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Key Challenges Facing Government Managers: 

Interagency Resources Management Conference: 
Cambridge, MD: 
April 21, 2009: 

By Gene L. Dodaro: 
Acting Comptroller General: 

GAO-09-609CG: 

Outline: 
* Economic Recovery and Financial Markets: 
* Transition – New President and Congress: 
* Long-Term Fiscal Outlook and Risks: 

American Recovery & Reinvestment Act: 

* Signed February 17, 2009; 
* Purpose: 
- preserve and create jobs and promote recovery; 
- assist those most impacted by the recession; 
- invest in science and health-care technology; 
- invest in infrastructure; 
- stabilize state and local government budgets; 

* Total cost, tax and spending: $787 billion, including over
$580 billion in additional spending (CBO Estimate); 

* Inspectors General review federal program and agency
implementation; 

* Recovery Accountability and Transparency Board 

* GAO responsibilities include:
- conducting bimonthly reviews of selected state and
localities; 
- commenting on the estimates of the number of jobs
- reviewing areas such as trade adjustment assistance, new education 
incentive grants, and efforts to increase small business lending. 

Figure: Map of the United States, highlighting the following states: 

[Refer to PDF for image] 

Arizona; 
California; 
Colorado; 
District of Columbia; 
Florida; 
Georgia; 
Illinois; 
Iowa; 
Massachusetts; 
Michigan; 
Mississippi; 
New Jersey;
New York; 
North Carolina; 
Ohio; 
Pennsylvania; 
Texas. 

Source: GAO analysis. 

[End of figure] 

Challenges for the federal, state and local officials: 

* Expectations for “an unprecedented level of transparency and
accountability”; 

* Qualified personnel need to implement proper controls and
accountability at all levels of government; 

* Close federal, state, and local government coordination needed; 

* Experience has shown that the risk for fraud and abuse grows when 
billions of dollars are going out quickly, eligibility requirements are 
being established or changed, and new programs are being created. 

Financial Institutions and Markets: 

* GAO Role in Financial Rescue; 

* Auditors of Bank Insurance Fund, FHFA, TARP, and U.S. Government 
Financial Statements; 

* Financial Regulatory System. 

* Emergency Economic Stabilization Act of 2008 created $700 billion 
TARP in October 2008; 

* GAO given statutory oversight role; 

* GAO’s TARP reports recommendations follow 3 themes: 
- Monitoring the use of funds to meet the Act’s objectives; 
- Articulating a better communication strategy; 
- Ensuring effective Treasury management structure. 

Modernizing The U.S. Financial Regulatory System: 

Financial Regulation: A Framework for Crafting and Assessing Proposals 
to Modernize the Outdated U.S. Financial Regulatory System (GAO-09-216, 
Jan. 8, 2009). 

* Explains the origins of the current financial regulatory system; 

* Describes market developments and changes that pose challenges to the 
current system; 

* Presents an evaluation framework that Congress and others can use to 
craft or evaluate potential regulatory reform efforts. 

Regulatory System Outdated: 

Risks Posed By: 

* Emergence of large, complex, and interconnected financial 
conglomerates; 
 
* Less-regulated entities are playing increasingly critical roles in 
the financial system; 

* New and complex products pose challenges to system stability and 
consumer protection. 

Crafting or Assessing Regulatory Reform Proposals: GAO Framework — 9 
Essential Characteristics: 

* Clearly defined regulatory goals in statute; 

* Appropriately comprehensive; 

* Systemwide focus; 

* Flexible and adaptable; 

* Efficient and effective; 

* Consistent consumer and investor protections; 

* Regulators provided with independence, prominence, authority, and 
accountability; 

* Consistent financial oversight; 

* Minimal taxpayer exposure. 

Transition: Assisting The New Administration & The New Congress: 

Figure: photographs of The White House and The Congress: 

[Refer to PDF for image] 

[End of figure] 

Figure: Screen capture of website: [hyperlink, http://www.gao.gov]: 

[Refer to PDF for image] 

Highlighted on this web page is the following link: 

GAO's Oversight of the Recovery Act: GAO.gov/recovery. 

[End of figure] 

Figure: Screen capture of website: [hyperlink, 
http://www.gao.gov/recovery/index.html]: 

[Refer to PDF for image] 

Page title: Following the Money: GAO's Oversight of the Recovery Act. 

[End of figure] 

Figure: Screen capture of website: [hyperlink, 
http://www.gao.gov/transition_2009/]: 

[Refer to PDF for image] 

Page title: Serving the Congress and the Nation. 

[End of figure] 

Other Urgent Issues: Timely Action Critical: 

* U.S. Efforts in Iraq, Afghanistan, and Pakistan; 

* Defense Readiness, Spending, and Care for Service Members; 

* Protecting the Homeland and Preparing for Public Health Emergencies; 

* Improving U.S. Image Abroad; 

* Food Safety; 

* Transition to Digital TV. 

Long-Term Challenges: 

* Today’s focus—understandably—is on:
- Dealing with financial system stress; 
- Addressing the economic downturn. 

* But... Underlying issues still need to be addressed: 
- Long-term fiscal challenge; 
- Sustaining progress on federal financial management. 

Long-Term Fiscal Challenge: 

Figure: Federal and Combined Federal, State, and Local Surpluses and 
Deficits as a Share of GDP: 

[Refer to PDF for image: line graph] 

Fiscal year: 2005; 
Federal surplus/deficit[A]: -2.6%; 
Combined surplus/deficit: -3.1. 

Fiscal year: 2006; 
Federal surplus/deficit[A]: -1.9%; 
Combined surplus/deficit: -2.3%. 

Fiscal year: 2007; 
Federal surplus/deficit[A]: -1.2%; 
Combined surplus/deficit: -1.9%. 

Fiscal year: 2008; 
Federal surplus/deficit[A]: -3.2%; 
Combined surplus/deficit: -4.3%. 

Fiscal year: 2009; 
Federal surplus/deficit[A]: -8.2%; 
Combined surplus/deficit: -9.9%. 

Fiscal year: 2010; 
Federal surplus/deficit[A]: -5.0%; 
Combined surplus/deficit: -7%. 

Fiscal year: 2011; 
Federal surplus/deficit[A]: -4.7%; 
Combined surplus/deficit: -6.7%. 

Fiscal year: 2012; 
Federal surplus/deficit[A]: -4.4%; 
Combined surplus/deficit: -6.3%. 

Fiscal year: 2013; 
Federal surplus/deficit[A]: -4.8%; 
Combined surplus/deficit: -6.5%. 

Fiscal year: 2014; 
Federal surplus/deficit[A]: -5.0%; 
Combined surplus/deficit: -6.7%. 

Fiscal year: 2015; 
Federal surplus/deficit[A]: -5.2%; 
Combined surplus/deficit: -6.9%. 

Fiscal year: 2016; 
Federal surplus/deficit[A]: -5.5%; 
Combined surplus/deficit: -7.2%. 

Fiscal year: 2017; 
Federal surplus/deficit[A]: -5.7%; 
Combined surplus/deficit: -7.5%. 

Fiscal year: 2018; 
Federal surplus/deficit[A]: -5.9%; 
Combined surplus/deficit: -7.8%. 

Fiscal year: 2019; 
Federal surplus/deficit[A]: -6.3%; 
Combined surplus/deficit: -8.2%. 

Fiscal year: 2020; 
Federal surplus/deficit[A]: -6.8%; 
Combined surplus/deficit: -8.7%. 

Fiscal year: 2021; 
Federal surplus/deficit[A]: -7.2%; 
Combined surplus/deficit: -9.3%. 

Fiscal year: 2022; 
Federal surplus/deficit[A]: -7.6%; 
Combined surplus/deficit: -9.7%. 

Fiscal year: 2023; 
Federal surplus/deficit[A]: -8.2%; 
Combined surplus/deficit: -10.3%. 

Fiscal year: 2024; 
Federal surplus/deficit[A]: -8.7%; 
Combined surplus/deficit: -10.9%. 

Fiscal year: 2025; 
Federal surplus/deficit[A]: -9.2%; 
Combined surplus/deficit: -11.5%. 

Fiscal year: 2026; 
Federal surplus/deficit[A]: -9.2%; 
Combined surplus/deficit: -12.1%. 

Fiscal year: 2027; 
Federal surplus/deficit[A]: -10.3%; 
Combined surplus/deficit: -12.8%. 

Fiscal year: 2028; 
Federal surplus/deficit[A]: -10.8%; 
Combined surplus/deficit: -13.4%. 

Fiscal year: 2029; 
Federal surplus/deficit[A]: -11.5%; 
Combined surplus/deficit: -14.2%; 

Fiscal year: 2030; 
Federal surplus/deficit[A]: -12.0%; 
Combined surplus/deficit: -14.8%. 

Fiscal year: 2031; 
Federal surplus/deficit[A]: -12.7%; 
Combined surplus/deficit: -15.5%. 

Fiscal year: 2032; 
Federal surplus/deficit[A]: -13.2%; 
Combined surplus/deficit: -16.2%. 

Fiscal year: 2033; 
Federal surplus/deficit[A]: -13.9%; 
Combined surplus/deficit: -17%. 

Fiscal year: 2034; 
Federal surplus/deficit[A]: -14.5%; 
Combined surplus/deficit: -17.7%. 

Fiscal year: 2035; 
Federal surplus/deficit[A]: -15.1%; 
Combined surplus/deficit: -18.4%. 

Fiscal year: 2036; 
Federal surplus/deficit[A]: -15.7%; 
Combined surplus/deficit: -19.1%. 

Fiscal year: 2037; 
Federal surplus/deficit[A]: -16.3%; 
Combined surplus/deficit: -19.8%. 

Fiscal year: 2038; 
Federal surplus/deficit[A]: -17.0%; 
Combined surplus/deficit: -20.6%. 

Fiscal year: 2039; 
Federal surplus/deficit[A]: -17.7%; 
Combined surplus/deficit: -21.4%. 

Fiscal year: 2040; 
Federal surplus/deficit[A]: -18.3%; 
Combined surplus/deficit: -22.1%. 

Fiscal year: 2041; 
Federal surplus/deficit[A]: -18.9%; 
Combined surplus/deficit: -22.9%. 

Fiscal year: 2042; 
Federal surplus/deficit[A]: -19.5%; 
Combined surplus/deficit: -23.6%. 

Fiscal year: 2043; 
Federal surplus/deficit[A]: -20.2%; 
Combined surplus/deficit: -24.4%. 

Fiscal year: 2044; 
Federal surplus/deficit[A]: -20.8%; 
Combined surplus/deficit: -25.1%. 

Fiscal year: 2045; 
Federal surplus/deficit[A]: -21.5%; 
Combined surplus/deficit: -25.9%. 

Fiscal year: 2046; 
Federal surplus/deficit[A]: -22.2%; 
Combined surplus/deficit: -26.7%. 

Fiscal year: 2047; 
Federal surplus/deficit[A]: -22.9%; 
Combined surplus/deficit: -27.5%. 

Fiscal year: 2048; 
Federal surplus/deficit[A]: -23.6%; 
Combined surplus/deficit: -28.3%. 

Fiscal year: 2049; 
Federal surplus/deficit[A]: -24,3%; 
Combined surplus/deficit: -29.2%. 

Fiscal year: 2050; 
Federal surplus/deficit[A]: -25.0%; 
Combined surplus/deficit: -30%. 

[A] Federal surplus/deficit is from GAO’s Alternative Simulation using 
the Trustees’ assumptions. 

Source: GAO's January 2009 analysis. 

[End of figure] 

Long-Term Fiscal Challenge Driven by Health Care Spending: 

Figure: Social Security, Medicare, and Medicaid Spending as a Percent 
of GDP (Current and Projected): 

[Refer to PDF for image: stacked line graph] 

2008: 
Social Security: 4.32; 
Medicaid: 1.5; 
Medicare: 3.236; 
Total: 9.056. 

2009:	
Social Security: 4.35; 
Medicaid: 1.525; 
Medicare: 3.277; 
Total: 9.152. 

2010:	
Social Security: 4.39; 
Medicaid: 1.6; 
Medicare: 3.323; 
Total: 9.313. 

2011:	
Social Security: 4.44;	
Medicaid: 1.6; 
Medicare: 3.367; 
Total: 9.407. 

2012:	
Social Security: 4.52; 
Medicaid: 1.625; 
Medicare: 3.446; 
Total: 9.591. 

2013:	
Social Security: 4.61; 
Medicaid: 1.7; 
Medicare: 3.568; 
Total: 9.878. 

2014:	
Social Security: 4.7; 
Medicaid: 1.725; 
Medicare: 3.618; 
Total: 10.043. 

2015:	
Social Security: 4.8; 
Medicaid: 1.825; 
Medicare: 3.713; 
Total: 10.338. 

2016:	
Social Security: 4.9; 
Medicaid: 1.9; 
Medicare: 3.819; 
Total: 10.619. 

2017:	
Social Security: 5.01; 
Medicaid: 1.925; 
Medicare: 3.967; 
Total: 10.902. 

2018:	
Social Security: 5.1; 
Medicaid: 1.962; 
Medicare: 4.122; 
Total: 11.184. 

2019:	
Social Security: 5.2; 
Medicaid: 2.002; 
Medicare: 4.281; 
Total: 11.483. 

2020:	
Social Security: 5.3; 
Medicaid: 2.044; 
Medicare: 4.445; 
Total: 11.789. 

2021:	
Social Security: 5.39; 
Medicaid: 2.087; 
Medicare: 4.616; 
Total: 12.093. 

2022:	
Social Security: 5.48; 
Medicaid: 2.133; 
Medicare: 4.797; 
Total: 12.41. 

2023: 	
Social Security: 5.56; 
Medicaid: 2.181; 
Medicare: 4.982; 
Total: 12.723.		 

2024:	
Social Security: 5.64; 
Medicaid: 2.231; 
Medicare: 5.166; 
Total: 12.976. 

2025:	
Social Security: 5.71; 
Medicaid: 2.284; 
Medicare: 5.351; 
Total: 13.345. 

2026:	
Social Security: 5.78; 
Medicaid: 2.338; 
Medicare: 5.537; 
Total: 13,655. 

2027:	
Social Security: 5.84; 
Medicaid: 2.395; 
Medicare: 5.725; 
Total: 13.96. 

2028:	
Social Security: 5.9; 
Medicaid: 2.45; 
Medicare: 5.910; 
Total: 14.26. 

2029:	
Social Security: 5.95; 
Medicaid: 2.506; 
Medicare: 6.088; 
Total: 14.544. 

2030:	
Social Security: 6; 
Medicaid: 2.564; 
Medicare: 6.258 
Total: 14.882. 

2031:	
Social Security: 6.03; 
Medicaid: 2.622; 
Medicare: 6.417; 
Total: 15.069. 

2032:	
Social Security: 6.06; 
Medicaid: 2.681; 
Medicare: 6.568; 
Total: 15.309. 

2033:	
Social Security: 6.08; 
Medicaid: 2.741; 
Medicare: 6.716; 
Total: 15.537. 

2034:	
Social Security: 6.09; 
Medicaid: 2.802; 
Medicare: 6.681; 
Total: 15.573. 

2035:	
Social Security: 6.09; 
Medicaid: 2.86; 
Medicare: 7.003; 
Total: 15.953. 

2036:	
Social Security: 6.09; 
Medicaid: 2.92; 
Medicare: 7.142; 
Total: 16.152. 

2037:	
Social Security: 6.08; 
Medicaid: 2.978; 
Medicare: 7.268; 
Total: 16.326. 

2038:	
Social Security: 6.06
Medicaid: 3.038; 
Medicare: 7.380; 
Total: 16.478. 

2039:	
Social Security: 6.04
Medicaid: 3.095; 
Medicare: 7.484; 
Total: 16.619. 

2040:	
Social Security: 6.02; 
Medicaid: 3.151; 
Medicare: 7.583; 
Total: 16.754. 

2041:	
Social Security: 5.99; 
Medicaid: 3.205; 
Medicare: 7.676; 
Total: 16.871. 

2042:	
Social Security: 5.97; 
Medicaid: 3.26; 
Medicare: 7.764; 
Total: 16.994. 

2043: 
Social Security: 5.94; 
Medicaid: 3.311; 
Medicare: 7.848; 
Total: 17.099. 

2044:	
Social Security: 5.92; 
Medicaid: 3.365; 
Medicare: 7.930; 
Total: 17.215. 

2045:	
Social Security: 5.89; 
Medicaid: 3.417; 
Medicare: 8.013; 
Total: 17.32. 

2046:	
Social Security: 5.87; 
Medicaid: 3.471; 
Medicare: 8.095; 
Total: 17.436. 

2047:	
Social Security: 5.85; 
Medicaid: 3.521; 
Medicare: 8.174; 
Total: 17.545. 

2048:	
Social Security: 5.84; 
Medicaid: 3.572; 
Medicare: 8.249; 
Total: 17.661. 

2049:	
Social Security: 5.82; 
Medicaid: 3.62; 
Medicare: 8.323; 
Total: 17.763. 

2050:	
Social Security: 5.81; 
Medicaid: 3.666; 
Medicare: 8.397; 
Total: 17.873. 

2051:	
Social Security: 5.8; 
Medicaid: 3.71; 
Medicare: 8.472; 
Total: 17.982. 

2052:	
Social Security: 5.79; 
Medicaid: 3.753; 
Medicare: 8.546; 
Total: 18.089. 

2053:	
Social Security: 5.78; 
Medicaid: 3.798; 
Medicare: 8.619; 
Total: 18.197. 

2054:	
Social Security: 5.78; 
Medicaid: 3.841; 
Medicare: 8.697; 
Total: 18.318. 

2055:	
Social Security: 5.77; 
Medicaid: 3.885; 
Medicare: 8.781; 
Total: 18.436. 

2056:	
Social Security: 5.77; 
Medicaid: 3.93; 
Medicare: 8.869; 
Total: 18.569. 

2057:	
Social Security: 5.77; 
Medicaid: 3.974; 
Medicare: 8.956; 
Total: 18.7. 

2058:	
Social Security: 5.77; 
Medicaid: 4.02; 
Medicare: 9.042; 
Total: 18.832. 

2059:	
Social Security: 5.77; 
Medicaid: 4.061; 
Medicare: 9.126; 
Total: 18.957. 

2060:	
Social Security: 5.77; 
Medicaid: 4.106; 
Medicare: 9.209; 
Total: 19.085. 

2061:	
Social Security: 5.77; 
Medicaid: 4.151; 
Medicare: 9.292; 
Total: 19.213. 

2062:	
Social Security: 5.77; 
Medicaid: 4.193; 
Medicare: 9.374; 
Total: 19.337. 

2063:	
Social Security: 5.76; 
Medicaid: 4.237; 
Medicare: 9.456; 
Total: 19.453. 

2064:	
Social Security: 5.76; 
Medicaid: 4.282; 
Medicare: 9.539; 
Total: 19.581. 

2065:	
Social Security: 5.76; 
Medicaid: 4.329; 
Medicare: 9.625; 
Total: 19.714. 

2066:	
Social Security: 5.76; 
Medicaid: 4.376; 
Medicare: 9.709; 
Total: 19.845. 

2067:	
Social Security: 5.77; 
Medicaid: 4.442; 
Medicare: 9.789; 
Total: 20.001. 

2068:	
Social Security: 5.77; 
Medicaid: 4.469; 
Medicare: 9.867; 
Total: 20.106. 

2069:	
Social Security: 5.77; 
Medicaid: 4.516; 
Medicare: 9.946; 
Total: 20.232. 

2070:	
Social Security: 5.77; 
Medicaid: 4.562; 
Medicare: 10.025; 
Total: 20.582. 

2071:	
Social Security: 5.78; 
Medicaid: 4.605; 
Medicare: 10.100; 
Total: 20.485. 

2072:	
Social Security: 5.78; 
Medicaid: 4.651; 
Medicare: 10.170; 
Total: 20.601. 

2073:	
Social Security: 5.78; 
Medicaid: 4.693; 
Medicare: 10.240; 
Total: 20.713. 

2074:	
Social Security: 5.79; 
Medicaid: 4.738; 
Medicare: 10.309; 
Total: 20.837. 

2075:	
Social Security: 5.79; 
Medicaid: 4.784; 
Medicare: 10.377; 
Total: 20.951. 

2076:	
Social Security: 5.79; 
Medicaid: 4.827; 
Medicare: 10.442; 
Total: 21.059. 

2077:	
Social Security: 5.8; 
Medicaid: 4.87; 
Medicare: 10.505; 
Total: 21.205. 

2078:	
Social Security: 5.8; 
Medicaid: 4.915; 
Medicare: 10.567; 
Total: 21.282. 

2079:	
Social Security: 5.81; 
Medicaid: 4.955; 
Medicare: 10.627; 
Total: 21.392. 

2080:	
Social Security: 5.81; 
Medicaid: 4.995; 
Medicare: 10.686; 
Total: 21.491. 

Source: GAO analysis of 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. 

Note: Social Security and Medicare projections based on the 
intermediate assumptions of the 2008 Trustees’ Reports. Medicaid 
projections based on CBO’s January 2009 short-term Medicaid estimates 
and CBO’s December 2007 long-term Medicaid projections adjusted to 
reflect excess cost growth consistent with the 2008 Trustees 
intermediate assumptions. 

[End of Figure] 

Federal Financial Management: Need to Continue Progress: 

* Significant improvements in federal financial management -- but still 
a long way to go. 

* Information for decision-making must be reliable. 

Federal Financial Management: Key Challenges: 

* Improve internal control—greater accountability and fewer improper
payments. 

* Obtain clean opinion on U.S. government’s consolidated financial
statements. 

* Improve extent and reliability of cost information for evaluating 
federal program operations. 

* Implement more effective federal financial management systems. 

* Improve federal grant accountability. 

* Streamline and enhance relevance and effectiveness of federal
accountability requirements and practices. 

2009 High-Risk List: 

30 items grouped into four categories: 

* Broad-Based Transformation Challenges (e.g., Strategic Human Capital 
Management, Protecting the Federal Government’s Information Systems and 
the Nation’s Critical Infrastructures). 

* Federal Contracting. 

* Tax Law Administration. 

* Insurance and Benefit Programs (e.g., Medicare, Medicaid, PBGC, flood 
insurance). 

Latest High-Risk List Additions: 

* Modernizing the Outdated U.S. Financial Regulatory System. 

* Protecting Public Health through Enhanced Oversight of Medical 
Products. 

* Transforming EPA’s Processes for Assessing and Controlling Toxic 
Chemicals. 

[End of presentation] 

On the Web: 

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

Contact: 

Chuck Young, Managing Director, Public Affairs: 
YoungC1@gao.gov (202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: