process. 

Develop key national (outcome-based) indicators (e.g. economic, 
security, social, environmental) to chart the nation's posture, 
progress, and position relative to the other major industrial 
countries: 

The Way Forward: Strengthen Budget and Legislative Processes and 
Controls: 

Restore discretionary spending caps & PAYGO rules on both spending and 
tax sides of the ledger: 

Develop mandatory spending triggers [with specific defaults], and other 
action-forcing provisions (e.g., sunsets) for both direct spending 
programs and tax preferences: 

Develop, impose & enforce modified rules for selected items (e.g., 
earmarks, emergency designations, and use of supplementals): 

Require long-term cost estimates (e.g. present value) for any 
legislative debate on all major tax and spending bills, including 
entitlement programs. Cost estimates should usually assume no sunset: 

Extend accrual budgeting to insurance & federal employee pensions; 
develop techniques for extending to retiree health & environmental 
liabilities: 

Consider biennial budgeting: 

Consider expedited line item rescissions from the President that would 
only require a majority vote to override the proposed rescission(s): 

The Way Forward: Fundamental Reexamination & Transformation: 

Restructure existing entitlement programs: 

Reexamine and restructure the base of all other spending: 

Review & revise existing tax policy, including tax preferences and 
enforcement programs: 

Expand scrutiny of all proposed new programs, policies, or activities: 

Reengineer internal agency structures and processes, including more 
emphasis on long-term planning, integrating federal activities, and 
partnering with others both domestically and internationally: 

Strengthen and systematize Congressional oversight processes: 

Increase transparency associated with government contracts and other 
selected items: 

Consider a capable, credible, bi-partisan entitlement and tax reform 
commission along the lines proposed by Sen. Voinovich and Cong. Wolf: 

Key National Indicators: 

What: A portfolio of economic, social, and environmental outcome-based 
measures that could be used to help assess the nation's and other 
governmental jurisdictions' position and progress: 

Who: Many countries and several states, regions, and localities have 
already undertaken related initiatives (e.g., Australia, New Zealand, 
Canaa, United Kingdom, Oregon, Silicon Valley (California) and Boston). 

Why: Development of such a portfolio of indicators could have a number 
of possible benefits, including: 

* Serving as a framework for related strategic planning efforts: 

* Enhancing performance and accountability reporting: 

* Informing public policy decisions, including much needed baseline 
reviews of existing government policies, programs, functions, and 
activities: 

* Facilitating public education and debate as well as an informed 
electorate: 

Way Forward: Consortium of key players housed by the National Academies 
domestically and related efforts by the OECD and others 
internationally. 

Key National Indicators: Where the United States Ranks: 

The United States may be the only superpower, but compared to most 
other OECD countries on selected key economic, social, and 
environmental indicators, on average, the U.S. ranks: 

16 0ut Of 28: 

OECD Categories for Key Indicators (2006 OECD Factbook): 

* Population/Migration: 
* Energy: 
* Environment: 
* Quality of Life: 
* Macroeconomic Trends: 
* Labor Market: 
* Education: 
* Economic Globalization: 
* Prices: 
* Science & Tech: 
* Public Finance: 

Source: 2006 OECD Factbook. 

GAO' High-Risk List 2006: 

Addressing Challenges in Broad-based Transformations: 

High-Risk Areas: Protecting the Federal Government's Information 
Systems and the Nation's Critical Infrastructures; 
Year Designated High Risk: 1997. 

High-Risk Areas: Strategic Human Capital Management[A]; 
Year Designated High Risk: 2001. 

High-Risk Areas: U.S. Postal Service Transformation Efforts and Long-
Term Outlook[A]; 
Year Designated High Risk: 2001. 

High-Risk Areas: Managing Federal Real Property[A]; 
Year Designated High Risk: 2003. 

High-Risk Areas: Implementing and Transforming the Department of 
Homeland Security; 
Year Designated High Risk: 2003. 

High-Risk Areas: Establishing Appropriate and Effective Information-
Sharing Mechanisms to Improve Homeland Security; 
Year Designated High Risk: 2005. 

High-Risk Areas: DOD Approach to Business Transformation[A]; 
Year Designated High Risk: 2005. 

High-Risk Areas: DOD Approach to Business Transformation[A]: DOD Supply 
Chain Management (formerly Inventory Management); 
Year Designated High Risk: 1990. 

High-Risk Areas: DOD Approach to Business Transformation[A]: DOD Weapon 
Systems Acquisition; 
Year Designated High Risk: 1990. 

High-Risk Areas: DOD Approach to Business Transformation[A]: DOD 
Business Systems Modernization; 
Year Designated High Risk: 1995. 

High-Risk Areas: DOD Approach to Business Transformation[A]: DOD 
Financial Management; 
Year Designated High Risk: 1995. 

High-Risk Areas: DOD Approach to Business Transformation[A]: DOD 
Support Infrastructure Management; 
Year Designated High Risk: 1997. 

High-Risk Areas: DOD Approach to Business Transformation[A]: DOD 
Personnel Security Clearance Program; 
Year Designated High Risk: 2005. 

Managing Federal Contracting More Effectively: 

High-Risk Areas: DOE Contract Management; 
Year Designated High Risk: 1990. 

High-Risk Areas: NASA Contract Management; 
Year Designated High Risk: 1990. 

High-Risk Areas: DOD Contract Management; 
Year Designated High Risk: 1992. 

Management of Interagency Contracting; 
Year Designated High Risk: 2005. 

Assessing the Efficiency and Effectiveness of Tax Law Administration: 

High-Risk Areas: Enforcement of Tax Laws[A, B]; 
Year Designated High Risk: 1990. 

High-Risk Areas: IRS Business Systems Modernization[C]; 
Year Designated High Risk: 1995. 

Modernizing and Safeguarding Insurance and Benefit Programs: 

High-Risk Areas: Medicare Program[A]; 
Year Designated High Risk: 1990. 

High-Risk Areas: HUD Single-Family Mortgage Insurance and Rental 
Housing Assistance Programs; 
Year Designated High Risk: 1994. 

High-Risk Areas: Medicaid Program[A]; 
Year Designated High Risk: 2003. 

High-Risk Areas: Modernizing Federal Disability Programs[A]; 
Year Designated High Risk: 2003. 

High-Risk Areas: Pension Benefit Guaranty Corporation Single-Employer 
Insurance Program[A]; 
Year Designated High Risk: 2003. 

High-Risk Areas: National Flood Insurance Program; 
Year Designated High Risk: 2006. 

Other: 

High-Risk Areas: FAA Air Traffic Control Modernization; 
Year Designated High Risk: 1995. 

Source: GAO. 

[A] Legislation is likely to be necessary, as a supplement to actions 
by the executive branch, in order to effectively address this high-risk 
area. 
[B] Two high-risk areas-Collection of Unpaid Taxes and Earned Income 
Credit Noncompliance-have been consolidated to make this area. 
[C] The IRS Financial Management high-risk area has been incorporated 
into this high-risk area. 

[End of table] 

21st Century Challenges Report: 

Provides background, framework, and questions to assist in reexamining 
the base: 

Covers entitlements & other mandatory spending, discretionary spending, 
and tax policies and programs: 

Based on GAO's work for the Congress: 

Source: GAO. 

Twelve Reexamination Areas: 

Mission Areas: 

* Defense: 
* International Affairs: 
* Education & Employment: 
* Natural Resources, Energy & Environment: 
* Financial Regulation & Housing: 
* Retirement & Disability: 
* Health Care: 
* Science & Technology: 
* Homeland Security: 
* Transportation: 

Crosscutting Areas: 

* Improving Governance: 
* Reexamining the Tax System: 

Generic Reexamination Criteria and Sample Questions: 

Relevance of purpose and the federal role: 

Why did the federal government initiate this program and what was the 
government trying to accomplish? 

Have there been significant changes in the country or the world that 
relate to the reason for initiating it? 

Measuring success: 

Are there outcome-based measures? If not, why? 

If there are outcome-based measures, how successful is it based on 
these measures? 

Targeting benefits: 

Is it well targeted to those with the greatest needs and the least 
capacity to meet those needs? 

Affordability and cost effectiveness: 

Is it using the most cost-effective or net beneficial approaches when 
compared to other tools and program designs? 

Best practices: 

Is the responsible entity employing prevailing best practices to 
discharge its responsibilities and achieve its mission? 

Illustrative 21ST Century Questions: Management & Human Capital Issues: 

What are the leadership models that can be used to improve agency 
management and address transformation challenges? For example, should 
we create chief operating officer or chief management officer positions 
with term appointments within selected agencies to elevate, integrate, 
and institutionalize responsibility and authority for business 
management and transformation efforts? 

How should the federal government update its compensation systems to be 
more market-based and performance-oriented? For example, should poor 
performers be guaranteed pay increases? How can these systems ensure 
pay comparability and provide reasonable annual pay adjustments while 
also competing for critical occupations or in higher cost locations? 

How can the executive branch and the Congress have a more strategic, 
crosscutting focus on policy and budget decisions to address goals that 
cut across conventional agency and program boundaries? Can the 
governmentwide performance plan required by GPRA be implemented to 
provide the necessary crosscutting focus? 

Transformation: 

Webster's definition: An act, process, or instance of change in 
structure appearance or character: 

A conversion, revolution, makeover, alteration, or renovation: 

Transformation is about creating the future rather than perfecting the 
past. Effective human capital strategy is key to any successful 
transformation effort: 

The Objective of Transformation: 

To create a more positive future by maximizing value and mitigating 
risk within current and expected resource levels: 

Transformation Has Different Dimensions: 

DOD: 
DHS: 
U. S. Postal Service: 
IRS: 
DOE: 
NASA: 

Information Sharing: 
Human Capital: 
Strategy Financial Management: 
Information Technology: 
Sourcing Strategy: 
Disability Programs: 
Real Property Management: 

Note: All of the above are on GAO's High Risk List to one extent or the 
other. 

Key Transformation Elements: 

Planning: 
People: 
Process: 
Partnerships: 
Technology: 
Environment: 

The most important of the six is people an agency's human capital. 

Transformation: A New Model for Government Organizations: 

Government organizations will need to: 

Become less hierarchical, process-oriented, stovepiped, and inwardly 
focused. 

Become more partnership-based, results-oriented, integrated, and 
externally focused. 

Achieve a better balance between results, customer, and employee focus. 

Work better with other governmental organizations, non-governmental 
organizations, and the private sector, both domestically and 
internationally, to achieve results. 

Focus on maximizing value, managing risk and enhancing responsiveness 
within current and expected resource levels. 

Keys to Making Change Happen: 

Commitment and sustained leadership: 

Demonstrated need for change (i.e., burning platform): 

Start at the top and with the new people (transformation takes 7+ 
years): 

Process matters (e.g., employee involvement) Don't fight a two-front 
war: 

15-percent rule: 

Identifiable and measurable progress over time: 

Communication, communication, communication: 

Figure out what's right versus what's popular: 

Patience, persistence, perseverance to pain before you prevail: 

Keys to Making Change Happen: 

Several other actions needed: 

Strategic Plan: 

Core values: 

Organizational alignment: 

Recruiting, development, and succession planning strategies: 

Modernizing and integrating institutional, unit and individualized 
performance measurement and reward systems: 

Employee empowerment and effective communications: 

GAO: Leading by Example (Change, Performance, and Human Capital 
Management): 

Mission and vision clarification: 

Core values: accountability, integrity, reliability: 

Strategic planning: 

Organizational realignment: 

Definitions of success: 

Multi-tasking and matrix management: 

Procurement, contracting, and acquisition: 

Human capital: 

Information technology: 

Knowledge management: 

Financial management: 

Client service/external agency relations and protocols: 

Enhanced products and services: 

Constructive engagement with agencies: 

Partnering with other accountability and "good 
government"organizations: 

GAO's Strategic Plan: 

Serving the Congress and the Nation: GAO's Strategic Plan Framework: 

Mission: 

GAO exists to support the Congress in meeting its constitutional 
responsibilities and to help improve the performance and ensure the 
accountability of the federal government for the benefit of the 
American people. 

Themes: 

* Long-Term Fiscal Imbalance; 

* National Security; 

* Global Interdependence; 

* Changing Economy; 

* Demographics; 

* Science and Technology; 

* Quality of Life; 

* Governance; 

Goals and Objectives: 

Provide Timely, Quality Service to the Congress and the Federal 
Government to. 

Address Current and Emerging Challenges to the Well-Being and Financial 
Security of the American People related to. 

* Health care needs and financing; 

* Education and protection of children; 

* Work opportunities and worker protection; 

* Retirement income security; 

* Effective system of justice; 

* Viable communities; 

* Natural resources use and environmental protection; 

* Physical infrastructure; 

Provide Timely, Quality Service to the Congress and the Federal 
Government to. 

Respond to Changing Security Threats and the Challenges of Global 
Interdependence involving. 

* Emerging threats; 

* Military capabilities and readiness; 

* Advancement of U.S. interests; 

* Global market forces; 

Help Transform the Federal Government Government's Role and How It Does 
Business to Meet 21st Century Challenges by assessing. 

* Roles in achieving federal objectives; 

* Government transformation; 

* Key management challenges and program risks; 

* Fiscal position and financing of the government: 

Maximize the Value of GAO by Being a Model Federal Agency and a World- 
Class Professional Services Organization in the areas of. 

* Client and customer satisfaction; 

* Strategic leadership; 

* Institutional knowledge and experience; 

* Process improvement; 

* Employer of choice: 

Core Values: 

* Accountability; 

* Integrity; 

* Reliability; 

Source: GAO. 

Selected Performance Measures: 

Key Dimensions: 

Results: 

Clients/customers: 

People: 

Partnerships: 

Context: 

Absolute: 

Trend: 

Compared to Peers: 

How GAO Has Addressed Its Human Capital Challenges: 

Administrative: 

Human capital strategic plan: 
HQ realignment & field office restructuring: 
Self-assessment checklist: 
Human capital profile: 
Workforce & succession planning: 
Employee feedback survey & suggestion program: 
Employee Advisory Council: 
Enhanced employee communications & participation: 
Skills & knowledge inventory: 
Employee preference survey: 
Frequent flyer miles: 
Student loan repayment: 
Recruitment & college relations: 
Phased retirement initiative: 
Training/development: 
Recognition & rewards: 
Business casual dress & business cards: 
Enabling technologies: 
Mentor/buddy programs: 
Commuting subsidy: 
Competency-based employee appraisal system: 
Human Capital Officer: 
Office of Opportunity & Inclusiveness: 
Flexitime and telework: 
Total compensation communications: 
Broad-banding: 
Market-based pay studies: 
Band II restructuring: 

Legislation Addressing GAO's Human Capital Challenges: 

Past: 

Broad-banding authority: 
Expedited hiring authority (e.g., internship program): 
Special pay rates: 
Senior level for technical staff: 
Targeted early out and buyout authority (3 years): 
Revised RIF rules: 

Recent: 

Targeted early out and buyout authority (permanent): 
Annual pay adjustment rates controlled by GAO: 
Pay retention provisions: 
Relocation benefits: 
Increased annual leave for upper level employees: 
Executive exchange program: 
Re-designation of "General Accounting Office" to "Government 
Accountability Office" 

GAO Elements of Reform: 

Modern, Effective, Credible, and Validated Performance Management 
System: 

Focuses on core competencies: 
Helps to communicate employee performance expectations: 
Creates a "line of sight" linking institutional team/unit and 
individual performance: 
Makes meaningful distinctions in employee performance: 
Provides for competency-based results automatically and relative peer 
group standing on request: 

Modern Classification and Compensation System: 

Uses pay bands: 
Is market-based: 
Is performance-oriented: 

Safeguards, transparency, and accountability built in: 

Provisions for employee participation: 
Pre-and post-implementation consultation and communications strategy 
incorporated: 
Internal pre-decisional revenues and reasonable post-decisional 
transparency: 
Avenues for adverse action appeals, both internally and externally: 

Source: GAO. 

Market-Based and Performance-Oriented Pay Systems: A Phased Approach: 

[See PDF for Image]- graphic text: 

3 vertical fields with 3 subfields each and then developments listed by 
year. 

Analysis: Performance; 
1999: Best practices study; 
2000: Competititve procurement; 
2001: Validate competencies and performance standards; 
2002: Pilot; 
2003: Implement 1st cycle; 
2004: Evaluate and refine; 
2005: evaluate and refine; 
2006: Evaluate and refine. 

Analysis: Merit pay; 
1999: [Empty]; 
2000: [Empty]; 
2001: [Empty]; 
2002: Develop; 
2003: First payout and evaluate and refine; 
2004: Evaluate and refine; 
2005: Evaluate and refine. 

Analysis: Pay Ranges; 
1999: [Empty]; 
2000: [Empty]; 
2001: [Empty]; 
2002: [Empty]; 
2003: [Empty]; 
2004: Conduct pay study; 
2005: Develop implementation policies; 
2006: Update and implement pay ranges. 

Attorneys: Performance; 
1999: [Empty]; 
2000: [Empty]; 
2001: Competitive procurement; 
2002: Validate competencies and performance standards; 
2003: Implement 1st cycle; 
2004: Evaluate and refine; 
2005: evaluate and refine; 
2006: Evaluate and refine. 

Attorneys: Merit Pay; 
1999: [Empty]; 
2000: [Empty]; 
2001: [Empty]; 
2002: [Empty]; 
2003: Develop and first payout at the end of the year; 
2004: Evaluate and refine; 
2005: evaluate and refine; 
2006: Evaluate and refine. 

Attorneys: Pay ranges; 
1999: [Empty]; 
2000: [Empty]; 
2001: [Empty]; 
2002: [Empty]; 
2003: [Empty]; 
2004: Conduct pay study; 
2005: Develop implementation policies; 
2006: Update and Implement pay ranges. 

APSS: Performance; 
1999: [Empty]; 
2000: [Empty]; 
2001: Competitive procurement; 
2002: Organize job families; 
2003: Conduct position review; 
2004: Validate competencies and performance standards; 
2005: Implement 1st cycle; 
2006: Evaluate and refine. 

APSS: Merit Pay; 
1999: [Empty]; 
2000: [Empty]; 
2001: [Empty]; 
2002: [Empty]; 
2003: [Empty]; 
2004: [Empty]; 
2005: Develop and 1st Payout; 
2006: Evaluate and refine. 

APSS: Pay ranges; 
1999: [Empty]; 
2000: [Empty]; 
2001: [Empty]; 
2002: [Empty]; 
2003: [Empty]; 
2004: [Empty]; 
2005: Conduct pay study; 
2006: Implement pay ranges. 

Source: GAO. 

[End of table] 

Competency-Based Performance Appraisal: 

Objective of new system are to provide a: 

Clear link to our strategic plan, professional standards, protocols and 
core values: 

Fair, honest, accurate and non-discriminatory assessment of performance 
based on standards that are valid, properly applied, and transparent to 
employees: 

A sound basis for enhancing the performance capacity of all staff, 
rewarding high-performing staff, and dealing with "below expected" 
performers: 

Figure: Competency Model: 

[See PDF for Image] - graphic text: 

An Octagon with the components of the competency model inside it and 
other areas of importance surrounding it. 

Competency Model: 

Achieving Results: 
Maintaining Client and Customer Focus: 
Developing People: 
Thinking Critically: 
Collaborating with Others: 
Presenting Information Orally: 
Presenting Information in Writing Leading Others: 

Outside the octagon: 

Succession Planning: 
Promotions: 
Recruitment: 
Work assignments: 
Performance Management: 
Pay Decisions: 
Career Planning: 
Training: 

Source: GAO. 

[End of figure] 

Classification and Compensation System: Key Guiding Principles: 

Enable GAO to attract and retain top talent: 

Result in equal pay for work of equal value over time: 

Be reflective of the roles and responsibilities that we expect GAO 
staff to perform: 

Be reasonable; competitive; performance-oriented; and based on skills, 
knowledge, and role: 

Be affordable and sustainable based on current and expected resources 
levels: 

Be in conformity with applicable statutory limits: 

Try to assure a reasonable consistency in ratings and related 
compensation results within and between teams: 

Pay Philosophy: Performance-Oriented and Market-Based: 

Historically: 

Pay ranges followed the GS schedule: 

Everyone could advance to the pay cap irrespective of their performance 
not a matter of if, but when: 

New Approach: 

Pay ranges set to be competitive with the labor markets in which GAO 
competes for talent: 

Everyone can advance to the pay cap but some staff must have 
performance in excess of a certain level to advance beyond a certain 
point in the pay range (e.g., 75th percentile): 

Pay ranges may overlap in upper part of band pay range to adequately 
reward expertise, leadership, and performance: 

Classification and Compensation Review (CCR) Approach-Best Practices: 

Hired an experienced and top quality firm Watson Wyatt: 

Followed an industry best practices process and methodology: 

* Early involvement of Career Stream Focal Points (including Employee 
Advisory Council representatives) to provide: 

- Knowledge and expertise on job content: 

- Insight regarding attraction and retention issues including turnover, 
recruitment sources, and mid-career hiring: 

- Hands-on review and confirmation of GAO job matches and 18 selected 
published survey sources: 

Multiple authoritative surveys used for determining competitive 
compensation data: 

Widely recognized local labor market data index used for local market 
categories: 

Extensive involvement throughout the study by the Executive Committee 
to: 

* Provide strategic guidance and input: 

* Confirm and approve job matches from selected published survey 
sources after consideration of recommendations from Career Stream Focal 
Points and Watson Wyatt: 

GAO's Band II Restructuring Effort: Lessons To Be Shared: 

Study the relative roles and responsibilities of the employees affected 
before determining the number of bands: 

Conduct an independent market-based compensation study instead of 
relying on GS-pay ranges: 

Design and implement a modern, effective, and credible performance 
management system that makes meaningful distinctions in performance: 

Key Leadership Attributes Needed for These Challenging and Changing 
Times: 

Courage: 
Integrity: 
Creativity: 
Partnership: 
Stewardship: 

On the Web: 

Web site: [Hyperlink, http://www.gao.gov/cghome.htm: 

Contact: 

Paul Anderson, Managing Director, Public Affairs AndersonP1 @gao.gov 
(202) 512-4800: 

U.S. Government Accountability Office 441 G Street NW, Room 7149 
Washington, D.C. 20548: 

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