Budget and Spending:

Effective Government in a Time of Significant Challenges

GAO-12-268CG: Published: Nov 17, 2011. Publicly Released: Nov 17, 2011.

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This speech was given by the Comptroller General before the National Academy of Public Administration in Washington, D.C. on November 17, 2011. Central among the difficult and pressing challenges facing our nation is the struggle to place our national government on a more sustainable long term fiscal path. The financial market crisis and the resulting economic downturn occurred against a backdrop of fiscal trends that were unsustainable even before these shocks. For several years, GAO has published long-term fiscal simulations illustrating this structural imbalance. GAO's most recent update on the government's long-term fiscal outlook showed the provisions of the Budget Control Act of 2011 have improved the federal government's fiscal outlook. The Act requires at least $2.1 trillion in deficit reduction from 2012-2021. But even with the Act, our simulations demonstrate there still is a longer term problem that needs sustained attention. We must pay attention to people. Budget cuts and workforce reductions can make employees, who came into government because they cared about the public good, feel devalued. Engaging them in the effort to improve government operations will be good both for morale and for government itself. In addition to keeping up staff morale, there are a number of ways in which managers can help elected officials address the challenges facing our government and the American people. Some challenges are long standing, others are newly emerging.

One of the trends we have long included in our strategic plans is global interdependence. Economies, politics, information sharing, public health, and many other human activities are now linked in ways that were unimaginable a generation or two ago. Some of these capabilities have led to significant improvements in the standard of living of U.S. citizens and others around the world. However, some of the more challenging implications of globalization are also apparent, such as the recent problems seen it the U.S. and the world financial markets. In terms of the crisis in the United States, the U.S. financial regulatory system simply failed to keep up with this trend and the systemic risks it posed. As GAO's High-Risk List pointed out earlier this year, contract management is a government-wide problem. Over the years, GAO has raised concerns about contracting practices at agencies ranging from NASA to the Department of Energy to the Department of Defense. In fiscal 2010, the federal government spent about $535 billion to acquire goods and services. On far too many of these contracts, significant shortcomings occur. Reducing improper payments could also yield significant savings. Congress and the Administration have both focused attention on this issue, but now we need to see results. Estimated levels of improper payments across government have been rising steadily for years. In fiscal year 2010, improper payments jumped an estimated $16 billion to $125 billion, largely because of significant increases in the outlays associated with unemployment insurance and the earned income tax credit program, both of which continued to exhibit very high error rates. Billions more could flow to the Treasury by closing the difference between taxes owed and taxes paid. IRS last estimated the net tax gap in 2001at $290 billion. Many experts believe that the current tax gap is larger than that. No single approach will fully address the tax gap, but several strategies could boost taxpayer compliance. For example, Congress could simplify the tax code. It's also time for government to become more consistent and successful in harnessing the power of technology. Wise technology investments can go a long way to help leverage scarce resources and maximize results. The government's planning, implementation, and use of IT all continue to need further attention. Additionally, shortcomings in the government's ability to address issues in a holistic way over time have led to overlap and duplication in federal programs and activities. GAO's recent report on duplication, overlap, and fragmentation cites a number of areas where such a holistic approach is needed. These include teacher quality programs, the military health system, surface transportation, and economic development initiatives. For many of the issues that we cited agencies need to collect more accurate and complete data on program outcomes and use the information to assess and compare programs' effectiveness. In a constrained budgetary environment, adopting best practices is more important than ever. Two years ago GAO issued its first cost-estimating guide to help federal, state, and local officials develop more reliable cost estimates for government projects of all sizes. The federal cost-estimating community in particular has long needed better tools for preparing cost projections. GAO's new manual will go a long way to bridge that gap. Following the broad success of our cost-estimating guide, we plan to also release one concerning best practices in scheduling next year. Our hope is that government agencies will be better able to avoid common problems, such as cost overruns, missed deadlines, and performance shortfalls. In fiscal times like these, leading and motivating agency workforces also takes on a greater urgency and presents a greater challenge.

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