[House Hearing, 113 Congress] [From the U.S. Government Publishing Office] WASTE IN GOVERNMENT: WHAT'S BEING DONE? ======================================================================= HEARING before the COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED THIRTEENTH CONGRESS SECOND SESSION __________ JANUARY 9, 2014 __________ Serial No. 113-102 __________ Printed for the use of the Committee on Oversight and Government Reform [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Available via the World Wide Web: http://www.fdsys.gov http://www.house.gov/reform _______ U.S. GOVERNMENT PRINTING OFFICE 87-646 PDF WASHINGTON : 2014 ______________________________________________________________________ For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC 20402-0001 COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM DARRELL E. ISSA, California, Chairman JOHN L. MICA, Florida ELIJAH E. CUMMINGS, Maryland, MICHAEL R. TURNER, Ohio Ranking Minority Member JOHN J. DUNCAN, JR., Tennessee CAROLYN B. MALONEY, New York PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of JIM JORDAN, Ohio Columbia JASON CHAFFETZ, Utah JOHN F. TIERNEY, Massachusetts TIM WALBERG, Michigan WM. LACY CLAY, Missouri JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts JUSTIN AMASH, Michigan JIM COOPER, Tennessee PAUL A. GOSAR, Arizona GERALD E. CONNOLLY, Virginia PATRICK MEEHAN, Pennsylvania JACKIE SPEIER, California SCOTT DesJARLAIS, Tennessee MATTHEW A. CARTWRIGHT, TREY GOWDY, South Carolina Pennsylvania BLAKE FARENTHOLD, Texas TAMMY DUCKWORTH, Illinois DOC HASTINGS, Washington ROBIN L. KELLY, Illinois CYNTHIA M. LUMMIS, Wyoming DANNY K. DAVIS, Illinois ROB WOODALL, Georgia PETER WELCH, Vermont THOMAS MASSIE, Kentucky TONY CARDENAS, California DOUG COLLINS, Georgia STEVEN A. HORSFORD, Nevada MARK MEADOWS, North Carolina MICHELLE LUJAN GRISHAM, New Mexico KERRY L. BENTIVOLIO, Michigan Vacancy RON DeSANTIS, Florida Lawrence J. Brady, Staff Director John D. Cuaderes, Deputy Staff Director Stephen Castor, General Counsel Linda A. Good, Chief Clerk David Rapallo, Minority Staff Director C O N T E N T S ---------- Page Hearing held on January 9, 2014.................................. 1 WITNESSES The Hon. Tom Carper, a U.S. Senator from the State of Delaware Oral Statement............................................... 4 Written Statement............................................ 8 The Hon. Tom Coburn, a U.S. Senator from the State of Oklahoma Oral Statement............................................... 10 Mr. Thomas A. Schatz, President, Citizens Against Government Waste Oral Statement............................................... 27 Written Statement............................................ 29 Mr. Chris Edwards, Director of Tax Policy Studies, CATO Institute Oral Statement............................................... 62 Written Statement............................................ 64 Mr. Brandon Arnold, Vice President of Government Affairs, National Taxpayers Union Oral Statement............................................... 72 Written Statement............................................ 74 Ms. Jaimie Woo, Tax and Budget Associate, U.S. Public Interest Research Group Oral Statement............................................... 79 Written Statement............................................ 81 APPENDIX Opening Statement by Ranking Member Cummings, Reps. Bentivolio and Cartwright................................................. 114 Staff Report submitted by Rep. Mica.............................. 118 2012 Congressional Ratings for the Council of Citizens Against Government Waste submitted for the record by Chairman Issa..... 122 Feb. 2013 publication ``Prime Cuts Summary'' submitted for the record by Chairman Issa........................................ 129 U.S. PIRG publication ``Toward Common Ground 2013'' submitted by Chairman Issa.................................................. 155 Mr. Edwards responses to questions for the record from Rep. Collins........................................................ 174 NTU responses to questions for the record by Rep. Speier......... 176 U.S. PIRG responses to questions for the record by Rep. Collins and Rep. Speier................................................ 180 Citizens Against Govenment Waste responses to questions for the record by Rep. Speier and Collins.............................. 186 WASTE IN GOVERNMENT: WHAT'S BEING DONE? ---------- Thursday, January 9, 2014 House of Representatives, Committee on Oversight and Government Reform, Washington, D.C. The committee met, pursuant to call, at 9:35 a.m., in Room 2154, Rayburn House Office Building, Hon. Darrell E. Issa [chairman of the committee] presiding. Present: Representatives Issa, Mica, Turner, Duncan, McHenry, Jordan, Chaffetz, Walberg, Lankford, Amash, Gosar, Gowdy, Farenthold, Woodall, Collins, Meadows, Bentivolio, DeSantis, Cummings, Maloney, Norton, Tierney, Clay, Lynch, Connolly, Speier, Duckworth, Kelly, Davis, Cardenas and Grisham. Staff Present: Will L. Boyington, Press Assistant; Molly Boyl, Deputy General Counsel and Parliamentarian; Lawrence J. Brady, Staff Director; Katelyn E. Christ, Professional Staff Member; John Cuaderes, Deputy Staff Director; Adam P. Fromm, Director of Member Services and Committee Operations; Linda Good, Chief Clerk; Tyler Grimm, Senior Professional Staff Member; Frederick Hill, Deputy Staff Director for Communications and Strategy; Christopher Hixon, Chief Counsel for Oversight; Mark D. Marin, Deputy Staff Director for Oversight; Laura L. Rush, Deputy Chief Clerk; Sarah Vance, Assistant Clerk; Peter Warren, Legislative Policy Director; Rebecca Watkins, Communications Director; Jeff Wease, Chief Information Officer; Sang H. Yi, Professional Staff Member; Beverly Britton Fraser, Minority Counsel; Aryele Bradford, Minority Press Secretary; Jennifer Hoffman, Minority Communications Director; Adam Koshkin, Minority Research Assistant; Juan McCullum, Minority Clerk; Leah Perry, Minority Chief Oversight Counsel; Brian Quinn, Minority Counsel; Dave Rapallo, Minority Staff Director; and Daniel Roberts, Minority Staff Assistant/Legislative Correspondent. Chairman Issa. The committee will come to order. The Oversight Committee exists to secure two fundamental principles: First, Americans have a right to know that the money Washington takes from them is well spent; and, second, Americans deserve an efficient, effective government that works for them. Our solemn responsibility is to hold government accountable to taxpayers because taxpayers have a right to know what they get from their government. It is our job to work tirelessly in partnership with citizen watchdogs to deliver the facts to the American people and bring genuine reform to the Federal bureaucracy. Today's hearing strikes at the heart of the committee's mission: finding and rooting out waste in the Federal government. At the beginning of every session, Congress holds a hearing to learn from experts about the status of wasteful spending and recommit ourselves to eliminating it. Much like the fiscal outlook in the past, the hearing today will be grim; grim both because of actual waste and because of organizational waste. President Obama has overseen the highest postwar deficits on record, and last year we had, in spite of tax increases that continue to pile up, a $680 billion deficit. The American people have a burden on top of their mortgage on their home of $140,000 per home. Real perspective is that this is unsustainable. If your home were going further in debt every year, you would ask, how long can I tolerate it? And yet in just a few years, your home will be a quarter of a million dollars in debt if we do not quickly reverse the waste and the unnecessary growth in government. This committee does not appropriate, nor do we tax. Our committee's responsibility is to find within the authorized mission of the government the kind of waste and inefficiency that can be eliminated to deliver to the American people a better value. Reasonable estimates are a better value could save $200 billion of the stockholders' hard-earned money. In other words, we could eliminate a third of the deficit simply by eliminating known and recognized waste. Our first panel today are our partners in the Senate, Senator Carper and Senator Coburn. No two people have been more willing to speak out against the organizational waste and misspending than these two Senators. Our second panel will be four individuals who represent organizations that are heavily contributed to the spending reform discussion. First, though, we will hear from our Senators. It is my great pleasure to welcome my colleagues, Dr. Coburn, who releases the Wastebook every year, and recently released this year's chronicles, the kind of waste that can be eliminated, and chairman, Senator Carper, has been a good partner in this discussion. I look forward to their hearings. I will remind my colleagues that any questioning or any further comments after their opening statements will be at the discretion of the Senators, and I take pleasure in introducing the ranking member for his opening statement. Mr. Cummings. Thank you very much, Mr. Chairman. I am very pleased that you called this hearing today. This is the bread and butter of what our committee does, and I hope today's hearing will further this important discussion, which we have had regularly in similar hearings over the past few years. I thank all the witnesses for taking time out of their busy schedules to be here today with us and participate in this hearing. I am delighted that Ranking Member Coburn has joined us at our first hearing this year to help set the tone for rooting out government waste. Senator, I want to say to you I have seen your reports, and I agree with many issues you identify. Since this may be one of our last opportunities to work together before your retirement, I look forward to an effective and rewarding collaboration, and I thank you for not only your service to your constituents, but your service to our Nation. Mr. Chairman, I also appreciate that you agreed to my request to invite our good friend Chairman Carper to share his thoughts and views with us as well. Chairman Carper has been tireless in his efforts to make Federal agencies work more effectively and efficiently. Senators Carper and Coburn have been at the forefront of legislation that has resulted in billions, and I repeat billions, of dollars in savings for the Federal Government. Today we have a unique opportunity. We have in the room the chairman and ranking member of the Senate Homeland Security and Governmental Affairs Committee. We also have the chairman and ranking member and additional members of the House Committee on Oversight and Government Reform. These are the two key committees that are responsible for reducing waste, fraud, and abuse in our government. I propose that we use some of our time today to set a bicameral agenda for the coming year. Although we have relatively little time remaining in this Congress, I propose that we try to identify some of the top reform proposals we might be able to achieve on a bipartisan basis. Let us begin with a process today to identify issues on which we have common ground and hopefully save taxpayers billions of dollars going forward. The Government Accountability Office's annual high risk list and duplicative programs report give us a critical tool for focusing our oversight efforts. Inspector general recommendations are another key we can examine, and then, of course, we have proposals from groups like those here today. One agency that comes up repeatedly every single year in virtually every single report is the Department of Defense. This makes sense because it is the largest Federal agency with the biggest budget. The Department's financial management as a whole continues to be designated as high risk because GAO determined that DOD has not been able to control costs, ensure basic financial accountability, measure performance, prepare auditable financial statements, and prevent and detect fraud, waste, and abuse. It would be a big step in the right direction if DOD could produce for the first time an auditable financial statement. DOD has also experienced significant problems with management and oversight of the $365 billion obligated for contracts last year alone. The Congressional Research Service reports that DOD acquisition programs have experienced poor performance against the backdrop of war in Afghanistan, spiraling contract costs, and decline in the size of defense acquisition workforce. DOD also leads the Federal Government with wasteful, duplicative IT investments, and I know this is something that our chairman is most interested in. In testimony before the committee last year, GAO warned that several DOD IT investments experienced significant performance problems and were, indeed, high risk. One specific example that GAO highlighted was a contract that the Air Force cancelled in December 2012 after spending $1 billion on expeditionary combat support system. Despite these and other examples of waste, some progress is being made that we should be proud of and build upon. Finally, President Obama made it a priority to reduce improper payments when he took office, and improper payments have been reduced from $125 billion in 2010 to $106 billion in 2013, but that is still not good enough. Chairman Carper and Ranking Member Coburn have been active with legislation on this topic, and I hope Chairman Issa and I can partner with you going forward. There is also improvement in financial management within government agencies. For example, the Department of Homeland Security has obtained a clean audit of its financial statement for the first time in the agency's 10-year history. This committee has been an integral part of improving financial management at DHS, and it is good to see positive results from our continued oversight. Moving forward, we have to continue this progress by conducting our oversight efforts in a sustained, dedicated, and bipartisan manner. It is not enough for us to convene hearings and hope for the best. We need to work cooperatively and diligently to find tangible solutions to minimize government waste and maximize efficiency. After all, ``government reform'' is part of the name of this committee. I anxiously look forward to the testimony, and I thank you, Mr. Chairman, for the courtesy. Chairman Issa. I thank the ranking member, and I thank you particularly for alluding to FITARA, something that we have worked on on a bipartisan basis. All Members will have 7 days to submit their opening statements. And we now welcome our first panel of witnesses. Senator Carper and Senator Coburn, you need no introduction, and, more importantly, I will not belabor the time necessary to get to your important statements by suggesting one. Chairman Carper, you are recognized. WITNESS STATEMENTS STATEMENT OF THE HON. TOM CARPER, A UNITED STATES SENATOR FROM THE STATE OF DELAWARE Senator Carper. Mr. Chairman, to you, to our friend, the ranking member Elijah, to many of our colleagues with whom Dr. Coburn and I have worked, including the fellow from Utah over here most recently on really surplus property, properties that we don't need, excess properties, wasteful properties. I have a prepared statement. I would ask, if we could, that it might be included for the record, Mr. Chairman. Chairman Issa. Without objection, both of your entire statements will be placed in the record. We are not running a clock on you, but it isn't the Senate, so bear that in mind. Senator Carper. Thank you. I would like to think that there are three--first of all, thank you for this hearing. Thank you for giving us a chance to participate. Last year when Dr. Coburn and I were renewing our positions as ranking member and chair of the Homeland Security and Governmental Affairs Committee, we invited both you and Representative Cummings to come and lead off our hearing on postal reform. I am encouraged to report today that I think Dr. Coburn and I, we have been working on bipartisan legislation, and I think we are very close to hammering out the last final details to enable us to move to a markup in our committee we hope this month, and to be able to report out a bipartisan bill, and to have--I think we are having some discussions with you already on the direction we are going, but we wanted to have more. In terms of deficit reduction, part of what they are doing over at the Postal Service is rightsizing the enterprise, figuring out how to spend less money, get a better result for that, and we need to take that kind of lesson across the way in our government. I like to think there are three ways, three keys to deficit reduction. One of those is entitlement reform. The largest part of our spending is entitlement programs. They are important, but if we are going to make progress on deficit reduction, we can't ignore them. What I suggest we do is three things. I think Dr. Coburn agrees with it; I think the President agrees with it. One, reform the programs so that they save money, so we save the programs for our children and grandchildren, and that we do so in a way that does not savage old people or poor people, those three things. The second thing to do for deficit reduction, I think we need some additional revenues. When we had balanced budgets for 4 years between 1997 and 2000, revenues as a percentage of GDP was about 20 percent for 4 years. Spending as a percentage of GDP was about 20 percent for 4 years. We had 4 years of balanced budgets. And I think we need tax reform. I serve on the Finance Committee. We are trying to do that working with Dave Camp and Sandy Levin over here, but we need tax reform that, one, I think lowers corporate rates so that we are competitive with the rest of the world, but also generates some revenues for deficit reduction. The third thing we need to do is look at everything we do in government, everything we do in government, and ask this question: How do we get a better result for less money or the same amount of money in everything we do? It is almost like a culture change, from a culture of spendthrift towards a culture of thrift, and that is what Dr. Coburn and I do with our committee, and I know it is a lot of what you do. Most of you know Mike Enzi, Senator from Wyoming. Mike Enzi has what he calls the 80/20 rule, and his 80/20 rule has enabled him to work with Ted Kennedy when he was alive, and they were both leaders of the Health, Education, Labor & Pensions Committee, and they got a lot done. I asked Mike Enzi, I said, how do you get so much done? He says, Well, we subscribe to the 80/20 rule. I said, What is that? He said the 80/20 rule is that we agree--Ted and I agree on 80 percent of the stuff; there is 20 percent of the issues we don't agree on; and what we decide to do is focus on the 80 percent where we agree, and the 20 percent that we don't, we set that aside for another day. And they make great progress as a team, Democrat and Republican. I think Dr. Coburn and I make pretty good progress, and I think you set a good example for us in some of the same regards. I want to take maybe just a couple minutes and focus on the third of the three pieces I talked about with respect to deficit reduction, and that is how do we get a better result for less money in everything we do. Representative Cummings mentioned improper payments. Dr. Coburn and I have gone back to that well again and again and again. We have introduced legislation, passed it in 2010 with your strong support, again enhanced it again in 2012. We introduced new legislation today so that--not today, but this year, last year, so that we don't continue to waste money on benefits to people that are dead, and a lot of commonsense--a lot of commonsense stuff. Elijah is right. When we--in fact, when I was new in the Senate, George W. Bush said, we know we are spending a lot of money, wasting a lot of money in improper payments. Let us do something about it. We passed legislation that said let us start that we want agencies to keep track of improper payments and report that. That was 2000, I think. 2010, Dr. Coburn and I, with your help, support, we updated that so that not only would agencies be required to report--identify and report improper payments, but we wanted them to stop making them, and we wanted them to go out and try to recover monies that were improperly paid, and we said we want the managers of agencies to be evaluated in part on how well they are complying with this law. And as Representative Cummings says, improper payments have been dropping since then. We enhanced that bill last year. We have offered legislation in the Senate called the PRIME Act, which would enable us to do--to waste less money in Medicare and Medicaid. People say we can't curb spending or curtail spending in those entitlements. Well, we can, and there is a lot of things we can do. We put it in the PRIME Act, it has been made part of the SGR legislation that is coming out--that has come out of the Finance Committee, and we hope it is something that you can embrace here in the House. It will enable us to save money in these programs, save the programs, and not savage old people or poor people. The other thing I want to mention, if I can, is that we have hundreds of thousands of properties that the Federal Government owns. Some of them are defense related; many are not. Some of the properties we own; a lot of them we lease. We waste huge amounts of money, billions of dollars every year, in maintaining these properties that we don't fully use or don't use at all, maintaining the properties, heating them, cooling them, securing them, and it is a real thicket to try to figure out how to deal with it. It involves not just the Congress, but it involves all kind of folks including homeless groups, including communities across the country. We have got to deal with this, and Dr. Coburn and I are committed to getting it done this year, and we welcome very much the opportunity to work with Republicans and Democrats on this committee. That is just one of the areas where we can get a better result for less money and save money that we are foolishly wasting. I would just say again, Enzi has got it right, that 80/20 rule. There is a lot to it. Let us focus on that 80 percent that we can agree on. We can't do it by ourselves, obviously you can't do it by yourselves, but if we can marry our fortunes together, work with OMB, especially with GAO, who gives us that great high risk list every 2 years with our--really that is a to-do list--we can get a lot done. And a lot of this stuff like improper payments, the administration actually agrees with us, and property reforms they agree with us, and we want to get something done, so let us just do it. Thank you, Mr. Chairman. Chairman Issa. Thank you. [Prepared statement of Senator Carper follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Chairman Issa. They might remind us all that they agree with us on 5-day instead of 6-day delivery, too. We will get there. Dr. Coburn. STATEMENT OF THE HON. TOM COBURN, A UNITED STATES SENATOR FROM THE STATE OF OKLAHOMA Senator Coburn. Well, thanks for the opportunity to be here, and I thank every member of the committee that is here. You know, the problem isn't that the Congress doesn't get along. No, we have a $680 billion deficit we all agreed to last year. My take is we get along too well. We have Presidents that come and go and Congresses that come and go, but the wasteful spending continues. Why is that? Why does it happen? I mean, we force through in legislation to make the GAO show us where duplication is, and there has been one piece of legislation come out of Congress in 4 years--it didn't even come out of Congress, it came out of the House-- that consolidated one of the things the GAO said needed to be consolidated. It is called the SKILLS Act. It is the only thing that has happened in 4 years. So the problem isn't that we don't know what the problem is. The problem is that we don't act on the problem, and it is hard. There is no question. If you talk to the members of the Labor and Workforce Committee, it is hard when they consolidated 36 programs into 6. That is not easy work. But that bill hasn't even been taken up by the Senate or the Health Committee in the Senate. So the problem is us. Sequestration couldn't even force Congress-- sequestration didn't even force Congress to cut, eliminate or consolidate any of the government's hundreds of duplicative, outdated or ineffective programs, not one. The problem is us. We are not acting on the information that we have. We agreed to undo modest, automatic spending reductions without eliminating a single unnecessary program. Not one. We added $60 billion back in spending over the next 2 years, but we didn't eliminate any of the waste. If you can't find waste in any part of the Federal budget, whether it is healthcare programs, defense spending, which is ripe with waste, or even the Tax Code, it is only one reason: You haven't looked. You have not looked. The government has grown so massive that there is only one department in the entire Federal Government that actually knows all of its programs. That is the Department of Education. They put out a list every year. They are the only one. There has been attempts to try to force that through the Senate. There is a bill in the House to try to make sure every department at least has a list of their programs. You haven't moved it; we haven't moved it. Before you can fix anything, you have got to know what is there. You have to look at it. We haven't looked. The Pentagon can't pass a simple audit. They were mandated to pass an audit the first time in 1984. We have a bill Audit the Pentagon, an act that has real teeth in it if the Pentagon doesn't perform. When the NDAA came through, they took the teeth out, but put the audit in. Well, we have been telling them to do an audit for 30 years. Do you think they are going to do an audit without any teeth, without any threat, without any consequences of not doing it? And yet it was pulled out. So we are not going to do it until we get serious about doing it. If you think about it, even in sequestration, you don't have to agree with everything that I listed in the Wastebook. I could have put 300 there and $60 billion worth of wasteful spending, but the one thing you can't disagree with is that when we are borrowing $680 billion a year from our kids, are these things that we listed in the Wastebook a priority for the Government of the United States? And they are not. And the reason they happen is because there is not good oversight by the committees of authority. That is why they happen. It is not meant to embarrass. It is meant to say what are we doing? Why are we not looking? Why are we not working to solve the problems? Representative Cummings, you mentioned a contract with the Air Force. In 2010 we notified the Air Force that they should cancel that program. That is when they were only a couple hundred million dollars into it. Consequence. What are the consequences of cancelling that program? They paid a close-out fee, but here is the consequences that didn't happen: Whoever was managing that contract or who let that contract in the first place didn't get fired, and the contractor wasn't sued by the Federal Government for nonperformance. So the same thing is going to continue to happen until we start demanding accountability, and that accountability has to start with us first. We can't ask the Air Force to be accountable if we are not accountable. The Wastebook details 100 projects, $30 billion. You can pick with it on whether or not it is accurate and whether or not it is right, so take--throw 50 percent of it away, $15 billion. The question is, is in a time when we are borrowing from our future, should we be spending that money now? And I would contend that we shouldn't. And so if we are, why is it happening? And it is happening because we are not doing our jobs, and I am talking collectively, the Senate and the House, the committees. If you think about the GAO reports that have come out over the last 3 years, another one will come this March, what has happened based on the information that they have given us? One bill out of the House. Nothing out of the Senate. The President, to his credit, has taken a lot of that and put it in his budgets, saying these are right things to do, we should do it. We haven't acted on it, he hasn't acted on it because he can't, because we won't do it. You know, I would close just by giving you just a little rundown of what is out there. Most people don't realize. We have 679 renewable energy programs from 23 different agencies costing $15 billion a year. Can anybody logically explain why we would need 679 programs for renewable energy? Nobody can. Each one of those, each one of those 679 has an overhead, has a management team, has associated costs with it. We have 253 different Department of Justice crime prevention programs, $4\1/2\ billion. Why do we have that many? Why can't we consolidate those? Finally, I will end, and I have got a list, I will be happy to supply it to all your Members, a summary of what the GAO has given us so far in terms of duplicative programs. I met with Congressman Collins before this, says, how do you do it? It is hard work. You have to win over the heart of the committee chairman of jurisdiction and say, won't you do oversight on this? Won't you look at it? Won't you try to consolidate it? And if that doesn't work, what you have to do is embarrass the Members of Congress into doing their job. I am embarrassed that we as Members of Congress have allowed this list with the multitude of programs that are on there, with the duplicity that is in it, that we haven't fixed it. And we don't have an excuse. We are guilty of not doing our jobs, and the way to turn that around is to start doing it. And I understand this committee has jurisdiction to look at it, but you can't change it unless the committees of jurisdiction act. And so what we need to all be is ambassadors to the separate committees that they will, in fact, do the hard work, do the oversight, streamline, eliminate, combine, and consolidate so that, in fact, we can actually get some savings to spend on things that may be much more important. And what I feel is we are not meeting the charge, we are not meeting our oath, because we fail to do the very, very hard work of having the committee hearings, pulling the people in, and saying, what is the problem? How do we address the problem? And most agencies, by the way, don't know they are a problem, either, because nobody in the agency knows all the programs. And so it starts with us, and my message would be, we need to redouble our efforts on both sides of the aisle, both sides of the Capitol, to say that we are going to be good stewards. And it is not that the program ideas are bad, but when you have 679, there is no way you can justify that to anybody. And so I would leave you with that. The first thing you ought to do is consolidate 679 renewable energy programs into maybe two or three and get rid of the overhead, and if you did that throughout the Federal Government on all these programs, we could actually get to a balanced budget without raising taxes, without making hard choices in things that really hurt people, and could actually do our jobs. Thank you, and I am happy to answer any questions you might have. Chairman Issa. Thank you. Chairman Issa. And if it is all right with the two Senators for a few minutes, we will go through informal questions. I am not going to yield 5 minutes back and forth, I know you don't have the time for it, and I am not going to recognize myself except to say that, Dr. Coburn, your Wastebook will be inserted into our record today as essentially the collateral material for your opening statement, without objection. To view Dr. Coburn's ``Wastebook,'' please visit: [www.coburn.senate.gov/public/index. cfm?a=Files.Serve&File-- id=Occ34c92-6901-425d-a131-d3151d7216ef]. Chairman Issa. Mr. Chaffetz, I understand you had a brief comment? Mr. Chaffetz. Yes. I thank the chairman, and I thank both gentlemen here, both the Senators, for their passion. It is inspirational to me what you are doing, and knowing there are people that truly care. I particularly wanted to highlight my interaction with Senator Carper. We had a bill here in the House, H.R. 328, that last term we passed unanimously, passed unanimously in this body, and passed unanimously out of the House, to deal with real property disposal. And working together to get that done with Senator Carper, there is something like, GAO estimates, nearly 78,000 properties that are either not utilized or underutilized. Additionally, the GAO estimates that we spend about $1.5 billion per year to operate and maintain these properties that we don't need. My State of Utah, we have got an operating budget of $12- to $13 billion, everything we do for the entire year, and yet the Federal Government has got 78,000 excess Federal properties, spend $1.5 billion. We have got to solve that. That is the low-hanging fruit. And it does have to happen in a bipartisan, bicameral way, and I just wanted to thank Senator Carper in particular for his working across the aisle in a bicameral way, and I am optimistic that we can actually help solve this. Senator Carper. Mr. Chairman, just a brief comment if I could. Chairman Issa. Of course, Senator. Senator Carper. It is a real pleasure for us to work-- both of us to work with you. The first things Tom Coburn and I ever did together when he was new in the Senate, he was chairman of the Republicans in the majority, he was chairman of the Federal Financial Management Subcommittee of what is now Department of Homeland Security and Governmental Affairs, we went to Chicago together, and we visited an old postal facility. It was empty, huge facility. It has been empty forever. It is still empty. There are tens of thousands of buildings like that, and we can do something about it. We are determined to get that legislation through; it is out of our committee. We are determined to get the kind of legislation that we have coauthored together and get it done. I wanted to just take a moment, it is in my prepared statement, Mr. Chairman, but you have done great work on what we call the DATA Act, try to focus on disclosure and try to focus on data standards for some of the spending that we do. Dr. Coburn and I have worked to get that legislation. Mark Warner, Mark Warner has been the lead, as you know, in the Senate. But we have reported the legislation out of committee, and my hope is that we can get that done. That is one of the 80 percent of the things that we agree on, and, frankly, so does the administration. Chairman Issa. Thank you. I will now go to the ranking member for a short comment. Mr. Cummings. Just one quick question. You know, first of all, thank you both for your testimony. One of the things I have learned after being on the Earth for 62 years is that a lot of times people don't do things because they can't do everything that they want to do, so they end up doing nothing. Maybe they don't have time, they find excuses, whatever. I guess where I am going with this is what do you all see? You talk about low-hanging fruit, Senator. I mean, what can we reasonably do, and particularly in light of Senator Coburn's comments, to get some things done? It may not be everything, but at least get some things done so at this time next year we will say, well, we were able to chip away at this. I mean, what-- I mean, what are the--and then---- Senator Coburn. It is not hard. It is not hard. Mr. Cummings. Yeah, okay. Senator Coburn. You get rid of a $680 billion deficit $1 billion at a time. You have got $5.6 billion being collected by people who are on disability for unemployment insurance. You have got $100 million going in unemployment insurance to people who have net incomes greater than a million dollars a year. Those aren't hard things to do. I mean, if you are disabled, the very fact that you are disabled, you are not working, that is one of the requirements other than the short period of time that you might be in a trial period, so it doesn't make sense. You know, the low-hanging fruit, it is all over, but it requires work. It means we have to move it through the process, but unless you start at a billion dollars at a pop or $100 million to get to a billion, you are never going to get there, and what has happened is nobody has started. The whole reason I passed the legislation forcing the GAO to outline all this duplication was I thought it would embarrass us into acting. Boy was I wrong. It hasn't embarrassed us at all because we haven't acted. We haven't done anything except what came out of the class--I mean, the SKILLS Act. So you do it by a billion at a time, and once you start doing it, what you find out is, you know, it really feels good to be an efficient steward of the taxpayers' money, and it doesn't have to be--these aren't necessarily controversial issues. These don't have to be partisan issues. Do you really think we would disagree in eliminating these 679 green programs? You know, couldn't we all agree that we want the green programs, but couldn't we do it with 10 or 15 instead of 679? I mean, those aren't controversial issues. The fact is just nobody has the initiative to go and do it. We are not seeing initiative by Members of Congress to say, I am taking this on, I am taking this on, let us get it done. And every year we don't do it, every year we don't reform contracting at the Pentagon, every year the Pentagon can't meet an audit means that they have no idea. Realize, the Constitution requires them to give us a report of how they spend their money, and they can't, and yet we don't want to put any teeth on the Pentagon to force them to do that, that is too hard? We need to embarrass our colleagues that are protecting the Pentagon from becoming responsible. Mr. Cummings. Thank you, Mr. Chairman. Senator Carper. If I could just give a quick response, if I could. Chairman Issa. Of course, Senator. Senator Carper. When Dr. Coburn and I were the chairs and the ranking member on a subcommittee of Homeland Security and Governmental Affairs, Federal Financial Management, it took me a while, but I finally realized, as much as we wanted to do something about some of these wasteful spending issues, if it was just our subcommittee working on it, we weren't going to get much done, but maybe if we partnered with the full committee, we could get something done. And so we started working with Joe Lieberman and Susan Collins, and we realized maybe if we work with the House on a bunch of this legislation, a lot of the things that we are talking about here, we could increase the leverage of a little subcommittee. Then we said, you know, over at GAO every 2 years they come up with their high risk list. It is really a to-do list for us for ways to reduce wasteful spending, inefficient spending. So we started meeting with Gene Dodaro, partnering with his folks at GAO, and that was helpful. We got ourselves a new--the President nominated a wonderful woman last year, Sylvia Mathews Burwell, to be OMB Director, and they put together good management teams that includes a gal named Beth Cobert, and who is now the Deputy for Management. They have a management initiative, agenda for the administration. So why don't we partner with them as well? You have got other people that are going to follow Dr. Coburn and I to the witness table, Citizens Against Government Waste, National Taxpayers Union, who really care about this, are passionate about how do we eliminate wasteful spending. And the key is to find that 80 percent of stuff that we agree on, all of us, and then we increase the leverage of a subcommittee or a committee and get real things done and make the kind of progress. The stuff that we put in the legislation that Dr. Coburn and I authored with input from you, help from many of you and a bunch of folks, but the PRIME Act, which is the next step, we think, in wasteful spending, put it in the SGR reform legislation, the doc fix legislation. Most of it is there. It is great stuff. It is great stuff. It doesn't savage old people or poor people. It helps save those programs, Medicare and Medicaid. It saves them. It saves money. Chairman Issa. Thank you. Mr. Duncan, I understand you had a quick question. Mr. Duncan. Well, I just wanted to express my appreciation to both Senator Carper and Senator Coburn. Both of them were great Members of the House, and they are doing great work in the Senate. It is sad that every week, sometimes almost every day, we read terrible examples of waste. I read recently about the military building a $36 million headquarters in Afghanistan that nobody wants, and there is nobody there to use it, it is just going to be a brand new, empty building. I remember USA Today writing about the billion-dollar air marshal program where they are spending $250 million per arrest, and they have had more air marshals arrested than arrests by air marshals. So many examples. And before Congressman Chaffetz got here, Senator Carper and I did another property disposal bill years ago. These are properties that the Federal Government doesn't even want, and I know Senator Carper's been working on that for years. And we passed it here in the House, and I don't know, we need to keep trying. But Governor Rendell, when he was mayor of Philadelphia, he was having problems with some government unions, and he said before the Ways and Means Committee, he said the problem with government is, he said, there is no incentive for people to save money, so much of it is squandered. There is no incentive for people to work hard, so many do not. That is the problem. We need to give more incentives or rewards. We have heard, all of us have heard, about how agencies spend 60 percent of their budget the first 11 months, and then scramble around to spend the last 40 percent in the last month. We need to give more incentives to government employees when they save some money. But I appreciate the work that both of you have done and are continuing to do. Thank you. Chairman Issa. Thank you. Mrs. Maloney. Mrs. Maloney. Thank you for calling this hearing, you and the ranking member, and I welcome our Senators and former colleagues in the House and congratulate you on your work. Senator Carper, your oversight on the census was very helpful, and I appreciated working with you. Dr. Coburn, I think your report is terrific. I am just glancing through it. I would like to hear a little bit of a history of it. When did you start it? Have you ever been successful in getting anything out of government that you have identified in the Wasteful report? And why can't we--I understand you are marking up an appropriations bill this week in the Senate, and Senate rules allow you to connect things to it. Why can't you connect a wasteful spending in a bipartisan way to this bill that is moving? Take some action. And I would like both of you to respond. I was astonished at the reports I have been reading through. I think Ms. Woo had this report on a plane that even the Pentagon doesn't want, the F-35 Joint Strike Fighter. The DOD Chief Acquisitions Under Secretary called it an acquisition malpractice. It is going to cost a trillion to maintain it, and they have already--the cost is now $400 billion, and they are saying it can't fly at night, can't land on aircraft, isn't useful in today's type of military operations that are more like the Navy SEALs than big planes that can't find a place to land and can't fly at night, and can't land on a--how would you get this out of the budget? How do you get something that even the Pentagon says they don't want out of the budget? So I am addressing the question to both of you, but, Dr. Coburn, could you start first with your history of this study that I am glancing at that I think is excellent, but have you gotten anything out of the budget that you have identified as extremely wasteful? And how do we get this F-35 that even the Pentagon is saying is wasteful, can't do what we want, is not responding to the type of military that we have in America today, which is more of a single swift strike, like the Osama bin Laden-type operation. Senator Coburn. Well, addressing the F-35, if you look at the history of that, when you are building planes, before you finish your design, you are going to have cost overruns. So it goes back to what I said earlier: Unless you do procurement reform within the Pentagon and actually have some adults in the room when you are buying something---- Mrs. Maloney. Well, excuse me. Let me ask you one question. How would you do that? Everyone has cost overruns. You can't outlaw cost overruns. You can document who is doing it, but---- Senator Coburn. Well, only the government has those kind of cost overruns. In the private sector you have a contract, and if you have a fixed-price contract, and if you have a cost overrun, it is on the provider, it is not on the buyer. So, you know, what we have done is create a culture where you do cost- plus on development; that is why the Nunn-McCurdy laws were put in. I would dispute some of the--parts of the F-35 are very applicable to what the military wants. There are some questionable areas of it, and there is no question it is way too expensive, I agree with you. We started the Wastebook about 4 years ago, again with the whole purpose to try to embarrass some of the agencies into thinking about some of the decisions they make. Just remember, Homeland Security, for example, you have billions and billions of dollars' worth of grants every year, but they don't follow them up, they don't see if they were met. There is only one agency in the Federal Government that is effective at grant writing, and it is the Department of Library and Museum Sciences, and let me tell you what they do. It is well known throughout the country that if you mess with them, and you are not compliant with your grant, and you spend the money other than, you are never going to get another grant. In other words, they create the proper expectation that when you deal with them, you are going to do what you said you are going to do, you are going to meet the requirements of the grant, and you are going to ascertain. You know, do you realize most of the grant programs we have people get grants for the same thing from two or three different agencies, and none of them even know it? Agencies don't have any idea. So we need grant reform. We need a mandate on how you write a grant, what the requirements are, what the consequences are. Homeland Security has no idea where their grant money is going, or how effective it is, and whether or not it is risk based. Where is the risk? Is the money going there? So it is lost. And we have thrown money at things, and we haven't done the oversight. I mean, when was the last time a committee of Congress said, we are going to do an oversight on the Department of Justice crime prevention grants, how well are they working, what are their metrics, what are they accomplishing? That is how we found out on job training. We actually did. I went to Oklahoma and looked at every Federal job training program in the State, every one of them. We have--in a city of 17,000 with an unemployment rate of less than 5 percent, we have 13 Federal job training programs working. Now, it is great about employing people in job training. They don't need a job training program. The other thing we found is the State-run job training programs are actually effective at giving somebody a skill. Most of the Federal job training programs are highly ineffective at giving somebody a skill to make a lifetime wage. And so when was the last time we had an oversight hearing on that? Mrs. Maloney. Well, I hope we have some oversight hearings on that. Senator Coburn. Yeah. Mrs. Maloney. But in your report, have you implemented any of the suggestions? Senator Coburn. Sure, we have done some things. We got a lot of squawk back, you know. We actually don't think that political science grants to study Congress right now are a priority. So I put that in a piece of legislation. They are squawking like crazy, the people who like to earn their money for doing studies of Congress, political science. Actually couldn't that wait until we are actually in a little better financial condition? It is about perspective. And what would you do if it was your money rather than somebody else's money? And that is the real problem. We don't treat it like it is our money, and we should be. Chairman Issa. Thank you. Senator Carper. Mr. Chairman? Chairman Issa. Let's go to the gentleman from Oklahoma. Senator Carper. Mr. Chairman? Chairman Issa. Yes, sir? Senator Carper. One minute, if I could, in response to Congresswoman Maloney's comments. You are all probably wondering what am I doing with these water bottles and this cup? This is an aircraft. It looks like a water bottle, but this is an aircraft. This is a C-5 aircraft, one of the largest airplanes in the world. We started building them in the late 1960s into really about the early 1980s. They carry a huge amount of cargo, troops, personnel and all. This is a C-17. It is a great airplane. It carries about half as much as a C-5, flies about half as far without refueling. This is a C-17. About 12, 13 years ago the Department of Defense and the Pentagon and President Bush said, we need C-17s, but what we really need are C-5s that have been modernized, have engines that don't need to be changed out every thousand flight hours, have hydraulic systems that work, avionic systems that will enable us to fly into the 21st century. They called for modernizing C-5s. Chairman Issa. The B models. Senator Carper. The Bs. Some As, but mostly the Bs. And what we started doing about 8 years ago was modernizing two Bs, C-5Bs, and one C-5A. As it turned out, for the price of buying one new C-17, we could modernize two or three of these babies. They fly twice as far, carry twice as much. We are now getting--in Dover Air Force Base we have C-17s. We also have C- 5s. We traded our Bs for C-5Ns. One of those aircraft a year ago set 42 world records for carrying cargo, flying literally from here to Turkey nonstop, no refueling. We can fly them over the North Pole to Afghanistan. For three of these, modernized, they will last another 30 or 40 years, cost as much as one of these. We have plenty of C- 17s. We don't need to lease aircraft from the Russians, a huge aircraft from the Russians. We need to modernize what we have. That is what we are doing. We are saving money, better result for less money. A lot of times we beat ourselves up in the administration, and we should, because of the wasteful spending that we do. This is an example of something that would make sense. It actually does save money and gives us a better result in terms of our airlift capability. The work that we are doing on improper payments, we are down, as Elijah said, from about $125 billion in improper payments a couple of years ago down to $106 billion. We are going to keep moving that in the same direction. The work that Dr. Coburn and I are doing especially in the PRIME Act will help us further in that regard. Chairman Issa. We are going to go into a lightning round very, very quickly, because I am getting more questions, not less. So I am going to ask everyone to stay within a minute. Mr. Lankford, you were next to ask. Mr. Lankford. Thank you, Mr. Chairman, and, Senators, thank you for being here as well. Senator Carper, you made the comment about the 80/20 rule. I have found that to be somewhat of a problem as we try to function going between the House and the Senate, even within the House or the Senate, because in my short time being here, most of the bills that come up are messaging bills rather than actual bills to fix a problem. They come with 80 percent of things that we agree on, and we decide to stick on 20 percent of things that are pure politics that we know will kill the bill. So a good idea gets, quote/unquote, voted on, but we know it goes nowhere. And that happens both directions, both parties are doing it. My question for you is, how do we move past that? How do we begin to deal with the actual issues and resolve the 80 percent of things that we do agree on that we can identify as waste and say, why can't we at least get an amendment on this in the Senate, why can't we vote it out of the House without adding a poison pill to it and to be able to get that moving? The comment that I want--I want you to be able to answer that. The comment I want to make as well is Dr. Coburn had mentioned identifying different programs. That is actually my bill, the taxpayer rights. That is something this committee has passed, passed with bipartisan support, and we are trying to get that to the floor, and it is one of those aspects I would like to see move through the Senate as well. It does something very simple. It forces every agency to identify every program that they have, what the cost is for administration for that program, how many people are served with that program, how many staff that they have for that program, the statutory authorization for that program, and a strange thing in government life, and that is the metrics, how do you evaluate this program? Because I have seen a tremendous number of programs that have no evaluation. The evaluation is how many people they serve rather than the effectiveness of actually what they do. And so I am hoping with the broad support that it had in this committee, it can pass with broad support in the House, and we would love to be able to have your help in the Senate to be able to get that through the Senate. That is a reasonable next step after the GAO reports. So your response on just that 80/20 and how we would be able to move some things with the politics of the day. Senator Carper. Dr. Coburn and I had breakfast this morning with Jeh Johnson, who is our new Secretary of Homeland Security. Dr. Coburn mentioned at our breakfast, he said the Founders, the people who wrote our Constitution, had in mind a system that was hard to get stuff done. They didn't make it easy. Part of the job of the Senate is to slow it down, but it doesn't mean stop it. I am going to go back to what I said before. What we have to do is just figure out how to use the leverage of a subcommittee, or a committee, or two committees working together, working with GAO, with OMB, with all these good government groups, and to pull in the same direction, work with the administration. And especially--we have got a team at OMB. They want to work, they want to do this stuff. The challenge for us is to figure out who the people are and to figure out how to work together, these different entities, and we can do that. We have got a couple of great examples. We can set an example. Your committee, our committee, we can set an example of bipartisan cooperation on something we all agree on. People don't want us to waste their money. If I had a dollar for every time somebody said to me in the last year, I don't mind paying a little more in taxes; I don't want you to waste my money. That is what they say. I don't mind paying a little more in taxes; I don't want you to waste my money. I don't want to waste my money or theirs, and there is so much we can do in a common agenda here. Let us do it. And we are doing it. Chairman Issa. Okay. As we go to Mr. Tierney, I am going to make a commitment and a pledge here consistent with Mr. Lankford. Mr. Coburn, Dr. Coburn, take anything out of your Wastebook that falls within our mutual jurisdiction. If you will make a vote on it with your chairman, I will make sure our committee brings the same bill and votes it out to the full House. And let us start trying to figure out whether it is $100 million, which would be a billion over 10 years, or a billion that would be $10 billion over 10 years. You pick something out of the book or something that is not in the book, and if the two of you are prepared to hold a committee vote on it, I will guarantee you a vote here on the same bill, and hopefully if we can suggest ones to you, we can come to the same agreement. And I will begin today scheduling that every week, if we have a bill that we agree on, no matter how small, if it falls within our jurisdiction, either completely or partially, I will guarantee you a vote in this committee on it. So hopefully that will give you an opportunity to go through the book and see if we can't find it, and whether it is FEHBP, the District of Columbia, you name it, let us find something and do something every week if necessary. Mr. Cummings. Mr. Chairman. Chairman Issa. Of course. Mr. Cummings. Very briefly. Mr. Chairman, I am very glad to hear you say what you just said, because, you know, there is an old song that says you have got me going in circles, and, you know, you can go in circles and never get off the merry-go- round. Chairman Issa. And doesn't it go, I am dizzy? Mr. Cummings. I am not taking it that far, just a circle. But my point is that, you know, I think it is good that, you know, we have got the four of us here right now, and what you just said is so very, very important. And it just goes back to what both of the Senators have said, that, you know, we have got to--we have got to move forward. And I appreciate your comment, and I am going to work with you. We will. Chairman Issa. Mr. Tierney. Mr. Tierney. Thank you very much. Just a comment that about a year and a half, 2 years ago, we did a bill identifying 250 tax expenditures and recommended just 28 of them be eliminated as low-hanging fruit, which was over $60 billion a year, and then suggested GAO take a look at the others and recommend which ones should be kept, which ones should be changed, which ones should be eliminated, and we haven't yet got any bipartisan support on that, but I don't think that is a bad way to go, at least a bad way to start. The other part we look at is the Defense. I mean, it is shameful, I think we can all agree, that the Defense Department's inability to even put financial statements together that can be used as a basis for audits. So do you have any ideas or comments, recommendations on what teeth to put into some sort of legislation that would tell the Department of Defense that unless they produce financial statements that are auditable, and then conduct an audit, something will happen, what might that be? Second, if you read the Stimson report of last year on the military, I think it recommends savings between $200 billion and $800 billion over the course of 10 years. But one of the recommendations in one of the subsidiary opinions that were written were that maybe rather than fight over the particulars of what is going to get cut in the Pentagon, we don't do a sequestration type of cut, but we say to the Pentagon, your budget is going to be reduced by X amount of dollars; you find out where you are going to save it, or you save it in these particular areas and report back to us how you have done it. Do you have any comments on those types of recommendations? Senator Coburn. Yeah. I was a member of the Bowles-Simpson Commission and actually voted for it, and most of those ideas came out of the work that we did in terms of the Pentagon. The Audit the Pentagon Act has teeth in it. The Pentagon is the only agency that pays their bills themselves. All the rest of them--all the rest of the bills of the Federal Government are paid by the Treasury, and the teeth that we put in Audit the Pentagon is if you can't get an audited Pentagon statement by 2017, we will have the Treasury start paying your bills, which means--and, by the way, a lot of the bills the Pentagon pay aren't due, and a lot of the bills that should be paid by the Pentagon aren't paid. It is a mess. And when you go to look at anything, there is all this fake accounting to be able to justify to make a payment. So the teeth where it was is to move the payment from the Pentagon. More importantly, you cannot manage what you cannot measure. The Pentagon can't measure hardly anything. And so the whole drive to get an audit of the Pentagon is not to get an audit of the Pentagon, it is to get them to the place where they can get management numbers that they can actually make decisions on. And the reason you have 20 percent waste in the Pentagon at a minimum is because they have no idea what they are doing because their numbers aren't any good. So it is a fixable problem, but remember, we had that in the NDAA, and when they incorporated it, they took all the teeth out. So you think we are going to get an audit in 2017? No. Because there is no consequences if there is no audit. And so we are going to continue the same practice. Mr. Tierney. Thank you. Chairman Issa. Thank you. Mr. Mica. Mr. Mica. I think this is a great way to kick off the new year. I congratulate you, Mr. Chairman and the Members of the Senate, with the responsibility for doing this. Listening to it, it is kind of interesting to hear the efforts of folks, Mr. Duncan, others, for example, disposal of public buildings or vacancies and hearing you talk about your early efforts, and we have all passed legislation, I passed some with Mr. Denham on that subject. But I come to the conclusion you can only eat an elephant a bite at a time, so you really have to focus. We haul folks down to an empty building; I think the first hearing I did as the chair of Transportation was in the vacant Post Office Building two blocks from the White House. That was in February 2 years ago. Then we went back a year later because they hadn't done anything and hauled the bureaucrats down there into the empty building. The first time it was 32 degrees outside, 38 degrees inside. That tends to get their attention, but it still takes time. That is a success. We have had successes, but you have to target. We have had a lot of failures. Amtrak, we are going to celebrate a billion dollars this year in a dozen years in food service losses for which we passed a law that you cannot spend money and lose money. TSA--Tom, you were here when we created it--started out with 16,500. We have 15,000 administrators and 66,000 employees, totally out of control. HIDTA, another example, set up to target some high-intensity drug traffic areas. Some of those are still going on, and it is a game that is being played. So we get constant oversight. I think they just released, we did 1600 hearings in the House. You have got to just keep going after the bastards until you are successful. I don't know anything else you can do. Chairman Issa. Senator Carper? Senator Carper. Mr. Chairman, I spent a lot of years in my life as a naval flight officer, Active and Reserve Duty. When we were trying to do something hard in the Navy, we used to say it is like turning an aircraft carrier. It takes a long time, but if you keep at it, you can turn them. We used to do--if you were doing something even harder, it is like changing an aircraft engine when the aircraft is in flight, and that is really hard. Last night I was invited to speak to a bunch of University of Delaware students who are down here for part of a semester. They are interns. They are doing internships on the cost of government here on Capitol Hill and outside of Capitol Hill. I asked all of them, I said, did you all know what you wanted to do with your life when you were 6 years old? Everybody there raised their hands. I said how many of you know what you want to do now? They are like 21, 22, 23 years old. Only just a few of them raised their hand. I said, I don't care what you want to do, if you will keep in mind four rules. If you do these four rules in your life, you will be successful. Number one, figure out the right thing to do and just do it, and that is really for us as well, to figure out the right thing to do. People all--we don't want to waste money. This is something we can agree on; this is the 80 percent we can agree on. There is plenty of targets to go after. Number two is treat other people the way we want to be treated. That applies especially to these entitlement programs. I want to save money in the programs. I want to save these programs for our kids and grandchildren. I want to make sure we don't savage old people or poor people. We have got to treat these folks, the beneficiaries, the way we would want to be treated. Senator Carper. The third is to really focus on excellence in everything we do. If it isn't perfect, make it better. And the last thing is just don't give up turning that aircraft carrier, changing that aircraft engine. Just don't give up. We know we are right. Just don't give up. We are right on a lot of this stuff. We just can't give up. I am not going to. I know this guy is not going to. And I sense the same spirit here today. Chairman Issa. Mr. Jordan. Mr. Jordan. Thank you, Mr. Chairman. Senators, picking up the chairman's comments and ranking member, have you two looked at the annual savings, wasteful spending that you see that you agree on, and have you done that analysis that you both agree this is wasteful? If you have done that analysis, what is that number? And if we have done that, it seems to me that is the starting point. So have you two done that, looked at Mr. Coburn's book, whatever you have identified, we agree on these several programs total so many dollars, let's start there, have you done that? Senator Coburn. We have not done that jointly. Our analysis of the recommendations just of GAO is at a minimum, if you just followed their recommendations to eliminate duplication, you would save $150 to $200 billion dollars a years. That is my office's analysis of what the savings are. Just eliminate duplication. That has nothing do with the $80 billion of fraud in Medicare and Medicaid. Mr. Jordan. Right, right. Senator Coburn. You know, it has nothing to do with the cost overruns in IT in the Federal Government, which are $42 billion a year, 50 percent everything we spend in IT. Mr. Jordan. I mean, there is all kinds of redundancy. I mean, there are 77 different means tested social welfare programs. Senator Coburn. Yeah. Mr. Jordan. If you had a handful, maybe you would actually help poor people get to a better. So I get all that. But to get something moving, to get off the dime, it seems that you two, the guys testifying, if you two can say, we agree with this, there is our starting point, let's get that legislation in front of the chairman, who said he is willing to do that, the ranking member said he is willing to do that, and now we have got someplace to start and we start to, as Mr. Mica said, eat that elephant one bite at a time. Senator Carper. Let me just say, one of the smart things I think we do is we have a good dialogue with GAO, with the head, Gene Dodaro, our Comptroller General. And also we, not every hearing, but so many hearings every month, we have GAO present at the hearing. They put out this High Risk List, as you know, every other year, beginning of the Congress, and point out any number of ways we can save money. On that High Risk List for years has been improper payments. And when we first started collecting improper payments and saying what are they, it was, what, $30 billion was reported, $40 billion. Finally it peaked out at about $125 billion, I think 4 years ago, $125 billion. And we have authored, co-authored with your support and involvement, one after the other after the other legislation going after improper payments. We are down from about 125 billion, to about 120, to 114, 108, to 106. And we have a whole lot more room to improve. Another area, the property stuff that we talked about, the Postal Service, to make sure the Postal Service is in a position to repay the $15 billion that they have borrowed from the Federal Government. There is a lot that GAO brings to us, and it is a common agenda, and that is what we work, that is our to do list. Mr. Jordan. I appreciate it. I mean, that is all great. But we have got to move quickly here. What I am asking is, can you two guys get together and come up with a bill? Get us a bill. Senator Carper. Actually, we have. If you look at the PRIME Act, it is part of the SGR legislation I talked about. That is our bill. That is our bill. Mr. Jordan. Mr. Coburn is on that bill? Senator Carper. Oh, yeah. We do lot of bipartisan bills. Mr. Jordan. All right. Thank you, Mr. Chairman. Senator Carper. And we will continue to do those as well. Chairman Issa. Last but definitely not least, the gentleman from Missouri, Mr. Clay. Mr. Clay. Thank you, Mr. Chairman. Thank you, Senators, for being here today. Could you quickly tell us what you think the challenges are of the Federal Government when it comes to the purchasing and procurement of information technology? Is it that the Federal Government doesn't have the expertise to actually purchase it? When you look at agencies like DOD and HHS and all of the others, do we have the expertise in those agencies to know what we are purchasing, to be able to identify the products that we should be securing from vendors? And just how do we approach that, Senator? Senator Coburn. The answer is this is difficult. This is not just difficult in government. I have a son-in-law that works for one of the large firms that does this, and his report is GE, big companies have the same difficulty. The difference is, is they have stops. Mr. Clay. Yeah. Senator Coburn. They have stop losses. We don't have any. We spend $82 billion a year on IT, and at least 50 percent of it is wasted every year. And the problem is we don't know what we want when we go to buy it. And we are gamed a lot. The second problem, as I mentioned with the Air Force contract, there are no consequences for nonperformance on the contractors and there are no consequences to the procurers within the government as a penalty of losing their job or losing their position if in fact they screw up. So it is about accountability. It is a difficult area. My estimate is the private sector wastes 25 percent of the money they spend on IT. That is my estimate. We waste 50 percent. So we can certainly get better. But it is a difficult area. And we need to be able to compete. One of the bills that Senator Carper and I have is to elevate the salary scales that Homeland Security can utilize to bring the proper people in, in terms of IT. In other words, we have to be able to compete with the private sector. And so we need to do that, and we probably need to do that in a lot of areas in government in terms of IT, because that is an area where we can't compete. So to get the quality people to make those decisions, we have to raise the level of salaries we are willing to do that. We have a bipartisan bill to do that. Mr. Clay. And we also have a responsibility, too, as far as oversight over these agencies, and maybe stop the train from leaving the station. Senator Coburn. Well, I would just give you one other point. Too often government tries to buy something off the shelf and make the off-the-shelf product fit their system rather than buy something off the shelf and make their system fit the off-the-shelf. And that is a big, especially with the Army, it has been a big waste of money in terms of their IT, because they are trying to change--things that we know work perfectly everywhere else it is used doesn't work in the Army because they are actually undermining the integrity of what they bought. We have a meeting that we have to be---- Chairman Issa. I want to thank the Senators for---- Senator Carper. One minute, if I may, on this point. States are laboratories of democracy. We have 50 of them. How can we learn from our States? I am a recovering governor. We used to do a poor job in terms of IT management. One of the things that is wrong, and Tom has alluded to it, is we would hire people to work in our IT shop, train them, they become skillful, and they get hired away for more money either in other governments or most likely the private sector. And the same is true here. We need to be able to attract and retain the people once they are trained. We need to have a set of incentives that do that, a compensation system that does that. The second thing, old Rolling Stones song, can't always get what you want, but if you try sometimes you can get what you need. We have a hard time in agencies figuring out not just what we want, but what we actually need, what we actually need, to know for sure this is what we need in a particular agency and to stick with that, not to change it, not to keep changing it. We need folks in those agencies who can manage these projects, that can manage it, and not be managed by the folks that are providing the IT system. And the last thing, we have to, like, stick with it, just got to stick with it from start to finish. Those are some of the things that would help us. Mr. Clay. Senator Carper took license with Mick Jagger's lyrics. Thank you. Chairman Issa. Well, you know, there is probably a song that goes, all good things must end, but I am not going to quote it. Senator, Chairman, Tom, my friend, you have been extraordinarily generous with your time and questions, and I appreciate that. Just to recap, I think we have agreed that there is a lot more we need to do. And I did mean it that, and Elijah mentioned it as I was offering it, we will, in fact, move what you move if you two can agree to it, because that is the beginning of chipping away at a billion dollars at a time. Lastly, I think we have talked around FITARA all day. It sounds like you have some ideas of some items, either as a companion bill or to include with it, that we need to do. The President has come out talking about needing to hire better people to prevent something like HealthCare.gov from happening again. We believe that FITARA is part of an organizational change, but we are certainly receptive that with that organizational change, with budget responsibility for chief information officers and the like, we may have to look at how we recruit and retain those people who have those large budgets and huge responsibility. So I look forward to this being the start of a great year together. I flew in those old C-5s. They had a reputation for landing more often than taking off easily. I appreciate the work you have done to try to modernize a portion of that fleet. I refueled a lot of times with those in the air, because you felt better if you refueled in the air, because you knew you were still flying. You have made a difference, and I think the C-5 as a portion of the fleet certainly is an area you have had leadership on, and I appreciate your mentioning it to a very old soldier. And with that, we will take a very short recess and reset. And thanks again, Tom. Senator Carper. Thank you. Thank you all. Thank you, sir. [Recess.] Chairman Issa. If you would all please take your seats. Mr. Mica. Mr. Chairman? Chairman Issa. The committee will come to order. What is the purpose of the gentlemen seeking recognition. Mr. Mica. I ask unanimous consent to insert in the record at this point a copy of a report that my staff and I completed during the recess that shows that we saved somewhere about in the neighborhood of a $0.5 billion as a result of the committee's work. I'm looking at conference spending, wasteful conference spending, nearly $0.5 billion dollars. It's very significant. Maybe you saw some reports about GSA savings, but we estimate, again, based on the hearings that we did and expanding that government-wide---- Chairman Issa. The entire report will be placed in the record, without objection. Mr. Mica. Thank you. Chairman Issa. We now go to our second panel of witnesses, who patiently sat through that short no-question period with the Senators. Mr. Thomas A. Schatz is president of Citizens Against Government Waste. Mr. Chris Edwards is director of Tax Policy Studies at the Cato Institute. Mr. Brandon Arnold is vice president of government affairs at the National Taxpayers Union. And Ms. Jaimie Woo is tax and budget associate with the U.S. Public Interest Research Group. I want to thank you all for being here. You are the main attraction, notwithstanding the previous period. And I think for all of us, the helpfulness is you know you have partners on the Senate side who are equally interested in what you have to say. Pursuant to the committee rules, I would ask that you please all rise to take the oath. Raise your right hands. Do you solemnly swear or affirm the testimony you are about to give will be the truth, the whole truth and nothing but the truth? Please be seated. Let the record indicate that all witnesses answered in the affirmative. This will be a little shorter perhaps in some ways, but like the first round your entire statements will be placed in the record without objection, and we would ask that you stay as close to the 5-minute guideline as possible. And with that, Mr. Schatz, you're recognized. STATEMENT OF THOMAS A. SCHATZ Mr. Schatz. Thank you very much, Mr. Chairman, and thank you for the opportunity to testify here today. My name is Thomas Schatz. I'm president of Citizens Against Government Waste, a nonprofit, nonpartisan organization with more than 1.3 million members and supporters nationwide. It is no secret that wasteful spending pervades the Federal Government and every agency could perform its functions more effectively and efficiently. Recommendations to eliminate waste, fraud, abuse, and mismanagement are regularly provided by the Government Accountability Office, Congressional Budget Office, congressional committees, the President's budget, and groups like Citizens Against Government Waste and others at the table today. For example, since 1993, Citizens Against Government Waste has released ``Prime Cuts,'' a compilation of this year's recommendations, 557, that would save taxpayers $580.6 billion in the first year and $1.8 trillion over 5 years. Despite the best intentions of Presidents and legislators to address wasteful spending and improve government efficiency, the size and scope of government continues to grow. One of the main impediments to reducing the mismanagement of the taxpayers' money is Congress' tendency to create a program to solve a problem rather than spending the time to determine whether or not an existing program can address the same subject matter. In fact, until the beginning of 113th Congress, there was no formal requirement that committees even specify whether a reported bill that establishes or reauthorizes a Federal program duplicates another Federal program. The rules of the House were amended to require both this information reported in each bill and provide committee chairmen with the authority to request a GAO review of any legislation referred to their committee to determine if there was duplication. This should help improve transparency, but it's not a requirement that Congress not approve a new program, it's simply to list that they might have a duplication in this legislation. Proposals by Senator Coburn to change the rules of the Senate in a similar manner have twice failed to receive the necessary 67 votes. In addition to preventing more duplication, Congress should immediately act to consolidate or eliminate the program identified in GAO's three annual reports, which Senator Coburn has estimated cost taxpayers about $295 billion annually. One prominent example of that duplication and waste is the 209 science, technology, engineering, and math programs, costing $3.1 billion spread across 13 agencies in fiscal year 2010. More than a third of these programs were first funded between fiscal years 2005 and 2010. Yet the U.S. does not have enough workers in the STEM fields, U.S. students remain behind students in other nations in math and science education, and the new programs created by Congress were a major factor in creating such a complex and inefficient system that has failed to achieve the intended objectives. There are other high priorities for CAGW in addition to the foregoing recommendations, such as the Army's Distributed Common Ground System, the Medium Extended Air Defense System, stolen identity refund fraud, also known as tax refund fraud, and mismanagement of information technology. The causes of wasteful IT spending include inadequate guidance and program management, unclear goals, and last-minute project modification. As a result, systems are often subject to significant delays, fail to meet agency needs, fail to launch at all, or launch without being fully tested. In other words, for observers of Federal IT expenditures, it was no surprise when HealthCare.gov did not launch as planned on October 1st, 2013. On the positive side, the government is starting to save money through the increased use of cloud computing. Even more money could be saved through the use of software asset management tools, which would prevent the misuse of existing software licenses and the purchase of unnecessary software. In regard to government-wide procurement, we have supported FITARA. We urge Congress to act on it this year. I was pleased to see it mentioned this morning. And we will continue to support these efforts, because it is the first major procurement reform bill since the Clinger-Cohen Act of 1996. Unfortunately, in some cases where eliminating waste and inefficiency has been accomplished success has been stymied or at least questioned, particularly through the suspension by the Centers for Medicare and Medicaid Services of some of the recovery audits that have helped correct more than $4.2 billion in improper Medicare payments. Regardless of whether the government is in surplus or deficit, there is no excuse for mismanaging the taxpayers' money. The American people would be well served if every day elected Representatives and Senators came to work thinking first and foremost about how they could better manage the taxpayers' money and solve problems effectively with the resources that are already allocated to the Treasury in existing programs. In other words, each Representative and Senator should ask questions first and spend money much later, if at all. Thank you for the opportunity to testify. I look forward to answering any questions. Chairman Issa. Thank you. [Prepared statement of Mr. Schatz follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Chairman Issa. And at this time I'm going to ask unanimous consent that the 2012 Congressional Ratings for the Council of Citizens Against Government Waste be placed in the record, and the February 2013 publication of ``Prime Cuts Summary'' be placed in the record. Without objection, so ordered. Chairman Issa. We now go to Mr. Edwards. STATEMENT OF CHRIS EDWARDS Mr. Edwards. Thank you very much, Chairman Issa and Ranking Member Cummings. I'm Chris Edwards, editor of DownsizingGovernment.org at the Cato Institute. The Federal Government faces a dismal fiscal future with rising spending and debt. If you look at the CBO long-range projection, long-range baseline, that looks bad enough, but for reasons I go through in my written testimony, our fiscal future is much worse than the CBO baseline shows. The upshot to me is that we need to look at every Federal agency and cut and terminate waste and low priority programs. What is waste? Well, it's government spending where the cost is higher than the benefits created for citizens, and in my view, it's also Federal activities that the Federal Government does a poor job at that could be much better carried out by State, local governments, and the private sector. As I think Congressman Duncan mentioned, there are stories in the media of GAO reports every week about waste in the Federal Government. My research for DownsizingGovernment.org shows there was waste and cost overruns and fraud and abuse all the way back to the beginning of the Republic. The 19th century is full of examples of wasteful spending. So what I take out of that is that there's a basic structural problem with the Federal Government and how it operates. Waste is endemic and chronic. There's a lot of reasons for that. The Federal Government today has become just so huge that Federal auditors and oversight committees just can't keep track of all the spending. There are 2,200 separate subsidy and benefit programs in the Federal Government today. They are all susceptible to fraud, waste, and abuse. Unlike the private sector, poorly performing Federal agencies never go bankrupt, they're not subject to takeover bids, there is no built-in mechanism to provide for efficiency in the Federal Government like there is in the private sector. Federal managers face no profit incentive, giving them little reason to proactively reduce waste and fraud. The only real solution, then, from my point of view is that we need to downsize the Federal Government. How do we do that? One thing we need to do is we need to revive federalism. We spend $560 billion a year on Federal aid to the States. In my extensive research, the aid system is rife with waste and inefficiency. Senator Coburn's Wastebook had many, many examples, and many of the examples were aid to State programs. So why is that? There's really bad incentives built into the Federal aid system. State and local governments simply do not spend Federal money as frugally and efficiently as they spend Federal money. Coburn's report, for example, goes into a gold-plated million-dollar bus stop in Arlington, Virginia, near where I live. 80 percent of the money for that bus stop came from higher levels of government, so Arlington County has no incentive to spend the money efficiently. And that happens throughout the Federal aid system. I think the three layers of government in the United States should be sort of like a tidy layer cake, with each layer funding its own programs. The citizens would know who's responsible for those programs. The aid system makes American government sort of like a giant, confused marble cake. Citizens have no idea who's responsible for various programs like bus stops that go over cost. So I think cutting aid programs would be a great way to reduce waste. My other recommendations I go into, privatization. Private sector companies have built-in incentives to minimize waste. Many governments around the world have figured that out. There has been a privatization revolution that has gone on around the world in recent decades. Over $2 trillion of electric utilities and railroads and airports and post offices have been privatized all around the world. That revolution has bypassed the Federal Government in the United States for some reason. Many things the Federal Government does today have been privatized in other countries. As this committee may know, Germany, the Netherlands and Britain have privatized their post offices. Now Canada and Britain have privatized their air traffic control systems. Most European countries use private airport screening, as I think Congressman Mica is certainly familiar with. Passenger rail has been privatized in Britain. If you look at a system like air traffic control, our system is really falling behind. It's got massive cost overruns, it can't handle technology. We're running our air traffic control, which is a high-tech business, we're running it like a bureaucracy. It makes no sense. The solution here is privatization like Britain and Canada have done. The Canadian system, set up as a nonprofit corporation, nonsubsidized, works extremely well. It's one of the safest systems in the world. It is a leader in IT. That's where the United States needs to go with air traffic control. Similarly, with the Postal Service, as I'm sure you're familiar with, Mr. Chairman, the Royal Mail, a 500-year-old government company was privatized a few months ago in Britain, raised $3 billion for the federal government. The British Government did that for the same reasons that we've got problems with our USPS: declining mail volume, the need for greater efficiency in the modern economy. So if Britain has done it, I see no reason why this country can't privatize its postal system. So in sum, I think reviving federalism and pursuing privatization would go a long way to cutting waste in the Federal Government. Thank you very much. Chairman Issa. Thank you. [Prepared statement of Mr. Edwards follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Chairman Issa. Mr. Arnold. STATEMENT OF BRANDON ARNOLD Mr. Arnold. Yes. My name's Brandon Arnold. I'm the vice president of government affairs for the National Taxpayers Union. And thank you to the committee and the chairman and ranking member for having me today. I'd like first of all to say Senator Coburn's done a phenomenal job with his Wastebook, as have CAGW with their ``Prime Cuts,'' and Chris Edwards and the Cato Institute with DownsizingGovernment.org. At NTU, we approached our guide to reducing wasteful spending slightly differently. We actually partnered with a group, United States Public Interest Research Group, and Jaimie is immediately to my left here, to find areas of the Federal budget, mostly wasteful in nature, inefficient, unnecessary programs that both the left and the right could agree upon. And we published this report, ``Toward Common Ground: Bridging the Political Divide with Deficit Reduction Recommendations for Congress,'' just last month. It contains 65 specific recommendations, again, that the left and the right can agree upon, and that would save well over $500 billion over a 10-year window. Now, let's be honest. If I'm writing this report singly, by myself, I would include a heck of a lot more, but, you know, when you're cooperating, there's a lot of talk about bipartisan cooperation here, we are very pleased to work with U.S. PIRG and find stuff that we both agreed upon. I won't--I don't have time to--go through all 65 recommendations in this brief period here, but the report is included in its entirety in the binder there, and I hope you guys will---- Chairman Issa. Without objection, the entire binder will be placed in the record. Mr. Arnold. Thank you. I hope you will look at it, share it with your staffs, share it with your colleagues, and use it as best you can. Let me just to touch on a couple quick highlights, if I may. Included in that $500 billion figure is up to $152 billion in savings from eliminating wasteful subsidies to agribusiness and other corporations. This includes things like cutting $2 billion by eliminating the Market Access Program, which pays for large corporations to market their products overseas; reducing funding by a billion dollars for the EDA, the Economic Development Administration. Also, there's $197.2 billion in savings from ending low priority or unnecessary military programs. Included in that $197 billion figure is reducing by $1.9 billion expenditures on military bands. There's as much as $42.3 billion from improvements to program execution and government operations. That includes $140 million in savings from eliminating duplicative catfish inspection program, which has been cited numerous times by many groups on the left, right, by many outlets of media as being an absolutely wasteful, duplicative program that's duplicated at the FDA, as well as at NOAA. There's also $131.6 billion in savings from reform to entitlement programs, often a tricky area to root out waste and fraud, but we found $1.8 billion by stopping improper Medicare payments to noncovered chiropractic services and $7.6 billion from aligning Medicare lab fees with those in the private sector. So of those 65 recommendations, I'm pleased to say that one has been enacted into law already in the budget deal that Congress passed last month. There was a $50 million savings that came from the Ultra-Deepwater Natural Gas and Petroleum Research program. It's a little bit of a mouthful there. Pleased to see that that was included in the budget deal. And again, that will save $50 million. So that's one down and 64 to go. There's a lot of work to be done. The second half of my testimony, and I know Jaimie's going to get a little bit more into the report in just a moment, the second half of my testimony I try to touch on a few legislative changes, more process-based changes that Congress could enact to reduce and eliminate waste and fraud. I'll touch on those just very, very quickly, and obviously they're there in my written testimony. But strengthening whistlerblower protections. We took a step forward in 2012 with S. 743, which I know was supported by the chairman and ranking member, to increase whistleblower protections for Federal employees. We took a step back, unfortunately, with the Conyers court decision in 2013 that'll exempt many Federal employees from whistleblower protection. So there's work to be done there. Ending the use-it-or-lose-it spending sprees that occur at the end of the fiscal year. I believe Congressman Duncan alluded to those in his earlier remarks. Reestablishing the ``Byrd Committee,'' sometimes called the anti-appropriations committee. Creating a sunset commission or committee to require the periodic review of programs that are no longer needed. Auditing the Pentagon. This has been mentioned several times today already. Limiting spending. Just reducing spending, keeping spending caps in place, requiring agencies and departments to prioritize their programs when you start to trim away at their budgets can be very effective in reducing waste. Touching on entitlement programs, critically important. My organization strongly supports the PRIME Act, which Senators Carper and Coburn spoke of earlier. And certainly involving the executive branch. The legislative branch can't do it alone. The executive branch needs to be part of the solution as well. I see I'm just about out of time, so I will end my remarks there. Thank you. Chairman Issa. Thank you. [Prepared statement of Mr. Arnold follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Chairman Issa. And since you get sort of a twofer, Ms. Woo, if you'll continue. STATEMENT OF JAIMIE WOO Ms. Woo. Good morning. Chairman Issa and Ranking Member Cummings, members of the committee, thank you for inviting me to testify today on behalf of the U.S. Public Interest Research Group. My name is Jaimie Woo, and I'm the Federal tax and budget associate for U.S. PIRG. U.S. PIRG is a federation of 27 State-based consumer advocacy groups. We are a nonprofit, nonpartisan organization that advocates improvements in fiscal policy, to stop special interest giveaways, increase budget transparency and accountability, eliminate waste, ensure subsidies or tax breaks serve the public, and make taxes fairer. As Congress works to pass a budget for the next year, U.S. PIRG and the National Taxpayers Union, as Brandon had mentioned, have come together to offer a set of deficit reduction recommendations worth more than $0.5 trillion dollars. This has appeal from across the political spectrum. Our December 2013 joint report, ``Toward Common Ground: Bridging the Political Divide with Deficit Reduction Recommendations for Congress,'' of which I am a coauthor, details 65 specific spending cuts over 10 years. NTU and U.S. PIRG do not often agree on policy approaches to solving our Nation's problems, however, we are united in the belief that we spend far too much money on ineffective programs that do not serve the best interests of the people. In this report, we identified the low-hanging fruit of waste and inefficiency in the Federal budget that both Republican and Democratic lawmakers should recognize as unproductive uses of taxpayer dollars. U.S. PIRG's approach to spending cuts is guided by four basic principles. Number one, oppose subsidies that provide incentives to companies that do harm to the public interest or do more harm than good. An example is funding for biomass research and development. Large-scale agricultural production of corn or other crops used for biomass often involve massive amounts of fertilizer, water, and land that drastically change the landscape of our country, accelerate problems caused by deforestation, and compete with food production, raising food prices globally. Number two, oppose subsidies to mature, profitable industries that don't need the incentive. These companies are going to engage in activity regardless of taxpayer support. For example, Congress should eliminate the crop insurance program, which directly subsidizes insurance premiums to large agribusinesses on coverage they should and could purchase on their own. Number three, support reforms to make the government more efficient. According to the Office of Management and Budget, the Federal Government owns tens of thousands of unused or underutilized buildings or structures, as Senator Carper had mentioned earlier. The public should not have to pick up the tab for maintaining buildings that are not used. Reducing inventory would save nearly $15 billion over 10 years. Number four, oppose programs where there is authoritative consensus to do so. So this means when there is a strong independent agreement across the political spectrum that a program is wasteful, or an agency and department receiving the funding has argued against it. So, for example, the Army, Pentagon, and White House have all said that the Army no longer needs additional Global Hawk drones. Our report's recommendations are specific, targeted, and name individual programs for reductions or elimination. Each recommendation is also backed up by authoritative sources, such as the Congressional Budget Office and the Government Accountability Office. We are long past the time for general references and rhetorical calls for attacking nameless, faceless programs that contain waste, fraud, and abuse. And this is the precise reason that U.S. PIRG did not support the recent across-the-board cuts. Such policies fail to differentiate between true public priorities and where there is genuine waste or inefficiencies in the system. Our organization has argued in favor of programs to aid access to higher education and measures to ensure the safety of our Nation's food supply. Across-the-board cuts equate those programs with the wasteful spending we highlighted in our report. While not in the report, we also urge committee members to review special interest carve outs through tax expenditures and loopholes. These expenditures have the same bottom line effect on our Nation's deficit as direct line item spending. Regardless of whether spending takes place through the Tax Code or through the appropriations process, ordinary taxpayers and small businesses wind up picking up the tab for that missing revenue in the form of cuts to worthwhile programs, higher taxes, or more debt. We recognize that many of the items on our list challenge longstanding subsidies to narrow yet powerful special interests. Despite the fact that these expenditures serve little or no continuing public service and the public would likely support their elimination, there will no doubt be intense lobbying efforts to preserve these handouts. We strongly urge you to resist those efforts and take the first important steps toward addressing our Federal budgeting problems and ensuring that any public expenditure is for the public interest. Thank you, and I'd be happy to answer any questions. Chairman Issa. Thank you. [Prepared statement of Ms. Woo follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Chairman Issa. I'll now recognize myself for a short round of questioning. Mr. Edwards, as you know, I'm a fan of your organization, but let me get into a question on the post office since that's within the jurisdiction of this committee. Privatization of the post office, do you imagine that anybody would take the post office even for free today? Mr. Edwards. Well, as I mentioned, you know, Britain did an IPO for their post office. They sold 52 percent of the ownership. Chairman Issa. I understand that. The post office is currently losing 16.2 or so billion dollars without paying a cent in tax, if you look at the deferrals, et cetera, in other words if you account for it the way you would a public company. On $60 billion of gross revenue, that's not a win. So very briefly, time's limited, but very briefly, isn't it true that we would have to do a dramatic reorganization, exactly the one that has been stalled for years, before the post office would in fact be privatizable? Mr. Edwards. You could do it either way. In Britain under Thatcher they made major changes to companies before they sold them off. But the way an entrepreneur would think about it is you can take government assets, you can make them a lot more efficient. So the post offices in Germany, Britain, and Austria, they became a lot more efficient after privatization and they went from deficits to surpluses. So just because the government can't make money doesn't mean entrepreneurs can't. Chairman Issa. Look, on a bipartisan basis we've been trying to get the post office fixed, and I just want to make sure that I use this opportunity to make one thing, I think, clear, but I want to use you, if you agree. We would have to throw $100 billion or more into the deficits that exist against an existing current and retired workforce if we were to transfer it to the public sector as it is today. And even if it has the ability to make a profit, let's just say it has the ability to make a $5 billion profit, you give it a 10 cap, that's $50 billion, no one is going to absorb our current obligations to our legacy employees based on that, are they? Mr. Edwards. That may well be true, but the British Government took over the unfunded liabilities of the Royal Mail's pensions before they privatized. Chairman Issa. Okay. So even looking at the British system, we would have to take that tens of billions or hundreds of billions of dollars of legacy liability. So the American people have a very expensive decision even if we were to, as I said, give away the post office. Mr. Edwards. I think that's probably true, but what you're looking for is economic growth and efficiency, which benefits the overall economy. To my mind, that's kind of a small and narrow issue. If you can have a more efficient mail system for decades in the future, it's worth taking a hit now. Chairman Issa. I completely agree with your last statement, and that's why we're trying to reform the post office and then let a future group look at a at least breakeven post office for whether there's opportunities to be a little bit more private than they currently are. Mr. Arnold, I'm not trying to be the adversary, you guys are my heroes, but I served for 10 years in the military, off and on Active Duty and then in the Reserves. When we look at the savings of DOD, wouldn't we be better off transferring $65 billion to $69 billion of noncore military activities out of the Department of Defense as a first step rather than looking at the millions of dollars that are spent in total on, for example, my Marine bands? I might note that there are Medal of Honor recipients who were Marine band people in Korea. Marine bands also are infantry trained and they fight. Mr. Arnold. Well, I think the expenditures that we list with regard to Marine bands, they're not booting these individuals out of the military, but at the same time we're spending a tremendous amount on a service, a portion of the military that I think is probably not directly related to national security, which should be the primary function of the Defense Department. And I think that was the kind of framework that we're operating with when we're looking at the Defense Department holistically, is what is necessary for national security and what can we trim away, given the fact that we're running $600, $700 billion dollar annual deficits. Chairman Issa. Well, I appreciate that, although we pay for the cost of the Medal of Honor when it's awarded. It's part of the esprit de corps, it's part of what the military is. I want to make cuts in the military, I really do, but I want to make the cuts that leave us with a military that's effective. And I often see those kinds of cuts and I push back pretty hard, as you can imagine, because I believe that we can trim. But I can tell you this: the Department of Defense Pentagon building is completely filled and has overflow annexes. The military is a fraction of the size it was in World War II, when we didn't have computers, and yet not a single office is empty in the Pentagon. And so I would hope that the committees of jurisdiction would look and ask the question of, why are there more civilians working for the Department of Defense than there are uniformed personnel? Why is there not an empty room at the Pentagon when, in fact, the military has been reduced in size? So that's a little bit of maybe my pushback. I do appreciate a lot of the other areas that you propose, and I recognize that I've already run over my time on just two subjects. Mr. Cummings. Mr. Cummings. Thank you very much, Mr. Chairman. Mr. Schatz. Mr. Schatz. Yes? Mr. Cummings. This is your report. Is that right? Mr. Schatz. Yes. Mr. Cummings. And I was just looking here about, and it's, you know, about page 36, I guess it is, and it talks about eliminating the Legal Services Corporation. And there are so many people who do not have access to legal services. Can you talk about that briefly? Mr. Schatz. Yes, sir. Mr. Cummings. Yeah. Mr. Schatz. As a retired attorney, I know that attorneys do provide pro bono services, they are essentially required to. And certainly on the form to renew your license it says, are you providing pro bono services? We think a lot of the services that are provided through the Legal Services Corporation could be provided through the private sector, through nonprofits, and not necessarily by the Federal Government. Of course before 1974 there was no Legal Services Corporation. I don't know that there's any evidence that the representation was better or worse prior to that time. Mr. Cummings. You know, I just think that our society is getting to a point where there are folks--and as a lawyer who practiced many years, I saw a lot of people come into court, and they were had a decided disadvantage. And although we have a legal system, a Constitution, legal rights, if people don't have counsel they are kind of out of luck. And I understand what you're saying. A lot of people say leave it to the pro bono. And as you probably know, in Maryland you really have to do quite a bit of pro bono. But even that, I don't think, captures so many people, the people that I see in--well, I used to see in courts. And this is a very interesting document. I want to really go through it. How did you all come up with these items? Mr. Schatz. Citizens Against Government Waste has been producing ``Prime Cuts'' since 1993. We use sources, in those days certainly a lot of old Grace Commission recommendations, some of which are unfortunately still not implemented. CAGW grew out of the Grace Commission. We also look at the Congressional Budget Office produces its report every year, GAO reports, the president's budget, budgets put out by members of Congress, such as the Republican Study Committee and others. It always ties back to something. Mr. Cummings. Sure. Mr. Schatz. And the database shows you where it came from. Mr. Cummings. Well, Ms. Woo, you know, the establishment of the Do Not Pay List is one of the most recent tools that resulted from Chairman Carper and Ranking Member Coburn's recent legislation on improper payments. The list permits all agencies to link databases, such as the General Service Administration's excluded parties list system, to check the eligibility of a payee to receive government funds. What else would your organization propose to help decrease the level of improper payments? You can imagine when the American public hears about improper payments and then see a situation where we're trying to come up with $6.4 billion to give their neighbors, their relatives, and friends an opportunity to get unemployment and survive, and we are losing money through improper payments, billions. That's something that's very alarming. And I'm just wondering, what would you propose? Ms. Woo. Thank you, Mr. Cummings. In terms of the entitlement reforms that we have listed, including the improper payments for noncovered chiropractic services that Mr. Arnold had mentioned, that is an area that I could actually follow up with you on in terms of getting back to our healthcare advocates and our healthcare team, and then I could provide you a better answer at a later time. Mr. Cummings. All right. Do you any of you all have an answer to that question, the improper payment issue? Well, let's go on to DOD. You know, when you look at DOD and you look at the situation where they can't even provide an audit, I mean, come on. Is it too big to control? And what do you all recommend with regard to DOD? Chairman Issa made some suggestions, and basically it's just transferring certain funds out of there. They have all kinds of funds there for things like medical research and things of that nature. But, I mean, did you all have any other suggestions on that? Mr. Schatz. Well, it helps to know what an agency is spending, what a department is spending. Mr. Cummings. Yeah. He said--I think Coburn said it. Mr. Schatz. Right. Mr. Cummings. If you can't measure it---- Mr. Schatz. Audit, right. Mr. Cummings. --you got a problem. Mr. Schatz. Right. We agree with you. I mean, Citizens Against Government Waste helped expose the $436 hammer and the $640 toilet seat, which we don't see as much of anymore, but I think things like FITARA and other reforms on procurement will help reduce wasteful spending throughout the government, including DOD. That's an important step to take. Mr. Edwards. I would say two general things about the Pentagon. You're right, it's hugely wasteful. I like spending caps combined with executive branch flexibility. I like the current spending caps. I'm disappointed with the recent budget deal. I think, you know, the Pentagon, if we gave them more flexibility to make these decisions to cut weapon systems and the like that they don't want and they don't need and we put tight caps on them, they would themselves find more efficiency. I also think one of the problems with the Federal Government again is because it is so huge, many Members spend their time on lots of little activities that, frankly, should be in the realm of State and local government. I think if we trim some of the extraneous functions of the Federal Government, more Members of Congress would focus more on some of the core functions, like Pentagon waste. Mr. Cummings. Thank you. I see my time has run out. Mr. Connolly. Mr. Chairman. Mr. Chairman. Mr. Mica. [presiding] Yes. Mr. Connolly. Could I just ask Mr. Schatz. Mr. Mica. Yes. Mr. Connolly. I couldn't quite hear Mr. Schatz. Did I understand Mr. Schatz to say FITARA, FITARA would save some money? Mr. Schatz. FITARA would help. Mr. Connolly. Very wise insight, Mr. Schatz. Thank you very much. Mr. Schatz. I never know if something's going to be good or bad when I get up here. Mr. Mica. Thank you, Mr. Connolly and Mr. Cummings. I guess I'll recognize myself next, having assumed the chair for Mr. Issa here. One of the things that's frustrating to me is--and these are great groups. You know, you've got Citizens Against Government Waste, Cato, National Taxpayers Union, and Ms. Woo, all of you working sort of in the same vein. But sometimes the voices are a little bit like Congress, they're not unified. Is there an attempt to come together with any of these groups? Do you all come out with a common policy? I mean, we have the groups here and then there are many others out there that are looking at saving taxpayer dollars. Is there some association and do you meet and do you decide on some priorities? Mr. Schatz. Mr. Schatz. Yes, Mr. Mica. Sometimes there's too many emails. I mean, we really, certainly with NTU in particular, we work very closely. It's kind of a joke around the office, if NTU has signed it, we'll sign it as well, and it's really true. And I think over the years there has been a lot more coordination. For example, the alternate engine for the Joint Strike Fighter we first identified as an earmark back in 2006. Over time, other groups joined with us. Mr. Mica. But do you also have a joint policy on---- Mr. Schatz. It's more coalition letters---- Mr. Mica. Because I think that would be helpful. Mr. Schatz. Well, we need it to be successful, because there are so many people that want to spend money, we have to work together. Mr. Mica. As I said earlier, you know, you just have to be persistent in this business and then hit a good lick. A good example, and I should have submitted this earlier, I did put this in the record, but this is the oversight on conference spending report that I alluded to. And while I gave credit to the committee, because we did follow up, it wasn't just GSA. And I have to give probably the most credit to the guy in the hot tub, the GSA guy in the hot tub. I mean, he made it go viral. I remember we did a hearing on the subject. Nobody attended, no one paid any attention until that guy became viral. But from that, we did IRS, we did VA, we did DOD. This is about $0.5 billion a year in reduced spending on conferences, so these are a success. My point, too, is that I don't see a lot of these groups joining in. It's not that you want to become cozy with Congress, but when we are on a roll, it does help. The public buildings, I mean, the history of public buildings and all the different bills and people who have attempted--I remember we were in the minority--it's great to be in the minority, but not for too long. I'm sorry, Mr. Cummings. I just bring that up. But when you're there, you can do productive things, and we produced a report, ``The Federal Government Must Stop Sitting on Its Assets,'' and we outlined all the public buildings, Amtrak, I mean, just incredible assets that the Federal Government has. But the problem is you don't get unified support from out there with some of these groups to go after these targeted things. So while you heard a lot of how we need to coordinate with the Senate and pick priorities, I think it would be good for your groups to coalesce and get behind some of these items. It would, again, enhance our efforts. And then when we do things, like Coburn talked about consolidating programs, the transportation bill consolidated between 20 and 30 programs. Now the bureaucrats, the little bastards are running around trying to justify their existence. We eliminated or consolidated, but nobody is focusing on the bureaucrats who are trying to justify their existence. They have nothing to do, because you eliminate the program, but they come up. Now the rules, dear God, they've come out with rules to justify their existence. Anyone want to comment on this new administer by regulation? It's a new phenomena. Mr. Schatz, Mr. Edwards, Mr. Arnold, Ms. Woo? Mr. Schatz. Mr. Mica, we'd be happy to come up on a regular basis and meet with your staff and the staff of any other committee that's interested in consolidating any program. Mr. Mica. No. We have already done this. Mr. Schatz. Well, we haven't done enough, because we still have them. Mr. Mica. This is a new phenomena. It's a new phenomena. It's rule by edict, fiat, regulation. And, again, we don't have a focus on what's going on there. There is some oversight. The administration's been kind of clever, too, now, in ruling by fiat and executive order to pack the District Court of Appeals. That's been the only recourse. You could pass a bill from the House and there's nothing done in the Senate, and the edict and the executive order prevails. Are you all paying any attention to that? Mr. Edwards. I'll give a general comment. The groups represented here are, frankly, pretty small, compared to the huge firepower and staffing power of the GAO and CBO. We have to---- Mr. Mica. But they just do reports and they have to be politically correct. You guys don't have to. Mr. Edwards. I agree with you. So we have to pick and choose. For example, I've written extensively about TSA reform in the last half year. I know that's something you've been very supportive of and a leader on. But, you know, it is difficult for outside groups, because most of the experts on Federal programs are in the executive branch and are staffers in Congress and are in the GAO. You know, outside groups, we need to pick and choose our battles, because our funding is limited. And so we'd love to work better more with you. Mr. Mica. Well, again, combined firepower, maybe some unified effort. I'm exceeded my time. Let me yield to the gentlelady from New York, Ms. Maloney. Mrs. Maloney. Well, I want to thank all of the panelists for your excellent presentation and your hard work in a tremendously important area. The prior panel had a consensus that one of the most mismanaged agencies was the Pentagon, and they were united in their belief that the Treasury should be paying their books or paying their checks, writing their checks, as opposed to the Pentagon. They pointed out the Pentagon was the only agency in the entire government that themselves pays their checks. And I'd just like to go down the aisle. Do you believe that the Pentagon should be able to pay their checks or should they be just like every other agency and have Treasury pay them? Just a yes-or-no answer. Mr. Schatz? Mr. Schatz. Yes. Mrs. Maloney. Pardon me? Mr. Schatz. They should turn it over to another agency. Mrs. Maloney. Yeah. Mr. Edwards? Mr. Edwards. Yeah, I agree with that. And I think one thing Congress can do, could give the Pentagon a fixed amount of cuts they want to see from efficiency, but then give the Pentagon flexibility to find those cuts and propose them to Congress. Mrs. Maloney. Mr. Arnold. Mr. Arnold. Yes, I agree. Mrs. Maloney. Ms. Woo. Ms. Woo. I will say that U.S. PIRG has worked with NTU on a number of different reports. We've written in conjunction about the common grounds. And we've also worked with Senator Coburn's office to help write this report. On that matter, I would say that U.S. PIRG is not an expert on defense policy and defense spending and so forth, and so I will give a yes or a no answer on that, but we do take the authority and the authoritative consensus of various experts, you know, in the Pentagon in and the White House and so forth. Mrs. Maloney. Well, Ms. Woo, you were very strong on the F- 35 Joint Strike Fighter debacle, as you called it in your report, or NYPIRG did, and this is one of the key programs that NYPIRG and NTU, their joint recommendation is cutting it, the Joint Strike Fighter, which is the largest weapon system in history and largest contract in history for the Pentagon. And so far, the DOD has spent 12 years developing it, and by all consensus, their own consensus, it's deeply flawed and has escalated with cost overruns to over $400 billion. Not only are the overruns now at $400 billion, they're estimating that it costs a trillion dollars to maintain these planes. And the price tag is not the only frightening thing about this acquisition. DOD entered into the contract to purchase these planes while critical testing is ongoing, a practice called concurrency. So at the end of 2012 the DOD had procured 121 aircraft at a cost of $28 billion, but as of 2012 only 22 percent of the testing that they want to do has been completed. So I would say that this is an area we can work on. We shouldn't be handing out contracts before you've tested them. And I'm going to put in a bill to that effect. And according to the Pentagon's own Office of Operational Tests and Evaluation, in 2013 the plane has, ``no night capacity.'' So my question, Ms. Woo, would you think that a fighter plane should be able to fly in the night? Ms. Woo. I do believe that. Mrs. Maloney. Okay. And do you agree with DOD's own statements from the chief of acquisition called it--and I quote, this is a quote from the chief of acquisition, I find it startling. He calls it, ``acquisition malpractice.'' Now, would you agree with the head of the chief acquisition, Under Secretary Frank Kendall, would you agree that it's acquisition malpractice which has happened? This is the DOD talking about their own procurement system. Ms. Woo. Yes. Mrs. Maloney. And does the acquisition--what I don't understand, and we can get into a longer conversation on this is, you know, how does an acquisition of a fighter plane become such a debacle that the own acquisition officers are calling it a disaster? But my main question is what steps does DOD need to take in order to eliminate the wasteful and unnecessary F-35 program? And it's noted in other reports, it may have been yours, Ms. Woo, or someone else's, that it doesn't even address the way that we are moving militarily. It can't land on an aircraft. The Navy has these big boats that the planes land on; the Navy plane cannot land on their own aircraft. So how do you move it around? And we seem to be having these smaller strike forces as opposed to a huge plane that can't fly at night and can't land. So what are the steps that DOD would need to take to eliminate what by their own acquisition leadership Mr. Kendall is calling an acquisition disaster? What are the steps? Anyone? How do you get rid of a wasteful item in the budget? How would you do that? Mr. Schatz. Well, one of the recommendations we have in prime cuts is to reduce the cost growth in the major defense acquisition portfolio by 20 percent over 5 years. GAO has done a lot of work on this. It's simply changing the way that procurement is achieved at DOD, and it's been an ongoing problem for many, many years. So it's a big operation. We're happy to work with this committee and others to try to reform it in the future. Mrs. Maloney. Any other comment? How do you get rid of a wasteful acquisition like this? How do you get rid of it? You've identified it. Now how do you get rid of it? Mr. Arnold. I don't know that it's fair to put the onus solely on DOD. I think it's probably going to require congressional action as well, and you're talking about these massive weapons systems, you're talking about a lot of parochial interests that are involved. So it's extraordinarily difficult, but I think Congress needs to run point. I mean, we have a significant number of weapons systems and other things being done by DOD that they say they do not need and they do not want, yet they are obligated by law to continue to contract and produce, to maintain. So Congress needs to step in at some point, and there's a lot of options in our paper and the publications that Coburn and others have put out that Congress can introduce legislation and pass it and stop these things from taking place. Mr. Mica. I thank the gentlelady and the witness. Mr. Lankford. Mr. Lankford. Thank you, Mr. Chairman. Mr. Edwards, I want to ask you a question about incentivizing agencies and agency individuals. Right now the incentive for an agency is to add more staff, and to try to chase down more dollars, and to spend as much as you can at the end of the year. How do we split that incentive? You mentioned spending caps. Sequestration caps and other caps really hit at every single program. Some--there are some programs that run more efficiently than others, but a cap like sequestration hits all of them with equal amount of fury. If I hand to an agency the authority to say I need you to cut 7 percent from your budget or 27 percent from your budget, there's very little oversight of which programs they're going to cut. They'll keep the ones they like the best, and they'll cut the ones that probably I like the best. So talk through different options that you have seen for incentivizing agencies in reduction. Mr. Edwards. I mean, I think ultimately for reasons I go into in my testimony, I list 15 reasons why the public sector will never be anywhere near as efficient as the private sector. The profit motive in the private sector is hugely powerful. Mr. Lankford. It is. Mr. Edwards. And the government doesn't have that. Government, there's been lots of talk for pay for performance in the Federal Government for decades, but it never really happens, and I don't think it can. The government has more rules because of basic structural reasons to prevent public corruption and because they have no clear motive like lowering costs and maximizing revenue. So I think the focus should be on fully eliminating programs and also capping spending, giving executive branch agencies more flexibility. I think executive branch agencies should and can do more to evaluate their own programs. Perhaps agencies should be required to do detailed analyses and rank order their most efficient or highest-priority programs to the lowest-priority programs, and make the information public so that Congress can see it and Congress can use it for decisionmaking. More information is always better. You know, one thing that I find really striking about the Federal agencies, you go to their Web sites, it's all good news, it's all essentially propaganda about all the great fabulous things they do, but I don't think that's fair to taxpayers. I think Federal agencies should be required to provide more balanced information about their programs, their failings, and what the low-priority activities they do are. And the ultimate decision is up to the Congress, but I think agencies can do more to provide information to Congress about where they fail. Mr. Lankford. Yeah, I would agree. The taxpayers' right to know that Dr. Coburn had mentioned earlier, that's my bill here in the House we've talked about this committee has passed. We had bipartisan input into that bill, and it has passed. I hope the full House will pass it on and we will send it over to the Senate. But just the basics of doing what every program is, how much we spend, how many people they serve, and the metrics, if there are any metrics, for the program would be a tremendous asset to Congress to make those decisions, because right now there's no description of all those programs or a listing of the programs. So what Dr. Coburn mentioned earlier about the hundreds of duplicative programs, it's very difficult to go through the tedious work of identifying all those programs because they all have different descriptions and different locations. Mr. Edwards. That's right. Mr. Lankford. Mr. Schatz as well, I appreciate, you had mentioned earlier about the rule change in the House. I'm proud to say that was actually my rule change that went through on that one as well to try to identify some of the duplicative programs. We have a long way to go on that, and you're right, there's not enough teeth to it, and I appreciate you bringing it back out because that is something that I hope in the years ahead we can continue to add more teeth to it so it's more than just identifying and listing, yes, this is duplicative, but a prohibition to that as well. Are there other rule change things that you have seen that would be an asset in the days ahead to the functioning of the House? Mr. Schatz. I think your--it reminds me a little bit of the Improper Payments Act. The first one just identified the improper payments, then the next two really put some teeth into it. So I hope that the rule that has been adopted would improve over the years, because if you're prohibited from enacting a duplicative and overlapping program, then that helps solve that problem to start. So I know rules change at the beginning of each Congress. I hope if there's a change in leadership, that rule continues, because it's really critical. It's amazing it took this long to have a rule like that, because one would think any organization wouldn't want to create a duplicative program. So we appreciate your leadership on that. We're happy to come up with some other rules, but I was happy to see that that one was there, because, to be honest, when we started our research for the testimony, we weren't--we didn't even know it was there. So that's something else that perhaps needs to be emphasized to the committees, that this is a rule, and they should be using it, because, again, if Citizens Against Government Waste didn't know much about it, the rest of the public probably doesn't know, either. So I encourage more information about what you've been doing. Mr. Lankford. Right. It's new, and it's a step process to be able to push on that. I have one quick question as well for Mr. Arnold and Ms. Woo. One of the items that you identified was requiring DOD and VA to jointly buy prescription drugs. This is something that I have tracked through as well. I have seen figures--you have a little over $4 billion in savings on that. I've seen figures as high as $7 billion in savings on that. I don't know if you wanted to mention or add any other detail to it. The GAO report came out in early 2000 suggesting that DOD and VA jointly purchase prescription drugs. They did it for several years, had millions of dollars of savings until 2005, and then in 2006 DOD changed its formulary, and they never really cooperated again since then. They've studied it, they've looked at it again, but I didn't know if you had any additional detail on it. That's one of those bipartisan areas to look at and say, why wouldn't we try to combine the drug purchasing between DOD and VA? Any other comments that either of you have on that? Mr. Arnold. I think you articulated it pretty well actually. I don't know if I have anything additional to add, but it's something we strongly support. Mr. Lankford. Thank you. Ms. Woo? Ms. Woo. Just to kind of repeat what you were saying, that that collaboration had really declined over the past few years, and we're really advocating for that to occur again. Mr. Lankford. Okay, thank you. With that, I yield back. Mr. Mica. The gentlelady from Illinois Ms. Duckworth is recognized. Ms. Duckworth. Thank you, Mr. Chairman, and thank you to all the witnesses for being here today to share your thoughts. Over the past couple weeks, we've been debating whether or not we can afford to extend unemployment insurance for a lifeline for millions of Americans, and in my home district of Illinois, thousands of families were talked about last year cuts to the food stamps program. Yet at the same time in this very committee we saw time and again the waste that happens in government, and it's really infuriating to me to think that I have kids in my district who are going hungry, and yet there's $900 million worth of unused Stryker parts sitting in a warehouse that the Army--that the military paid for but couldn't use and continued to purchase. I would like to sort of talk a little bit more about the DOD and its process. You know, this past year, my first year in Congress, two things that happened that really sort of crystallized in my mind the waste that happens in DOD, especially in--under the Defense Logistics Agency. One was a hearing in this very committee on the Supreme Food contract, and that is this corporation, Supreme Food Services, that provide under a sole contract all the food in Afghanistan for the last decade, and, in fact, has now been found to have overcharged the DOD by $757 million for that food contract. They continue to get extensions to the contract in a noncompetitive award process. This is something that the DOD's IG itself discovered and brought to light. And then I talked about the Stryker part also, again a result of a DOD IG investigation. Mr. Arnold, could you give me any suggestions that you might have as to how DOD can develop some sort of controls over the DLA? I know that, you know, we talked about the audit process, and I absolutely agree, we need to put some teeth into the process of forcing DOD to do the audits, but what about the DLA itself? I mean, if the DOD's own internal IG is identifying these as problems, what is there that we can do? Mr. Arnold. Well, let me confess, first of all, I was a coauthor of the study, and I didn't work quite as much on the defense aspects of it, so in terms of getting into the real technical details, I would have to defer to my colleague, Pete Sepp, who did a lot of work, or perhaps some folks at PIRG. So I don't know that I have a really articulate answer for you, I apologize for that, but I would be happy to get back to you after the hearing. Ms. Duckworth. No problem. Ms. Woo? Ms. Woo. In terms of the consolidations that we found that could occur in the Defense Department, and a lot of them include, and it's listed in our report, consolidating foreign language contracts, uniform designs for the armed services or support services on joint bases, or consolidating management of retail bases. These are all of the smaller things that can add up to a lot of money in the end. In terms of the process of how that would go about, you know, as I mentioned before, U.S. PIRG, we're not defense experts, and we don't have anything to say about the process by which it would happen, but these are the things that need to be addressed, and need to be consolidated, and need to be cut, especially because, you know, I think, as Senator Coburn had said, we have so many programs, over 600 programs, for other departments, and the same for the Defense Department. When there are multiple programs for designing uniforms, that needs to be addressed. Ms. Duckworth. Well, the uniform thing is right after my heart. I'm actually the individual who got passed in this year's NDAA the single camouflage pattern bill that will save the Army alone $82 million by going back to a single camouflage pattern, which is what we had for most of my entire time in the military up until 2004 when the Marines developed their own. Mr. Edwards, let's switch gears a little bit and talk about Medicare. I recently had an event in my district where we talked--where we taught our seniors to look into Medicare fraud and waste, taught them to read their own Medicare statements. And one of the things that was quite shocking to me is that the regional Medicare representative who came to teach the course actually made the statement that they know that 10 percent of their payments are to fraudulent and wasteful claims, that they know and accept that they have that 10 percent waste, and that they're working to fix it, but that comes out to about a billion dollars a week. It is stunning to me that that is acceptable. I don't think that we would accept it in business, and we shouldn't accept it in government. Can you talk a little bit about Medicare, just the waste portion of it; not just the fraud and abuse, because that we can deal with, but the waste? Ms. Woo. Yeah, absolutely. I think that's appalling to me as well, the fact that they readily knowingly accept that 10 percent. I think you said 10 percent goes to fraudulent claims and improper payments. But, yeah, there are a lot of different--as listed in our report, there are several different entitlement reforms within the healthcare system that we have advocated for. One of them is better aligning Medicare payments to teaching hospitals, so Medicare--the Medicare Payment Advisory Commission, or MedPAC, has actually stated that the cost of teaching hospitals is much less than the amount of government funding that we're providing them. So better aligning that would save over $10 billion in the next 10 years. And then there's plenty of other things: Bundling Medicare payments so that a single payment goes to a number of different individual episodes in a 3-month period, that would also advocate for a more effective use of time, more effective and efficient actual services. And so these are the types of things that we think that are really important within the healthcare system that we can and should change. Mr. Mica. Thank the gentlelady. And we'll recognize now the gentleman from Michigan Mr. Walberg. Mr. Walberg. I thank the chairman. And I just arrived back from meeting with Ed and Workforce Committee and was delighted to hear Senator Coburn talk about the SKILLS Act extensively as being one of our greatest accomplishments, even though it be limited, and I think it was, downsizing the numbers of redundant programs, 35 ineffective, duplicative programs, including 27 identified in the 2011 Government Accountability Office. I guess I would like to ask any of you who would like to weigh in, the fact that this has unfortunately languished in the Senate, and, in fact, what they are even thinking about offering includes only one of our proposals in that SKILLS Act. Could you discuss further proposals to remove arbitrary roadblocks that will help get Americans back to work in the jobs that are currently in demand? And I know on my own Michigan Web site, the MIjobs.gov lists 52,000 unfilled jobs right now, and most of those--and that's--we know there are many more than that, but that's on that one Web site, a State government Web site, and the majority of reasons why they're not being filled is people don't meet the certification requirements, the qualifications. They haven't been trained for that. So if you could speak to that issue, what proposals would you have in mind to remove further arbitrary roadblocks to making people employable? Mr. Schatz, I'll start with you, if you would care to answer. Mr. Schatz. Thank you, Mr. Walberg. Certainly creating progrowth policies here in Washington would be helpful, and certainly that does not entail creating new and duplicative programs, as Dr. Coburn noted. He examined the job training programs in Oklahoma. It turned out the State was far more efficient at creating jobs because the training that they were conducting was related to jobs, and that's something that the government should be looking at as well. I know that in the House the SKILLS Act was supported strongly by Republicans, not supported as much by Democrats, some differences in how it should be done, but whether it's through legislation, whether it's through progrowth policies, tax reform, there are many other ways to help create jobs. The government needs to be more out of the way rather than trying to force its own view on how jobs should be created, because that's not something that we ever found in the Constitution, yet Members seem to think creating jobs is one of their major functions. Mr. Walberg. As opposed to getting out of the way so that people who do know how to create jobs can do that, including our States. And I think that was one of the best points of the SKILLS Act; it did give the flexibility back and the opportunity back to the States to do. Mr. Edwards? Mr. Edwards. A broad comment on job training. I've looked in detail at the job training programs over the decades, and, you know, it is astounding. The Federal job training programs have never really worked very well. Back over half a century to John F. Kennedy, every decade or so we reorganize them and change them and try to fix them, but the GAO comes back every time and basically says, you can't really show that these things work very well. I think the Federal Government ought to get out of the job training business. If you look at the data, it is the corporate sector, the business sector in the United States does a much more massive job training, on-the-job training, and the Federal Government's $18 or so billion is a tiny drop in the bucket. It hasn't really worked very well. I'd take the Federal Government out of that business. In terms of progrowth policies, there's a gigantic--it's outside the jurisdiction of this committee, but there's a gigantic reform that is on the plate here there should be bipartisan support for, and that's corporate tax reform. We've got the highest corporate tax rate in the world. It absolutely makes no sense. You read in the newspaper every few weeks or every month or two about major corporations who are moving jobs elsewhere, often because of the corporate tax problem we've got. President Obama says he's for corporate tax reform, Republicans are for it. Why we can't do that I don't understand. Our neighbor to the north, our largest trading partner, Canada, has a 15 percent corporate income tax; we've got a 35 percent rate. It makes no sense at all. That is a big thing we can do, because when businesses, they have a lower corporate rate, they invest more, they buy more machines, and when you buy more machines in investment, you need workers to run those machines. A corporate tax cut would be a huge jobs bill, in my view. Mr. Walberg. Mr. Arnold. Mr. Arnold. I'll just--I'll concur with both Chris and Tom, but also add at the State level especially we see licensure laws that place real strong restrictions on the amount of job growth that can occur within a particular field of expertise. And we understand when those are created for surgeons, et cetera, but when those are created for things like interior decorators, they're just protectionism on the part of some these trade associations that, again, limit the access of people seeking jobs to actually become employed. Mr. Walberg. I'm out of time, but could Ms. Woo---- Mr. Mica. Go right ahead and respond. Ms. Woo. Just to add a quick note, in terms of job growth, I'm not going to say anything much just in terms of the confines of our report, but at the same time, you know, the Federal Government is spending billions each year subsidizing large agribusinesses, which really put small farmers, small businesses at competitive disadvantages. Tax loopholes and tax havens where companies are able to shift their profit offshore and use a zero percent tax rate or a very, very minimal tax rate really puts small businesses at competitive disadvantages and really hurts taxpayers in that they have to now pick up the tab through cuts to public programs or more debt or higher taxes, and that can really put a damper on job growth and put a damper on being able to find a job and being able to pick up, you know, your household in that kind of way. So, yeah, I end my statement there. Mr. Mica. Thank you, gentlemen. Recognize the gentleman from Illinois Mr. Davis. Mr. Davis. Thank you very much, Mr. Chairman. You know, I really think that all of the members of this committee agree that waste in government and unnecessary spending is unacceptable. It also appears to me that members will probably agree that this committee is well positioned to investigate and examine issues of waste and conduct legitimate oversight work that holds agencies accountable and help implement necessary reforms. Despite the various examples of waste identified during today's hearing, there has been some progress in this administration that agencies and Congress should continue to build upon. President Obama made it a priority to reduce improper payments when he took office, and we should be pleased to see that over the past 3 years the Federal Government has avoided making $47 billion in improper payments and recaptured $4.4 billion in overpayments to contractors. Another initiative established by President Obama is the Securing Americans Value and Efficiency Award, or SAVE Award, which taps the knowledge and expertise of frontline Federal workers for recommendations to help improve government performance and ensure that taxpayer dollars are spent wisely. Mr. Arnold, in your testimony, you acknowledge and support the SAVE awards, correct? Why do you believe that the SAVE awards can be effective in identifying government waste? Mr. Arnold. Yes, I did include that, and I think that is something that President Obama deserves credit for. I believe he's included about 80 recommendations, people from this program, into his budgets over the past several years. So, yeah, I mean, along the same lines as whistleblower protections, providing an incentive structure for Federal employees to report on the waste that they are seeing and to devise systematic reforms that will help to limit those things that are wasteful, it makes a lot of sense. You know, we can study budgets and GAO reports and CBO reports all day, but we don't have that same on-the-ground experience that these Federal employees do, so we need to tap in to their expertise as well. Mr. Davis. Do you think that we will get from them more of an accurate accounting than other types of oversight might provide? Mr. Arnold. Whether it's more accurate or not I don't know, but it's certainly a different perspective, and it's a very valuable perspective. Mr. Davis. You know, I have always--since I guess being a kid, I've always been amazed at the amount of waste, inefficiency that was always pointed out in government, and I've also been amazed at the notion that the private sector automatically is going to be more efficient than any public sector activity, and I guess because of the profit motive. Given the profit motive, though, does that mean that the level of benefit is going to be greater to the public, or the benefit is going to be part of the profit that the private sector earns, and there might be a kind of balance in terms of public interest and what benefits the public? I think it's just something to give thought to and consideration, but I certainly appreciate all of the areas of identification and suggestion that the government or the Federal Government is making some progress by no means suggests that we're close to where we need to be in terms of ferreting out waste and inefficiency. So I thank all of you for your testimony, and I yield back. Mr. Mica. Thank the gentleman. The gentleman from Texas Mr. Farenthold. Mr. Farenthold. Thank you very much, Mr. Mica. I had a couple of questions. The Wastebook points out that we're potentially spending close to $700 million to promote HealthCare.gov, a Web site that doesn't work. And I know that my colleague from Missouri, Billy Long, has a bill out that would require advertising purchased by the Federal Government to have a disclaimer like we have on political ads, you know, this advertisement was paid for with tax dollars, and sometimes it's difficult for the public to know. As somebody who worked in broadcasting, we ran PSAs, many of which came from government agencies, and we ran them for free in available commercial time, but in other cases you've got the Federal Government paying for advertising. I certainly see a need for maybe advertising for recruiting for our military, but driving people to a Web site that doesn't work, or at least wasn't working well when some of these ads were running, seems to be a problem. Have any of you all looked at government advertising expenditures as a source of waste? Mr. Schatz. We've looked a little more at sponsorships; for example, having agencies sponsor NASCAR, among others. So we've taken it from a little bit of a different direction. In terms of disclosure, it's not something we've thought about, but I think taxpayers do deserve that kind of transparency because they should know how that money is being spent. Mr. Farenthold. I do think Mr. Long's bill would go a long way to at least raising public awareness of that. Mr. Edwards, you talked a lot about moving stuff to the private sector, and I'm a big supporter of that. I think the private sector, with a profit motive and unburdened by as many rules and regulations as exist within government organizations, is a good idea. But I come back to HealthCare.gov. That was outsourced to a private company and had huge, excessive cost overruns. We've talked a little bit about procurement reforms, but, you know, you can't just turn it over to the private sector and not have some sort of oversight on the contracting. And could you talk a little bit about that? Mr. Edwards. I absolutely agree with that, and to go back to what Congressman Davis said, the private sector, it's sort of a two-part partnership in the private sector. Companies want to earn profits, but what we want to do for public policy is we want to maximize competition in the private sector to peel away any excess profits. So companies want to earn profits, and other companies want to grab those profits, and that's why the private system, private sector works. With Federal contracting, it is a problem, you know. We should absolutely minimize sole-source contracts. You know, the CGI Federal, I guess the prime contractor on Obamacare, I didn't look into the details of that contract, but for Federal contracting we should try to maximize competition every way we can, maximize transparency, maximize the transparency of the competition. Mr. Farenthold. But we've also had some hearings with respect to contracting reform where, for instance, in building contracts, in design/build contracts, you are going out, and rather than coming to three or four finalists to come up with a very detailed proposal after the initial request, you're ending up with 10. So you've got huge costs associated with bidding for a government contract and the regulations associated with that that have to get built in. So if you're only getting 1 of 10 contracts you're spending hundreds of thousands of dollars bidding on, you've got to recover that cost somewhere else. Mr. Edwards. Yeah, but I mean, the private sector, that's the way the private sector works. When GE goes out and wants to buy--you know, spend the money on IT, they have, you know, people, you know, competing to contract. I'm a big--I think you're referring to the PPP sort of infrastructure of partial privatization. I'm a big fan of it. I think it works well. You look at the Capital Beltway in Virginia, it came--the private sector put a billion dollars into that. It came in on time and on budget. So there may be some extra costs, but I think getting the private sector in, private management, and having contractors compete is the way to go. Mr. Farenthold. All right. I think both you and Mr. Schatz talked a little bit about centralizing IT for the Federal Government. Are we risking creating another massive bureaucracy in a government that looks like it can't compute its way out of a paper bag? Are we going to create a bigger problem, or are we going to solve something there? Mr. Schatz. I don't think I mentioned the word ``centralizing.'' I think we did talk about giving agency CIOs more authority, because that is their job. That was part of FITARA, and I think it is important that they have more decisionmaking power. I will point out, however, that there were no CIOs until 1989, which begs the question why we didn't have that prior to that. And we've had other legislation since then to improve management, and it requires continuous work, because, as you say, it is so large, and it is quite difficult. But competition is important, and I think that this legislation is also very important. Mr. Farenthold. I see my 5 minutes went by a lot faster than I thought it would. Mr. Mica. Thank you. Recognize the gentlelady from California Ms. Speier. Ms. Speier. Thank you, Mr. Chairman. I want to thank each of you. I wonder to what extent you get a little fatigued, coming here every Congress, making recommendations to us. We seem very interested and engaged, and then what happens? Maybe you could help us by providing me, which I would be happy to provide to the full committee, a list of all the things that we have actually done as a result of the work you've provided to us. You've given us tangible, easy-to- effectuate recommendations, and I frankly think that very few of them have been embraced. Let me go to the one that both Mr. Arnold and Ms. Woo have agreed is something that the Republicans and Democrats can agree on, and that is spare parts and obsolete parts. This is a plumbing elbow. I bought it at the hardware store for $1.41. A defense contractor charged us, the taxpayers of this country, $80 for this. This is a package of washers, $1.22 at the local hardware store; defense contractor, $196.50. It's outrageous. We have a Defense Logistics Agency, it's our hardware store, it's got parts that are going to be there for and can be used for the next 100 years, and what do these various departments do, these various operations within Defense do? They go out to a defense contractor to get the part. So you've identified something, and I hope to God we do something about this. This is real money. It's $4 billion; is it not? Mr. Arnold, is it---- Mr. Arnold. Yeah. It's $3.9 billion is the number that we cited in our report, and actually that was one of the more difficult numbers that we had to track down because there was just so many conflicting stories about how much is wasted at the Pentagon on spare parts. So we did end up citing a GAO report, but there are many other studies out there that actually would put that number much higher. Ms. Speier. I'm not going to ask you to speak to it today, but the GAO has just done a series of reports on physician self-referral, where in ancillary medical services, whether it's an MRI, an IMRT, a laboratory is owned by them, they end up referring more of their patients to it, and the result is a savings of probably $10 billion or more over a 10-year period of time, probably closer to $20 billion over a 10-year period of time. I'm interested in whether or not you have looked at that issue. You can just respond to me separately on that. Mr. Arnold. Yeah, I think that may be addressed by Medicare bundling, which is something that we did include in our report. If you have a single payment going out to a provider---- Ms. Speier. It's not a bundling issue, it's a self-referral issue. Mr. Arnold. I'll have to look at that then. Ms. Speier. Okay. Let me move on to crop subsidies. The GAO has indicated that we've seen a gross increase in crop subsidies. In 2000-2006, it was about $3 billion each year; now it's looking at $9 billion per year. The report argues that we could save more than $84 billion over 10 years by eliminating this program. What's most stunning is that the GAO reported that the biggest recipient of the subsidy is a corporation; not the family farmer, but a corporation who received $2.2 million in premium subsidies. Seventy-five percent of these subsidies are going to 4 percent of, quote, ``farmers.'' Now my question to you is who is in this, quote, ``4 percent''? Ms. Woo. Ms. Woo. Yes, that's absolutely correct; 75 percent of the subsidies in the crop insurance program are only going to 4 percent of the recipients. I mean, that 4 percent---- Ms. Speier. But who? Give us some names. Ms. Woo. Oh, I actually don't have that information. Mr. Edwards. Ted Turner, for example. Ms. Speier. Pardon me? Mr. Edwards. Ted Turner is an example. The Rockefellers have got it. Jon Bon Jovi, the rocker, has got farm subsidies. There's a lot of famous---- Ms. Speier. Members of Congress? Mr. Edwards. Members of Congress, right. Ms. Speier. I mean, let's just be fair, Mr. Edwards. I'm willing to go after anyone regardless of their political affiliation, but who are the 4 percent? Let's get a list of who the 4 percent is. Mr. Edwards. You know, the think tank EWG.org does a very good job on identifying the particular farmers who are getting particularly the direct payments. The statistic that I think is remarkable is that the average farm household in the United States now earns income 25 percent higher than the average household in the United States, so farm subsidies are a reverse Robin Hood program. We're taking from average taxpaying families that we're giving to higher-income people. I think it's completely unfair. Ms. Speier. Now, 80 percent of the farmers, though, get about $5,000 on average, so we're talking about a very small percentage that is getting the lion's share of this money, and if we know who they are, and they're corporations that shouldn't be getting it, we shouldn't be offering it. The GAO has recommended a cap of no more than $40,000 as a farm subsidy. Do you all support that? Mr. Edwards. Absolutely. One thing I would point out about farm subsidies that people who don't look at it don't really get, with the direct payments, it's the landowners get the subsidy, it's not even the tenant farmers. So that's why people like the Rockefellers and Ted Turner, they own massive amounts of land. I think Ted Turner is the largest landowner in the country. He gets the subsidies, not the tenant farmers he hires. Mr. Schatz. Just quickly, as Congressman Mica mentioned earlier, cooperating with each other. The farm bill is an area where we have cooperated very well over the years, and we have a good right-left coalition on that issue. Unfortunately a lot of what we wanted didn't get into the farm bill. Mr. Mica. Thank the gentlelady and the witnesses. The gentleman from Arizona Mr. Gosar is recognized. Mr. Gosar. Well, thank you very much, and some of the previous comments have led right into my aspect. Competition is one aspect for efficiency, but also accuracy in writing contracts is another. Would you not agree, Mr. Schatz? Mr. Schatz. Yes, I do. Mr. Gosar. Mr. Edwards? Mr. Edwards. Absolutely. Mr. Gosar. Mr. Arnold? Mr. Arnold. Yes. Mr. Gosar. Ms. Woo? Ms. Woo. Could you repeat that one more time? Mr. Gosar. Yeah. Competition is one aspect to ensure fair competition, but also accuracy in contracts and calculations are another part of this; is it not? Ms. Woo. I would agree with that. Mr. Gosar. Okay. So are you familiar with the prevailing wage? Mr. Schatz. Davis-Bacon, yes. Mr. Gosar. How about you, Mr. Edwards? Mr. Edwards. Yes, absolutely. It should be repealed, in my opinion. Mr. Gosar. Mr. Arnold? Mr. Arnold. Yes. Mr. Gosar. Well, I mean, I'm of that mindset, too, but, you know, I was taken aback by the GAO account last year of the audit, and what it showed for us is that we've got a problem. So do you believe a fair wage for a fair job that's fair to the taxpayer, Mr. Schatz? Mr. Schatz. Yes, I do. We've also supported repealing Davis-Bacon and the service contracts. Mr. Gosar. Okay. How about you, Mr. Edwards? Mr. Edwards. Absolutely. Mr. Gosar. Mr. Arnold? Mr. Arnold. Yes. Mr. Gosar. Well, it came to my attention, I agree with you, but, I mean, we can stairstep this, because I don't see-- there's no benefit to it. Maybe at one time there was, but I don't see much of an aspect now. But would you be surprised that 100 percent of the audited calculations for Davis-Bacon were fraudulent? Mr. Schatz. That doesn't surprise me. I haven't seen the report, but it wouldn't surprise me. Mr. Gosar. How about you, Mr. Edwards? Mr. Edwards. I guess it would not surprise me. Mr. Gosar. How about you? Mr. Arnold. A hundred percent? Mr. Gosar. Uh-huh. Mr. Arnold. It's a little surprising. Mr. Gosar. It is surprising, isn't it? How about you? Ms. Woo. Yeah. Mr. Gosar. I'll be honest, I was prepared for maybe 50 percent or 60 percent. So we actually contract calculations for the prevailing wage, so the Department of Wages, which is crappy--yeah, you heard it from me, crappy--what if we were to exchange that and just say let's give up on right now the prevailing wage, and let's recalculate it so it's properly done for a fair wage for a fair job to the taxpayer and move it to the Bureau of Statistics. Do you know how much money we would actually save in that calculation per year? Estimate between $15- and $25 billion a year. Would you be for that? Mr. Schatz. That would certainly be helpful. Mr. Gosar. I mean, I'm a scientist, I'm a dentist, so beauty is in my detail, and I compare--I like facts, and the way we're doing it right now, we have no facts to base it on. Some people are being overpaid, some people are being underpaid, and we don't even have a calibration on which we can base our judgment on. So would you think that would be something that you could support, just getting accuracy back into the prevailing wage? Mr. Schatz. Well, it's not just the prevailing wage, Congressman, it's everything that Congress receives in terms of information, but that would be a good place to start. Mr. Gosar. Oh, absolutely. How about you, Mr. Edwards? Mr. Edwards. Absolutely. And the losers are the citizens, because they get less highway maintenance, for example, because wages get inflated. So citizens would get more quality services and more investment that helps them without this particular law. Mr. Gosar. I'm going to come back to you, because it's a great question. How about you? Mr. Arnold. Yes. Mr. Gosar. Yes. And Ms. Woo? Ms. Woo. I think that the amount of money that you would be getting out of that definitely helps the Federal Government in streamlining processes. In terms of what the wage is supposed to be or how that's supposed to be calculated, it's not something that's in the purview of U.S. PIRG expertise and our position. Mr. Gosar. But that would be a good thing, getting back to facts? Ms. Woo. Getting back to facts, absolutely. Mr. Gosar. So, I mean, coming back to you, Mr. Edwards, I mean, you're exactly right. So, you know, the prevailing wage is an average of 22 percent additionally added to Federal contracts, just for Davis-Bacon. That means if you were to have better accuracy, you could get five bridges for the cost of four. Interesting application to our infrastructure problem. Mr. Edwards. Right. Mr. Gosar. So I actually have a bill that actually just changes those six words. It's H.R. 448, the Responsibility in Federal Contracting Act. We would like to see that. It is a down-to-earth, simple thing that I think everybody could agree with, okay? I have one more thing that I would like to ask you. What do you think the influence of having a sunset clause on every bill so that you see bills coming in front of Congress mandated to show their worth? What do you think about that application, Mr. Schatz? Mr. Schatz. We include that recommendation in our testimony. We support what Congressman Brady has been doing with his MAP Act, which he is reintroducing it, we have long testified in support of the Sunset Commission at the Federal level. Mr. Edwards. I'm very much in favor of that. As you may know, the State of Texas has long had a sunset law that's worked very well, I understand, so I'm in favor of that federally. Mr. Gosar. Arizona, too. Mr. Arnold. Mr. Arnold. I support that as well and actually included it in my testimony. Mr. Gosar. Thank you. Ms. Woo. Ms. Woo. I'm not too familiar with that, so I can get back to you. Mr. Gosar. I would like that. Basically it makes accountability a process of the law, that you answer a Fed three side 7 years down the road. But I would really love to see the calculations based on fact, and I think both sides of the aisle could benefit from that, so could our infrastructure, and so could our contracting, because those savings I was telling you about did not include Homeland Security, nor the DOD, because they had not been audited, and so the savings could be much more magnified just in a simple six words. I yield back. Thank you. Mr. Mica. Thank the gentleman. Recognize, waiting patiently, the gentleman from Massachusetts Mr. Lynch. Mr. Lynch. Thank you, Mr. Chairman. And I do want to thank the panel for your good work and your willingness to come before the committee and help us. One of the strongest and most effective tools that we have on this committee and in Federal Government for making the government more efficient is the inspector general community. You know, we have 70 inspectors general across the government. I have to say, because many of them testify before this committee and we worked with them over the years, I would say uniformly they do a great job, they really do. In each of the last--and part of the work that they do, much of it involves rooting out waste, fraud, and abuse in various government programs. And in each of the last 2 years, the chairman of this committee, and the ranking member of this committee, and our members have signed a letter to the inspector general community generally just asking them how many recommendations they have made within various departments, and how many of those recommendations have either been left open, which means they've been unaddressed, or are actually adopted. And the information that our committee has received in response to that request to the inspectors general is really staggering. There are nearly 17,000 open recommendations across the government with a potential savings of more than $67 billion. So this is where our inspector generals have gone out and looked at some of the things that you've talked about and some of the Members on both sides of the aisle have talked about. They've said, we've got to make these changes, and yet in 17,000 instances, the Department has basically refused, and there's been no change. And fulfilling these unimplemented recommendations is really probably a good place to start for many of the things that we're talking about here. I mean, do you agree on that? Mr. Schatz. We not only agree with that, but we've also noted that the funding for IGs has not been up to where it should be as well. We've written on that extensively over the last few years. So it is a good place to start. Between the IGs and GAO, literally hundreds of billions of dollars a year could be saved. Mr. Lynch. Right. Mr. Edwards. Mr. Edwards. Generally the IGs, I agree with you entirely, they do a superb job. It's the one area of Federal spending I would increase substantially. I think the IGs really do a great job. Mr. Lynch. Thank you. Mr. Arnold. I agree as well. I think oftentimes the problem, IGs do a great job of pointing out this waste or these problems, but there's not enough incentive structure for the managers at the Federal level to actually implement them. But certainly applaud the work of the inspectors general. Mr. Lynch. Thank you. Ms. Woo. Ms. Woo. I would say I agree with more collaboration within the Federal Government to root out fraud and waste and abuse, and if that's through the inspectors general, I would agree with that. Mr. Lynch. Okay. When you think about what we're doing right now with sequestration, which is, you know, indiscriminate, it's across the board, we're giving good programs a haircut as well as programs that should be completely eliminated, it would seem to me rather than doing this indiscriminate cutting to try to reduce the size of government and the amount of spending, we should probably target these programs that we all agree and the inspectors generals have identified as being completely wasteful. One of the things that I've been working on with some of the Members on the other side is a lack of transparency in DOD contracting, and our inspectors general there have--even the special inspectors general and the more general ones have identified, you know, billions of dollars in savings, but we've had a very difficult time in getting transparency for the inspector general and also an ability to actually go in and make the changes. One of the ancillary issues is prescription drugs that the gentleman from Oklahoma earlier brought up, and while the VA and DOD each have the ability to negotiate drug prices, because of the--I don't know how to describe it--just nonfunctioning nature of their system, you have the VA on some drugs paying 100 percent higher prices for the same drug as compared to Department of Defense, mostly, and that's the area of brand- name drugs. So in many cases it's 239 percent higher than what the DOD is spending. And then in other cases on generic drugs, you have the opposite situation where DOD is spending 200 percent what the VA is getting on their prices. If they were all paying the lowest price, there would be billions and billions of dollars in savings year to year, and what I'm hoping for is we also have 8 million Federal employees, and right now they don't even have the ability to negotiate lower drug prices. So imagine if we were to add-- first of all, get both the DOD and the VA down to the lowest reasonable price, and then add in the 8 million employees that are working for the Federal Government, and have them paying the same price, it would be tens of billions of dollars per year in terms of what our pharmaceutical costs would be across the government. It would be incredible. And in these days when we're facing--well, maybe not tens of billions, but several billion dollars a year for prescription drugs that are being purchased by the Federal Government, and I'm just beside myself with the inability of the Federal Government to really get at this. There may have been a time--I don't believe so, but there may have been a time where we could overlook things like this, but now that we're facing sequestration, we're trying to cut $1.2 trillion out of the budget, and you have unacceptable costs across the board like this, I just hope that you continue to work with us in terms of, you know, trying to get some of this stuff--the prescription drug prices issue is one that I've been working on a long time, and unfortunately there are probably 10 drug lobbyists for every Member of Congress, so it's an uphill fight. But I think the fight is worth it, and it's more attainable, I think, because of the good work that you all are doing and the people who support you are. So I thank you for that. Mr. Mica. I thank the gentleman, and his time has expired, and I would like to recognize Mr. Woodall, the gentleman from Georgia. Mr. Woodall. Thank you very much, Mr. Chairman. I appreciate you all being here and letting me stand between you and lunch. I've gotten to work with most of you on some other projects in some other venues and really do appreciate all the work that you do. I put your work in the category of those things that the government could be doing instead of you doing it, though I suspect you do a better job at it, and you do it for less, which is why that's valuable. So I want to come back to something Mr. Edwards said in his testimony, because it's been fascinating to listen to the back and the forth, and it really amplifies for me why the work that the two of you are doing together, why those collaborative efforts are so important. I heard Ms. Speier talk about waste and fraud and abuse in the Defense Department and how we ought to be able to agree to get that out, then Dr. Gosar said well, we've got this Davis- Bacon issue, and shouldn't we be able to agree to get that out. Mr. Edwards, you kind of framed what we're talking about. You had three categories, if I can paraphrase you, of spending. You had I think what you called silly projects, just those absolutely horrendous things that we can all agree have no place on the taxpayers' dime or perhaps on anyone's dime. You have those projects for which the benefit does not outweigh the cost, and then you have those projects that just perhaps the Federal Government shouldn't be doing anyway. And I listened to Mr. Lynch; he's talking about prescription drugs, and I know he's absolutely right. When the Federal Government is picking up two-thirds of all the healthcare bills in America, if you use that monopoly power, you can absolutely drive down the cost of prescription drugs, though using the government's monopoly power to manipulate the marketplace, I would argue, isn't the role of government, and it would fall into that third category of things that the government shouldn't be working on. Mr. Cummings was talking about the Legal Services Corporation and CAGW's identifying of that, and I really appreciated your answer, because what you said was not folks who can't afford legal services shouldn't get legal services. What you said is there are other opportunities to get those legal services, and can't we utilize those nongovernmental channels? Dr. Coburn, sitting in Mr. Arnold's chair, was talking about the Army, and he said, golly, they have these software problems because they buy software and they try to mold it to the Army's model instead of buying good off-the-shelf software and molding the Army's model to that. The Legal Services Corporation is exactly that example. What has happened to the justice system in America that I cannot walk in to court as a citizen and avail myself of the protection? Should we be changing the government to adapt to a very complicated legal system, or should we be changing a complicated legal system to make it accessible to those of us as individuals? And I don't know how we get started without the projects that folks come there collaboratively. But let me ask you, for example, you all have timber sales in your project, in your list. The U.S. Forest Service manages our timberlands. They're not in the conservation business; they're in the management business. One of your opportunities for savings is just, say, golly, the Forest Service is losing more money on their timber sales than they're gaining in timber sales. Is that an example of something that should go away because that's a bad use of government resources, or is that an example of something that still needs to be done? We need to manage Federal timberlands. Is the solution to get rid of our Federal lands, and that way we don't have to manage them, or is the solution to farm that out to the private sector? When we identify wasteful spending, we then have to do the ``and so what's next,'' what do we do to fill that void if it creates one? In that example in particular, do you happen to have a ``what's next'' vision? Ms. Woo? Ms. Woo. I think in that example your suggestion of moving that to the private industry is one that we support. Taxpayers shouldn't be subsidizing for things that can be done by the private industry, especially when the government is very obviously losing money in this case. So I think that whereas taxpayers shouldn't be subsidizing profit-making ventures for private companies in the timber industry, that would apply to this situation. Mr. Woodall. Well, I think that becomes the question-- market access program for our farmers is in there as well, you know--is providing markets overseas for our farmers, is that in the category of things that the government shouldn't be doing, folks should fend for themselves, or is it in the category of things that we're doing, but we're not getting an extra dollar of benefit for our dollar of taxpayer burden, and so it's just inefficient? Would you characterize the things in your book as things the government shouldn't be involved in, or the things that perhaps we should be involved in but we're just not doing well? Ms. Woo. I think it would be the first one in this case especially, and also really depending on the type of benefit that it's providing. So I think it's a little bit of combination of both. In this case the market access program is funding trade associations to have wine-tasting events in Europe, or to have a reality TV show in India to, you know, showcase different designs. I mean, does that really benefit the taxpayer who is paying the $20 million a year for that reality show? I don't think so. So I do think that it is partially not the government's responsibility to do that, but also there is no benefit that comes out of it for the average taxpayer. Mr. Woodall. I hope you will all keep doing with the same fervor that you have always done what you continue to do. I see a real opportunity this year. I appreciate the chairman's commitment to moving bills forward, and I hope we'll take him up on it. Thank you, Mr. Chairman. Mr. Mica. Thank the gentleman. And now waiting most patiently, I believe the last member of our committee, the gentlelady from New Mexico, Ms. Lujan Grisham, you are recognized. Ms. Lujan Grisham. Thank you, Mr. Chairman. I, too, want to thank the panel for being here today and for your work prior to your testimony today. I don't think you're hearing from any Member that we disagree that this is a fundamental responsibility of this committee, it's a fundamental responsibility of Congress, it's a fundamental responsibility of any administration, and as that trickles down into investments in the private sector or into other bodies of government, those are also those fundamental responsibilities. And I also agree that regardless of the climate, whether we have resources that we could do anything we desire, or in the climate that we have today where we know that we have a fiscal crisis in this country that we have to address, that we should be mindful about making sure that we aren't wasting any of our resources. And I hope that having this hearing and starting again that this committee will return to a partnership with you and others at looking at ways to make sure that we are not wasteful, and that we are getting the bang for the buck that we deserve and that our taxpayers and citizens deserve for their investments. And so we're clear about that. And I know that you touched on this, Mr. Schatz, in your written testimony, that there isn't anybody--I can't imagine anyone--is going to disagree that paying $900 for a hammer is a good idea. And I know that my eyebrows raise and worse every time I look at healthcare spending and know that at anywhere, anywhere, I can buy a Band-Aid or an aspirin for 1/100th of the cost that I'm going to get it in a hospital or a clinic. So it doesn't make any sense whatsoever, and there's so many areas. I really want us to focus today in your report on that low- hanging fruit, because I think that many of these program issues are in the eyes of the beholder and create, I think, interesting debates that prevent us all too often from dealing with easy decisions and easy responsibilities by Congress and by the administration and listening to recommendations for you. I'll give you an example. I mean, some may think that tax breaks for millionaires and billionaires are unnecessary. Others clearly feel that extending emergency unemployment insurance is wasteful. So we're going to continue to debate those programs. I can give you another example based on some of the testimony today. I come from a State where we don't have a sunset clause, but we've done sunset clauses on some legislation, and because of the political climate, that particular issue or program needs to be reauthorized doesn't get reauthorized, and we spend wasteful money on a special session trying to get that addressed. So it depends on what's happening. It's a case-by-case basis, but we aren't doing anything on that low-hanging fruit. So I need you to grade us on Congress--I've been here only a year. On adopting sensible, good government reforms outlined in your reports every year, how are we doing on picking up on that low hanging-fruit, A to F? Mr. Schatz. Not so well. Ms. Lujan Grisham. Is that an F? Mr. Schatz. That would be an F. Although, as I've mentioned, the FITARA bill, which has come out of this committee, would be very, very helpful to improving procurements throughout the Federal Government. So that would be a positive step. Unfortunately, the Senate so far hasn't agreed to that. Mr. Edwards. I think Congress is doing poorly on cutting waste. You know, one of the big problems, as you know, especially if you've only been here a year, is that the government is so vast that I think that there could be 80 percent agreement bipartisan on a lot of these issues, but Members simply don't have time to dig in and look at them. And I think there could be a lot more agreement if we restructured the way Congress works somehow so that Members could actually focus on some of these issues, there could be more agreement. Because I think oftentimes Members sort of reflexively don't want to get involved in certain issues if they don't understand them, and so I don't know how to overcome that problem. But there could be more agreement if there's more understanding. Mr. Arnold. Yeah, I would say Congress is doing pretty poorly as well. You know, the problem with eliminating waste, and I think this has kind of been touched on a little bit, is that no matter how wasteful, ridiculous, unnecessary, duplicative a program is, and we can all agree upon that here, there's somebody that benefiting from it. And maybe on genuine terms, maybe on disingenuous terms, but somebody's benefiting from it, and those people are going to fight tooth and nail to keep that program on the books, and it makes it a lot tougher for Congress. Ms. Woo. I agree with Mr. Arnold's statement in that I do believe that Congress is doing quite poorly, and that's also because of when Congress or when the Federal Government gives a tax break or when they subsidize a corporation or advertising abroad or such things as the Market Access Program, someone's benefitting, and it's typically these wealthy corporations. And as Ms. Speier had mentioned earlier, it's also Members of Congress, it's people who aren't necessarily by benefiting helping the average taxpayer who has to shoulder that burden. Ms. Lujan Grisham. With the chairman's indulgence just quickly, because I'm over, I'm out of time, a couple more things. I agree and I appreciate that. And like all Members of Congress, I believe we're all interested in getting the right work done. This committee, I think, has an incredibly important role. And it may be a consequence in working in one of the most partisan and unproductive eras of congressional history, but I'm confident that we can move these issues forward in a bipartisan way. I mean, we've got Chairman Issa and Congressman Connolly's IT Acquisition Reform Act, and it passed this committee on a bipartisan basis. We need this committee to put forward a bipartisan, low- hanging fruit bill every year, maybe more than just one a year, and take the information that we have readily available to us, because we're looking at it and we're all agreeing on much of it, but we aren't doing anything really about it. So this committee still finds those and you do, too, those $900 hammers. I look forward to many more hearings like this and finding real areas of cooperation. We can make a difference. Thank you very much for being here. Mr. Mica. Well, thank the gentlelady. And I thank all of the Members. I know Chairman Issa appreciates everyone's cooperation. I have to thank our witnesses for their extensive, long testimony and participation today and for their work beyond this. So we look forward to working with you in this new year. And this is a great way to start off the new year, particularly for our Oversight Committee. So there being no further business before the Government Reform and Oversight Committee, this meeting is adjourned. Thank you. [Whereupon, at 12:38 p.m., the committee was adjourned.] APPENDIX ---------- Material Submitted for the Hearing Record [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]