The federal high risk list in the comptroller general’s own words

Tom Temin: This would be your, what, seventh or eighth high-risk list?

Gene Dodaro: At least Tom.

Tom Temin: And and yet you’re smiling at it’s being out somehow. You separate the personal frustration at what’s going on with the professional presentation of it. How do you do that?

Gene Dodaro: Well, you know, at GAO, we’re fact based, you know, nonpartisan, non-ideological, fair and balanced. That requires a level of professionalism to be able to stick to the facts, support Congress as appropriate to our mission to help them implement their constitutional responsibilities and try to help to improve the performance of the federal government for the benefit of the American people. So, you know, we take our job seriously and professionally, and we present ourselves as such.

Tom Temin: And you don’t really call this a disaster report. I mean, it’s high risk, but I’m impressed this year with the nuance of it in that some things do get better, and some recommendations, maybe about two-thirds of what you’ve recommended over the years of the thousands do actually get done by the government.

Gene Dodaro: Yeah, there’s quite a bit that gets done in the process. In fact, we report this year as a result of implementing our recommendations from the last high risk update two years ago, there’s been $87 billion in financial benefits to the government because of actions taken on the high risk area, even though areas remain on for a long period of time until they’re fully resolved and the risk is reduced. There’s a lot of benefits that accrue to the American people and to the Congress as a result of improvements that are made. Although you mentioned we don’t call it a disaster list, we did add this year improving the delivery of disaster assistance because of long standing problems that we thought need to be elevated.

Tom Temin: Right. And that’s a good case in point of my next question. And that is this is both a report on financial risk and financial loss and financial responsibility with the perennials, like the improper payments and so forth, fraud and Medicare. And you know the list better than anyone. But this seems to crystallize the relationship between financial risk or the coincidence of financial risk with real operational risk in a FEMA case, it can result in death and destruction or extended greater death and destruction than might have been otherwise. Maybe comment on the interplay of it’s not just about dollars and not just about not doing things?

Gene Dodaro: Sure, absolutely. It’s always been about an addition of financial risk risks to public health and safety. Risk to national security. Economic security and well-being. You know, some cases in point, Tom, is that we have on their oversight of medical products and drug safety that is integral to America’s public health area, very concerned about their food safety. So on the list, another important public health issue, reviewing EPA’s efforts to prevent toxic chemicals from entering into commerce in the United States. We have weapons systems acquisition, which is integral to national security, issues as well as cybersecurity on the list. So disaster assistance fits both categories. I mean, there’s huge financial exposure, as we’ve seen in the last ten years, Congress has had to appropriate over $500 billion. You know, insurance companies now or not insuring certain risks. You know like wildfires.

Tom Temin: Or real estate.

Gene Dodaro: Or real estate. And so that means the federal government has become sort of always the insurer of last resort in these areas. And FEMA stretched way too thin. They’re still managing over 600 recoveries from prior disasters, some dating back 20 years. So we need reform. There’s 30 different federal agencies involved in this area. If you want to have infrastructure, you can go to FHA at DoT, Federal Highway Administration, you can go to HUD and you can go to FEMA. All have different rules and regulations. So it’s very confusing. And while the American public sees a lot about the initial response that happens at the time the event occurs, the recoveries drag on for years. You know, it’s very difficult for survivors to get back their footing.

Tom Temin: Yes. And the idea of FEMA and the disaster relief, of course, you relayed it in the report to the higher incidence of bigger and larger and more frequent disasters. And it’s kind of ironic, because the government has been warning every other sector about the need for resilience and planning. You can’t change the climate, but you can change how you react to it, essentially. And yet this is where Congress and the agency and successive administrations from both parties have failed to take their own advice.

Gene Dodaro: Yeah. The one area that’s an exception to that has been in the national defense area at DoD. Congress has always been including directions to the DoD to build resilience into their operations because they have such a direct impact, particularly on bases along coastal areas, both domestically and internationally. So DoD has been doing a better job at the urging of Congress in that area. But it needs to be much more broader as you have. You said. In fact, we added in 2015 limiting the federal government’s exposure by better managing climate risks. And the big message there was to build in resilience in the process. Congress passed a law in 2018 to create a grant program to build resilience, and they’ve also changed the approach of initially when disasters occur. The direction to FEMA was to build back to where it was before, which put you in no better situation than you were initially at risk. And so now the FEMA is allowed to build back a little bit better and to build resilience into the recovery efforts. But it’s still there’s a long way to go. And you’re exactly right. More needs to be done to focus on climate resilience to help limit the fiscal exposure of the federal government.

Tom Temin: You mentioned that FEMA is thin, and it’s thin in people as well as resources. And that’s another recurring theme is the human capital that overlays pretty much all of this. And when you talk about food safety or toxic chemicals, I mean, that is all systems for prevention and reporting and tracking. But it takes a lot of human intelligence and knowledge. And these days, that’s at greater risk, it seems, than when this report was being prepared.

Gene Dodaro: Yeah, absolutely. You know, 20 of the high risk areas of the 38 that are on there now are on in part because of skill shortages and gaps in human capital. In fact, human capital strategic management across the federal government is a high risk area that’s been designated such for the past 24 years. I’ve been long concerned about the state of the federal workforce, and I continue to be concerned if care is not taken in reducing the size of government and streamlining it, which I believe needs to be done. I mean, I’ve spent most of my career butting heads, trying to get bureaucracies to be more responsive and to be more streamlined. And I don’t dispute that needs to be done. But great care has to be taken to do it strategically, so you don’t make some of these areas worse. And it also needs to be done in a way that’s respectful to the federal employees and other people that are involved, and people that rely on the services of the federal government.

Tom Temin: And by the way, of course, when the DOGE idea came into existence and people were speculating what they were, do me and a whole bunch of other commentators, thousands really said, “well, all you have to do is look at the GAO’s duplication list and its high risk list. There’s your target.” Any connection, if they reached out, if they said, can you can you help us on this?

Gene Dodaro: Yes. Well, one thing I did is a proactive way in the Presidential Transitions Act. There’s a GAOs to be a resource to incoming administrations. So we prepare always a detailed website that lists all of our open recommendations, all the high risk areas, all the overlapping duplication, all the key issues that incoming administration should focus on to understand the management risks and opportunities that are there, and key experts in jail that can be contact points. So I did that in this case the day after the election. As soon as Vice President Harris conceded, president elect Trump was designated that such. Send a letter to him, the president-elect and Vice President-elect Vance, and unveiled the website. And so they’ve had access to all the information that we have. They’ve referenced some of our work and reports. The only two contacts we’ve had so far is that the people at the Treasury Department reached that, or people who had done audits of the Treasury payment system. So they want to understand our work there more. And then yesterday they reached out to the people who had done ago, or Friday’s report that were released last year. To understand more about how we made that estimate. And in both cases, they’ve indicated they want to continue to discuss these issues with us, and I expect more interaction with them as we move into the departments and agencies and continue to do our work.

Tom Temin: Yeah, I sense that there’s a little bit more of an architecture to all this than would seem apparent, because it looks like a multi-car crash at a busy intersection. I’m not asking you to confirm that. That’s what I’m calling it. But at the bottom of it, there does seem to be kind of a grand plan for streamlining and reduction, but it’s hard to discern.

Gene Dodaro: Yeah, I think there needs to be, you know, additional deliberations before actions have taken. They’ve had to take a number of actions and then reverse them. You know, both with people and with other things like this latest listing on federal properties that they want to sell, and then they’ve taken the list down. So I expect that things will settle into more of a pace, at least I’m hopeful. Now that the heads of the departments and agencies have been confirmed and you get a management structure within the teams, I think it was, you know, they were operating at a high pace. We really didn’t have confirmed leadership in the departments and agencies. And so I think now that we’ll do that, I will be doing what I do in every administration. And I’ve already started to reach out to the make arrangements to meet the new cabinet secretaries, talk to them about our open recommendations in GAO and other suggestions we have for them about improving the efficiency and effectiveness of their operations.

Tom Temin: And of course, you have been watching this for 15 years, as nearly as Comptroller General, but for more than 40 years as being at GAO.

Gene Dodaro: And actually, Tom is 51 years.

Tom Temin: That’s right.

Gene Dodaro: Time goes quickly. I can understand why that last decade escaped you.

Tom Temin: Well, you know, I bought a new car the other day, and I was looking at the final price. And with the check I had to make, and I said, I remember I bought a car that was exactly those numbers. Except the fifth number on the front, wasn’t there? they got they got a chuckle at that. I don’t think the person had been born yet. But on the human capital challenge, I mean, so we had within 51 years, I guess it would have been civil service reform of 1978. Right. The kinds of reforms that you see required for human capital over these many, many years. Do you believe at this point that they are obtainable under Title Five strictures, or does it need to be more fundamental than that?

Gene Dodaro: I think that it’s like many things in government, the structure’s okay, but it’s how it’s implemented is a problem. You know, we’ve long had concerns about OPM leadership in this area, not being flexible enough, not having the right skills to aid agencies. In fact, in the last high risk report we talked about, OPM didn’t have necessarily the skills they needed for their own operation, let alone help the rest of the government. And there’s this there’s a noticeable lack of strategic planning, workforce planning going on, the agencies. You need to figure out what functions you want to perform first, and then align your human capital to meet those needs so you can have the right skills, the right mix of federal employees, contractors, etc. sometimes we leap to make changes without thinking through strategically. You know where we want to end up, what kind of outcomes the government wants to achieve. The government issued a report before there’s 105 different hiring flexibilities. Congress has given the president only I think ten of them are used for 90% of all the hiring. So there’s a lot of flexibilities in the current laws and regulations. Some of that can be streamlined further. But for a good manager, there’s really not that many impediments, including removing people who aren’t performing well. If you’re a good manager, you set expectations, you document things, you give feedback early, give people an opportunity to improve. And if they don’t, then you move to, you know, move them out of the organization. It could be done compassionately and it could be done to help them find jobs elsewhere.

Tom Temin: Right. Because federal employees are not employees at-will. Some states, quite a number, about 20, according to a report I recently read from looking at state civil service reform that have had success with employees at will. The way you describe it is you could essentially have that in practice, if not in statute.

Gene Dodaro: Yeah, absolutely. The other thing is, in the government, unlike the private sector, you have limits on the salaries that you that you can pay people. So you’re somewhat at a disadvantage because you don’t have the same competitive advantage. So you have to try to like a GAO. We sell our mission. We have a great mission. We’ve got a great place to work with a lot of professionals. People listen to what we have to say and we have impact, and that helps attract and retain it. We have no problem attracting the skills that we need here. We’ve in fact grown triple the size of our science and technology assessments group even in the current environment. But you have to manage properly. Now we have our own personnel authority, but we have to follow Title Five years at GAO. We’ve got to be consistent with that. Everything’s merit based and but you you have to be, you know, creative and you have to have a clear mission, sell it and recruit and encourage people to come in. And it hasn’t been easy to sell people on public service. And I think it’ll be increasingly difficult lest we alter some of the paths that were taken here most recently. But that can be a call. The federal government does incredible work, the federal employees are by and large dedicated people, and you know, they didn’t cause a deficit, they didn’t even cause the structures to occur within the agencies that are currently operating. And we need to make change. There’s no question about it. I don’t dispute that. I encourage those kinds of changes, but we just have to be thoughtful about how we go about it.

Tom Temin: And you mentioned the deficit. And that’s kind of the Sword of Damocles, really, over all of this, over the Republic itself in some ways, not to get apocalyptic. But when you look at the debts piling up, the result of the accumulated deficits year by year, I mean some of the if you IRS if that number is believable about what the tax gap is, that’s about halfway toward yearly deficit reduction. But, you know, 50% or so if that could actually if that is the gap and it could actually be closed. Everything in this report could add up to almost a balanced budget. It sounds like.

Gene Dodaro: Yeah, well, we have a lot of revenue that should be coming into the government under current tax.

Tom Temin: And not just income tax.

Gene Dodaro: Not just income tax, payroll taxes, etc.

Tom Temin: In the oil and gas leases and so on.

Gene Dodaro: So on. Yes. And we’ve mentioned that as well. So you have a lot of revenues not coming in. Should be coming in. We need to have better tax enforcement. Our voluntary compliance rates hovering about 82 to 85%, so we still have a lot of underreporting, a lot of people report but then don’t pay. And then you have people who don’t file at all and should be filing. But we also have a lot of money flying out the door and improper payments that should not be being paid. And that’s it been an excess last year of $162 billion that’s been reported by the agencies, but that’s not the complete number. And you also have a significant fraud problem. You know, we did estimates last year based on 2018 to 2022, those five years that fraud losses were between $233 billion to $521 billion. That included years he didn’t have the pandemic funding and and years that you did can’t necessarily project that on a linear process. But there’s it shows that there’s a problem, a big problem that needs to be addressed. And we’ve had many recommendations to to do that. But I would point out that even addressing the tax gap and improper payments and fraud, you still would not be able to deal with the long term deficit problem until you deal with the main drivers, which are health care. It’s health care costs because they’re growing up for two reasons. One, more people are hitting 65 and our ever-aging of our population.

Tom Temin: In our case way beyond that.

Gene Dodaro: This is true and this is true. And so but but health care costs themselves are growing faster than the economy. So it’s a combination of of increasing population that needs Medicare services. You also have Medicaid that’s reaching a lot of people, both in terms of children, low income people, but also nursing homes, you know, as well. And so and then, of course, interest on it, that’s been the fastest growing cost right now. And so we have to get these things under control better. We’ve advocated for a plan with some fiscal targets and rules that need to be put in place. We don’t have any national goals on how much that could we have, should we have, or as a percent of gross domestic product or you know, any.

Tom Temin: And now it’s just about gross domestic product.

Gene Dodaro: It is from bed about a public. Exactly right. And our long range projections show that it could be over 200% of GDP by 2050. Absent any fiscal changes in that approach and interest on the debt, this year for fiscal 25 is expected to hit $1 trillion. That’s more than tripled in the last few years. As you know, the interest rates have risen. And of course, we don’t pay off or pay down any of our debt. So we have to keep refinancing the debt as well as financial need that. And so this needs to be a change of also call for a change in the debt ceiling approach. It does really nothing to control the debt, all it does is limit Treasury’s ability to pay the bills. Congress has already appropriated a law and a president signed into law. And so, and I’m afraid that absent a change in how we set that which should be more set at the time. We set revenue and spending decisions for the federal government that we could stumble into default, which I think be cataclysmic both in the short term and in the long range. And so we have an urgent, urgent, a Congress to to change that approach.

Tom Temin: And the way to get around at least, say, Social Security costs. And to some extent, maybe Medicare is long term changes. You can’t cut benefits tomorrow. That’s not possible politically, or even if it was desirable. But the last time they reformed these things, it was over the long term and so-called bending the curve. Is anybody on the Hill? I mean, you work for Congress and you can’t criticize them, but do you ever want to grab some of the leadership by the lapels and say, “stop making this the third rail, make it the first rail”?

Gene Dodaro: Well, we in 2017, I commissioned a special report about what I called the retirement crisis in the United States, because you have and you have Social Security that by 2034, the old age portion won’t have enough taxes coming in from payroll taxes to support the benefits. You’ll be only be able to pay about $0.77 on the dollar. Should be like a 23% cut. But you also have a situation where in the private sector, many companies don’t offer a retirement program at all. For those that do, for their employees, for those that do, it’s based upon defined contributions, not defined benefits. And so the more the burdens on the employees. And then the third store retirement, which is your own personal savings, many people are doing well. Middle and higher income groups for many people are not. And so they don’t have any money. And so that puts more they’re putting more stock and having Social Security be their primary, if not only source of retirement. And and that puts, I think, the country in a precarious retirement situation. I’ve called for a commission Congress created commissioned on that. So I’m trying to get their attention on this subject. I think in this case, it’s same with the debt. Everybody sort of knows there’s a big problem, but we can’t reach agreement politically on how to solve these problems. And I’m hoping we do not wait until there’s a crisis in order to to deal with these issues. Because you’re right, the options become more limited. We’re better off. The sooner we address these issues, the better, and that we can phase in changes over time, which, given the size of our problem is, is quite likely. And in solving it, we need to look at all aspects of the government’s operations, including tax expenditures. We’ve got to look at the mandatory spending, the entitlement programs and discretionary programs. We have to look at the revenue side of government as well. The problem is huge, and it’s going to require a mix of these things to be able to be crafted to get, you know, bipartisan support and to deal with the these fundamental issues.

Tom Temin: And a couple of lightning round questions. Getting back to the high risk list itself, one of my favorites is the Bureau of Prisons. The Best Places to Work came out to just recently, a couple days ago, and once again, it’s the worst place to work in the government. I stress that one. It’s also on the risk the Bureau of Prisons on the risk list, because in some ways, the condition and operation and outcome of prisons is a measure of a society, in my view. And so what’s your thoughts on the Bureau of Prisons and how can that get straightened up?

Gene Dodaro: Yeah, no, I’m very concerned about it as as is the inspector general, Michael Horowitz, and I talk a lot about that. He’s an inspector general, as you know, at the Justice Department. The prisons are deteriorating, the physical condition of them. There’s not enough staff, there’s too much use of overtime, and there’s a lot of risk to the safety, not only of the people who work there, the staff, but also the incarcerated individuals. There’s also not enough attention made to evaluate the programs that are provided them to help reduce recidivism. So after they get out of prison, they can transfer and incorporate back into society smoothly and successfully and avoid being re incarcerated. So it’s a big problem and I don’t think enough attention is being paid to it, which is why I added it to the high risk list.

Tom Temin: And the other one is a perennial. And that’s information technology management. And we’ve seen the advent of many computers at one time. And then we saw PCs coming in and networks generation after generation of technology networks. Now cloud, now artificial intelligence. And yet, the government always seems to be just a step behind in managing these acquisitions. What would you like to see happen on that one?

Gene Dodaro: Yeah, I’d say the government’s further behind than just a step behind. Put it in horse racing terms were several lengths behind. You know, FAA, we should report on FAA 138 air traffic control systems, 51 or 37% of them, by their own definition, are not sustainable. There’s not enough parts. We’ve got legacy systems, including those at IRS, that are 40 or almost 50 years old still using COBOL language. So this is why they decided few years ago to make it a government-wide issue. You know, we’ve seen problems this past year to with the student aid application that that was a disaster. And as a result, there were a lot of people who weren’t able to apply to it, 9% less students will apply for college. And now they’ve they’ve made some changes and is getting better, but still needs some refinement in that area at the Veterans Health Administration. They’re on their fourth effort to try to have electronic health care records. They’ve already spent $12 billion. And so sites have been deployed to four medical centers there. Within the next year or two, they’re going to do five more, but there’s 160 beyond that that need to make the change to that system time slot of $100 billion every year, that’s for government spends on it. Most of it goes to continues for these legacy systems, which of course, all also have security vulnerabilities associated with it. So yeah, we’re more than a step behind. We need to pick up the pace here.