This is a Comptroller General speech given before the George W. Romney Institute of Public Management at Brigham Young University in Provo, Utah on March 2, 2006. At all levels of government, we need more men and women who are willing to speak the truth, face the facts, take a long-term perspective, and prepare our country and its citizens for the changes and challenges of the 21stt century. Many of these challenges are unprecedented in their size, scope, complexity, and potential impact. Candidly, if our ship of state continues on its current course, we're all going to have to fasten our seat belts, because we're headed for one heck of a bumpy ride, and possibly a crash. What we need now are leaders who have the courage to put the needs of the next generation ahead of the next election cycle, leaders who will fulfill their stewardship responsibility to our nation and its citizens. At the end of the day, we should be able to look our children and grandchildren in the eye and say we did everything we could to pass on an America that's both better off and better positioned for the future. This has been a long-standing tradition in this country, one that we should try to continue. Changing demographics will decisively shape the American and global landscape of 2020 and beyond. Our population is aging. At the same time, U.S. workforce growth is slowing. This means that just when growing numbers of baby boomers like me start to retire and draw benefits, there will be a lower ratio of workers paying taxes and contributing to pension plans. Importantly, retirees are living longer and retiring earlier. This is going to put huge strains on our pension and health-care systems. Perhaps the most urgent challenge is our nation's worsening financial condition and growing long-term fiscal imbalance. Largely because of known demographic trends, rising health care costs, and lower federal revenues as a percentage of the economy, America faces decades of red ink. The facts on this aren't in question. Given our worsening financial outlook, the government's recent spending sprees and deep tax cuts are nothing less than a body blow to federal fiscal responsibility. Despite strong economic growth, in fiscal year 2005, the federal unified budget deficit was about $319 billion. The unified deficit dropped from $412 billion in 2004, but it's still imprudently high given that federal spending is set to rise dramatically when the baby boomers begin to retire later this decade. In addition, while the cash-based deficit went down about $90 billion in fiscal year 2005, the accrual- based deficit went up more than $140 billion to $760 billion that year. Our federal deficit numbers are big and bad, but it's the government's long-term liabilities and unfunded commitments that are the real problem. Clearly, a crunch is coming, and eventually every federal program and service will take a hit. If we continue as we have, higher interest rates and inflation are inevitable. It is only a matter of when and how high. As government is forced to borrow more and more money to finance its debt, less and less will be available for companies to invest to innovate, improve, and stay competitive. Eventually, long-term economic growth will suffer, and along with it American jobs, prestige, and purchasing power.

To keep pace with the challenges that are coming, our government must also change. For too long, the political process has been afflicted with myopia and tunnel vision. To help restore fiscal discipline, we need to set realistic spending caps and impose pay-as-you-go rules on both the spending and the tax sides of the ledger. Members of Congress should also have more explicit information on the long-term costs of spending and tax bills--before they vote on them. The new Medicare prescription drug benefit has also become the poster child for having more accurate and more complete information before legislation is enacted. More broadly, I'd urge the leaders and managers of every federal agency and program to give careful thought to their mission and operations given 21st century changes and challenges. The problem is that much of government today remains on autopilot and is based on social, economic, national security, and other conditions that existed when Dwight Eisenhower and John Kennedy were in the White House. We need to ask a series of basic questions about what government does and how it does business. For example, what is the proper role of the federal government in the 21st century? How should it be organized? Should contractors or federal employees or some combination of the two provide basic services? How much will it cost? How should it be financed? Nothing less than a top-to-bottom review of federal activities is needed to determine whether agencies are meeting their objectives. This will also help free up resources for other needs. Congress and the President need to decide which policies and programs remain priorities, which should be overhauled, and which have simply outlived their usefulness. In particular, entitlement reform is essential. We need to restructure Social Security, Medicare, and Medicaid and make these programs solvent and sustainable for future generations. We also need to reengineer the base of federal spending and tax policies. To help in this effort, GAO published last year a groundbreaking report that asks a series of probing, sometimes provocative, questions about both mandatory and discretionary spending and tax policy. GAO's report is called "21st Century Challenges: Reexamining the Base of the Federal Government." I'm also hopeful that GAO's work will encourage the development of a set of key national indicators. These are quantitative and outcome-based measures that policymakers can use to better assess our nation's position and progress over time and relative to other nations on benchmark issues like public safety, health care, housing, and the environment. For years now, foreign governments and even some U.S. states and localities have been using indicators to successfully prioritize and target public resources. It's time for the U.S. government to do so. Transforming government isn't something that will happen overnight. Elected, appointed, and career officials will need to work together for a sustained period of time--perhaps a generation or longer. Public officials will need to reach across institutional and political lines. The federal government will need to partner with businesses, professional organizations, and nonprofit groups. It's going to take patience, persistence, perseverance, and even pain before we prevail in transforming government. But prevail we must.

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