This is a Comptroller General Speech given to the Diamond Cluster Exchange in Kiawah Island, South Carolina, on September 19, 2005. Today, more than ever, our nation and government need to start planning for a range of societal changes that we know are coming. We need to start stepping up to the plate and making difficult decisions aimed at securing our collective future. What's at stake is nothing less than America's continuing role as a superpower, our continuing economic growth, the future quality of life for our children and grandchildren, and the future security of our nation. We face a number of important long-term demographic changes. For example, during the next 50 years, the ratio of workers to retirees is expected to decline dramatically. Like most industrialized nations, the United States now faces the prospect of fewer relative active workers caring for more retirees with longer life spans. The retirement of the "baby boomers," of which I am one, will place unprecedented strains on both our public and private pension and health care systems. Beyond these demographic trends, the United States confronts emerging challenges in other areas. Our world is being shaped by forces that aren't restricted by national borders or natural boundaries. We're seeing increasing globalization in many areas, including markets, technologies, and businesses. The fortunes of once-distant economies are now linked, and global communications are now virtually instantaneous. Environmental and public health issues are also global in scope. As you can imagine, air and water pollution don't just stop at the border. And with today's international air travel, infectious diseases can spread from one continent to another literally overnight. This is one reason experts are so concerned about avian flu. With the end of the Cold War, we face new security threats, including transnational terrorist networks and rogue nations armed with weapons of mass destruction. These require multi-national cooperation in order to be successful. We face technological innovations that have transformed everything from how we do business to how we treat and cure diseases. Our society has moved from the industrial age to the information age, where specialized knowledge and skills are the keys to success. Unfortunately, the United States is number 25 in the world on K through12 education results. This should be a big flashing red light in today's knowledge-based economy. We also face a range of quality-of-life issues, from educating our people to protecting the environment to balancing the demands of work and family. We and other nations also face growing energy challenges with significant economic, environmental, and security implications. And recent events have underscored the importance of being prepared for both natural and man-made disasters. But perhaps the most urgent yet lesser known challenge is our nation's worsening financial condition and growing long-term fiscal imbalance. Largely due to the aging of the baby boomers, rising health care costs, and relatively low federal revenues as a percentage of the economy, America faces a rising tide of red ink. The government's recent spending binges and tax cuts have combined to hemorrhage our bottom line. At the same time, much of our nation's fiscal policy remains on autopilot, a strategy that is both imprudent and unsustainable. Government continues to expand, with new federal programs and initiatives added every year to a base that continues to grow. Importantly, we rarely seem to question the wisdom of existing federal commitments.

If our government is to have any hope of addressing these challenges, every federal agency and every federal program is going to have to give careful thought to its current and future missions and operations. As I said earlier, the problem is that much of government today remains on autopilot and is based on conditions that existed decades ago. This is inappropriate, imprudent, and unsustainable. It's time to transform government to better meet current needs and the many challenges that lie ahead. We need to ask a series of basic questions about what government does and how its does business. For example, what is the proper role of the federal government in the 21st century? How should it be organized? Should contractors and/or federal employees do the government's work? How much will it cost? How should it be financed? Who should pay for it? Nothing less than a top-to-bottom review of federal activities is needed to determine whether they are meeting their objectives and to free up resources for other needs. Many current federal programs, policies, functions, and activities are based on conditions that existed when Dwight Eisenhower and John Kennedy were in the White House. Congress and the President need to decide which of these policies and programs remain priorities, which should be overhauled, and which have simply outlived their usefulness. Similar efforts will also be required at most state and local levels. To help in this effort, GAO recently published an unprecedented report that asks a series of illustrative questions about both mandatory and discretionary spending and tax policy. I should stress that while GAO isn't a policymaking institution, decades of experience and expertise put GAO in a unique position to pose a range of substantive and thought provoking questions that policy makers need to address. GAO's report is called "21st Century Challenges: Reexamining the Base of the Federal Government," and you can find it on our website at www.gao.gov. In my view, this is must reading for anyone who's interested in public policy and our nation's future. My hope is that policymakers and the public will begin to think more strategically about where we are; where we're headed; and, more importantly, what we need to do to get back on a more prudent path. I'm also hopeful that GAO's work will also spur the development of a set of key national indicators and a much-needed and long-overdue baseline review of the federal government. Such a set of key national indicators would help to improve strategic planning, enhance performance and accountability reporting, and facilitate the much needed baseline review of the federal government. We've been working with the National Academies; the Organisation for Economic Cooperation and Development, better known as the OECD; and others to help make this a reality. Cultural transformation will be an essential part of this process. Federal agencies today tend to be hierarchical, process oriented, stove piped, rigid, and inwardly focused. In the future, we will be better served by agencies that are flatter, more partnerial, results oriented, integrated, agile, and externally aware. Transforming government isn't something that will happen overnight. Success or failure will depend on sustained leadership that transcends the efforts of a single person or a single Administration. Elected, appointed, and career officials will need to work together closely for a sustained period of time--perhaps a generation or longer. Public officials will need to reach across institutional lines and partner with other federal agencies, businesses, professional organizations, and nonprofit groups. It's going to take patience, persistence, perseverance, and ultimately pain before we prevail in transforming government. But prevail we must.