Presidential and Congressional Transition

  • The Management Agenda provides high-level information for new leaders about the critical management challenges facing the federal government and lays out the actions needed to address those challenges.

  • GAO’s Management Agenda

    Chris Mihm, Managing Director, Strategic Issues, describes how the management agenda can help policy makers and other leaders address existing problems and ensure the efficiency and effectiveness of new policies going forward.

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  • Manage Finances to Improve the Nation’s Fiscal Condition

    The incoming Administration and Congress face major challenges to improve the nation’s fiscal condition. These challenges include reducing the gap between revenue and spending, addressing a multibillion-dollar tax gap, reducing billions of dollars in improper payments, and improving the reliability of financial information.

  • BALANCE SPENDING AND REVENUE

    Challenge: Unsustainable Debt

    The federal long term fiscal path is unsustainable. In 2016, the debt-to-GDP ratio was 77 percent, exceeding the historical average (43 percent since 1946). We have projected that the federal debt will grow because revenue and spending are fundamentally imbalanced. If there are no policy changes (baseline forecast), by 2036, debt held by the public will be 100 percent of the value of the goods and services produced (gross domestic product, or GDP). If policy changes reflect historical trends (alternative forecast), it is estimated that the debt will reach 100 percent of GDP by 2029.

    The aging population, rising health care costs, and net interest on the federal debt drive the increases in spending shown in our simulations. Continued growth in these costs and the widening gap between spending and revenue limits government spending in other areas—including addressing future challenges. Tax policy needs to be part of a multipronged approach as policymakers assess how to alleviate the fiscal pressures. The government must act soon to change the long-term fiscal path or risk significant disruption to individuals and the economy. The longer action is delayed, the more significant the change that will be needed.

    Rising debt may also lead to more frequent impasses over raising the debt limit, which may undermine confidence in the credit of the United States and cause significant damage to Treasury securities markets, increasing financing costs for the federal government.

    Key Actions Needed:

    1. Begin reducing the gap between revenue and spending through a combination of spending reductions and revenue increases. Actions related to spending may include reviewing mandatory and discretionary spending, setting priorities and ensuring that spending leads to positive results, and identifying options to reduce spending. Actions related to revenue may include reducing the complexity of the tax system to simplify individuals’ ability to comply and conducting periodic reviews of tax expenditures to ensure they achieve their intended policy goals.
    2. Consider alternative approaches that better link decisions about the debt limit with decisions about spending and revenue at the time those decisions are made—which may help avoid Treasury securities market disruptions and inform the fiscal policy debate in a timely way. This would also ensure confidence in the full faith and credit of the U.S. government—one of our greatest assets.
  • Debt Held by the Public as a Percentage of GDP

    Title: Debt Held by the Public as a Percentage of GDP

Image: Line chart (by year, baseline calculation--actual and projected, alternative calculation--actual and projected, historical high, and historical average).

Year	Base	Alt	HH	HA

2000	34	34	106	43
	31	31	106	43
	33	33	106	43
	35	35	106	43
	36	36	106	43
	36	36	106	43
	35	35	106	43
	35	35	106	43
	39	39	106	43
	52	52	106	43
2010	61	61	106	43
	66	66	106	43
	70	70	106	43
	72	72	106	43
	74	74	106	43
	74	74	106	43
	74	75	106	43
	74	75	106	43
	73	75	106	43
	73	76	106	43
2020	73	77	106	43
	74	78	106	43
	75	80	106	43
	76	82	106	43
	76	84	106	43
	77	86	106	43
	78	89	106	43
	79	93	106	43
	81	96	106	43
	82	100	106	43
2030	84	105	106	43
	87	110	106	43
	89	115	106	43
	91	120	106	43
	94	125	106	43
	97	131	106	43
	100	137	106	43
	103	142	106	43
	106	148	106	43
	109	154	106	43
2040	112	160	106	43
	115	166	106	43
	118	172	106	43
	121	178	106	43
	124	185	106	43
	127	191	106	43
	130	197	106	43
	133	204	106	43
	137	210	106	43
	140	217	106	43
2050	144	224	106	43
	147	231	106	43
	151	238	106	43
	154	245	106	43
	158	252	106	43
	161	260	106	43
	165	267	106	43
	169	275	106	43
	173	282	106	43
	177	290	106	43
2060	181	298	106	43
	185	307	106	43
	189	315	106	43
	193	323	106	43
	197	331	106	43
	201	339	106	43
	205	348	106	43
	210	356	106	43
	214	365	106	43
	218	373	106	43
2070	223	382	106	43
	227	391	106	43
	231	400	106	43
	236	409	106	43
	241	418	106	43
	245	427	106	43
	250	437	106	43
	254	446	106	43
	259	455	106	43
	264	465	106	43
2080	268	475	106	43
	273	484	106	43
	278	494	106	43
	283	504	106	43
	288	515	106	43
	293	525	106	43
	298	536	106	43
	304	547	106	43
	309	557	106	43
2089	314	568	106	43


Source: GAO.  |  GAO-16-541T

    Notes: Data are from GAO's 2016 simulations. Both of GAO’s simulations assume that Social Security and Disability benefits are paid in full regardless of the current projections of revenues into the Old-Age, Survivors, and Disability Insurance trust funds.

  • GAO Contact

    Sue Irving

    Director, Strategic Issues

    irvings@gao.gov

    202-512-6806

  • CLOSE THE TAX GAP

    Challenge: More Taxes Owed Than Collected

    Addressing the tax gap—the difference between taxes owed and those paid on time—could help improve the government’s fiscal position. The estimated average annual gross tax gap is $458 billion. Current tax law enforcement efforts and the collection of late payments are estimated to recover $52 billion of the shortfall, resulting in a net annual tax gap of $406 billion.

    The tax gap is a result of taxpayers underreporting their tax liability, underpaying taxes, or not filing tax returns. All of these types of noncompliance could involve fraudulent activity.

    Key Actions Needed:

    1. Enhance and expand third-party information reporting.
    2. Better use of data to target noncompliance.
    3. Ensure high-quality services to taxpayers.
    4. Leverage external stakeholders, such as whistle-blowers.
    5. Enhance electronic filing.
    6. Expand math error authority.
    7. Regulate paid tax preparers.
    8. Enhance budget planning, such as the allocation of enforcement resources.
    9. Simplify and reform the tax code.
  • Estimated Average Annual Gross Tax Gap by Type of Noncompliance and Tax (Tax Years 2008-2010)

    Title: Estimated Average Annual Gross Tax Gap by Type of Noncompliance and Tax (Tax Years 2008-2010)

Image: Series of three pie charts.

Dollars (in billions)

Pie chart 1: Underreporting
Total of all three types: 84% ($387)
Individual income tax: 68% ($264)
Corporation income tax:11% ($41)
Employment tax: 21% ($81)
Estate tax:none


Pie chart 2: Underpayment
Total of all three types: 9% ($39)
Individual income tax: 74% ($29)
Corporation income tax: 8% ($3)
Employment tax: 15% ($6)
Estate tax: 3% ($1)


Pie chart 3: Nonfiling
Total of all three types: 7% ($32)
Individual income tax: 81% ($26)
Corporation income tax: none
Employment tax: 13% ($4)
Estate tax: 6% ($2)



Source: GAO analysis of IRS information.  |  GAO-16-684CG
  • GAO Contact

    James R. McTigue Jr.

    Director, Strategic Issues

    mctiguej@gao.gov

    202-512-9110

    Jessica Lucas-Judy

    Director, Strategic Issues

    lucasjudyj@gao.gov

    202-512-9110

  • REDUCE IMPROPER PAYMENTS

    Challenge: Improper Use or Payment of Federal Funds

    Since fiscal year 2003 cumulative improper payment estimates have totaled over $1 trillion. In fiscal year 2015 alone, federal agencies made an estimated $136.7 billion in improper payments—e.g., overpayments, underpayments, payments made to ineligible recipients, or payments that were not properly documented. While fraudulent payments are considered improper, not all improper payments are the result of fraud.

    The federal government has consistently been unable to determine the full extent of improper payments because of incomplete, unreliable, or understated estimates, among other things. The government is also unable to reasonably assure that appropriate actions are taken to reduce improper payments.

    Until the federal government can determine the full extent of improper payments and take effective actions to reduce them, it cannot be assured that taxpayer funds are adequately safeguarded.

    Key Actions Needed:

    1. Identify all programs and activities that may be susceptible to significant improper payments.
    2. Develop reliable methodologies for estimating improper payments.
    3. Report improper payments as required by statute.
    4. Analyze the root causes of improper payments and implement effective corrective actions to prevent or minimize improper payments.
  • Government-wide Improper Payment Estimates by Program for FY2015

    Title: Government-wide Improper Payment Estimates by Program for FY2015

Image: Pie chart.

43.7%: 
$59.7 billion--Medicare
Medicare Fee-for-Service (Parts A and B)
Medicare Advantage (Part C)
Medicare Prescription Drug (Part D)

23.6%:
$32.3 billion--All other programs

21.3%:
$29.1 billion--Medicaid

11.4%:
$15.6 billion--Earned Income Tax Credit


Source: GAO analysis of agencies data. | GAO-16-541T

    Note: These estimates do not include the Department of Defense’s (DOD) Defense Finance and Accounting Service (DFAS) Commercial Pay program. The DOD Office of Inspector General reported in DOD’s fiscal year 2015 Agency Financial Report that the department was unable to reconcile outlays and ensure that all payments subject to improper payment estimation requirements were captured for review. Therefore, DOD’s fiscal year 2015 improper payment estimates, including its estimate for the DFAS Commercial Pay program, may not be reliable.

  • GAO Contact

    Beryl Davis

    Director, Financial Management and Assurance

    davisbh@gao.gov

    202-512-2623

  • IMPROVE FINANCIAL ACCOUNTABILITY

    Challenge: Reliabilty of Federal Financial Information

    Federal financial management has improved since the Secretary of the Treasury, in coordination with the Director of the Office of Management and Budget, began preparing consolidated financial statements of the U.S. government 19 years ago. Almost all of the 24 largest federal agencies received unmodified (“clean”) opinions on their fiscal year 2015 financial statements.

    However, the Department of Defense—which represents 30 percent and 15 percent of the government's reported total assets and net costs, respectively—has consistently been unable to receive such an audit opinion on its financial statements because of pervasive deficiencies in its financial and related business management systems, processes, and controls. These deficiencies impair the ability to determine whether the Department of Defense’s financial statements are complete and accurate. In addition, the federal government has been unable to (1) adequately account for and reconcile intragovernmental activity and balances between federal agencies and (2) effectively prepare the consolidated financial statements. Because of these major impediments and other issues, we have been able to only issue a disclaimer of opinion on the consolidated financial statements of the U.S. government.

    Control deficiencies underlying these major impediments continued to (1) hamper the federal government’s ability to reliably report a significant portion of its assets, liabilities, costs, and other related information; (2) affect the federal government’s ability to reliably measure the full cost, as well as the financial and nonfinancial performance of certain programs and activities; (3) impair the federal government's ability to adequately safeguard significant assets and properly record various transactions; and (4) hinder the federal government from having reliable financial information to operate in an efficient and effective manner.

    Key Actions Needed:

    1. Resolve the serious financial management problems that have resulted in auditors of the Department of Defense issuing a disclaimer of opinion on the Department’s financial statements.
    2. Improve the federal government's ability to account for and reconcile intragovernmental activity and balances between federal agencies.
    3. Improve the federal government's process for preparing the consolidated financial statements of the U.S. government.
  • GAO Contact

    Larry Malenich

    Director, Financial Management and Assurance

    malenichl@gao.gov

    202-512-9399

  • Manage Acquisitions to Maximize Cost Savings and Performance

    In recent years, the federal government has spent approximately $440 billion annually to acquire goods and services. To maximize cost savings and performance, Congress and the incoming Administration need to address issues involving major systems acquisitions; the protection of critical technologies and supply chains; federal contracting, and services acquisitions.

  • Develop and Manage Information Technology to Meet the Government's Needs

    Advances in information technology (IT) change the way agencies do business. Managing this technological change government-wide poses a number of challenges for the incoming Congress and Administration, specifically in acquiring and operating these systems.

  • Strengthen Cybersecurity Over Sensitive Data and Protect Critical Infrastructure Systems

    Federal agencies and our nation’s critical infrastructures depend on computerized (cyber) information systems and electronic data to carry out operations and to process, maintain, and report essential information. The security of these systems and data is vital to public confidence and the nation’s safety, prosperity, and well-being.

  • Strengthen Human Capital Capabilities to Enhance Performance

    Strategic federal human capital management is fundamental to maximizing the government’s performance and assuring its accountability to the nation as a whole. Challenges for Congress and the incoming administration include addressing mission critical skills gaps, recruiting and retaining a skilled workforce, aligning human capital strategies across government, and changing agency cultures.

  • Collaborate to Achieve National Outcomes

    The incoming Administration and Congress face challenges that involve multiple agencies, specifically: inefficient government operations, insufficient collaboration across agencies, and mismanaged federal grants. Strategies to improve how agencies work together can also help them address these challenges.

  • Improve Federal Performance to Better Achieve Results

    Given the increase in public demands for a more effective and accountable federal government, it is critical that Congress and the incoming administration collect and use evidence to drive improvements and better achieve results. Agencies should use data for decision making, enhance regulatory processes, build evaluation capacity, and improve the visibility of agency-wide risks.

  • Promote Transparency and Open Government to Enhance Civic Engagement and Foster Innovation

    To foster transparency, improve oversight, and enhance public participation in decision-making, Congress and the new administration are challenged to ensure government and public access to reliable and complete federal financial and performance information. Attention to these initiatives can help agencies gather more data, make data more accessible, be more responsive to the public, and involve the public in accomplishing social goals.