FAILURES OF FISCAL MANAGEMENT: A VIEW FROM THE COMPTROLLER GENERAL HEARING BEFORE THE COMMITTEE ON THE BUDGET HOUSE OF REPRESENTATIVES ONE HUNDRED FIFTEENTH CONGRESS FIRST SESSION HEARING HELD IN WASHINGTON, D.C., MAY 3, 2017 Serial No. 115–4 Printed for the use of the Committee on the Budget ( Available on the Internet: www.govinfo.gov U.S. GOVERNMENT PUBLISHING OFFICE 30–527 WASHINGTON : 2017 VerDate Mar 15 2010 08:56 Jul 30, 2018 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 F:\HEARINGS 2017, 2018\5-03-17 COMPTROLLER GENERAL\30-527.TXT PIKE BU00-A363290 with DISTILLER COMMITTEE ON THE BUDGET DIANE BLACK, Tennessee, Chairman TODD ROKITA, Indiana, Vice Chairman JOHN A. YARMUTH, Kentucky, MARIO DIAZ-BALART, Florida Ranking Minority Member TOM COLE, Oklahoma BARBARA LEE, California TOM MCCLINTOCK, California MICHELLE LUJAN GRISHAM, New Mexico ROB WOODALL, Georgia SETH MOULTON, Massachusetts MARK SANFORD, South Carolina HAKEEM S. JEFFRIES, New York STEVE WOMACK, Arkansas BRIAN HIGGINS, New York DAVE BRAT, Virginia SUZAN K. DELBENE, Washington GLENN GROTHMAN, Wisconsin DEBBIE WASSERMAN SCHULTZ, Florida GARY J. PALMER, Alabama BRENDAN F. BOYLE, Pennsylvania BRUCE WESTERMAN, Arkansas RO KHANNA, California JAMES B. RENACCI, Ohio PRAMILA JAYAPAL, Washington, BILL JOHNSON, Ohio Vice Ranking Minority Member JASON SMITH, Missouri SALUD O. CARBAJAL, California JASON LEWIS, Minnesota SHEILA JACKSON LEE, Texas JACK BERGMAN, Michigan JANICE D. SCHAKOWSKY, Illinois JOHN J. FASO, New York LLOYD SMUCKER, Pennsylvania MATT GAETZ, Florida JODEY C. ARRINGTON, Texas A. DREW FERGUSON IV, Georgia PROFESSIONAL STAFF RICHARD E. MAY, Staff Director ELLEN BALIS, Minority Staff Director (II) VerDate Mar 15 2010 08:56 Jul 30, 2018 Jkt 000000 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 F:\HEARINGS 2017, 2018\5-03-17 COMPTROLLER GENERAL\30-527.TXT PIKE BU00-A363290 with DISTILLER CONTENTS Page Hearing held in Washington, D.C., May 3, 2017 .................................................. 1 Hon. Diane Black, Chairman, Committee on the Budget ............................. 1 Prepared statement of ............................................................................... 3 Hon. John A. Yarmuth, Ranking Member, Committee on the Budget ........ 5 Prepared statement of ............................................................................... 7 Hon. Gene L. Dodaro, Comptroller General of the United States ................ 9 Prepared statement of ............................................................................... 11 Hon. Pramila Jayapal, Vice Ranking Minority Member, Committee on the Budget, questions submitted for the record ......................................... 106 Hon. Barbara Lee, Member, Committee on the Budget, questions sub- mitted for the record ..................................................................................... 107 Hon. Gene L. Dodaro’s response to questions submitted for the record ...... 109 (III) VerDate Mar 15 2010 08:56 Jul 30, 2018 Jkt 000000 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 F:\HEARINGS 2017, 2018\5-03-17 COMPTROLLER GENERAL\30-527.TXT PIKE BU00-A363290 with DISTILLER VerDate Mar 15 2010 08:56 Jul 30, 2018 Jkt 000000 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 F:\HEARINGS 2017, 2018\5-03-17 COMPTROLLER GENERAL\30-527.TXT PIKE BU00-A363290 with DISTILLER FAILURES OF FISCAL MANAGEMENT: A VIEW FROM THE COMPTROLLER GENERAL WEDNESDAY, MAY 3, 2017 HOUSE OF REPRESENTATIVES, COMMITTEE ON THE BUDGET, Washington, D.C. The Committee met, pursuant to call, at 10:00 a.m., in 1334 Longworth House Office Building, Hon. Diane Black, [chairman of the committee] presiding. Present: Representatives Black, McClintock, Grothman, Lewis, Bergman, Faso, Smucker, Ferguson, Arrington, Woodall, Johnson, Westerman, Smith, Sanford, Renacci, Palmer, Brat, DelBene, Jayapal, Carbajal, Schakowsky, Higgins, Jackson Lee, and Lujan Grisham. Chairman BLACK. The hearing will come to order. I want to wel- come the Committee on the Budget to the hearing of failures of fis- cal management. Today, we will hear testimony from the Comp- troller General of the United States, the Honorable Gene Dodaro. I want to welcome everybody back today. As I am sure everyone is aware, we will be introducing the fiscal year 2018 budget later this spring, and the challenges we face are enormous. Deficits are set to start rising again. Many government programs are in dire need of reform. And our economy is being held back by the policies of the previous administration. And while these problems are daunting, we are elected by our constituents to make the hard decisions and confront the chal- lenges head on. And that is exactly what we plan to do in this year’s House Budget Committee. That is also why we are having this hearing today on the failures of fiscal management, and it is so important and so timely to what we are called to do. We need to do better to understand how the government, Federal Govern- ment, is failing to effectively manage taxpayer dollars and how that is affecting our long-term fiscal solvency. I am happy to welcome our witness today, the Honorable Gene L. Dodaro. He is the Comptroller General of the United States and the director of the Government Accountability Office. The GAO possesses a wealth of information about the govern- ment’s fiscal condition and the operation of its programs. Three areas we plan to examine today are the disturbing rise of improper payments by the government agencies; the programs GAO con- siders as high risk for waste, fraud, and abuse and mismanage- ment; and the government’s long-term fiscal outlook, which, as all of you are aware, is not good. (1) VerDate Mar 15 2010 08:56 Jul 30, 2018 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 F:\HEARINGS 2017, 2018\5-03-17 COMPTROLLER GENERAL\30-527.TXT PIKE BU00-A363290 with DISTILLER 2 Mr. Dodaro, thank you for taking time out of your busy schedule to be here with us today. The Committee is looking forward to your testimony. But before we build solutions, we need to understand the core of the problem, and Mr. Dodaro’s testimony will be vital to that. First, are the improper payments made by the Federal Government. Im- proper payments are defined as any government payment that was made in an incorrect amount to the wrong individual or entity or for the wrong person. For example, an improper payment would be an unemployment check going to a person who has already re- turned to work. According to the GAO, improper payments surged to $144 billion in just 2016. That is a 35 percent increase from the $107 billion in 2012. This is a problem that is government wide, including 112 pro- grams across 22 agencies. Even worse, those numbers probably un- derestimate the extent of the problem since 18 government pro- grams deemed susceptible to improper payments did not even sub- mit error estimates last year. $144 billion is the minimum of the problem, not the maximum. Second, we want to examine the government’s high-risk pro- grams. Every 2 years, GAO publishes an updated list of programs that it covers especially vulnerable to waste, fraud, abuse, and mis- management. This year, GAO identified 34 programs that matched this description. The programs that demand further review are Medicare, Medicaid, Federal disability programs, Pension Benefit Guaranty Corporation, insurance programs, and the National Flood Insurance Program and veterans’ health care. Third, we want to focus on our long-term fiscal outlook. In Janu- ary, GAO released a report examining government spending, reve- nues, deficits, and debt. The conclusion was all too familiar. Our fiscal path is unsustainable, and if we fail to get control of debt and deficits, we are putting our country at risk of a fiscal and economic crisis. GAO’s simulation shows our debt-to-GDP ratio would pass its all-time historical high of 106 percent in the next 15–20 years and that Social Security disability insurance, the Medicare Hos- pital Insurance Trust Fund, and the Social Security Old-Age and Survivors Trust Funds will be depleted, and, therefore, forced to pay reduced benefits. A failure to solve these problems means seniors, who have worked their whole lives, and those truly in need of help, can no longer count on these vital safety net programs. Improper pay- ments, high-risk programs, and our growing debt all pose an enor- mous challenge, and we need to take real, tangible steps to reduce the amount of money that is being wasted to help keep our fiscal house in order. Mr. Dodaro, once again, thank you for being here. I know you and your staff have worked very hard to prepare for this hearing today. And thank you for taking your job as a government watch- dog so seriously. I look forward to hearing your testimony and your recommendations on how we can all be better stewards of the tax- payer dollars. And thank you for that, and I now yield to the rank- ing member, Mr.Yarmuth. [The prepared statement of Chairman Diane Black follows:] VerDate Mar 15 2010 08:56 Jul 30, 2018 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 F:\HEARINGS 2017, 2018\5-03-17 COMPTROLLER GENERAL\30-527.TXT PIKE BU00-A363290 with DISTILLER 3 BLACK OPENING STATEMENT: GAO Hearing on the Failures of Fiscal Management Washington, D.C., May 3, 2017 As Prepared for delivery-House Budget Committee Chairman Diane Black: Good morning, and thank you everyone for being here. As I'm sure everyone is aware, we will be introducing the Fiscal Year 2018 budget later this spring and the challenges we face arc enormous. Deficits are set to start rising again, many government programs arc in dire need of reform, and our economy is being held back by the policies of the previous administration. While these problems are daunting, we were elected by our constituents to make the hard decisions and confront these challenges head on. And that's exactly what we plan to do at the House Budget Committee. That is also why today's hearing Failures of Fiscal Management is so important and so timely.