GovernmentExecutive.com

January 23, 2007

TIM CLARK: Let me welcome all of you for being here, and of course a special welcome to David Walker, the comptroller general of the United States who has consented to join us here today to put up with all my questions, and some from the audience. I asked him in advance actually, while we were having breakfast, whether I had missed any particularly mean questions. I thought he might have one in mind that I hadn't thought of, but he said he hadn't actually seen the list of questions that I was going to ask him, so he couldn't really respond to that. (Laughter.)

David and I were recalling that this is our fourth session, we think, together. I think of it as an annual debriefing of one of the most interesting people in government, and certainly one who has as broad a portfolio as anyone else in government, with the exception perhaps of the president and one or two others.

David has passed the halfway mark in his term as comptroller general. As you all know, it's a 15-year term, confirmed by the Senate, and he has been there more than eight.

He's taken on a lot of big topics. From the time he got to Washington, he set out to call the attention of the government and the nation to problems that he thought were important in the federal sector, beginning with the human capital crisis, which he put on the high-risk list - the GAO high-risk list early on. The fiscal future of the United States has been a major theme for several years. In 2005, the GAO and David issued a booklet called "21st Century Challenges" about the big items on the national agenda that need resolution. On November 17th, just two months ago, he issued a 44-page list of issues for oversight for the next Congress - for the 110th Congress. And then in January he issued yet another document suggesting particular areas for oversight on Iraq.

I will give you a preview of the column I wrote that will describe some of these documents - I've written but not yet published, and still subject to revision. But it says, "The new activist Congress is fortunate to have, in a supporting role, an activist Government Accountability Office just down the street. Controller General David M. Walker has offered up a 44-page document suggesting a hugely ambitious oversight agenda. Among 15 targets for near-term oversight: the effectiveness of U.S. counterterrorism efforts and of nuclear nonproliferation efforts, transforming our nuclear weapons complex, enhancing border security, and reducing the tax gap. Among 13 policies and programs in need of fundamental reform and reengineering, reforming Medicare and Medicaid, reviewing efforts to stabilize and rebuild Iraq and Afghanistan, reforming the tax code, assuring the quality of our education system, and improving America's image abroad." And then there's another list of eight governance issues, from improving federal budgeting to examining the way we nominate and confirm presidential appointees.

In his introduction to the November 17th document on oversight, Mr. Walker wrote, "There are two general themes that support our recommendations. First, we cannot afford to continue business as usual in Washington, given our current deficit and growing long-term fiscal challenges.... Second, most of the federal government's current policies, programs, functions and activities are based on conditions that existed decades ago and are not results-based and are not well aligned with 21st century realities. Therefore, there is a need to engage in a fundamental review, reprioritization and reengineering of the base of government." If that isn't an ambitious and wide-reaching statement, I don't know what is.

I thought we might start out talking, David, about the balance between the branches of government. There has been a lot of talk about that in Washington, as you know, and the president and especially the vice president, Dick Cheney, have insisted that the executive branch has lost power to Congress and have made efforts to regain power for the executive branch. With your documents, you seem to suggest that this has gone too far and that Congress has abdicated its oversight role. And I thought I would ask you to react to that. Is that what you think?

MR. WALKER: Well, first, thanks for inviting me back, Tim. To answer your question, history shows when one party controls the Senate, the House and the White House, irrespective of which party it might be, it's generally not good for transparency, accountability and fiscal responsibility. And as a result, to the extent that we've had one-party control in recent years, it has not been conducive towards maximizing those three elements. It's not that there hasn't been oversight; there has been oversight, and in fact, some committees and subcommittees have been pretty dedicated to oversight, but those have been the exceptions rather than the rule.

And we do have a balance of powers concept in the Constitution, but there's a reason that the Congress is Article I. There is a reason that the Congress is on a hill. And, yes, you can't manage a country by committee, but the Congress was envisioned by the founding fathers as being the branch that is most representative and is the closest to the people. And I think that things have gotten out of kilter and it's time to bring them back into balance.

MR. CLARK: Well, the Bush administration now has been in office since 2000, and during that period, the Senate was in Democratic hands for about 18 months. But other than that, it's been a Republican control of both chambers. Did it make a difference when the Senate was Democratic back in - or is it too long ago to really remember that?

MR. WALKER: I think that during that period of time I don't think there was a significant change. We're talking about a fairly short period of time. As you know, any time there is a change of control, it takes a number of months in order for things to be able to get in shape as to who's going to be in charge, which staff are going to be involved, in setting the agenda. As you can probably recall, back when that change of control happened, it was totally unexpected because what happened was a member changed their alignment, and it wasn't a result of an election. It was a result of a member changing their alignment due to close control.

So I think even in that circumstance, you know, there was a longer transition period. And there's going to be a transition period now, I mean even though it was a result of an election. But the key is, irrespective of who controls the Congress, GAO continues to try to do its work on a professional, objective, fact-based, nonpartisan, non-ideological, fair and balanced manner.

Now, to the extent that you have one-party control, it means we're doing more of the work that could be used for oversight than otherwise the committees might be. When you have divided government, it means in addition to GAO, you can have work being done by the committee in a more aggressive manner than otherwise might be the case.

Last thing: It's important to do oversight, but it's also important that it be constructive oversight. This slash and burn oversight is not good. You know, the public already has lost confidence in government in many ways, and so what's important is that, yes, we promote transparency, we assure accountability, we make sure people are focusing on generating positive results, but not just to focus on the negative. We also have to highlight those agencies' programs and policies that are working and that are generating positive results for the American people, try to understand why they're working, and see how we can highlight that and replicate it throughout other parts of government.

MR. CLARK: So let me ask you on a general level to give us your view of oversight - of the purpose of oversight. To what end should we have oversight? I mean, I think it's obviously good to have Congress reviewing what the agencies are doing, but you strongly suggest in your documents that we should move beyond - that oversight is only the first step and that there are large changes that should be undertaken in the policies and programs of the U.S. government.

So, how do you view oversight? What is the essential purpose of oversight? And has there been any oversight in the past six years that has actually produced the kind of change that you appear to be seeking in your documents?

MR. WALKER: Well, we do three types of work at GAO primarily: oversight, insight and foresight. And my view is congressional hearings are necessary in order to deal with all three dimensions. And the oversight typically is, are people performing the mission that they were given? Are they complying with applicable laws and regulation? Are they generating positive results for the American people? And are they doing it in a fashion that is economical, efficient, effective, ethical, et cetera? That's traditional oversight. But I think that we also need to understand insight: what's working and what's not working, you know, whether it's policies, programs, functions or activities. I think we also have to focus on foresight: you know, what are the emerging trends and challenges that face the United States, its position in the world. How can we try to help better position the country to deliver positive results, to mitigate risk within available resources?

And as you alluded to earlier, a vast majority of the federal government is based on the 40s, 50s and 60s. And that's when the programs were put in, or last had major reforms. And they have - the Congress needs to get in the business of stepping back and fundamentally reassessing, why do we have this? What were we trying to accomplish? How do we measure success? Is it outcome based? Are we successful on that basis? Are we trying to do everything we can to improve economy, efficiency and effectiveness? Is this as high a priority as it used to be? We're not doing that. You know, one of the problems we have is that the United States spends $2.5 (trillion) to $3 trillion a year. It issues tax preferences that result in foregone revenue of about 800 billion a year, and we don't have a set of key national indicators - economic, safety, security, social, environmental indicators to help access our nation's position, our progress, and how we compare to others, and to help inform planning, enhance performance accountability reporting, and facilitate congressional hearings that deal with oversight, insight and foresight.

And that's one of the items, by the way, that was on the list of 36 [oversight suggestions]. We need to work towards developing a public-private partnership to make that a reality. It exists in certain countries. It has an impact. It's about time it existed in the most powerful county on Earth.

MR. CLARK: I might observe that Congress, with its committee structure, has, historically anyway, not been particularly conducive to this kind of review that you're talking about where - you know, where committees are established and the feds become captive of the interest groups that support the programs.

So I'm suggesting that there may be a need for a higher level mandate to force the kind of review and weeding out of old programs that you suggest. What do you think about that?

MR. WALKER: Well, first, the federal government is a lag indicator. I mean, you know, the states are on the front lines. The states are the models of innovation. That's what the founding fathers intended, all right? I mean, localities are closest to the people. So the federal government is a lag indicator. And the federal government typically acts when others fail to act, you know, whether it's in the government or the private sector. That's what we saw with Sarbanes-Oxley. The federal government acted because other players failed to act.

Now, frankly, the Congress is a lag indicator in the federal government, all right? And the reason that the Congress is a lag indicator of the federal government is it's a committee. It's a committee of 435 in the House - maybe going to go up to - and it's a committee of 100 in the Senate. There is nobody in charge of the Congress. I mean, even the leadership in the Congress is partisan leadership. They are leaders of their parties, all right? They have an incredibly important role and function, and we support the Congress because we're part of the legislative branch, but you don't have a single CEO like you have in the executive branch.

And so, from a practical standpoint, the transformation has to start in the executive branch, and Congress needs to help facilitate that, encourage that, and provide for enabling legislation as well as accountability for positive results.

Ultimately the Congress is going to have to transform itself because one of the challenges that we have in government, including in the legislative branch but also the executive, is that people tend to be myopic or short sighted and have tunnel vision. They look at their program, their department, their agency, or in the Congress their committee, their state, their district, and we've got to be able to have mechanisms that force us to look long-range in a more comprehensive and integrated fashion because most of the challenges that we face don't have boundaries. You've got to have multiple players involved within government, between levels of government, between sectors of the economy, domestically and nationally, to get results.

So, yes, there is going to have to be some structural changes, and I think we're going to also have to think about what can be done to, for example, mandatory spending. That's on autopilot; 61 percent of the government is on autopilot. We need mandatory reconsideration triggers for programs that are on autopilot. Nothing should be on autopilot. Everything should be forced to be periodically reexamined. Now, not every year necessarily, but periodically it needs to be reexamined in light of the factors that I've talked about because we're not going to be able to sustain the status quo.

MR. CLARK: You talked about mechanisms, and I suppose that if you put provisions in laws that force their reexamination, sunset, or whatever, that's one mechanism. But I think you were also talking about structural mechanisms, new ways of organizational structure -

MR. WALKER: Right.

MR. CLARK: - so that you could think more long range. I wonder whether you have any thoughts about what kind of structure that might be.

MR. WALKER: Well, I think one of the things we have to do is - I mean, take homeland security. You have many, many different committees that have a piece of homeland security. And I think that one of the things we're going to have to do is Congress is going to have to reexamine, you know, what's the best way for it to organize itself in order to make sure that we maximize the chance of success in homeland security, but that we're also focusing on people doing their job while periodically coming up and being held accountable to make sure that they are doing their job. So that's an example.

And Congress is not organized in a way to really do strategic planning. And, quite frankly, that's why we're that much more important. In all candor, GAO didn't have a strategic plan until 2000, and our strategic plan is a strategic plan to serve the Congress, but it's also a plan for the Congress to be able to focus on the issues that I've talked about before: oversight, insight, foresight across government. And in candor, the executive branch still doesn't have a strategic plan, which needs to happen, at least on the management side. You know, there are a lot of good things going on, but there's nothing that takes the place of a strategic, forward-looking, cross-cutting and integrated plan that provides a vision of a way forward, metrics milestones and accountability mechanisms to make sure that people are pulling the oars in the same direction.

MR. CLARK: If the executive branch were to decide to produce such a plan, would it be possible to do it in the existing structure of the White House Executive Office of the President, OMB, et cetera, or would you need a new institution there, say an office of federal management or some other new organization?

MR. WALKER: I think OMB could do it. I mean, a good first step would be to have a strategic plan for transformation of government dealing with the management issues. I mean, that's a good place to start. Let's face it: You know, while we have a number of policy related challenges facing the country - you know, we have elections, and when we have elections, whoever gets elected as president is going to have a major impact on what the relevant priorities are going to be.

And so I think we have to recognize that reality, and that has to be input into whatever cycle might exist for a policy-oriented strategic plan from the executive branch. But on management, those aren't inherently partisan issues. They really shouldn't be ideological issues, and that's something that, quite frankly, we need to maintain momentum, not only within administrations when there are changes in players, but between administrations, which we know by definition it's gong to happen.

And so I think we could start with that. And I've talked to Clay Johnson about it, that that might be one of many legacies that could happen to try to help maximize the chance that momentum will be maintained, you know, when the administrations change - not if but when administrations change.

MR. CLARK: Let's talk a little bit about fiscal affairs. That's been a major theme of yours for some years, and you've been having this terrific fiscal wakeup tour, which I'd like you to tell us about, but first, Rob Portman, the current OMB director, has said recently that the budget can be balanced by 2012. True or false?

MR. WALKER: It is possible to balance the budget by 2012, but that's not the problem. The problem is that, irrespective of what we do dealing with short-term deficits, we face large and growing structural imbalances over the longer term, due primarily to known demographic trends and rising health care costs. And let me give you some numbers that will put this in perspective. This is why I come back to myopia and tunnel vision. The last two years the deficit has come down somewhat. It's still imprudently high - no doubt about it. There is no way you can defend, with a straight face, the size of operating deficits that we've been running in recent years because we haven't been in a recession since November of 2001. We've had among the strongest GDP growth rates of any industrialized nation on Earth, and most of the deficit doesn't relate to Iraq and Afghanistan. But if it did, you could understand it, but it doesn't, all right?

So you can't defend what's there. Obviously lower deficits were better than higher deficits, but while the deficits have been coming down in the short term, in the last six years the nation has gone from total liabilities and unfunded commitments in discounted present value dollar terms, just for Social Security and Medicare as well as public debt, civil and military pensions and retiree health care, et cetera - for just those items, basically - from 20 trillion to 50 trillion in six years, and it's going up 2 (trillion) to 4 trillion a year on autopilot. Now, what's $50 trillion? Ninety-five percent of the entire net worth of every American. We're going to pass 100 on our current path within two years.

You know, 95 percent of the net worth of every American. It's about $440,000 per household. The average of the median household income in America is about $47,000. So that means that American families, American households, have an implicit debt of nine times their annual income based on current policies and programs in our current path - nine times. Guess what? That's like having a house - pardon me; backwards - that's like having a mortgage and no house. And the only thing that Americans have, to be able to service that debt, which will have to be serviced over a number of years after dramatic reforms - and it's really going to be their kids and grandkids - is their citizenship. That's all they have.

Now, I would respectfully suggest that being a citizen of the United States gives one unparalleled opportunity to reach their maximum potential to earn. And they're going to need it - (laughter) - on the path we're on.

So my point is is that whether he's right or wrong is really kind of irrelevant. That's not what the problem is. You know, we're headed for a cliff. Let me give you an analogy - the Grand Canyon. I've been there. I've stood on the edge. It is amazing - absolutely amazing. We're headed towards the Grand Canyon in a car at 100 miles an hour. And I would respectfully suggest cutting it down to 50 by the time we get to the edge won't get the job done. (Laughter.) And by the way - by the way, when he's talking about eliminate the deficit, he's talking about the unified deficit - not the operating deficit. The operating deficit is much higher than the unified deficit. You know, last year, for example, the operating deficit was $434 billion, the unified deficit was $248 billion, and the accrual-based deficit was $450 billion. And the only reason it was $450 billion is because we had a significant actuarial gain associated with certain VA programs during the year. Who knows; next year it could be a loss, I don't know.

But, you know, we don't have the right metrics. We don't have the right milestones. Yeah, we want to bring the deficit down, but we've got to deal with the large and growing structural imbalance. And so I'm happy to get into that if you want.

MR. CLARK: And so you allude to that these three different deficits - the operating deficits, the unified deficit and the accrual-based deficit.

MR. WALKER: We have a unified budget deficit, which last year was $248 billion. This is off the top of my head. We [also] have the operating cash-based deficit because the unified budget deficit is largely cash-based. The difference between the operating and the unified - the $248 billion to $434 billion - is overwhelmingly the Social Security surplus. We spend every dime of the Social Security surplus. We've been doing it for a number of years; it's not new. The only time we didn't do it is when we had a real operating surplus, which we did for one or two years in recent years, where we paid down debt, if you will - public debt. And then the third number is called the net operation cost, which is an accrual-based number. It's in the financial statements of the U.S. government, and the biggest difference between that number is it accounts for accrual of military and civilian pensions and retiree health care where people are rendering service today but are not going to get paid for a number of years. Now, there are other differences, but those are the big numbers.

MR. CLARK: And so you could easily argue that the unified deficit, which is the one the president talked about in his talk, is not the best measure of the deficit because we're borrowing money from the Social Security Trust Fund that we're going to have to pay back in the future, correct?

MR. WALKER: Yeah, it represents the core claim on the economy, but I don't think it's the right measure. I think we ought to be talking - if we're talking about a cash-based deficit, I think our goal ought to be with regard to the operating deficit, because guess what? The Social Security surplus is going to start declining in 2009. So government is going to start going through withdrawal. I mean, it's been dependent on theSocial Security surpluses. In 2017, they are G-O-N-E, gone. They turn to deficits. It will be interesting; people will probably want to change how you account for it then. You know, right now it's helping. It's amazing how people want to change things, you know, when it doesn't work for you.

MR. CLARK: So getting back to Rob Portman, we'd have to conclude, given this conversation, that he was false because he cannot balance the operating budget in 2012.

MR. WALKER: No, it can be done.

MR. WALKER: What I'm saying is it's the wrong goal.

MR. WALKER: It's the wrong goal. And Rob - I mean, I was with Rob last week at the latest Fiscal Wake-Up Tour, which you may want to get into, and Rob has acknowledged publicly, and the administration has acknowledged publicly over the last year, I think in large part due to the efforts of the Fiscal Wake-Up Tour and GAO and others, that, look, yes, deficits were coming down the short term; yes, we need to try to continue to bring them down and hopefully eliminate them within a reasonable period of time, but even if we do that, we face these large and growing structural imbalances, due primarily to entitlement programs, spending that's growing faster than it should - based in many cases on outdated programs and policies - and the need for fundamental tax reform, which we could get into if you want.

MR. CLARK: Yeah, maybe in a minute, but if I were to offer you a $10 bet as to whether Rob Portman is going to offer a unified balanced budget or an operating balanced budget?

MR. WALKER: Unified. I mean, you're going to lose your money. You don't want to do that. (Laughter.) I don't want to take your money, Tim.

MR. CLARK: (Laughs.) I was going to bet unified.

MR. WALKER: The answer is it's going to be unified and I don't want to take your money.

MR. CLARK: Which we agreed was not the right measure, so I say it's false. (Laughter.)

MR. WALKER: As long as it's your words, not mine. (Laughter.)

MR. CLARK: All right, let's talk about the PAYGO rules. The House has just adopted a version of them that's not particularly strong, as I understand it. It does not require contemporaneous reductions in spending or tax increases to offset new spending that they might want to undertake. The Senate has not yet acted on this. Give us your take on these PAYGO rules and whether they're really going to mean -

MR. WALKER: Well, first, the House bill, as I understand it, is stronger; in some ways it's weaker than the prior PAYGO rules. But without talking about that, let me tell you what I think we need to do.

We had significant deficits in the '80s and '90s, and one of the things that we did to bring them under control is meaningful budget controls were in place. Those meaningful budget controls included a number of elements: pay-as-you-go rules on both the spending and the tax side of the ledger, discretionary spending caps. We need to bring back both of those, but we need to augment those with additional provisions because we're in worse shape today in the long term than we were back then, and because we're closer to the demographic tsunami of spending hitting our shores, and that's a big issue.

And so we need to supplement what was done in the past with mandatory reconsideration triggers for front-door spending, which is traditional spending, and back-door spending - back-door spending or tax preferences. Those are off the radar screen. They're not part of the budget process; they're not part of the financial statements; they're not part of the periodic reconsideration, reauthorization. They've got to be on the radar screen. They cost money. And we need to understand whether they're working or not, who is benefiting from them, whatever else.

And we also need to make sure that when major tax and legislative and spending proposals are being considered, that there is a mandatory disclosure of not just the one-year, five-year and 10-year cost, on a cash-flow basis, but for items that explode in cost beyond the 10-year horizon and that are big numbers, we need to force disclosure of the discounted present value dollar cost of those items. And I'll give you the perfect poster case for that: Medicare prescription drugs.

Congress decided that it could afford to spend $3 (hundred billion) to $400 billion on Medicare prescription drugs over 10 years when we had a surplus. When the bill passed, we had a deficit. CBO calculated a number. The actuaries at Medicare calculated a number. The actuaries at Medicare's numbers were much higher than CBO's. The Medicare actuary was told he could not disclose it for fear of this job. That was not only ethically wrong; it was illegal, and nothing has been done and nobody has been held accountable.

But more importantly, several months after the bill passed and was signed into law, the Medicare trustees - which I used to be one, and a Social Security trustee from 1995 - issued their annual report, which disclosed the discounted present value dollar cost, how much money you'd have to have today invested at Treasure rates to deliver on the promise for the next 75 years: $8 trillion.

And that was more than Social Security's imbalance What kind of credibility does government have, going out and calling for Social Security reform - which we need and I support, and is easy, quite frankly - when you add burdens that are far in excess of the Social Security imbalance? I mean, there is just no credibility in that.

And so we've got to re-impose what we had and we've got to strengthen them because we're in worse shape and we're closer to hitting the wall.

MR. CLARK: It's safe to say that the Medicare prescription drug Part D program of Medicare would not have passed if the PAYGO rules had been in effect at the time it was considered -

MR. WALKER: No, it wouldn't.

MR. CLARK: - because they would have had to make offsetting cuts or tax increases.

MR. WALKER: Right. I don't think it would have passed had the actuary's number been disclosed, and I feel very confident it wouldn't have passed had the discounted present value dollar been disclosed. And now we've got a situation where people want to fill the donut hole - I think everybody probably knows what I'm talking about, the donut hole - on Medicare prescription drugs, with jelly. I mean, we can't afford the donut. (Laughter.) And you have people here saying, gee, this program is not costing as much as we thought so we ought to celebrate. Hey, we couldn't afford it to begin with. I mean, the fact that it cost 90 percent of what we thought it was going to cost and we couldn't afford it -

MR. CLARK: Well, you know that a jelly donut tastes better than a regular donut.

MR. WALKER: I've got to be honest and tell you that while my wife and I have gone to Dunkin' Donuts after mass on Sundays for decades, that I haven't had a jelly donut in a long time. (Laughter.)

MR. CLARK: Well, I have to confess that I have a weakness for jelly donuts. (Laughter.)

MR. WALKER: Now I know where the idea came from. (Laughter.)

MR. CLARK: They do have good ones.

Right now we are facing another sort of threshold question. We've gotten Medicare Part D and we have the alternative minimum tax, and the alternative minimum tax is high up on the agenda of things that the Congress wants to do at a huge cost if they reduce the burden of the alternative minimum tax on the middle class, and that burden is growing. Can that be done? What's your view of that? Can it be done if you have PAYGO rules? Should it be done at all?

MR. WALKER: Can it be done? Yeah, if you come up with revenues to offset. But, look, I mean, the alternative minimum tax is a perfect example of why government loses credibility, all right? Our tax system is mind-numbingly complex. Most Americans, in good faith, if they sat down and tried to prepare their tax returns by hand without software wouldn't be able to do it. The AMT is nothing more than a bait and switch surtax. I've paid it three of the last four years. I'm not a super-rich person; I'm a public servant, okay?

It was intended to be able to address the super-rich, but because of some of the flaws in the legislation, including the fact it wasn't indexed for inflation, it's now reaching more and more people. We have these temporary fixes. The answer is simple: target it to the super-rich and eliminate it for everybody else, and pay for it by either expanding the tax base and taxing things that otherwise aren't taxed, or adjusting the tax rates to make it revenue neutral. I mean, it ain't rocket science. I mean, that's not raising taxes; that's redistributing the burden.

MR. CLARK: Well, that sounds good to me although an increase in the tax rate would probably be attacked as a tax increase. Tell us about -

MR. WALKER: Well, but that's part of the problem; the rhetoric doesn't match reality, okay, you know, just like all tax cuts don't stimulate the economy and very, very few tax cuts pay for themselves. I mean, that's a fact; it's not an opinion.

MR. CLARK: Mr. Walker held a very interesting fiscal forum - I was privileged to attend in December 2004 in which there were people from the media and pollsters and others, and the consensus coming out of that meeting appeared to be that action to reduce the deficit and improve the fiscal situation would not happen absent external pressure from public opinion and so on. And in the wake of that, David and his colleagues have dreamed up the Fiscal Wake-Up Tour, which is a great name, and have been to I don't know how many cities, but they go out there and they spread the message. So tell us what that's been like and what the reaction has been, whether there has been any follow up after the events in the particular cities.

MR. WALKER: Well, there are a number of actions that have taken place since the December 2004 CG Forum. And we're holding more and more of these forums in order to bring together a range of key stakeholders to find out where there are areas of agreement, where there are areas of disagreement, and to stimulate further action. This was one area; postal reform was another area. I could give you several more examples.

Now, as far as the Fiscal Wake-Up Tour, it is being led by the Concord Coalition, which is a nonpartisan, not-for-profit entity that has existed since the early '90s. And it is an organization that is based in Washington but has field operations throughout the country. I am the leading government speaker. We have speakers from the Brookings - a speaker from the Brookings Institution and the Heritage Foundation. So those are the four: Concord, myself from GAO, Brookings and Heritage.

We have many other organizations that are involved: AGA; AICPA; AARP; Committee for Economic Development; the state treasurers, comptrollers, auditors, et cetera. Many other organizations are involved. But basically what we came to an agreement on was that our financial condition is worse than advertised, that we're too focused on the short term and not doing enough to create a positive future, that we need to help the public understand where we are, where we're headed, the need for action, the consequences of inaction because the public ultimately has to either force or enable elected officials to make touch choices without them losing their jobs, all right? We've been to 15 cities, the latest being in Columbus, Ohio where former Senator John Glen and Rob Portman join us. We're going to Iowa on February 1st. We're going to New Hampshire later in February. We're going to South Carolina.

If these sound familiar, they are early caucus and primary states because one of the objectives is to maximize the chance that any serious candidate for the presidency has to deal with this issue in specifics, and to maximize the chance that whoever is elected president will have to make fiscal responsibility a priority. That's what Ross Perot did in 1992, you know, with Bill Clinton, and it worked. And we're not counting on Ross coming back or anybody else running, but I think that there is a lot that can be done through coalitions to get it on the agenda, and that's what we're doing. And I can tell you, it has made a difference. There is a difference in the tone and tenor and actions in Congress, and there is a difference also in the executive branch.

MR. CLARK: And so these tours have featured a fair amount of media coverage, correct? The newspapers have -

MR. WALKER: Typically in each city what we do, Tim, is in addition to a town hall meeting, which is typically held on a college campus because young people - we're trying to get young people involved because they're the ones who are going to pay the price and bear the burden if changes aren't made. We typically have a business and community leaders event - either breakfast or lunch. We typically do some media. We meet with the editorial board of one or more major publications in the city. And so there are multiple events that happen on a given day. It's a blitz.

And then there is an effort now to try to see if we can get some of the leaders from those 15 cities and then future cities to have follow-up forums, and we're doing things with Public Agenda and a few other groups to try to facilitate citizen interactive potential solutions at a fairly high level to this so we can then take that information and use that to help build the case for more timely reform.

MR. CLARK: And members of Congress have been involved?

MR. WALKER: Well, in some places. I mean, for the most part we've done it without active elected officials. If we ever have active elective officials, it's got to be bipartisan. We won't do it unless it's bipartisan because we're committed to professional, objective, fact-based, nonpartisan, non-ideological, fair and balanced approach. Does that sound familiar? (Laughter.)

MR. CLARK: Your November 17th letter to Congress suggesting many areas for oversight was developed earlier than the election, and we're told that it was going to be forwarded to Congress no matter which way the elections went. Now you've got, of course, a Democratic Congress, new people, divided government, more chance to really get it done. Then, on January 2007, just this month, you sent up a second letter, quite a detailed list of oversight issues for Iraq, which I guess was undertaken after the election and perhaps in the knowledge that Democrats were coming in and seriously wanted to look at the Iraq policy. I don't want to put words in your mouth, but let me read two paragraphs from the introduction to that:

"Increasing Iraqi security forces and transferring security responsibilities to them have not resulted in reduced violence, rather a tax increase throughout 2006. Although more Iraqi troops have been trained and equipped, high absenteeism and divided loyalties have limited their overall effectiveness." And then you go on a little bit later to say, "Congress and the American people need complete and transparent information on the progress made toward achieving U.S. security, economic and diplomatic goals in Iraq to reasonably judge our past efforts and determine future direction," thus suggesting - if I'm not putting words in your mouth, which I will - that they haven't been getting transparent information on these items.

And you list several different categories of areas for oversight: strategy and costs, security conditions, governance challenges, reconstruction challenges, U.S. military readiness, and improving acquisition outcomes. So this is a very ambitious agenda.

Now, on page 12 of this document, you ask some pretty pertinent oversight questions: What is the desired end state of U.S. involvement in Iraq? How long and at what cost will it take to achieve a peaceful, stable and secure Iraq? And then a few more along those lines. These are questions that are top of mind in the American public, of course: If the president suggests a troop increase, what would be the mission of the additional troops? How long would they stay? How would the success of the mission be measured? What additional costs would the United States incur? And to what extent does the administration's revised strategy integrate the input and resources of the Iraqi government?

These are questions that are being asked now, I guess, and I'll want to ask you how you conceive of your role here -

MR. WALKER: Sure.

MR. CLARK: - in guiding congressional oversight, which to some extent is already happening of course with hearings with Gates and Rice and so on.

MR. WALKER: Well, first, we've issued about 73 reports and testimony dealing with Iraq since 2003. You know, I've been to Iraq twice myself. We've had teams go in and out of Iraq periodically. We're looking to establish a more recurring presence there in the near future. My son fought in Iraq with the Marine Corps.

Secondly, number one item on the second category of the November letter on oversight dealing with policies and programs that are in need of fundamental reform and reengineering dealt with Iraq. That's the number one item. The number one issue on the minds of Americans, arguably, in November was Iraq. At the same point in time, as I said before, while we need additional oversight, we need to try to take steps to make sure it's constructive and it's informed oversight. And so therefore, I made the decision that our people needed to pull together - and they did a great job, I might add; all these documents are on our website - of pulling together a compendium of all the work that we've done across all these different dimensions, and in recognition that there were going to be oversight hearings for us to be able to make a contribution of pulling together all the work that we've done and suggesting certain questions that need to be asked and answered in order to facilitate effective and constructive oversight.

We've given Congress a tremendous amount of information on Iraq since 2003, and for the most part, we've received cooperation. There have been occasions where we haven't gotten things as quickly as we would like, and there's one case now where we have a serious problem, which I've already talked to the deputy secretary of Defense about, which needs to get resolved, and that has to do with something called transitional readiness assessments.

What these are is these are our assessments of the readiness of Iraqi forces. We do the same thing on our own forces, and we get access to them all the time and report on them all the time.

MR. CLARK: You do - GAO does?

MR. WALKER: GAO does. In fact, I just saw the latest version yesterday.

We are seeking access to the same information for the Iraqi forces. We clearly have a statutory right to it, but we have not yet gotten it - part of the DOD bureaucracy I think. There are differences of opinion in there. And quite frankly, I think one of the reasons we haven't gotten it is just some embarrassing stuff in there.

MR. CLARK: That they don't want let out.

MR. WALKER: I mean, you just can't go by how many people you've trained, all right? Of the people that you've trained, how many are left? To what extent do they have a loyalty to the unified government of Iraq? To what extent are they adequately equipped? To what extent do they have appropriate support? I mean, there are some - frankly, most of the questions in that document are management 101.

MR. CLARK: And so you have had no reports at all on the readiness of the Iraqi forces?

MR. WALKER: We have received high-level briefings, you know, which are helpful but not adequate. And I have an agreement in principle with the deputy secretary that we're going to get it. I mean, I had an agreement in principle for several months but we just haven't gotten them yet.

MR. CLARK: So you've had this agreement for a month and it hasn't happened?

MR. WALKER: Right. DOD is a pretty big bureaucracy. I mean -

MR. CLARK: Yes, but it takes a decision by one person to make it happen, correct?

MR. WALKER: In theory.

MR. CLARK: Yeah. When you do get it, you'll make it public?

MR. WALKER: No, no, these are classified.

MR. CLARK: They're classified.

MR. WALKER: Yeah, there is no doubt that this is going to be classified information, but we will make it available to the Congress, all right? And the question is is whether and to what extent we can have a public version. That's obviously something we always seek to do to the extent possible. I mean, one of the things that we've been pushing on - and now DOD I think has done a much better job - is, you know, the monthly attack reports. We've been pushing to get those released - declassified - on a monthly basis.

MR. CLARK: Correct.

MR. WALKER: And that says a lot. And at first there was a reticence to do it, but now there is more cooperation. Look, this stuff is going to get out, you know?

MR. CLARK: Yeah.

MR. WALKER: I mean, you're much better off to give it to us where you're going to get professional, objective, fact-based, nonpartisan, non-ideological, and hopefully fair and balanced, than having to deal with 10 different committees in the food fight that otherwise might end up happening.

MR. CLARK: I was going to ask you, actually, about those very reports because my understanding is that the Defense Department will not and does not release data on a number of attacks that happen in Iraq, and there's a very interesting chart on page 24 of the GAO's Iraq letter. It's right here and it shows that the number of attacks subdivided between attacks on Iraqis, attacks on American forces, and attacks on coalition forces have risen in the past year from 3,000 to 5,000. And of course these attacks don't represent casualties; the casualties are higher obviously.

But the Defense Department will not release this data to the public but it will release it on a quarterly basis, as I understand it, to GAO, which then in turn releases it to the public in this form. Is that correct?

MR. WALKER: Well, they are releasing it in a more timely manner there. They had been releasing it quarterly. We're seeking for it to be released monthly. And it does get to the public through our reports. I mean, so the public does ultimately gain access; the question is how quickly and through what means.

MR. CLARK: It seems that it's common knowledge, or at least common opinion, that the Iraqi forces are not particularly ready to take over, and they don't have the equipment, they don't have the leadership; there is absenteeism, there's sectarianism, there's the Mahdi army embedded in the Iraqi army and all that. Have you reached any conclusions along those lines in your work on Iraq or not?

MR. WALKER: Well, I would rather that our work speak for itself, and I think we're not going to reach full conclusions until we get access to the transitional readiness assessments. I think it - I don't want to presuppose what's in there. I have a pretty good idea what's in there but I don't want to presuppose it.

Let me just say this - I mean, I meet with my counterpart from Iraq fairly frequently, and I've met with him over there and he's met with me over here, and we've met within the last month on issues, and I try to get his insights on issues as well. But I think the bottom line is is that the situation in Iraq is a challenging situation. We clearly have to change course because our present course has not been achieving the results that have been desired. But to me there's little doubt that the situation in Iraq in many ways is worse than a civil war, and the reason that I would say that is - I'll give two examples.

Typically in a civil war, you can identify the sides. They either wear uniforms, they have banners; they have some type of identification. Such is not the case in Iraq. Secondly, typically in a civil war, you have two sides. Such is not the case in Iraq. There are many different sides. I mean, I think it is possible to succeed, you know, based upon a reasonable definition of success in Iraq, and I think we need to make efforts to try to be able to do that. But I don't think we should kid ourselves. I mean, ultimately the Iraqis are going to have to be in the lead. We should be in a supportive role because one of the things that public opinion in Iraq is broadly behind is getting us out, rightly or wrongly. An overwhelming percentage of Iraqis want us out, rightly or wrongly.

And so the fact is that we're going to have to figure out how we can do things differently in order to maximize the chance of success and maximize the chance that the Iraqis will be in the lead, the Iraqis will start delivering results, because it's not just security; security is fundamental, but it's jobs, it's potable water, it's reliable electricity, it's picking up the trash. I mean, these are basic, fundamental things that, frankly, whether you're an American or an Iraqi or British or whatever you care about. I mean, they're pretty fundamental things. And the Iraqi government hasn't been able to deliver on these.

And we're going to need more international support, too, at least in the capacity building standpoint. I don't think it's realistic we're going to get it from a military standpoint, but from a capacity building standpoint, there's a tremendous opportunity for the international community to help the Iraqis help themselves to be successful, and I think more needs to be done there.

MR. CLARK: And one of these oversight questions - let's return to it for a second - if the president suggests a troop increase, what would be the mission of the additional troops? Do you think that that question has been answered yet?

MR. WALKER: Not sufficiently. I mean, I think clearly at a high level it's to secure Baghdad. But then part of the issue is how are you going to go about doing that, and how are you going to define when that's been achieved? And the key is is not just whether or not it's been achieved; can it be sustained? Because there have been circumstances in which we've achieved short-term results - kind of like deficit reduction - but we're not able to sustain it with regard to the longer term. Ultimately you've got to be able to sustain it or else it's not a real success.

MR. CLARK: Let's turn for a moment to the November 17th letter, which has many, many, many suggestions for oversight, and just quickly run through a few of them.

One of them is, "Address government-wide acquisition and contracting issues, and among topics needing congressional oversight, one is to require agencies to report on mechanisms in place to ensure that contractors are playing appropriate roles and that agencies retain a sufficient workforce capacity to monitor contractor cost, quality and performance." And then another would be to "require agencies with significant acquisition budgets - DOD, NASA - to better align requirements, budget, and acquisition processes to reconcile the differences between wants, needs, affordability and sustainability, given current and future demands and resources."

So would it be fair to characterize that as saying that you are worried both about the adequacy of resources that are needed to fulfill procurement promises that have been made and, B, that you're worried about oversight of the contractors?

MR. WALKER: Well, there are several dimensions. First, government-wide contracting and acquisition issues are all on our high-risk list, have been on our high-risk list. It's probably a pretty - a safe bet it's probably going to stay on our high-risk list for the new one that comes out on January 31st.

It's a multidimensional challenge. On one hand, what do we hire contractors to do? There are many circumstances where it makes very good sense to hire contractors, but there are many cases where we're hiring contractors because it's the quickest and easiest way to get something done, all right?

We've gotten to a situation now where when you can go to meetings in certain departments and agencies, you don't know who the contractor is and who the employee is. Lines have blurred tremendously between who's responsible for that. That's a problem.

Secondly, even when it makes sense to contract something out - and there are many circumstances in which it does, no doubt about it - you need to have an adequate number of civil servants who can oversee cost, quality and performance. And if you don't, everybody is going to get in trouble. The government is going to get in trouble, the contractor is going to get in trouble, and the taxpayers are going to pay a price.

You know, we do not have very good visibility over what all contractors are doing, including in Iraq. I mean, census has estimated that we have 100,000 contractors in Iraq. I don't know if that's right or not; we haven't done an evaluation or an audit of that. But there are many, many dimensions to the problem. On the acquisitions - for example, weapons systems acquisitions, there is no question there is no way we're going to be able to afford everything that everybody wants. And sooner or later somebody is going to have to make some choices about where we're going to end up applying our limited resources to deliver as much as we can to meet our national security strategy, support our troops, et cetera, because the systems are such that we keep on wanting to buy a lot of wants rather than focusing our resources on true needs that are affordable and sustainable over time.

And so what ends up happening is you get a lot of wants but you don't get enough needs, when the crunch comes. But there are many, many different dimensions, and in fact, one of the things I've recently done is I provided to the Department of Defense, the top leadership there, as well as to the Hill, a list of 15 systemic problems with weapons systems acquisition. There's systemic, and they've been there for years. I mean, they're not new, they're not just this administration; they've been there for years, but there are issues that need to be tackled one by one, and in order to be able to do that, it's going to take years, and among other things it's going to take a chief management official.

MR. CLARK: I take it that you think that DOD management structure and systems are totally inadequate.

MR. WALKER: Look, I mean, a lot of great people at DOD. There's a lot of good things happening at DOD. People are committed. I mean, people are doing the best that they can. But let me tell you, DOD has by far the highest number of high-risk items, individually and as part of government-wide as any agency in government. It's got 14 out of 26. DOD was created in 1947 - 14 out of 26. Many of them are going to take years to be able to effectively resolve. We need somebody, among other things, focused fulltime on business transformation, which provides continuity within and between administrations on good governance issues. You know, we need a pro with a proven track record of success, with a term appointment - I'm saying seven years; some people have said five - with a performance contract that is not a new layer. This person would not be a new layer; this person would be the focal point working with the undersecretaries, working with the service secretaries and others on the business transformation challenges.

And, you know, we desperately need that. I mean, right now you don't have somebody who you can point - push the belly button, as they say in the Pentagon. I mean, whose belly button are you going to push? And there's a lot of really good ideas they've come up with, but implementation is 90 percent of the challenge. You can come up with great ideas, but if you can't get them implemented, it doesn't make any difference. And this is a key part: implementation.

The good news is the Defense Business Board has endorsed our recommendation. McKinseyhas endorsed it - not just at DOD but broader. And I'm still waiting to see the report by the Institute for Defense Analysis [due soon] that is rumored to recommend something along these lines as well. And I think the administration is going to have to decide, do they want to have the first CMO at Defense? This could be part of the legacy. Do you want to have the first CMO? Because if you do, you better do it in '07 because you're not going to get it in '08.

MR. CLARK: Yeah, it would take a statute, I assume.

MR. WALKER: Yeah, but the problem is not on the Hill.

MR. CLARK: The third area: "Ensuring the safety and security of all modes of transportation and the adequacy of related funding mechanisms is the first topic for oversight. Alternative mechanisms to increase revenues for infrastructure improvements, including user fees and alternatives to stimulate private investment."

I think you probably think - but I want to ask you - that there has been massive amounts of underinvestment in public infrastructure in the past generation or two. Is this - do you agree with that, and is this a key thing that needs a federal solution, or does it need action at all levels of government, and what do you think about that?

MR. WALKER: Well, first, there's no question that we have a lot of deferred maintenance, and there's a lot of questions - there's no question that there are increasing infrastructure challenges in our country. It is not just a federal issue; it is a state and local and a private sector issue as well.

There is also no question that some of our current funding models for transportation are not sustainable, for a variety of reasons. And so it's something that we need to take a look at. The federal government has a role to play, but other players obviously have roles to play as well.

MR. CLARK: Right. But the federal government can lead.

MR. WALKER: Yes, it can start looking at its own programs that it has right now. I mean, it can do that, and it needs to do it more strategically, more long range, more comprehensively. Even in transportation there is a tendency to look at, well, gee, let's look at aviation, different from surface - you know, we need to start looking at things more comprehensively, not just with regard to that, but when you look at transportation, it's not just economic; it's environmental, it's congestion - I mean, there are just many, many different dimensions that we just need to start pulling together on these public policy challenges better than we have been in the past.

MR. CLARK: "Review the effectiveness of strategies to ensure workplace safety." You write, "Now more than ever it is important to find the right balance between ensuring the safety and health of workers' and employers' needs to increase productivity in an increasingly competitive global environment."

Workplace safety - is this a topic that's just plain been ignored in recent years and -

MR. WALKER: I wouldn't say it's been ignored. You know, I wouldn't say that at all. I mean, it's an area that deserves attention - additional attention. And I think the other thing you have to understand is the nature of the workplace has changed fundamentally to reflect the change in our economy. I mean, we're now a knowledge-based economy primarily. And plus, the nature of work has changed. I mean, you know, take GAO. I mean, we have a lot of people that telecommute, you know, and then you raise all kinds of different workplace issues, not just with regard to safety but computer security and all kinds of others issues.

So, you know, there have been dramatic and fundamental changes in the economy, in the workforce and in the workplace. You know, safety is only one dimension that needs to be looked at in that context, but there are others that need to be looked at as well.

MR. CLARK: You have a section on recovering and rebuilding from catastrophic events. You say one topic for oversight is to "ensure that leadership roles, responsibilities and authorities are clear, well-communicated and understood, and the capacity of the nation to prepare for, respond to, and recover, rebuild from catastrophic events is effectively assessed and exercised." We've had a Department of Homeland Security and an executive branch at work on this kind of thing, especially in the wake of Katrina. I take it that you don't think that that's been effective so far.

MR. WALKER: Well, no, I think - well, clearly everybody knows about Katrina, and there are some, you know, departments and agencies that performed in an exemplary manner and there are others that didn't, okay? And we've issued a number of reports dealing with Katrina. We're trying to go beyond Katrina. We're trying to talk about catastrophic events. There are different kinds of catastrophic events. One kind of catastrophic event is a natural disaster, like a hurricane. Another type of catastrophic event is a manmade terrorist attack, okay? Another type of catastrophic event is war, all right, like in Iraq. There are a number of - which, by the way, technically is not a war because Congress hasn't declared war, but that's a different story.

You know, one of the things we have to recognize is that irrespective of the nature of the catastrophic event, we ought to be doing a lot more advanced planning. We ought to be doing a lot more advanced contracting arrangements. You know, for example, we know hurricanes are going to happen. We know earthquakes are going to happen. We know floods are going to happen. We know that there are periodically going to be military conflicts of varying size and varying locations for varying reasons. Why don't we enter into advanced contracting arrangements where you can draw down on task orders so that when you're in a pinch - you know, you can get what you need at a reasonable price rather than waiting to enter into all these things when the taxpayers have no leverage and when everybody is trying to do whatever needs to get done. I mean, it's just common sense.

And so that's an example of some things that we ought to be doing more.

MR. CLARK: On reforming the tax code, you suggest that Congress consider establishing a bipartisan commission to examine options for entitlement transformation and tax reform issues. Why do you think a commission is needed?

MR. WALKER: Look, I believe very, very strongly that we need to do several things. We need to improve transparency, both from a financial reporting as well as from a budgeting standpoint. Secondly, we have to re-impose meaningful budget controls and strengthen those controls. And number three, we have to reform entitlement programs, reengineer and reprioritize the base of spending, and we need to engage in comprehensive tax reform in ways that will not undercut economic growth but will raise more revenues. We need to do all of those.

COMMENTS

• I dont care if Social security goes broke as long as the wealthy and wall street does not get one dime of FDR's money. I am tired of Wall St. and the proxies of the wealthy who resent the non-wealthy of being able to retire, telling us how to manage our money. Its corporate welfare who is bankrupting the social programs in america. The military industrial complex is using this nation as a slush fund to enrich themselves by crying that the sky is always falling; while their companies look for ways to avoid paying taxes. What america is not told about Cuba is that it was used as a tax haven by the wealthy to avoid paying taxes in America. The military was used has a collection agency in the alleged bay of Pigs to save the elite like the Bush family who lost money in their investment in US Rubber in Cuba. matt Hood Posted July 7, 2007 9:58 PM
• Dear Mr. Walker: You go around rantting about the United States living beyond its means, but you never say that one of the main causes is the Federal Reserve. If we printed our own money we would not have to pay interest on the money we use nor would we have a national debt over time. John Bisese Posted July 8, 2007 8:41 PM