Thursday, February 24, 2005
Mr. Lawrence: Good morning and welcome to The Business of Government Hour. I'm Paul Lawrence, partner in charge of the IBM Center for The Business of Government. We created the Center in 1998 to encourage discussion and research into new approaches to improving government effectiveness. You can visit us on the web and find out more at www.businessofgovernment.org.
The Business of Government Radio Hour features a conversation about management with a government executive who is changing the way government does business.
Our special guest this morning is David Walker, Comptroller General of the United States, and head of the Government Accountability Office.
Good morning, David.
Mr. Walker: Good morning. It�s good to be with you again, Paul.
Mr. Lawrence: Thank you for joining us. And also joining us in our conversation from IBM is Al Morales.
Good morning, Al.
Mr. Morales: Good morning, Paul.
Mr. Lawrence: Well, David, let�s start by talking about GAO. Could you tell us the history of the Government Accountability Office, the vision and the mission?
Mr. Walker: Well, the GAO has been around since 1921. We are a legislative branch agency; we were created the same time of the Bureau of Budget, which is now called the Office of Management and Budget. And initially, we were called the General Accounting Office, but now we�re the Government Accountability Office.
Mr. Lawrence: And how do you describe its size in terms of its budget? And you know, I'm interested in the skill set of the employees.
Mr. Walker: Well, we have about 3200 employees; 70 percent of whom are in Washington, D.C. The balance are in 11 other cities around the United States. Our budget is about $460 million a year, and the skills and knowledge is very diverse. You know, candidly, we probably have about the most diverse array of skills and knowledge of any organization in the world.
Mr. Lawrence: And what I always find interesting is, who do you report to?
Mr. Walker: The answer is I report to the Congress, but no one particular individual. As you know, there are 100 members of the Senate, 435 members of the House, and we do have an Oversight Committee in the Senate and the House. In the Senate, it�s Senate Homeland Security and Governmental Affairs; in the House, it�s House Government Reform, but there isn�t a single person that I report to.
Mr. Lawrence: You mentioned in your answer to the last question that GAO has just changed its name. Why was the name changed?
Mr. Walker: Well, there are a number of reasons. Number one, we were not in the accounting business; we�ve never been in the accounting business, and so the word "accounting" was not reflective of who we are and what we did. And it caused confusion with regard to recruiting; it caused confusion with regard to new members of Congress, with regard to new Cabinet-level officials who have never been in Washington before. And so my view was, and it was shared by a vast majority of the people within GAO, is that we needed a name that more accurately reflected who we are and what we do.
And we have three core values: accountability is who we are and what we do; integrity is how we do it; and reliability is how we want the work to be received. So we went from the General Accounting Office to the Government Accountability Office, which enabled us to maintain our brand acronym, which is GAO.
Mr. Morales: David, what are the specific roles of the Comptroller General of the GAO?
Mr. Walker: Well, I am the Comptroller General of the United States and head of the GAO, and as Comptroller General of the United States, I am the de facto chief accountability officer of the United States, and obviously, the CEO of the Government Accountability Office.
Mr. Morales: Great. That�s a very large responsibility. Can you describe the previous positions and experiences that you had prior to being appointed to the Comptroller General?
Mr. Walker: I�ve had about 20 years in the private sector with PricewaterhouseCoopers, that should sound familiar, and also with Arthur Andersen, as well as in consulting with an international consulting and executive search firm. I also have had positions in the executive branch. I was head of the Pension Benefit Guarantee Corporation, Assistant Secretary of Labor for Pensions and Health, and also served as trustee of Social Security and Medicare while I was with Arthur Andersen, so a pretty balanced public and private sector background, more private sector than public, but by the time I get done with this job, it will be about half and half.
Mr. Morales: Can you describe to us how the experiences you�ve had in both the public and private sectors help shape your current role?
Mr. Walker: I think there�s no question that my experiences both from the public and the private sector have helped me to be more effective in my current job. You know, there are a lot of transferable knowledge and skills that you can get between sectors, but there are some important differences between the sectors, too. One of the things that I know -- that when my position was open, and when I was competing with about 59 other people for appointment, that there were a lot of people who were involved in the appointment process who really wanted somebody who had both public and private sector experience, who had a proven track record of success in both sectors; recognizing that you need new ideas, you need people who are coming in from the outside who can challenge the status quo. At the same point in time, you need people who understood government and that there were different cultures, and there were very important differences between the public and private sector that you need to be aware of in order to be effective.
For example, in the public sector, you have many more bosses; you have a lot more constraints on what you can do; you live in a fish bowl. And generally, a lot of the top executives, especially in the executive branch, don�t stay in their jobs very long. And so it�s actually much more challenging to be successful in the public sector than it is in the private sector, but that�s a real opportunity as well.
Mr. Morales: You�re nearly halfway through a 15-year term; why does this position carry such a long term, and what are some of the challenges with this type of assignment?
Mr. Walker: Well, my term is the longest of any position in the federal government that has a term. Second place is the Federal Reserve Board; third place is the director of the Federal Bureau of Investigation, the FBI. And the reason being is because the idea is that you want to have at least one person in government who has a long enough term that you can think long-term, and take on complex and controversial issues that may take years to effectively address. And so that�s the reason for the 15-year term.
But I think you have to couple that with the fact that the Comptroller General of the United States can only be removed by impeachment for specified reasons, and so therefore, once you�re in, it�s very difficult to be removed. And that provides you a degree of job security to be able to speak truth to power, tell it like it is, say what you mean, mean what you say, et cetera.
Mr. Lawrence: I know our audience would be interested in terms of the other changes you have been making at GAO besides the name. I think you�ve been involved in a lot of transformation, and in a relatively short period of time. Could you tell us about some of the changes that have been taking place since you took over?
Mr. Walker: Well, GAO has always been a great agency; it�s always had great people and it�s had strong and effective leadership, but one of the things that I found when I came to GAO was that it itself needed to engage in a fundamental transformation of what it did and how it did business. And I gained agreement among our top executives early on in my tenure to a very simple concept: leading by example. Since we were the agency that audits, investigates, evaluates others, my view is that we should be as good or better than anybody else that we audit, investigate or evaluate; we should practice what we preach. And as a result, our people have rallied to that, such that we are recognized externally by others as being the best or among the best in strategic planning, organizational alignment, human capital strategy, financial management, information technology, change management, knowledge management, which helps us do a better job, but also enhances our credibility.
Mr. Lawrence: That sounds like pretty radical change. Maybe you could take us through a couple of steps; I am wondering, sort of, how you got everybody there, because getting people on the same page for change is the first step, and then whether many of the same people continued with you or you had to make some changes in people as well.
Mr. Walker: Well, first, obviously, to the extent that you make significant changes, you have to be able to make a compelling case for change. You have to convince people that the status quo is inappropriate, unacceptable, unsustainable, whatever is the case. And that�s a challenge, but if something needs to be done, it�s especially challenging when you talk about an organization that doesn�t change that much; an industry, government, that, by definition, is fairly rule-bound. You know, fortunately, I was able to make that case as to why we needed to make changes and why it was in everybody�s interest to be able to do that, but as you know, whether you�re in the public sector, private sector or not-for-profit sector, you have to start at the top, and you start with the new people.
And so as a result, I gained agreement of the executives, and during the last six years since I have been at GAO, we�ve hired a lot of new people. In fact, over 40 percent of the people who work at GAO today have come to work since I�ve been Comptroller General of the United States. So by starting at the top and starting with the new people and working to the middle, you can end up achieving a lot in a fairly short period of time.
Mr. Lawrence: Now, I remember once you told me this math, so if I don�t get it right, it�s just from my recollection: that prior to your arrival, GAO�s budget and the headcount had been either reduced or was flat. Could you tell us what�s changed in that area?
Mr. Walker: Well, in the five years before I joined GAO, the Agency was downsized 40 percent, and it had a virtual hiring freeze for about five years. So at the time that I joined, less than five percent of the employees had been with the Agency for less than five years, and so therefore, that was a challenge for a variety of different reasons. You know, we had a development gap in the pipeline, we had succession planning challenges, we had a variety of skills imbalances, et cetera. And so we took that very seriously and took it on to be able to deal with it.
I am pleased to say that since I�ve been at the GAO, the Congress has, I think, treated us well. I think they�ve treated us as well or better than others, and what I have tried to do is to make sure that we have modest budget requests, that we don�t try to build up the base and try to just ask for what we think we need; don�t play games on the budget; and generate a very, very strong rate of return, or return on investment. Last year, our return on investment was $95 to one, an all-time record, number one in the world; nobody�s even close.
Mr. Lawrence: How did you engage the Congress of the United of States? In a previous answer, you told us there�s 535 individuals. I mean, how did you do that?
Mr. Walker: Well, you obviously have to be able to respect the views of every single member of Congress, no matter how long they�ve been there and whether or not they�re a freshman, or -- you know, where they�re from and what committees they�re on. And at the same point in time, you spend a disproportionate amount of time with the leadership of the Congress and the chair and ranking members of various committees; in particular, the committees that are our oversight committees, the ones that I mentioned before. So one has to end up allocating your time, you know, strategically, and that�s what I�ve tried to do.
Mr. Lawrence: It�s interesting, especially when you think about your comment earlier about not having a boss.
What are the challenges of the 21st Century, and what do they mean for citizens and government? We�ll ask David Walker of the GAO to take us through this when our conversation about management continues on The Business of Government Hour.
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning�s conversation is with David Walker, Comptroller General of the United States and head of the Government Accountability Office.
Also joining us in our conversation is Al Morales.
Well, Dave, according to the GAO report, Challenges of the 21st Century, that just came out recently, where are we headed now as a nation in terms of fiscal conditions?
Mr. Walker: Paul, it�s not a pretty picture. Last year, we had an operating deficit of over $560 billion; we had a unified deficit of over $400 billion.
Of that unified deficit, less than 25 percent had anything to do with Iraq, Afghanistan and incremental Homeland Security costs, and yet we had strong economic growth. But more importantly than where we were last year and where we are this year is where we are headed. We face large and growing structural deficits due primarily to known demographic trends, namely the retirement of my generation, the baby boom generation, and rising health care costs. And it�s a serious problem; it�s getting worse, and we need to start doing something about it.
Mr. Lawrence: Can you take us a little bit more through the problem of deficits? I mean, how does it affect government programs, and its impact on the American citizens?
Mr. Walker: Sooner or later, you have to be able to match your revenues with your expenses. And right now, what�s going on is we are mortgaging our children and grandchildren�s future, because we are not matching revenue with expenses. There is no free lunch, and ultimately, the crunch will come, and that crunch will come in the form of significant increased budget pressures on existing government programs; significant additional pressures for higher taxes; which could have, you know, adverse economic growth consequences. And ultimately, we�re talking about, you know, our competitive posture and the quality of life of Americans in future years.
Mr. Lawrence: Before I ask you about your recommendations, I�d like to drill a little bit further into what would it look like if the conditions continue, I mean, sort of, unabated? I mean --
Mr. Walker: Well, we run several simulations, long-range budget simulations, several times a year at GAO; we�ve been doing that since the early 1990s. And depending upon whether you want to go with an optimistic or pessimistic scenario, the bottom line is, even under the optimistic scenario, we face large and growing structural deficits that we�re not going to grow our way out of. Under the pessimistic scenario, we could be doing nothing more than paying interest on federal debt by 2040, 2042. That�s obviously not an acceptable outcome. I think the likely scenario is between the optimistic and pessimistic, but the bottom line is this: we face large and growing structural deficits that are too great to grow our way out of, and tough choices are going to be required.
Mr. Lawrence: In terms of those scenarios -- and maybe you can help me calibrate them -- one expectation of the future is the quality of life increases. If we were to reach a point in the pessimistic scenario where we were just paying interest, would that mean the quality of life would be equal to a period of time in the past? Is that kind of what we�re taking about?
Mr. Walker: Well, realistically, what we�re talking about is you�re not going to be in a scenario where all you�re doing is paying interest on debt. If you don�t end up restructuring the base of government, the likely outcome to that is tax levels that are two and a half times as great as they are today. Well, think about, you know, if your federal taxes went up -- you know -- two and half times what they are today -- by the way, that doesn�t count state and local, which also face, you know, challenges as well in the out years. And so that, obviously, would have a significant adverse effect on economic growth; it would have a significant adverse effect on quality of life issues. And right now, you know, the miracle of compounding is working against us. Debt on debt is not good, and time is working against us, and so it�s important that we act soon.
Mr. Lawrence: All right, now let�s go to the recommendations. What were some of the recommendations to turn the current situation around?
Mr. Walker: Well, in our report, we recommended the fact that we need to increase the amount of transparency with regard to where we are from a financial and fiscal standpoint. That means revising and enhancing current financial reporting. It also means revising and enhancing reporting dealing with the budgetary process. We�ve recommended a number of budget process reforms; to reconsider PAYGO rules on both the spending side as well as the tax side; to look at some type of spending caps; to look at triggers for mandatory spending that would prompt needed action by the Congress because now we�ve got a situation where over 60 percent of the budget is on autopilot, and it�s growing every year. And so there are a range of proposed possible reforms that we lay out in the report as a beginning.
Mr. Morales: David, in a keynote address, you mentioned that key indicators can help inform strategic planning, enhance performance and accountability reporting, and improve decision-making. Can you describe to us what these key indicators may be, and what ways the U.S. can adopt these key indicators at a national level?
Mr. Walker: Well, Al, it�s amazing to me that the U.S. Government that spends, or will spend in fiscal 2005-2006, about $2.5 trillion, does not have a set of key national indicators in order to be able to assess our nation�s position and progress over time, and relative to other countries. Other countries have this; some states and local and localities have it, and we need a set of outcome-based indicators, a dashboard, a portfolio, if you will, of indicators that deal with economic, safety, security, environmental, social indicators, in order to do just the three things that you said: to help inform strategic planning; help enhance performance and accountability reporting; and help to facilitate that baseline review that we�re talking about in the 21st Century Challenges Report, that needs to be undertaken.
Mr. Morales: You mentioned other countries. What other countries have these national indicators?
Mr. Walker: Well, some examples would be the United Kingdom, Australia, Canada, and New Zealand, as well as the European Union.
Mr. Morales: You mentioned in the 21st Century Challenge Report the need to engage in a baseline review of the entire federal government. Why must there be a review of the entire federal government?
Mr. Walker: Well, basically, what the report notes is that to a great extent, the current federal government is an accumulation of policy, programs, functions, and activities that have arisen over a number of years and that in fact are based on conditions that existed in the United States and around the world in the 1950s and 1960s, and that we have not engaged in a fundamental review and re-examination of discretionary spending, of entitlements and mandatory spending, and tax policies and preferences, in decades, and that the assumption has been that the base of government is okay and the great debate that occurs every year is are you going to plus up something a little bit, or cut something a little bit.
But the fact of the matter is the base is not only not okay, it�s not well-aligned with 21st Century realities, and it�s not sustainable. So we need to engage in that fundamental review and reassessment. And in our report, we raise generic questions that should be asked about every major policy, program, function, activity, and over 200 illustrative questions that need to be asked and answered. Hopefully, it will stimulate discussion and debate on this very important issue.
Mr. Morales: How can policymakers examine and engage in the review of federal government?
Mr. Walker: Well, one of the things that we have in the report is there are a variety of ways this could be done. I mean, for example, we clearly need more rigorous oversight; we clearly need to make sure that the reauthorization process is substantive; we clearly need to re-look at which programs and policies are working and which ones aren�t working as part of the annual appropriations process. And so those are just three examples, but we may also have to, in some circumstances, have additional studies conducted by GAO or others as input. Commissions may be necessary or appropriate in order to deal with particularly complex and controversial issues.
So there are a variety of different means and vehicles that I think we are going to have to be using. And candidly, I think we�re talking about an effort that could take as long as a generation to effectively address all of the issues that are going to have to be addressed.
Mr. Lawrence: It�s hard not to think about the big challenges facing our country without thinking about Social Security and health programs. What�s your perspective on the status of these programs in the United States?
Mr. Walker: Well, both Social Security and our health programs are unsustainable in their present form. Social Security represents a large and growing problem; health care is a much bigger problem. For example, the Social Security has an estimated unfunded obligation of about $3.7 trillion in current dollar terms for the next 75-year period. That�s how much you�d have to have today invested at Treasury rates to close the gap between projected revenues and expenditures. Medicare alone has a gap of $27-28 trillion, so about eight times greater. And yet Medicare is only a subset of the much broader problem. Clearly, we�re not going to be able to get back on a sustainable path and a prudent course unless you reform entitlement programs, and these are the two biggest entitlement programs.
Mr. Lawrence: You�ve talked about entitlement reform before and said that it�s essential, and problems with Social Security are not that difficult to solve. What do you mean by this?
Mr. Walker: Well, first, the imbalance in Social Security is much less than the imbalance in Medicare. Furthermore, what I have found over the years in my speaking and other interaction opportunities with the American people around the country, of all ages I might add, is that people who are retired or nearing retirement are the ones most fearful of change; whereas young people are discounting Social Security and in many cases don�t think they�re going to get it at all.
Therefore, that means you have an opportunity. You have an opportunity to restructure Social Security in a way that will leave current retirees and near-term retirees alone; that will make progressively greater changes to the program the younger the person is; and has an opportunity to be phased in over a number of years and exceed the expectations of every generation of Americans. In other words, everybody will get more than they think they�re going to get -- not more than they�ve been promised -- more than they think they�re going to get. And after all, if you can exceed expectations, I call that a win.
So I mean, frankly, it�s going to be a lot easier to do that for Social Security and we need to get on with it because time is working against us. And if we can reform Social Security, that will end up improving our credibility with the markets and enhance confidence to be able to deal with much more difficult issues.
Mr. Lawrence: That�s fascinating. You described quite a lot of challenges in just a short period of time.
How is GAO changing and facing its own challenges? We�ll ask David Walker of GAO to take us through this when The Business of Government Hour continues.
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning�s conversation is with David Walker, Comptroller General of the United States and head of the Government Accountability Office.
And joining us on our conversation is Al Morales.
Mr. Morales: David, in GAO�s strategic action plan for FY �04 through �09, I understand there are eight themes. Can you give us an overview of these eight themes?
Mr. Walker: Sure. These themes are themes that represent trends that have no geopolitical boundaries and also cross all different sectors: public sector, private sector, not-for-profit sector. Things like long-term fiscal imbalances; changing security threats in a post-cold war environment; increasing global interdependence; the changing nature of the economy from the Industrial Age to a knowledge-based economy; a variety of demographic trends; fewer and fewer workers supporting more and more retirees; longer life spans, more diverse country; rapidly evolving science and technology; a variety of quality of life issues, such as education, the environment, work, family, urban sprawl, and changing governance structures, where more and more issues have to be handled on a multilateral basis, and between different levels of government and crossing different sectors in order to achieve positive and sustainable outcomes.
Mr. Morales: Can you tell us about the four goals of GAO�s strategic action plan?
Mr. Walker: Well, we have four primary goals. The first two goals are tied to the Constitution of the United States. You know, there�s not a lot of things that people agree on here in Washington, but hopefully one of the things that will stand the test of time is the Constitution of the United States. So the first two talk about supporting the Congress in meeting its Constitutional responsibilities in areas dealing with areas under the Constitution; the third one talks about us trying to help the federal government transform what it does and how it does business. And the fourth one is about GAO being a model federal agency and a world-class professional services organization.
Mr. Morales: How does GAO plan on measuring performance and progress against these goals?
Mr. Walker: Well, we have a number of performance metrics and many of them -- in fact, most of them are outcome-based metrics. For example, we have certain ones that can be quantified, like financial benefits; to the extent that institutions or -- whether it be agencies or departments, or whether it be the Congress as an institution -- if they adopt our recommendations, then does it save money, does it free up money for re-deployment to higher priorities? Last year, $44 billion, $95 returned for every dollar invested in GAO.
But we also have other non-financial benefits, things like safety, security, privacy, you can�t measure in dollar terms, but they�re significant and so we do it in descriptive terms. We look at, you know, pipeline statistics, to what extent are we making recommendations? What percentage of the recommendations are adopted? How frequently are we being asked to testify? Because these are kind of leading indicators, if you will, that can give us a sense as to whether or not we�re going to develop, we�re going end up having positive outcomes over a reasonable period of time. So we�re very, very results-oriented, and everybody is focused on how can we maximize value and manage risk; how can we minimize resource requests and maximize return on investment.
Mr. Lawrence: David, I know you�re interested in human capital. It dates back on probably your entire professional career. So could you tell us about GAO�s human capital strategic plan?
Mr. Walker: Well, first, we�re only as good as our people. We�re a knowledge-based enterprise. We�re a professional services organization, and as I said, we�re only as good as our people. So we take our people very, very seriously; we not only have an overall strategic plan, we have a human capital strategic plan. We have very aggressive recruiting efforts. We do a lot with regard to trying to maximize the chance that the people that we hire will stay with us at least three years, because history has shown if they stay with us at least three years, the likelihood they�ll stay with us long-term increases dramatically. We are an empowerment organization; our employees are very much involved in providing input on all the major issues that we have to deal with as to who we are and how we conduct ourselves as an employer. For example, one of the things that we have is a democratically elected Employee Advisory Council that I meet with and my fellow Executive Committee members meet with at least once a quarter, typically more frequently, to be able to talk about issues of mutual concern and how can we make GAO a better place.
Mr. Lawrence: It�s always interesting to hear a leader like you talk about dealing with people. It seems so obvious that many organizations don�t. I�m just curious about your perspective as to why they don�t deal with that; that training tends to be one of the things that�s cut and people don�t pay attention to their most important asset.
Mr. Walker: Lack of enlightenment, and myopia might be two good reasons, I would say. You know, there are a lot of people, in fact, almost everybody will tell you people are our most valuable asset, but you know, actions speak louder than words. And I think that you need to look at the facts and circumstances and find out whether or not they practice what they preach.
Mr. Lawrence: Interesting. Now, GAO has a human capital office, and what I am always curious about is when you think about human capital and even HR, it was once just a support function, and now people are beginning to think about it more in terms of strategy and managing. How are you making that work at GAO?
Mr. Walker: Well, first, I believe there are a number of factors that are critically important in connection with any particular transformation effort: you know, people, process, technology and environment, for example, of which I believe people represent the most important. People are the source of all innovation, all technological enhancement; they are ultimately the ones that make things happen. And so I think you have to put people first. You have to make sure that the human capital function is strategic, that it is well-aligned with the overall strategic plan, that they are working in partnership with the major operating entities and units to try to achieve positive results. It�s a fundamental philosophical change, and I believe very strongly that it�s necessary.
Mr. Lawrence: Some would say, and you might call them cynics, that gee, you can�t do a lot around human capital and government; we�re constrained by pay, we�re constrained by conditions, we can�t offer stock options. I mean, how do you address this sort of criticism?
Mr. Walker: Well, I think 80 percent plus of what needs to be done in the human capital area in the federal government can be done without changes in laws. I find many times, people end up assuming they can�t do something because it�s never been done before, or they�ve got regulations that they promulgated where they�ve shot themselves, and therefore need to step back and basically re-examine what they can do. I�ve done that at GAO. I mean, there are many times when I wanted to have things done, I have asked why can�t we do it? Or stated differently, here�s what I want to do, can we do it? And I�ve pressed on a number of occasions: show me the law that says we can�t do this or what type of legislation might we need in order to be able to do this, if it makes sense to do it? And I find there�s a lot of that.
One of the critical missing links I find is, everybody now wants to move more towards market-based and performance-oriented compensational arrangements. But what I find is there are very few agencies that have modern, effective, and credible performance management systems, including performance appraisal systems. And if you don�t have those, and if they�re not linked to the strategic plan, tied to desired outcomes, and if they don�t have adequate safeguards to prevent abuse and minimize the chance of discrimination, then you�re not going to be able to effectively deliver on a performance-based compensation system. And so everybody is out there saying they want it, but they don�t have the infrastructure in place. We have the infrastructure in place; it isn�t perfect, and never will be, but it�s clearly the best in government.
Mr. Lawrence: In an earlier answer, you mentioned the fact that if folks stay with you for three years, they�ll stay longer. Is there any one or two critical things that have to happen in their first three years to make them stay?
Mr. Walker: Well, most people that we hire today are highly educated. For example, over 90 percent of the people that we hire for our mission side have Master�s degrees and some have Ph.D.s, and really from the top schools in the country. So they want to be able to make a difference. They want to be constantly learning; they want to be challenged. That�s the real key, and so you need to make sure that you do that.
Now, obviously, people want to be paid fairly, and if somebody�s primary motivation is compensation, then they may not want to come into government, although our people make pretty good money, quite frankly. You can have a very good standard of living by working at GAO and many other government agencies. But if somebody measures success primarily based upon net worth rather than self worth, then they might not want to come into government.
Mr. Morales: David, you mentioned in an earlier answer that since you�ve arrived, 40 percent of the organization is new. Where do you attract people from to join GAO?
Mr. Walker: We have very aggressive recruiting programs, in particular at the entry level. We take it just as seriously as any professional services firm does. We have targeted universities, where we have executives that are assigned responsibility for those universities; to develop relations with the key faculty, with the Dean, with the placement office. We try to end up giving speeches and do other types of activities with the university. We have an internship program which is critically important to our recruiting effort. We hire 200-300 interns a year; that gives them an opportunity for them to look at us and us to look at them. We have an ability to make timely offers to those interns. We don�t have to compete those jobs; if somebody works with us at least nine weeks, then we can hire them on a non-competitive basis.
And so there are a number of things that we�ve done, not only with regard to how we�ve recruited, but also from the standpoint of using student loan repayments; being able to review performance every six months rather than every year; making compensation adjustments every six months rather every year; having a very aggressive training and development program for the first two years that somebody�s with us. And when I talk about those six-month reviews and compensation adjustments, those were in the early years. After that, you go on an annual cycle. So we do a lot to hire the best people, treat them well, and give them a lot of opportunity to make a difference.
Mr. Lawrence: You talked about a lot of very interesting programs. What kind of external recognition has GAO gotten?
Mr. Walker: Quite a bit. Obviously, one of our objectives is to lead by example and be as good or better than anyone else. A couple of examples that I would give off the top is our strategic plan has been widely acclaimed externally. Our performance and accountability reports have won awards every year that we�ve sought to apply for consideration; for example, the AGA being one. CIO Magazine just rated GAO as one of the top 100 information technology organizations in the United States, including the private sector. And so we�ve got a lot of external recognition.
I know that Harvard Business Review is doing a case study on GAO now. In fact, I think IBM is doing a case study on us now, if I�m not mistaken, with regard to our transformation. So quite a bit; there�s no doubt that we would be green across the board in executive branchspeak, if we were part of the executive branch. But our objective is not just to be green, it�s to be as good or better than anybody else that we audit and evaluate and to stay that way. And to stay that way means continuous improvement. I mean, sometimes it�s tougher to stay there than it is to get there.
Mr. Lawrence: Maybe we'll change the G to Green instead of Government.
We've heard about the challenges facing our nation. What does the future hold as we address these? We�ll ask David Walker of GAO for his insights and advice when the conversation about management continues on The Business of Government Hour.
Mr. Lawrence: Welcome back to The Business of Government Hour. I�m Paul Lawrence, and this morning�s conversation is with David Walker, Comptroller General of the United States and head of the Government Accountability Office.
And joining us on our conversation is Al Morales.
Well, David, can you elaborate on how the debate about our fiscal future is ultimately not about numbers, but about values?
Mr. Walker: Well, first, we�re talking about very big numbers. When you�re talking about total liabilities and commitments of $43 trillion, those are huge numbers. It�s tough for people to be able to relate to it, but my point is that, yes, numbers are involved, but the real important thing is two other dimensions: values and people. Values like fiscal responsibility and stewardship to future generations, needing -- having a responsibility not just to leave things better off when you leave than when you came, but better positioned for the future; and people from the standpoint of our children, our grandchildren and future generations of Americans. Those are the type of issues that will move people to act. Numbers won�t do it by themselves; it�s about values and it�s about people.
Mr. Morales: Dave, we spoke earlier of the major fiscal challenges that the U.S. is facing. What can Americans do now to mitigate the circumstances?
Mr. Walker: Well, a couple of things. One, I think they have to recognize that we are on an unsustainable path from a fiscal standpoint. There are going to have to be dramatic changes, and that individuals ultimately are going to have to assume more responsibility in the future than may have been the case in the past. They need to plan, save, and invest for retirement, among other things.
Yes, Social Security will still be there, but it�s going to be reformed. Yes, Medicare will still be there, but it�s going to be more dramatically reformed over the years. And secondly, I think what they need to is they need to exercise their civic responsibility to become informed and involved with regard to a lot of the issues that we�re talking about in order to play a meaningful role in the coming debate about that baseline review and the future of government.
I think it�s particularly important for young people to be informed and involved, because ultimately, we�re talking about their future. And ultimately, they�re going to bear the burden if others fail to act in a timely and responsible manner. They�re going to get what we call a double whammy. They�re going to end up paying much, much higher tax rates, get less, and have less choice about what they think the proper role for government is. And it�s important they recognize that reality and act.
Mr. Morales: In turn, what can government leaders do today to address the fiscal challenge debate?
Mr. Walker: Well, the first thing that we have to do is face the facts and recognize that we are on an unsustainable path. You know, you can�t solve a problem until you admit that you have a problem, and that it�s more prudent to deal with it sooner rather than later. So that�s the first thing. Secondly, I think we have to make sure that we have more transparency over where we are and where we are headed. I think we need to have some process reforms with regard to the budget process. And in that regard, the first thing you do when you�re in a hole is to stop digging. And then I think we have to engage in this fundamental review and reassessment of the base of government, to figure out what�s the proper role of government in the future; how should it do business; and how are we going to finance and pay for whatever the revised role and responsibilities might be?
Mr. Morales: What advice can you give to government leaders working on their financial statements today?
Mr. Walker: Well, financial statements are important, but frankly, not enough people are reading the financial statements of the U.S. Government. That�s part of the problem. I think you have to keep in mind that we�re dealing with the people�s money. We have a stewardship responsibility; we serve a public purpose and work for the public good, and that the taxpayers have a right to make sure that we�re handling their funds in a responsible manner.
And part of that is an appropriate transparency and accountability mechanism in the form of annual financial reports and audited financial statements. But it�s not just with regard to financial reporting; it�s also performance reporting. You know, the taxpayers have a right to know what kind of results have been achieved with the financial, human, and other resources and authorities that agencies have. And so I think it�s important that we not just look at financial statements and continue to make progress there, but we also have to enhance our performance reporting in order to provide more meaningful information that hopefully people will pay attention to.
Mr. Lawrence: David, as you�ve talked a lot about the challenges, this morning, we face, I�ve heard a lot of sort of what I might characterize as pain now for gain later. And I�m sort of wondering if you think that�s correct, and if so, it seems like a pretty hard equation for people to work their way through naturally. How would you reflect on this or give people advice to think about it?
Mr. Walker: Well, this isn�t easy. Nobody said it was going to be easy, but it�s essential and, you know, sometimes I think back to the old Popeye show. I remember Wimpy, you know, �I�ll gladly pay you Tuesday for a hamburger today.� Well, we�re eating a lot of hamburgers and we�re delaying the day of reckoning, and I think that�s got to stop. We�ve got to get serious, we�ve got to remember what those values are, we�ve got to be able to see the faces of our kids and our grandkids and think about future generations to do that. But I believe, in America, anything is possible with persistence and dedication and leadership and commitment. And I am confident that ultimately, we will end up effectively addressing these. What I�m concerned about is when we�re going to start. And I believe it�s critical that we start now.
Mr. Lawrence: In the last segment, you talked a lot about GAO, and I was reflecting on one answer you gave to hiring. And you spoke a lot about hiring entry-level professionals. Does GAO hire experienced folks, or have you hired experienced folks?
Mr. Walker: We do, and we do to a greater extent today than we did before I was at GAO. While a vast majority of the people that we hire will end up coming in at the entry level, we have brought in a number of people with various skills and knowledge that we need, including at the highest levels. For example, our chief administrative officer, who also serves as our chief financial officer, came in from the outside. Our current general counsel came in from the outside, although he didn�t come in in that position. A number of top executives did.
And we�ve hired people in the middle as well, who have skills and knowledge that we need. In part because of that gap in the development pipeline that I talked about before, where when I came to GAO, we hadn�t hired very many people at all in the five years before I was there, and therefore, there was a development gap. And I think it�s important to bring in people from the outside in order to be able to get people with different experience, different perspectives, in order to try to help facilitate the change necessary.
Mr. Lawrence: I know in the first segment, you described your career and you�ve been in the private sector and in the public sector, too, but I think if people will reflect on it, they would describe you as a public servant. And I guess I�d be curious about the advice you�d give to someone interested in a career in public service, and maybe even with a focus on finance, because I think you�ve talked a lot about the financial aspects of government in our talk this morning.
Mr. Walker: Well, if I talk about the federal government, for example, but I will say that public service is a lot more than federal government. You know, it�s federal government, state government, local government, and frankly, it�s more than government. It�s not, you know, not-for-profit organizations, NGOs if you will, there�s a lot of public service that can be done there. But if I focus on the federal government, what I would say is that the federal government represents the largest, most complex, most diverse, arguably most important entity on the face of the earth. It�s 20 percent of the U.S. economy, the only superpower on earth, and therefore, you need to have top-flight talent running that type of enterprise. There are tremendous challenges, tremendous opportunities in the federal government. Individuals can assume a lot of responsibility very early. They can make a difference that involves billions of dollars and millions of people. It�s rare that you get that opportunity.
You know, I�ve had the pleasure and privilege of being able to have responsible positions both in the private sector and the public sector. And I�ve enjoyed every job that I�ve had. And I enjoyed the private sector to a great extent. But I�ve never enjoyed anything more than public service. You know, obviously, my wallet�s not as well off as it used to be, but my head and my heart are much fuller than -- well, I -- certainly, my heart is; not my head, hopefully. I mean, my -- I know a lot more, let�s put it that way, and I feel a lot better about what I�m doing. So it�s a real opportunity to make a difference for your fellow citizens and for the future of our country.
Mr. Lawrence: David, that will have to be our last question. Al and I want to thank you for joining this morning and fitting us in your very busy schedule.
Mr. Walker: Well, Paul and Al, I want to thank you again for being a repeat customer. And don�t forget that GAO website, www.gao.gov. Thanks.
Mr. Lawrence: Thank you, David.
This has been The Business of Government Hour, featuring a conversation with David Walker, the Comptroller General of the United States and head of the Government Accountability Office.
Be sure and visit us on the web at businessofgovernment.org. There, you can learn more about our programs and research, and get a transcript of today�s fascinating conversation. Once again, that�s businessofgovernment.org.
For The Business of Government Hour, I�m Paul Lawrence.
Thank you for listening.