This speech was given by the Comptroller General before the Arthur S. Flemming Awards Ceremony audience at George Washington University in Washington, D.C. on June 6, 2005. This evening, I'm going to talk a little about the broad challenges facing the federal government and our nation. I'm also going to talk about the need for and importance of leadership to address these challenges and capitalize on related opportunities. Much of GAO's work focuses on day-to-day government operations, but GAO also seeks to alert policymakers and the public to a range of emerging and long-term challenges. It's not always an easy job, and some people don't like to hear the facts, but I can assure you that GAO will continue to speak out on key issues of concern to Congress and the nation. Perhaps the most urgent challenge is our nation's worsening financial condition and growing fiscal imbalance. Primarily due to the aging of the baby boomers, rising health care costs, and inadequate federal revenues, America faces a rising tide of red ink. Despite what some say, deficits do matter--especially if they are large and structural in nature. Today, our nation's financial condition is far worse than advertised. Candidly, the federal government's business model is broken and it's time we started to fix it. Anyone who says that we can grow our way out of the problem probably wouldn't pass economics or basic math. To grow our way out of the problem, we'd have to have sustained economic growth way beyond what we saw during the boom years of 1990s. It's just not going to happen--and the sooner we recognize that reality, the sooner we can do something about it. While the deficit numbers are big and bad, it's the government's long-term liabilities and unfunded obligations that are the real problem. I'm talking about promises for Social Security and Medicare along with civilian and military retirement plans, future environmental cleanups, and potentially costly bailouts of government-sponsored enterprises like the Pension Benefit Guaranty Corporation. These items now total about $45 trillion, or roughly $365,000 for every full-time worker, and that burden's growing every day. In the last year alone, this amount rose by over $13 trillion, largely because of the new Medicare prescription drug benefit. Clearly, a crunch is coming, and eventually all of government--including the Department of Defense and the Department of Homeland Security--will feel its impact. GAO's longterm simulations show that without meaningful changes, increasingly drastic actions on both the spending and tax sides of the ledger will be required to balance the budget. By 2040, it's entirely plausible that the federal government could be reduced to doing little more than paying interest on the national debt.

To save our future, tough choices are required. Entitlement reform is essential and inevitable. We're also going to have to reconsider and revise a range of spending and revenue policies. To keep pace with the many changes that we know are coming, our government must also change. Unfortunately, much of today's federal government remains on autopilot and is based on conditions that existed in the United States and the world decades ago. In my view, transforming what our government does and how it does business is one of the central challenges facing policymakers and government leaders today. In my view, we need nothing less than a top-to-bottom review of federal activities to determine whether they are meeting their objectives. It's time to eliminate outdated and ineffective programs and policies, and it's time to consolidate overlapping or redundant functions. People, processes, and technologies will all be critical to this transformation, but the most important factor by far is people. The simple but powerful truth is that effective government demands a quality workforce. How can we settle for anything less than first-rate people to run what is arguably the most important institution on earth--the U.S. government? I've said this before, and I'll say it again: People are our most valuable asset, and we must treat them accordingly. In addition, effective and respected leaders are invaluable. Government transformation won't happen overnight. Transformation will succeed only with sustained leadership that transcends the efforts of a single person or a finite term of office. Elected, appointed, and career officials, like the ones we are recognizing tonight, will need to work together for some time before we see real, measurable, and sustainable results. One of the biggest problems in Washington today is the continuing unwillingness of public officials to look to the future, recognize reality, and make difficult policy choices. Unfortunately, time is working against us. The miracle of compounding works against you when you're a debtor. The simple but plain truth is, the longer we postpone difficult policy choices, the more we threaten our collective future. Right now, we need more policymakers and public officials with the courage to do the right thing and who will put the needs of the next generation ahead of the next election cycle. In my view, we need more leaders in government who possess three key attributes. Those attributes are courage, integrity, and innovation. We need leaders who have the courage to speak the truth and to make difficult decisions even though those decisions may not be popular. We need leaders who have the integrity to lead by example and practice what they preach. We need leaders who are willing to try new ways of addressing old problems and who can help others to see the way forward. Stated differently, we need more leaders like those of you who are being recognized tonight. In closing, cynics are fond of saying one person can't make a difference. But the cynics are wrong. The recent disclosure of the identity of Watergate's Deep Throat reminds us that one person--in this case a career civil servant--can change the course of history. In fact, if you look around this room you'll see at least 11 individuals who've proved the cynics wrong by making a big difference. Congratulations again to each of tonight's Flemming Award winners on a job well done! Let's hope that many others will follow your lead.