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Addressing Fiscal and Other Key Sustainability Challenges' which was 
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The Evolving Role of Supreme Audit Institutions in Addressing Fiscal 
and Other Key Sustainability Challenges: 

Presentation by the Honorable David M. Walker, Comptroller General of 
the United States at the “Future Fiscal Challenges and Performance 
Evaluation” Seminar.

Hosted by the Korean Board of Audit and Inspection: Seoul, South Korea: 
August 31, 2007 

Thank you, Dr. Chang Young Jung, for your kind introduction. I would 
also like to thank Chairman Jeon for the invitation to address you 
today. Chairman Jeon is a good friend who was very helpful in 
connection with the INTOSAI Strategic Plan when he was Chairman of 
INTOSAI.

It's a pleasure to be here today. I don't need to tell any of you that 
Asia has a long and impressive history. But Asia's future may be even 
more impressive. Today, the Pacific Rim is modernizing and growing at 
an incredible rate. More and more Asian nations are playing a pivotal 
role in the world's economy, both as exporters and as investors. In 
fact, the world's next superpower may well come from Asia.

But whether we're talking about the industrialized world or the 
developing world, every nation faces the challenge of change. On so 
many fronts in recent years, from new technologies, to capital markets, 
to public health, the environment, and many other areas, we've seen 
profound developments. Many of them demonstrate a growing 
interdependency. And the pace of change and the degree of 
interdependence are increasing with the passage of time.

Some people see change as a bad thing. Yet change is essential for 
progress and innovation. Entities that fail to successfully adapt to 
changing circumstances can see their value diminish and even their very 
existence threatened over time.

Nearly a century ago, one of my favorite U.S. Presidents, Theodore 
Roosevelt, said, "We have to, as a nation, exercise foresight ... and 
if we do not exercise that foresight, dark will be the future." My talk 
today is about the foresight role that more supreme audit institutions 
(SAI) and other key accountability organizations should be undertaking.

In addition to our normal oversight and insight functions, SAIs like 
the U.S. GAO and the Korean BAI can and should educate government 
leaders about emerging trends and challenges. As independent, 
professional, fact-based, and nonpartisan organizations, SAIs are 
uniquely positioned to speak truth to power and help policymakers 
address key current and emerging challenges in a timely and informed 
manner. SAIs have credibility, in part, because of their independence. 
In addition, SAIs should have only one agenda: the public good.

It's important to recognize that in today's environment, events can 
easily outpace the best intentions of policymakers. To effectively 
manage change and capitalize on related opportunities, government 
policymakers need to take a more strategic, integrated, and disciplined 
approach to policymaking. SAIs can help to foster this approach to 
policymaking. First, by advising policymakers to plan ahead and to 
focus more on the future. Second, by urging policymakers to act sooner 
rather than later on key sustainability challenges--before they reach 
crisis proportions. Third, by ensuring that policy decisions are 
evidence-based and reflect a clear understanding of various collateral 
effects and longer-term impacts.

The challenges we face in the 21st century can be incredibly complex, 
and in many cases, they represent shared challenges. As a result, 
progress on many of these issues will require the collaboration of many 
players, inside and outside of government, both domestically and 
internationally, over many years. This means that SAIs should "lead by 
example" and "partner for progress" both domestically and 
internationally to help share knowledge, replicate successes, and avoid 
making common mistakes. At the same time, SAIs and other public 
officials must also look beyond today's problems and consider what lies 
ahead.

Too many policymakers in my country and elsewhere are consumed with the 
here and now. They suffer from myopia, or shortsightedness. Many also 
suffer from tunnel vision by focusing on one issue at a time and issues 
of concern to their own constituents. I'm sure many of you have seen 
this firsthand: Some elected officials become fixated on the issue of 
the moment, their own narrow span of control, and their constituents' 
current wants rather than their nation's or society's overall needs. 
Many can't see beyond the next election. In the process, some elected 
officials can lose sight of the big picture and the greater good.

This myopia and tunnel vision have contributed to one of the most 
serious problems facing my country: America's growing long-term fiscal 
imbalance. Largely due to the aging of the baby boomers, individuals 
born in 1946-1964, coupled with rising health care costs, the United 
States faces a tsunami of spending that is just on the horizon. The 
facts on this aren't in question. However, at the present time, 
policymakers aren't taking enough steps to prepare for the deluge 
that's coming. This must change and the sooner the better for both the 
U.S. and the world.

Many government leaders in Washington, D.C., have decided to live for 
today rather than prepare for tomorrow. We've heard few calls for 
meaningful reforms or shared sacrifice as the wave builds silently but 
surely offshore. In fact, just the opposite has been happening. Despite 
our long-range fiscal imbalance, in recent years the U.S. federal 
government has pursued an unsustainable policy of promoting additional 
spending increases while expanding tax cuts.

In less than a decade, the U.S. government has gone from budget 
surpluses to budget deficits. Depending on which accounting method you 
use, the federal deficit last year ranged from $248 billion to $450 
billion.

But today's deficits aren't the problem. After all, federal deficits 
have declined for three straight years. Rather, the real threat is the 
federal government's mounting liabilities and unfunded commitments for 
federal entitlement programs like Social Security, Medicare, and 
Medicaid and the deficits that will result in the future absent 
meaningful reforms. These represent our major government-sponsored 
retirement, disability, and health insurance programs. In the last six 
years alone, the estimated present value of these combined items has 
soared from about $20 trillion to about $50 trillion.

What this means is the U.S. government has made a whole lot of promises 
that, in the long run, it can't possibly keep. And here's why: Fifty 
trillion dollars translates into an IOU of about $440,000 for every 
American household. Keep in mind that the median household income in 
the United States is less than $50,000 a year. The growth of this 
burden is outpacing the net worth of most Americans and the growth rate 
of our economy.

Today, America is on an imprudent and unsustainable long-range fiscal 
path. Long-range simulations from my agency, the U.S. Government 
Accountability Office, are chilling. If we continue as we have, U.S. 
policymakers will eventually have to raise taxes dramatically or slash 
government services that the public has grown to depend on.

Our growing indebtedness is also undercutting U.S. flexibility to 
change course and tackle new 21st century challenges. For example, 
caring for our aging population is going to be enormously expensive. I 
know this is also a problem in several Asian countries and Western 
Europe as well. Many retirees are expected to live far longer and spend 
more years in retirement than their parents and grandparents. This is 
going to put unprecedented demands on America's pension and health care 
systems.

At the same time, billions of dollars are needed to modernize 
everything from our nation's highways, airports, and bridges to water 
and sewage systems. America faces similar sustainability challenges in 
a range of other areas, including our elementary and secondary 
education system, current immigration policy, increasing energy 
dependence, growing environmental concerns, the conflict in Iraq, and 
our badly broken health care system.

With regard to health care, the U.S. is spending much more per capita 
than any other nation on earth and yet our outcomes are of major 
concern. For example, we have below average life expectancy, above 
average infant mortality, and high medical error rates for an 
industrialized nation. We also have the greatest percentage of 
uninsured population of any major industrialized nation, and we're 
number one in obesity, which does not bare well for future health care 
costs.

In my view, well-run and adequately resourced supreme audit 
institutions like GAO have a key role to play in putting these key 
sustainability challenges into perspective. We can provide lawmakers 
and the public with evidence-based information on the outcomes of 
current policies and programs. We can also help policymakers by 
providing options on various policy choices and the trade-offs that 
will be required in the future. Some of these options are likely to be 
based on the experiences of other countries. Furthermore, we can 
provide information to help policymakers prioritize issues and reach 
consensus on what outcomes the citizens want their governments to 
achieve. At the same time, we must maintain our independence and ensure 
that elected officials are the ones who make the decisions on key 
policies choices while also holding policymakers accountable for 
achieving real results in an economical, efficient, effective, ethical, 
and equitable manner.

SAIs have traditionally been about government oversight. And clearly, 
financial , compliance, and other traditional audits are an important 
check on waste, fraud, and abuse. Likewise, program evaluations and 
best-practice studies can help improve government efficiency and 
effectiveness. But today, SAIs need to be doing more than routine 
oversight of day-to-day government operations.

I'm reminded here of the psychologist Dr. Abraham Maslow's hierarchy of 
needs. Maslow believed that people first must meet their "self- 
preservation" need for things like food, shelter, employment, and 
personal safety. Once these basic needs are met, individuals then want 
to satisfy higher needs. At the top of Maslow's hierarchy is self- 
actualization. Those individuals reaching this stage have made the most 
of their God-given abilities. These individuals have become the best 
they can be.

When it comes to supreme audit institutions, there's a similar 
hierarchy. (See attachment.) Envision a pyramid with six levels, each 
describing a mission. At the bottom is the most basic mission every 
government SAI should hope to achieve--fighting corruption. It's 
essential that civil servants be honest and committed to the public 
good. After all, any government run by corrupt officials isn't going to 
accomplish much, other than picking the pockets of its own people.

The next level in the SAI pyramid is promoting transparency, which 
helps to facilitate progress on all fronts. The third level is 
accountability, and I'd include here efforts like traditional audits 
and compliance reviews. The idea is that all aspects of government 
should be accountable to the taxpayer for the results they achieve with 
the resources and authorities they have been given. At a minimum, every 
SAI, whatever its budget, whatever its expertise, should be fighting 
corruption, ensuring transparency, and pursuing accountability.

The fourth level is enhancing government economy, efficiency, ethics, 
equity, and effectiveness. The fifth level is providing policymakers 
with insight and options to make government work better by refining 
programs, consolidating redundant efforts, or adopting best practices.

The sixth and final level in the pyramid is foresight, a function that 
more mature and experienced SAIs should consider undertaking: I'm 
taking about helping policymakers focus on the future. Government 
decisionmakers need to develop a long-term perspective, understand the 
big picture, and appreciate the collateral implications of their 
actions. Too often, it's the immediate crisis that gets all the 
attention. Policymakers find it easier to ignore issues whose impact 
may not be felt for several years, even decades. However, our 
government's historical "crisis management" approach to dealing with 
selected major public policy challenges is no longer viable. The stakes 
are simply too high.

With their reputations for professionalism, objectivity, integrity, and 
reliability, SAIs are uniquely positioned to alert public officials to 
emerging trends and future challenges. By encouraging policymakers to 
face up to these problems sooner rather than later, SAIs can help their 
governments avoid costly crises in the future. Similarly, SAIs can also 
help educate policymakers about the true costs and potential benefits 
of various policy choices.

At every level of the pyramid, SAI work needs to be balanced, 
constructive, and nonpolitical in its approach. SAIs shouldn't simply 
point out what's wrong in government. It's also important to highlight 
policies and practices that are working well. By sharing success 
stories and describing best practices, SAIs are more likely to get 
their governments to transform how they do business. A balanced and 
constructive approach to oversight is also more likely to build public 
trust and confidence in government.

Created by statute in 1921, GAO is a good example of a mature SAI. In 
recent years, largely due to my personal emphasis, GAO has made it a 
priority to provide Congress and the American people with information 
on future trends and emerging challenges that should be addressed. For 
example, as Comptroller General I've been trying to raise awareness 
about my country's long-range fiscal imbalance and the need to address 
several other large and growing sustainability challenges that I 
mentioned previously, including the current direction of policies 
relating to health care, education, energy, the environment, 
immigration, infrastructure, and Iraq, just to name a few. In fact, 
just last week, the Financial Times published an op-ed piece that I 
authored in all of its global editions. That piece addressed the need 
for the U.S. to learn the lessons of history while preparing for the 
future.

GAO and I take seriously our responsibility to speak out on a range of 
complex and sometimes controversial issues. It's not always an easy 
job, and some people don't like what we have to say, but as U.S. 
President Harry Truman once said, "If you can't stand the heat, get out 
of the kitchen." When it comes to key issues of concern to Congress and 
the nation, you can rest assured that GAO and I have no plans to stop 
speaking truth to power. After all, if the head of an SAI isn't willing 
to speak up, who will?

Today, GAO is working hard to fulfill its foresight role. We're trying 
to help Members of Congress better understand the trends and challenges 
affecting the United States and its position in the world. As I noted 
earlier, many countries share many of these challenges, and as a 
result, we need to work together to solve them. GAO is also trying to 
help lawmakers grasp the long-term implications of current policy 
choices, especially when it comes to costs.

Our goal is for Congress to expand its horizons and act more often in a 
timely, evidence-based, and integrated way. We want policymakers to 
better understand where we are, how we may look 40 or even 50 years 
out, and how various policies and programs can have ripple effects, 
across sectors and over time.

To this end, in 2005 GAO published an unprecedented report called "21st 
Century Challenges" that asks probing, sometimes provocative questions 
about current government policies, programs, and practices. I 
understand that one of your own BAI staff has translated this document 
into Korean and distributed it to selected interested parties. The 
report brings home how much of the U.S. government reflects social and 
spending priorities that date back to the 1950s and 1960s. More and 
more, we are spending finite taxpayer dollars on activities that are of 
questionable value today. I commend this report to you because I have 
little doubt that much of its content would also be of interest to 
other countries. As former President Ronald Reagan once said, "The 
closest thing to eternal life on this earth is a federal program." 
Maintaining the status quo is not just inappropriate, it is 
unsustainable.

Our current path in several key areas is both inappropriate and 
fiscally irresponsible. It's also alarming given the emerging 
challenges that I've been discussing today. Significant resources will 
be needed to address many of these areas. The math is clear and 
compelling: Every dollar we spend on an outdated, unneeded, or 
ineffective program or policy is a dollar we can't use to meet new 
challenges. By freeing up these resources, the U.S. government will be 
better positioned to meet future needs and capitalize on future 
opportunities.

To this end, a top-to-bottom review of federal programs and policies is 
essential. Congress and the President need to decide which federal 
activities remain essential, which should be overhauled, and which have 
simply outlived their usefulness. Policymakers will be much better 
positioned to do so if they have the benefit of GAO's professional, 
objective, fact-based, nonpartisan, nonideological, fair and balanced 
work.

So what's been the reaction of policymakers to GAO's "21st Century 
Challenges" report? I'm pleased to say we're seeing hopeful signs in 
several areas. For example, concern is growing about America's 
financial condition and fiscal outlook. For example, recently proposed 
legislation would convene a commission of public and private sector 
leaders to study entitlement and tax reform issues and recommend 
changes. In addition, a major presidential candidate recently announced 
his intention to make our fiscal and other key sustainability 
challenges facing the U.S. a centerpiece of his campaign.

To keep the momentum going, GAO published two key reports this past 
April. The first was our updated strategic plan. The second was our 
first-ever strategic themes booklet, which examines the key forces 
affecting the United States and other countries. I also commend the 
strategic themes document to all of you because it addresses issues 
that many other countries also need to address. In fact, I would 
suggest that you may want to translate and distribute this report as 
well. All of the documents that I have mentioned are on our Web site at 
[hyperlink, http://www.gao.gov].

In addition to publishing this strategic themes document, GAO is 
working with our National Academies, the Organization for Economic 
Cooperation and Development (OECD), and others to make the adoption of 
key national indicators a reality in the United States and around the 
world. In this regard, I'm pleased to say that key national indicators 
will be one of two themes covered in this year's triennial INTOSAI 
congress in Mexico City. The other theme will deal with public debt and 
fiscal responsibility issues. Both of these are timely and important.

Timely and reliable performance and foresight information can help 
enhance government performance, ensure accountability, improve the 
future, and strengthen democratic values. With better information about 
emerging trends, average citizens tend to have a better grasp of where 
we are, where we're headed, and how we compare to others. In my view, 
an informed electorate is more likely to support leaders who are 
prepared to make difficult decisions. An informed electorate is also 
more likely to accept shared sacrifice today to help build a better 
tomorrow for our children and grandchildren.

Some nations in this region have already acted to address their long- 
term fiscal challenges. Two good examples are Australia and New 
Zealand. Like the United States, they have aging populations. Unlike 
the United States, they have stepped up to the plate and dealt with 
some of their most serious challenges. Among other steps, they've 
reformed their overburdened public pension and health care systems. The 
efforts by policymakers in Australia and New Zealand show it's 
politically possible to take the longer view and make difficult 
decisions that are in a country's long-term best interests.

When you return to your offices, I hope you'll give some thought to 
providing your government officials with greater foresight about the 
future. Whether we're talking about Washington, Tokyo, Beijing, or 
Seoul, immediate policy results can no longer be the sole benchmark of 
success. It's time more policymakers consider the needs of their 
children and grandchildren and take steps to build a brighter future 
for our countries and our citizens.

In closing, don't get me wrong. Despite our many key sustainability 
challenges, America is a great nation and we have dealt successfully 
with many great challenges in its past. And in the end, I'm convinced 
America will do so again when it comes to our fiscal and other key 
sustainability challenges. Difficult public policy decisions are 
unavoidable, but SAIs can help elected officials make more timely and 
informed choices. Let's do our part, and hopefully others will do their 
part as well--and the sooner, the better.

Thank you for your time and attention.

[End of section]

Appendix:

Figure 1: Supreme Audit Institution Maturity Model:

This figure is a pyramid with the following items stacked from bottom 
to top: 
Combating Corruption:
Promoting Transparency:
Assuring Accountability:
Enhancing Economy, Efficiency, Ethics, Equity, and Effectiveness: 
Increasing Insight:
Facilitating Foresight.

[See PDF for image]

[End of figure]

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protection in the United States. The published product may be 
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from GAO. However, because this work may contain copyrighted images or 
other material, permission from the copyright holder may be necessary 
if you wish to reproduce this material separately.