The biannual list of high risk federal programs, published last week by the Government Accountability Office, is both promising and discouraging. It shows that more appropriations can help and also that money is not always the answer to improving programs.  Federal Drive with Tom Temin gets executive analysis from the man who runs the GAO, Comptroller General Gene Dodaro.

Interview transcript:

Tom Temin And I feel like you should be Dr. Dodaro, you’re kind of like the kindly, knowledgeable bedside doctor to federal agencies. You don’t spare the truth, but you don’t hit them over the head with it either.

Gene Dodaro Well, it’s important to be constructive, Tom. I mean, there’s a lot of serious problems that need to be dealt with. You need to be clear, candid with people, but you need to be understanding and making sure that you’re doing everything you can to try to help them improve their performance for the benefit of the American people.

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Tom Temin And let’s talk about a couple of the items that did get removed this year, the Pension Benefit Guaranty Corporation and the 2020 Census. I think those show kind of what I said at the beginning, is that sometimes a little bit more money helps from Congress, but sometimes it’s just sheer managerial knowhow that gets you through a situation.

Gene Dodaro In the [Pension Benefit Guaranty Corporation (PBGC)] case, it definitely was the money appropriated from the Congress. The multi-employer pension part of that program was due to be insolvent in 2026, and the latest estimates in Congress provided enough funding that, according to the current projections of PBGC, will extend that program through 2050 timeframe. And the single employer part of it has been getting better on its own. So that’s been better management, as you point out. But the PBGC now rates the risk of insolvency for both programs to be extremely low for the next 15 years. So it doesn’t solve the long-term problems that they have. But for now, we’re going to take them off the list. And just because they’re off the list, they’re not out of sight. So we’ll keep an eye on them going forward. Census Quarterly was a good management exercise. They’ve kept the cost from growing exponentially as it had been with prior decennials, they implemented the first Internet response option for people using and some administrative records. They effectively dealt with the cybersecurity recommendations that we and the Department of Homeland Security had put forward. And so, they’ll continue to be challenged as we run up to the 2030 census. So we’ll keep an eye on that as well. And if we need to, add them back to the list.

Tom Temin And of course, 16 areas, as you mentioned, to Congress have improved. And without running through the details of all the 16, what are the themes there for people to maybe not get off the list, but at least step closer to the doorway out of it?

Gene Dodaro Actually, in a number of cases, there are two pivotal parts that get started on the path to coming off the high risk list. One is sustained leadership commit and a number of them exhibited that. And this is particularly important, there’s changes in the administration. If you recall, our last update was 2021, just as this administration was coming in office. So it’s important in many of these issues, as you know, been on for a long time. So it’s important that that commitment be sustained across administrations. Secondly, detailed action plans that really get to the root cause of this situation, and that is very important. We saw a number of meaningful efforts to come up with better action plans going forward, particularly through the Veteran’s Administration. And so I was very pleased with both the leadership commitment and the action plans, and now it’s a matter of following through and executing it is getting to the hard part. But unless you have those two prerequisites, you really don’t make much progress.

Tom Temin We’re speaking with Gene Dodaro, comptroller general and head of the Government Accountability Office. And let’s talk for a moment about the three items that got added here again. Bureau of Prisons, there’s a big money issue there, but also some managerial problems. The unemployment insurance fraud was really discouraging, and I know GAO has had several reports on that, as have some of the inspectors general, that you kind of work in parallel with. And all of this fraud, as you pointed out, yes, the COVID response accelerated the fraud maybe by an order of magnitude, but it was not an unknown problem before then. And then, of course, [Department of Health and Human Services (HHS)] responds to public health emergencies that kind of underlie many, many of the issues agencies have faced over the past couple of years.

Gene Dodaro Absolutely. I’ll start with that one first, on the HHS area. We’ve seen over the last decade that they’ve struggled with providing adequate leadership and efforts to respond to various public health emergencies and to coordinate the federal response. There’s been problems with clarity and roles and responsibilities among federal agencies with foreign governments, state and local governments. There has been not effective communication, clear consistent information to the public. There has been data collection issues that have made it more difficult to target the response rate, and so there’s a lot of work that needs to be done. I added to the list to keep it visible to the Congress and the public as the pandemic fades or emergency parts of it say,  sometimes not enough attention is given to be in a better position next time. And I think we’re a long way from being in a better position to deal with the next public health emergency. So that’s important that we stay focused on that as a country.

Gene Dodaro On the unemployment insurance error, you’re exactly right. We estimated that at the low end of fraud, at least $60 billion of fraud in the unemployment insurance program we’re working on a higher and estimate right now. But in addition to the fraud and improper payments issue, which you are right, it was there before, but it was magnified during the pandemic because all the money and the new programs. But also we found problems with timely delivery of benefits to eligible people, legitimate people. And there were some questions about equity based on racial lines. And the program is at the state level, antiquated IT systems that are not really meant to serve the modern federal workforce. And of course, the workforce has changed itself and the dynamic. So it needs broad based transformation to deal with these range of issues. And then the Bureau of Prisons, we saw for a number of years, they’re having some leadership challenges. They had six different directors in six different years. Current director Colette Peters is committed to addressing these problems, I’ve met with her. But their staffing challenges, their use of over time has grown. They’re understaffed, they can have issues in terms of safety, both for the inmates and for the staff. And then they have a big challenge in trying to prevent recidivism. Their last estimates are 45% of inmate population were back in prison after a few years of being released. And so there’s a number of programs, including the first step back, to try to get them to be more successful in preventing that and help inmates make successful transitions back into society.

Tom Temin And on the BOP issue, I have spoken to your director on that issue, Gretta Goodwin, and one of the questions I asked her, and this gets almost to the philosophical level, is that, yes, some of the people incarcerated by the Bureau of Prisons from some easy camp for elderly white collar prisoners all the way to the supermax at Florence, Colorado. Yes, they are some of the worst members of society, but when they become incarcerated, they also become among the most vulnerable, kind of an irony there. And in some ways, it’s a reflection of the entire government and maybe society as to how those people get treated. Given that incarceration itself is pretty bad punishment, they should not suffer physical abuse, etc.. The things that happen under incarceration, beyond the fact of incarceration, and nor should the people that care for them have to be in danger.

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Gene Dodaro Absolutely. And that’s one of the issues that I decided and put them on high risk for. There’s health care issues, because there’s aging in the inmate population as well. And there’s issues of safety and also there’s medical care. There’s issues helping people recover from drug abuse. There’s all sorts of different challenges and they are vulnerable, and the goal is to rehabilitate people to be better members of society when they’re released from their punishment. And so this is a big challenge the Bureau of Prisons has. It’s a tough issue dealing with these issues and things that have built up over time with these individuals. So it’s very appropriate, it’s our goal and we want to make sure that we try to help them be in the best position possible to keep their staff and their inmates safe, and also to meet their rehabilitation goals.

Tom Temin My guest is Comptroller General Gene Dodaro, and I want to talk about the Defense Department. Some of the problems there have been on the high risk list, I think, since it was inaugurated back in 1990, including acquisition of weapons programs and so on. And there’s never been a shortage of efforts to try to address that. But I wondered if you felt that the Ukraine situation and the granting of all of this equipment and ammunition that has been flowing to Ukraine has brought those problems into sharp relief?

Gene Dodaro Well, I think that the question of replenishing the supplies that we’ve been providing to the Ukraine will be an issue that we’re going to be looking at, Tom. We have a separate mandate from Congress to provide oversight over the agencies provision of assistance to the Ukraine, whether it’s military assistance, humanitarian assistance, etc. So we’ll be looking at those issues. But as you point out, a number of issues have been longstanding at the department. And so they need to be addressed, along with repercussions from providing the assistance to the Ukraine. So we’ll be keeping an eye on both, whether they’re getting at a root cause of some of these problems and executing good action plans. I’ve been pleased with the commitment of the Department and their cooperation, and I’ve had discussions about that with their leadership and looking forward to hopefully some additional progress of them. As you recall, maybe the last time we met, we’ve taken a couple of DoD areas off the high risk list, so I was pleased with their progress before the supply chain management and infrastructure areas. So they’re working on these other issues, some of them are very difficult. The weapon systems acquisition in the financial management area in particular. So we’ll see how things go going forward. But we’ll be keeping an eye on the Ukraine situation as well.

Tom Temin Because there have been a couple of high level commissions. One was called the Section 809 Commission, and it had to do with that name of the section that authorized it in the [National Defense Authorization Act (NDAA)] a few years back, and they were looking at acquisition issues. And then there’s another commission that is just turning in reports on PPBE, what they call Planning, Program, Budget Execution. That whole process which dates back many, many years, decades, really. And so it seems like if they could act on what is the recommendations before them, from their own commissions and their own study groups, they could make a lot of progress.

Gene Dodaro You’re exactly right. I think there are two fundamental tensions that occur within DoD. One is you have large, complex problems that need disciplined systems, management acquisition, management approaches, and to mature technologies before you put them into production, for example, when to have good business cases. The other tension, though, is you have this enormous pressure to meet and stay with the competition from adversarial nations, and that pressure ultimately drives some decisions to move forward faster than discipline management practices would take you in that area. And so those two tensions always create challenges within the department. And so better management practices can help could make better decisions early on. But this competition from near-peer countries is not to be underestimated as a force guiding their decision making.

Tom Temin Yeah, everywhere you look, there are stimuli that have brought to light some of these problems, whether it was the COVID and HHS, and Ukraine now in competition for DoD. In the U.S. Financial regulatory system modernization, that was one of the items that was cited. And here we had Silicon Valley Bank, which is really still unfolding in many ways. And there’s a lot of controversy over the response by the [Federal Deposit Insurance Corporation (FDIC)], whether it was the best deal for taxpayers, and then the whole Bitcoin FTX deal kind of sucked in a lot of banking with it. And so what’s your sense of how that can make some progress? Again, it’s a very old issue.

Gene Dodaro Yeah. That’s brought the financial modernization area into a more vivid relief now since the time we put it on during the global financial crisis back in 2009. And we’re looking now at the Silicon Valley Bank situation and the signature bank situation. We’ll have our first report at the end of this week in those areas. We have a statutory obligation if regulators make a systemic risk determination to go in and look at that and advise Congress what happened there. We also, Tom, gained additional responsibilities to audit the Federal Reserve emergency lending facilities during the global financial crisis. We needed that authority, congress responded to my request positively there, in order to audit the Troubled Asset Relief Program there, because the Federal Reserve was backing up some of Treasury’s activities. And then we’ve received the bipartisan request from the Congress to look at what happened in Silicon Valley at Signature Banks. So we’ll be looking at it. And we’ve also received another request to look more broadly at the bank examination and supervision process, and all that will bring us back into looking and focusing in on the high risk area of financial modernization.

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Tom Temin We’re speaking with Gene Dodaro, comptroller General and head of the Government Accountability Office. And in some sense, GAO has been saying the entire government enterprise is a high risk on into itself, because of the non sustainability of the fiscal situation. That’s a little separate study than the high risk list. But do you worry that every time there’s a trillion dollar response to something, and they’re talking about there’s new trillion dollar programs being contemplated, who knows whether they’ll pass politically. But does that cause you pause, when you think that the debts are mounting and we’re not getting closer to some sort of sustainable fiscal path, even though it might happen program by program individually?

Gene Dodaro The overall fiscal health of federal government is a concern. I’ve regularly, for the last six years, issued an annual report on the fiscal health. And so government had come to the conclusion that it’s on a long-term unsustainable fiscal path. There’s a structural issue there, in terms of the imbalance between revenues and expenditures that was there before the global financial crisis, the Great Recession and now the pandemic. Those extraordinary events have added to the debt and to this fundamental problem, which is largely been driven by demographics as our society is aging and rising health care costs, and then soon to be rivaled by the increase in interest costs to service our debt. So our latest report, Tom, will be out next month. And in those reports, I’ve called for a plan to put federal government a roadmap, if you will, on a path to long-term sustainability. But we need to have some goals, guidelines is how much debt we want to have as a percent of gross domestic product, for example. And how would we get there to constrain those things while still allowing ourselves to be responsive to global and domestic emergencies? I’ve also called for changes in how we deal with the debt ceiling. So the way we do it right now is really not an optimal approach and it could lead to extreme difficulties. And I’m concerned about that, I have been and I hope that once we get through this most recent episode that we get to a more rational way of setting our debt at the time we make appropriation decisions, and not have it bifurcated and create potential turmoil on markets.

Tom Temin And I wanted to ask you to on that regard, you are about to reach your 50th anniversary in June of serving in the federal government. That is pretty rare. A 50 year career, you hear a lot about a lot of 30 year careers and 40 year careers, and yet you have managed not to become a Jeremiah when it comes to some of these issues. But as I said at the outset, more of a kindly bedside doctor who nevertheless has to give bad news. What keeps your equanimity in all of this when the problems just go on for generations and seem in some cases to be accelerating?

Gene Dodaro Tom I joined the government, because I wanted to provide public service. I didn’t want to become somebody to just complain about government and not get in the game to be able to make good, positive outcomes. When we get together, we talk a lot about the high risk list and the problems, but GAO generates tremendous benefits for the federal government and we achieve a lot of improvements. The last five years, for example, we’ve got tens of billions of dollars of financial savings, $145 back for every dollar invested in GAO. The high risk program, for example, over the last 17 years have saved $675 billion. I’ve talked to you before about the overlap, duplication, fragmentation, that’s over a trillion dollars in savings. So there is a lot of job satisfaction with improvements that are made, and the government that comes with this job. But our job largely is to keep the country and Congress focused on challenges and emerging issues. And so therefore we spend a lot of time on this. But I have three children, seven grandchildren an eighth on the way. I want to make the country better and leave it better for my stint in government. And so that keeps me motivated, plus working with the tremendous people over here at GAO that we have, and one of the best talented, most dedicated workforces in the world. So I’m happy, Tom. I’m looking forward to the rest of my term here at GAO and to continue to help our country.

Tom Temin And in that regard, yes, you actually got applause from one of the committees you were testifying for, I think was the Senate, they don’t applaud too many witnesses. But citing GAO for its repeated being the best midsize agency to work for. And we should remind people that you don’t have to do the FEV survey as a congressional agency, but you do it voluntarily.

Gene Dodaro I think it’s important to continue to hold ourselves to the same standards that we all others do when we audit people. So we try to implement leading practices of GAO, and it’s important that we have our employees engaged, and try to be the best the workplace that we could be, because better motivated people produce better results. And then we have a better chance of achieving our mission in the most effective and efficient manner.

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