<DOC> [109 Senate Hearings] [From the U.S. Government Printing Office via GPO Access] [DOCID: f:29512.wais] S. Hrg. 109-965 WHAT YOU DON'T KNOW CAN HURT YOU: S. 2590, THE FEDERAL FUNDING ACCOUNTABILITY AND TRANSPARENCY ACT OF 2006 ======================================================================= HEARING before the FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, AND INTERNATIONAL SECURITY SUBCOMMITTEE of the COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED NINTH CONGRESS SECOND SESSION __________ JULY 18, 2006 __________ Available via http://www.access.gpo.gov/congress/senate Printed for the use of the Committee on Homeland Security and Governmental Affairs ------- U.S. GOVERNMENT PRINTING OFFICE 29-512 PDF WASHINGTON DC: 2007 --------------------------------------------------------------------- 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) 512-2250 Mail Stop SSOP, Washington, DC 20402-0001 COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS SUSAN M. COLLINS, Maine, Chairman TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii TOM COBURN, Oklahoma THOMAS R. CARPER, Delaware LINCOLN D. CHAFEE, Rhode Island MARK DAYTON, Minnesota ROBERT F. BENNETT, Utah FRANK LAUTENBERG, New Jersey PETE V. DOMENICI, New Mexico MARK PRYOR, Arkansas JOHN W. WARNER, Virginia Michael D. Bopp, Staff Director and Chief Counsel Michael L. Alexander, Minority Staff Director Trina Driessnack Tyrer, Chief Clerk FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, AND INTERNATIONAL SECURITY SUBCOMMITTEE TOM COBURN, Oklahoma, Chairman TED STEVENS, Alaska THOMAS CARPER, Delaware GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan LINCOLN D. CHAFEE, Rhode Island DANIEL K. AKAKA, Hawaii ROBERT F. BENNETT, Utah MARK DAYTON, Minnesota PETE V. DOMENICI, New Mexico FRANK LAUTENBERG, New Jersey JOHN W. WARNER, Virginia MARK PRYOR, Arkansas Katy French, Staff Director Sheila Murphy, Minority Staff Director John Kilvington, Minority Deputy Staff Director Liz Scranton, Chief Clerk C O N T E N T S ------ Opening statements: Page Senator Coburn............................................... 1 Senator Collins (ex-officio)................................. 3 Senator Carper............................................... 4 WITNESSES Tuesday, July 18, 2006 Hon. John McCain, a U.S. Senator from the State of Arizona....... 5 Hon. Barack Obama, a U.S. Senator from the State of Illinois..... 6 Gary D. Bass, Ph.D., Executive Director, OMB Watch............... 14 Eric Brenner, Director, Maryland Governor's Grants Office........ 16 Mark Tapscott, Editorial Page Editor, The Washington Examiner Proprietor..................................................... 18 Alphabetical List of Witnesses Bass, Gary D., Ph.D.: Testimony.................................................... 14 Prepared statement........................................... 31 Brenner, Eric: Testimony.................................................... 16 Prepared statement........................................... 47 McCain, Hon. John: Testimony.................................................... 5 Prepared statement........................................... 27 Obama, Hon. Barack: Testimony.................................................... 6 Prepared statement........................................... 29 Tapscott, Mark: Testimony.................................................... 18 Prepared statement........................................... 50 APPENDIX Article submitted by Senator McCain from the Washington Post dated July 18, 2006............................................ 56 National Taxpayers Union, prepared statement..................... 63 WHAT YOU DON'T KNOW CAN HURT YOU: S. 2590, THE FEDERAL FUNDING ACCOUNTABILITY AND TRANSPARENCY ACT OF 2006 ---------- TUESDAY, JULY 18, 2006 U.S. Senate, Subcommittee on Federal Financial Management, Government Information, and International Security, of the Committee on Homeland Security and Governmental Affairs, Washington, DC. The Subcommittee met, pursuant to notice, at 2:31 p.m., in room SD-342, Dirksen Senate Office Building, Hon. Tom Coburn, Chairman of the Subcommittee, presiding. Present: Senators Coburn, Collins (ex-officio), and Carper. OPENING STATEMENT OF SENATOR COBURN Senator Coburn. The Federal Financial Management, Government Information, and International Security Subcommittee of the Homeland Security and Governmental Affairs Committee will come to order. I would put in this note that we have three stacked votes at 3:45, so we are going to try to move through this to not delay anyone. Two-thousand-six marks the 40th anniversary of the Freedom of Information Act, also known as FOIA. The essence of FOIA is to give the average citizen access to nearly all government documents simply by asking for them, in the hope that with more information would come more accountability. But FOIA requires government staff to respond to requests for information, and as the government has grown through the years, the Act has proven woefully inadequate at providing citizens timely and complete information on their government. Today, the government continues to grow at a tremendous pace. We now spend nearly $3 trillion each year to keep it running. This includes $460 billion in grants and subgrants, $340 billion in contracts, and hundreds of billions of dollars more in loans, insurance, and direct payments. With this kind of spending, transparency is more important now than it was when FOIA was first passed. This is why I, along with Senators Obama, Carper, McCain, Sununu, and DeMint, have introduced a bill that we believe will go a long way towards equipping citizens with the information that they need. The Federal Funding Accountability and Transparency Act of 2006 (S. 2490) would require the Administration to operate a website--that anyone can access for free--disclosing every recipient of Federal grants, contracts, and loans. This would include how much money was given and for what purpose, extending to subcontractors and subgrantees. On the issue of tracking subawards, I believe it is vitally important to know where the tax dollars are ultimately spent. Oftentimes, grants and contracts are given to initial recipients, but the money ultimately goes to organizations farther down the line. I don't think it is too much for the American people to ask that if they are going to supply the money, they should know where the money is ultimately spent. I like to think of this bill as ``Google for Government Spending.'' The concept behind the bill is really quite simple: Put information on government spending out there for all to see and greater accountability will follow. It will also change expectations of those receiving funds that they will know in advance that the information will be public. This is not a new concept by any means. It was espoused first by Thomas Jefferson, who in 1802 had this to say about the subject: ``We might hope to see the finances of the Union as clear and intelligible as a merchant's books, so that every member of Congress and every man of any mind in the Union should be able to comprehend them, to investigate abuses, and consequently to control them.'' The Founding Fathers believed in transparency for government because even back when budgets were much smaller, the possibility of abuse, waste, and malfeasance was just as real. But with transparency comes accountability. Those who we envision using this information would be everyone from the man on the street to the watchdog organizations to media outlets to government auditors. The hope of our bill is to harness the power of an eager citizenry wanting to know where tax money is spent by arming them with information. No business or household could operate the way the Federal Government does. Every entrepreneur knows that transparent accounting and budgeting information is critical to keeping the business afloat and knowing the decisions that need to be made. I note that our government is not exactly afloat, and maybe the shroud of secrecy around how money is actually spent is partly to blame. Federal agencies have access to money and power often without the needed transparency or accountability, and so it is not a mystery why abuses occur. Without the level of transparency called for in the bill, the potential for waste and abuse is enormous. Consider the following examples of outrageous spending that we have uncovered: <bullet> Lhalf a million dollars for a Teapot Museum in North Carolina; <bullet> Lhalf a million dollars in defense money for the Arctic Winter Games--that is money designed to defend this country; <bullet> Lhalf a million dollars for the Museum of Glass in Tacoma, Washington; <bullet> Lhalf a million dollars for the Fort Dupont Ice Arena in Washington, DC; <bullet> Lmore than $2 million for the Appalachian Fruit Laboratory in West Virginia; and <bullet> L$5 million for the St. Louis Zoo. All at the time that we are running record deficits. It is fine that we have done that, but we should be held accountable for it. Each of these items was buried deep within a report not readily accessible to the public or even to Members of Congress who had to vote on them. The American public should know that its Members of Congress are spending their money on these things. Some have argued that the government already operates some databases and, therefore, this bill is unnecessary. Let's talk about some of those. For example, the Federal Procurement Data Base, which tracks Federal contracts, does not provide details on what Federal contractors are doing with the money they get, nor is the system very easy to use. Or, again, the Federal Assistance Awards Data System, which tracks grants, loans, and other awards, while giving more details than FPDS, only provides quarterly data and is not searchable. Even the President's annual budget to Congress, which gives the most comprehensive picture of what the Federal Government spends, is only an estimate. OMB does not collect this information. Congress does not collect this information. Nobody collects this information. The bottom line is there is no single source of information available to the taxpayers and Members of Congress and the auditors explaining where Federal money is spent and there should be. When I tell people about the bill, the response I usually get is, ``You mean, that doesn't already exist?'' Most people are astounded to hear that there is not a website available now disclosing everyone who gets Federal money. The idea is just so common sense that it is hard for anyone to oppose--that is, unless they have something to hide. As of today, the bill has been endorsed by over 100 organizations spanning the entire political spectrum and under normal circumstances would not be able to agree on much. Liberal and conservative organizations have come together around this idea of sunshine. If they can agree, so can Congress. I look forward to hearing from our witnesses today, and I want to thank them for what they have done for us thus far. I would next recognize the Chairman of our full Committee, Senator Collins. Senator Carper. Madam Chairman, go right ahead, please. OPENING STATEMENT OF SENATOR COLLINS Senator Collins. OK. I know, Mr. Chairman, that you are eager to hear from our witnesses, so I am going to just make a few comments. First, I want to applaud your leadership, Senator Carper, Senator McCain, and Senator Obama, for introducing this bill. It is astounding in this age of the Internet that we do not already have an easily accessible, searchable web-based site that the taxpayer can go to to see how our money is being spent. And I think your proposal will increase accountability. As you have often said, transparency is the first principle of accountability. If people have no idea how their tax dollars are being spent, then it is very difficult for them to hold us all accountable. So I think this is an excellent concept. I have been working very closely with you to refine the bill, and I want to give you my personal commitment to moving this bill out of Committee as soon as possible. Thank you for your leadership. Senator Coburn. Thank you, Madam Chairman. Senator Carper. OPENING STATEMENT OF SENATOR CARPER Senator Carper. I have a statement I would like to give. I want to refrain from doing so until we have heard from our two witnesses. Mr. Chairman, you quoted our third President, and just sitting here, Senator Collins, I just thought, we heard a quote from our third President. It is possible in this first panel we may have a future President, maybe two future Presidents, to tell us why this is such a good piece of legislation. I have heard Senator McCain say that in the United States, everybody is assumed to be running for President unless--what is it? You are indicted? Senator McCain. Unless you are under indictment or detoxification, you automatically consider yourself a candidate for President. Senator Carper. I consider that Senator Obama throwing his hat in the ring as well. [Laughter.] I am going to hold off. One thing I would say--you quoted Thomas Jefferson. One of the things that--I think it was Jefferson who said, ``If the people know the truth, they will not make a mistake.'' And I really think this is what it is about, trying to make sure that the folks around this country know the truth, and if they do, they and hopefully we will not make a mistake. And with that having been said, maybe I can give the rest of my statement once we have heard from our witnesses. But to our colleagues, Senator McCain and Senator Obama, it is great to see you sitting side by side, and it is good to hear from you. Thank you. Senator Coburn. Let me first recognize Senator McCain. He is known by his reputation as being one of the lone voices in the Senate championing the cause of fiscal restraint and his crusade against earmarks. His support of this bill is vital, and he recognizes its importance to us as a Nation to control spending that otherwise is out of control. I have had the great pleasure of working with Senator Obama on many issues in a bipartisan fashion to make government spending more transparent, more accountable, and, therefore, doing the proper job of oversight which we are entrusted with. I am delighted to be working together with him on this bill, and I thank both of our Senators for being here, and I would recognize Senator McCain first, and then following that, Senator Obama. TESTIMONY OF HON. JOHN McCAIN,\1\ A U.S. SENATOR FROM THE STATE OF ARIZONA Senator McCain. Thank you very much, Mr. Chairman, and I want to thank you, Senator Obama, Senator Carper, and Chairman Collins for your involvement in all these issues, and including this specific one. --------------------------------------------------------------------------- \1\ The prepared statement of Senator McCain appears in the Appendix on page 27. --------------------------------------------------------------------------- Mr. Chairman, I am going to make my remarks brief because some of it would be repetitious from what you and Senator Collins already said, so I would ask that my complete statement be made part of the record. Senator Coburn. Without objection. Senator McCain. I will summarize by saying, as you mentioned, Mr. Chairman, this bill would create a searchable database, available to the public at no cost, that lists each entity receiving Federal funding. It would show the amount of Federal funds the entity received in each of the last 10 fiscal years, an itemized breakdown of each transaction, the location of the entity, and a ``unique identifier'' for the entity and its parent entity. They would be very important, all of those provisions, Mr. Chairman. I think critics of this bill have suggested that the requirements are too burdensome and that it would be too costly and take too much work to collect and post this data. I do not buy that argument, Mr. Chairman. In fact, if you looked at--and I know you did--the front page of this morning's Washington Post--and if you don't mind, I would just quote briefly from it: ``On a clear, cold morning in February 2003, Nico de Boer heard what sounded like a clap of thunder and stepped outside his hillside home for a look. High above the tree line, the 40- year-old dairy farmer saw a trail of smoke curling across the sky--all that remained of the space shuttle Columbia. ``Weeks later, de Boer was startled to learn that he was one of hundreds of East Texas ranchers entitled to up to $40,000 in disaster compensation from the Federal Government, even though the nearest debris landed 10 to 20 miles from his cattle. ``The money came from the U.S. Department of Agriculture as part of the Livestock Compensation Program, originally intended as a limited helping hand for dairy farmers and ranchers hurt by drought.'' By drought. ``Hurriedly drafted by the Bush Administration in 2002 and expanded by Congress the following year, the relief plan rapidly became an expensive part of the government's sprawling system of entitlements for farmers, which topped $25 billion last year.'' Mr. Chairman, the important point--and I would ask that this entire article be made part of the record.\2\ --------------------------------------------------------------------------- \2\ The article referred to appears in the Appendix on page 56. --------------------------------------------------------------------------- Senator Coburn. Without objection. Senator McCain. But the interesting thing is sometimes you and I are derided because we talk about $75,000 for the Cowgirls Hall of Fame, $50,000 for this. Mr. Chairman, this was $1.2 billion that were given to cattle ranchers even if the debris from the space shuttle landed 20 miles away from the place where their cattle were kept. Now, how did we find out about it? Because there were some enterprising reporters who dug it up, who found it out. I did not know about it. I doubt if any of us here knew about such a program. And so why don't we have a way that people, average citizens, would know about the program? That is the question about these incredible excesses. The only way I think, Mr. Chairman, as Senator Collins mentioned, the first step is transparency. And I believe that your proposal needs to be enacted. It needs to be enacted quickly. As you know, Mr. Chairman, in 1994, there were 4,126 earmarks. In 2005, there were 15,877. The list goes on. Finally, Mr. Chairman, a recent editorial in the Tennessean stated, ``Congress needs to open up and shed light on its business in many ways. With an accessible database of grants and contracts, the public may see spending it despises, and it may see spending that it approves of, down to the last penny. The only reason to oppose compiling the information for public use is if the government has something to hide.'' I thank you, Mr. Chairman, and I want to again thank the bipartisanship that is associated with this bill, including Senator Carper and Senator Obama. I thank you, Mr. Chairman. Senator Coburn. Thank you, Senator McCain. Senator Obama. TESTIMONY OF HON. BARACK OBAMA,\1\ A U.S. SENATOR FROM THE STATE OF ILLINOIS Senator Obama. Thank you very much, Mr. Chairman, Senator Carper, and Senator Collins. It is a great privilege to be testifying with Senator McCain, who has worked so tirelessly in shedding light on some of the problems that we have seen here. --------------------------------------------------------------------------- \1\ The prepared statement of Senator Obama appears in the Appendix on page 29. --------------------------------------------------------------------------- I want to personally thank Senator Coburn, who I think has, since he and I entered the Senate at the same time, been a constant thorn in the side of those who want to waste our money. It has been a pleasure to work with him consistently. Senator Collins has done terrific work on the Governmental Affairs Committee, and so I am really appreciative that you have taken an interest in this bill, and I think your support makes all the difference. And, Senator Carper, thank you for your outstanding work on it as well. This year, the Federal Government will spend about $2.7 trillion. The overwhelming share of this spending will go to fulfill America's commitments and to support our public priorities. So not all money in the Federal Government is waste. A lot of it is good spending. We have a whole bunch of seniors who are going to be getting their Social Security checks on time, as they should. We depend on government spending to ensure our national defense, our homeland security, to safeguard our environment, to help our children receive a quality education, provide an adequate safety net for our seniors and the poor. So I strongly believe that much of the money that we spend here is well spent. But as Senator McCain pointed out, if even a small percentage of Federal spending is wasteful or lost to fraud or abuse, we should be concerned. Unfortunately, based on what I have seen in my relatively short time in the Senate, we are not talking about a small percentage of waste, fraud, and abuse. It is unacceptable, particularly at a time when this country's most vulnerable citizens need to see government at its best, at a time when we are running up the credit card for our children and our grandchildren, to be wasting money. But I think all of us have seen evidence just from reading the papers every day that waste is taking place. It is embarrassing to hear about the government paying 15 times more than the market price for plastic tarps to cover damaged roofs in New Orleans, or paying five times too much for debris removal or contracting with vendors for ice or transportation services who do not have the relevant equipment or experience. How can we expect the American people to have confidence in us when they hear about overcharging and overpayment, when they hear about pork-barrel projects like the ``Bridge to Nowhere,'' when they hear about money being wasted on frivolous expenses? How can we expect them to have confidence when the Administration and Congress seem unwilling or unable to hold people accountable? Now, remarkably, as Chairman Coburn and I have discovered, it is often not possible to get good information about Federal grants and contracts, even when you are a U.S. Senator. There are several different databases of Federal spending information, and some who have opposed or expressed doubts about this legislation have suggested that it would be duplicative of existing databases. But the fact is that all these databases work differently. They are all incomplete. There is no way to see the full picture of government spending, and they are extraordinarily hard to access, even for professionals whose job it is to monitor Federal spending. It is certainly difficult for the average citizen. And the lack of transparency over the use of Federal resources is, to my mind, and I know to the minds of Senator McCain and all of you, unacceptable. If we, as Senators, cannot get this information, we can be sure that the American people know even less. And the fact of the matter is that the taxpayers have a right to know how the Federal Government is managing its fiscal resources. We have the right to insist upon answers to reasonable questions about where and how our tax dollars are used. Let me just make a few more points. This is not a partisan issue, as reflected by the sponsorship of this bill. Every single dollar that is wasted is a dollar that cannot be used for reducing the deficit, investing in health and education, or eliminating child poverty. So I think it is important for us to realize that whatever our priorities, whether Republicans or Democrats, those priorities are compromised and shortchanged when Federal funds are not prudently managed. It also should not matter whether you think that government ought to spend more money or less money. We can all agree that we should spend money efficiently and transparently. Democrats and Republicans can all agree that wasteful spending is unacceptable, whether it is by FEMA or HUD or DOD or any other Federal agency, and one of the pleasures that I have had in working with Senator Coburn and Senator McCain, observing the work they do on the floor, is that sometimes it is our own favorite agencies that need to be taken to task. And I think that is important. So the first step in solving this problem has already been mentioned. It is shining a little light on the issue. And to me, at least, this should be a no-brainer. If government spending cannot withstand public scrutiny, then the money should not be spent. If a government agency is not willing to be held accountable for the grants or contracts it awards, then that agency should not have control over Federal resources. Now, it is important to emphasize, because I have heard this argument as well, and I am trying to anticipate a few, because I know our time is short, that transparency by itself is not enough, but it is necessary. It may not be sufficient, but it is an important place to start. Transparency would not have stopped FEMA from spending $880 million on temporary housing trailers that are now sinking and rusting away in Arkansas. Transparency by itself would not have prevented Federal relief monies from being used to perform sex change operations or to take Caribbean vacations. But transparency is a prerequisite to oversight and financial control. And my sense is that once agencies get a sense that somebody is watching them and the taxpayers are watching them, they start asking some tougher questions before money is spent. So, in closing, Mr. Chairman, I just want to thank you for your extraordinary leadership on this issue. I think that anybody who doubts that this is a sensible proposition should take a look at the enormous spectrum of support that this bill has generated. I rarely have seen so many editorials from such diverse outlets and such diverse organizations as on this issue. So I think it is time for this bill to pass the Senate. I applaud the Subcommittee for holding this hearing. Again, I thank you very much, Madam Chairman, and the Subcommittee, as a whole, for helping hopefully to shepherd this bill through. Senator Coburn. Thank you, Senator Obama. I just want to ask both of you, some of the critics of this bill have claims that the Federal Government has no business collecting information on subcontractors and subawardees. Do you believe it is important for the government to track Federal spending down to the point of actual use? For example, most grant money actually just goes to the State, but the State subgrants the money to other organizations. What is your feeling on that? Senator McCain. Well, Mr. Chairman, if I could just respond briefly, it is the taxpayers' dollars. I think we should track the taxpayers' dollars to its ultimate end. I know you know there are burgeoning scandals associated with a lobbyist and a group and a member and a committee, and one of the things that we have seen is that entities now feel, particularly small towns and cities across America feel, that they must hire a lobbyist who is well connected in order to get money for projects that they feel they need. I am not saying they should not do that. But I am saying that we should know where the money went and the entity that got the money, all of it. Senator Coburn. Senator Obama. Senator Obama. Well, I think Senator McCain summarizes it appropriately. Look, if the city of Chicago receives a CDBG grant and it is going to be using those Federal dollars to fund a wide range of organizations, then it should be fairly simple for the city of Chicago to gather up the information about how this money is going to be spent and report it back to this website so that all Federal taxpayers can know, folks in Maine can see, whether this money is being well spent in Chicago. And if we cannot defend how that money is being spent in Chicago, then the people of Maine or Delaware or Oklahoma have a right to say this is a bad use of Federal dollars. I think those objections particularly make no sense to me given that, as it is, anybody who is applying for Federal grants is already providing this information to somebody. And simply making sure that it is transmitted to OMB I don't think is going to be a tremendous burden on their part. Senator Coburn. If they are not already supplying that information or don't know the information, they should be. Senator Obama. Absolutely. I mean, I don't know who is getting Federal money no questions asked. If they are, then we should probably stop that practice. Senator Coburn. We have quite a bit of that. We are going to be outlining that in this Subcommittee. A couple of the concessions that we have made as this bill has worked through: We have proposed a pilot program for subaward reporting so we can streamline that to make it easy; we have added a study on how best to implement a governmentwide program to collect and report subaward data; we have added provisions to minimize the burdens to grantees and contractors of reporting subaward data; and, we have delayed the requirement of subaward reporting from 2007 to 2009. So we have answered all the questions that the subgrantees and subawardees and subcontractors have had with this bill by providing the mechanism where sunshine can flow and it will be easily accomplished. One of my thoughts when we came up with this bill was that we need help doing oversight. We can have 300 million Americans helping us do oversight. And the real question for Congress, in declining revenues and increasing obligations that we have already committed to, is how do we make the priorities? How do we put what is first, what is second, what is third? What are your thoughts on how this bill, if enacted and when enacted, will help us do those priorities? Senator McCain. Senator McCain. Well, Mr. Chairman, I just think that it is the heart and soul of what government should be all about. The more our constituents and our citizens know about how we do business, the greater their trust will be in us. And as I am sure you know from recent polls, not a lot of Americans have a very high opinion of us, and I think this is one of the reasons, because they do not know what we do with their tax dollars. I would like to make one additional point, Mr. Chairman. Maybe 10 years ago this would have been a very onerous task to set up this kind of a database and have everyone have access to it. I am not a computer expert, but smart people have told me that this is a relatively easy operation and one that is not too difficult nor expensive. So let's say it costs maybe a couple hundred thousand dollars to set this up. Compare that with the knowledge of some of the ways that this money is spent so that it will be a caution to people who want appropriate money that is not for useful purposes because they will know that their constituents will know and not appreciate the way their tax dollars are being spent. I will bet you that it justifies whatever expense is associated with it in the first 5 minutes. Senator Coburn. Senator Obama. Senator Obama. I concur. Look, not only do I think that it is a basic principle of self-government, as articulated by Thomas Jefferson, that taxpayers should know where their money is going; frankly, I also think this will help us Senators because I think even given the vigilance of some of the Senators who are here in this room, there is a lot of stuff that slips by that we do not know about. None of us have the time, even with our staffs, as able as they are, to track down every dollar of spending. And, I think we are all constantly surprised at what shows up after we have voted for a bill. This website will empower citizens and organizations. It is one of the wonderful democratizing aspects of the Internet that we can empower a lot of people to do what maybe a few individuals would have difficulty doing. Senator Coburn. Senator Collins. Chairman Collins. Thank you, Mr. Chairman. I think that Senator McCain hit on an issue that is very important, and that is the lack of public trust in government. And certainly the kinds of wasteful spending projects that have been discussed today contribute to that lack of trust. I think there is an upside also from this website, and that is in some cases people may be pleased to see what money is going for. I wonder if our witnesses might comment on that as well. I see this as helping to give the public more information on what their taxpayer dollars are used for, and also helping us to sort out the proper role of government at the Federal level, what kinds of projects and programs should the Federal Government be paying for as opposed to the State or local level, or perhaps projects that should not have any government involvement at all. So I would like to ask our two witnesses to comment on that issue, too. Senator McCain. Senator McCain. I certainly agree, Madam Chairman, and I would also like to point out that eventually, perhaps, you could have this listing of what the money was spent for and all the entities and subentities, but also you could have a link to the department of government that is responsible for this money, and they could have a website explaining exactly what that program does. I think it could be a tremendous educational factor for our constituents, so they would know not only the name of what that program is, but link up with the various agencies of government who would give them a full and complete explanation. Chairman Collins. Senator Obama. Senator Obama. Well, I think you are right, Senator Collins. To the extent that people know where dollars are going that can actually serve a useful purpose. For example, I serve on the Senate Foreign Relations Committee. If you were to poll the average person, they might think that 25 percent of the Federal budget is going to foreign aid. And when you let them know that actually it is less than 1 percent, then they have a better perspective in terms of why we might want to provide assistance to other countries. Now, they then may take a look at where some of the foreign aid is going to and question whether it is appropriate or not. The point, though, is that it can create better understanding, a more robust conversation within our democracy. I will be honest with you. One of the things that I have always found to be helpful in my own office--and this was true when I was a State legislator--is the more transparency there is, sometimes that helps me fend off constituents who want questionable projects from me. And when I explain to them that we are going to have to defend this and that I have to explain why this would be a higher priority than something else, it helps me do my job better. Chairman Collins. Thank you. Senator McCain. It is always easy to explain to Dr. Coburn, I have found. Senator Coburn. Senator Carper. Senator Carper. Sitting here this afternoon listening to the testimony and the responses from our colleagues, I am reminded of an older reporter, now deceased, who used to write for the News Journal paper in our State. We only have one statewide newspaper called the News Journal. He was a crusty old reporter who became a columnist. His name was Ralph Moyed. He died about 5 years ago. We used to say when I was a Congressman and then governor that when we are faced with an issue about whether or not to go forward and do something or not and it is sort of a close call, we would always say, ``Imagine a front-page article in the News Journal written by Ralph Moyed above the fold about this particular issue.'' And we would say, ``Well, maybe we should not do that.'' [Laughter.] Or we would say, ``Well, maybe we should.'' In a way, I think of the legislation that we have all cosponsored, and Senator Coburn has authored, is a little bit like having a whole lot of Ralph Moyeds alive and well, looking over our shoulder, and ready to blow the whistle, and then whether people want to pay attention or not, that is up to them. I don't know that there is any silver bullet out there in the fight that I think we all share, and that is a fight to try to restore some fiscal sanity in this Nation of ours, at least for our Federal Government. But the thought occurs to me that most of what we are talking about is domestic discretionary spending. And if you actually look at the budget deficit we have, I think, for the last year, we could eliminate entirely domestic discretionary spending, and I think we would probably still have a budget deficit. So while it is part of the answer, getting rid of the wasteful spending in domestic discretionary, it is not the whole answer. One of the things that Senator Coburn and I have been working on is trying to figure out where improper payments are occurring, and we have learned that there was roughly $50 billion or so, maybe more, in improper payments last year. Mostly overpayments--that does not include the Department of Defense. And among the things that we have learned is that financial controls at the Department of Defense are so haphazard at best that we do not know really what their improper payments are. I would just ask both of you, in addition to taking a step like this, which I think we all agree is important, what might be some other steps that we should take to rein in the deficits that we all abhor and want to curtail. Senator McCain. Senator Carper, I think about that all the time. I think that the package of reforms that has recently been proposed by Senator Gregg and cosponsored by many Members of the Senate is probably a good idea. It is a package of budgetary controls ranging from the line-item veto to various other provisions that would enforce budgetary discipline. Senator Carper. Does that include two-way PAYGO discipline? Senator McCain. I think it does, but---- Senator Carper. I think it is one-way. Senator McCain. Is it one-way? Do you know, Senator Collins? Chairman Collins. Yes, it is one-way. It exempts taxes. Senator McCain. I think it should be two-way myself, but anyway, I do think that at least it is a good framework of a package of reforms. But I think the other aspect of this, as you mentioned, this may be a small part of the budget we are talking about, but we all know that when we have to fix Social Security and Medicare, we are going to have to ask the American people for some sacrifice in order to fix these systems. How can you do that if we are spending their tax dollars in the most profligate and obscene fashion, as we did for people who had cows 10 miles from where the Columbia crashed? So that is why I think we hear so much from our constituents, because they just do not get it. I am sure you have the same experience that I do when I mention the Bridge to Nowhere. Everybody knows--they may not know the name of their Senator, but they know the Bridge to Nowhere, and they are offended by it. And so I think one of the reasons why we need to focus on this is so that we can go to the American people with clean hands. Finally, could I mention, Senator Carper, I think that this issue of Defense Department financial controls is really something that we have to get on. As you know, the largest part of the budget is defense appropriations, appropriately so. But it and procurement are totally out of control, and it has to be one of our highest priorities. Senator Carper. Thank you. Senator Obama. Senator Obama. I would echo what Senator McCain says. I think all of us are aware that at some point, in order to get our deficit under control, there are going to be revenue issues that we have to bring up, and there are going to be spending issues, and we are going to have to talk about entitlements. We are going to have to control costs. And it is very difficult to have that conversation, particularly at a time when Americans are feeling squeezed and more vulnerable, if they think that the money is being wasted. Now, once the waste has been identified and some confidence has been restored that we know where the money is going, then I think the American people are responsive to calls to sacrifice. They want to do the responsible thing for their children and their grandchildren. But right now the levels of cynicism are so high that it is very difficult to have these meaningful conversations. And so, my hope is that this would be a first step. One other aspect that I would add to this--and I think this dovetails into some of the legislation that has been proposed to shed light on what is happening with earmarks and so forth-- is that we do not have what I think most Americans would consider a budget or a budget process. I mean, it is this sort of loose, haphazard stew in which it seems like sometimes the purpose is to make things obscure. And it is very hard from my perspective to step back and see if we are spending each dollar in accordance with our priorities since we cannot do everything. This kind of effort can hopefully build on other reform efforts to get an overview of the budget. It may help the Administration to start thinking about how we can change our practices at the administrative level in order to have a better overview of spending. And I think it will help put pressure on Congress as a whole to defend or change those practices. As you know, I am a big supporter of PAYGO as an example of a way to at least stop the bleeding, but I think that this ends up being just one more brick in that structure of accountability that I hope we are going to be building over the next several years. Senator Carper. Mr. Chairman, as our colleagues prepare to go back to work, I just want to express my thanks for their being here and for the leadership that they provide. I would just add maybe one concluding thought. I think Senator Obama made a very telling point here. As we get serious in the months and years ahead about reining in these budget deficits, it is going to call for some difficult decisions with respect to revenue and with respect to spending, both on the discretionary side and on the entitlement side. One of the other things is that a lot of people in our country are surprised to find out that there is a tax gap of over $300 billion in revenues that are owed. In some cases, the IRS has a pretty good idea who owes the revenues, but they are not being collected. And for us to be able to convince the American people to join us in making some of the tough decisions, they want to make sure that we are doing a better job in controlling discretionary spending. They want to make sure that we are getting a handle on what is going on at the Department of Defense, which we desperately need to do. I think they want to make sure that the folks who actually owe taxes are paying their fair share before anybody else is asked to pay any more. Again, our thanks to each of you. Senator Coburn. I want to thank the Senators for testifying. If the next panel will please come forward. Just to clarify the record, only 18 of the 32 agencies of the Federal Government reported improper payments. Of the 18 that reported, they documented $38 billion in overpayments in only 57 programs out of the 100 programs. The biggest problem is lack of compliance of the agencies with the improper payments law. I would also note that it is estimated that there is a $30 to $35 billion improper payment in Medicaid, and their improper payments are not being tracked. I want to welcome our second panel: Gary Bass is the Executive Director of OMB Watch. He has been with OMB Watch since he founded the organization in 1983 to serve as a watchdog for Federal policies on issues of transparency, openness, and good government. Prior to his work at OMB Watch, Dr. Bass was President of the Human Services Information Center and received his doctorate in psychology and education from the University of Michigan. Next is Eric Brenner, Director, Maryland Governor's Grants Office, the office of Governor Bob Ehrlich. Mr. Brenner became Director of the Maryland Governor's Grants Office in February 2004. He worked with four governors in three States for both Republicans and Democrats. He even worked for the Governor of Illinois during Senator Obama's tenure in the Illinois State Senate. He has a degree from Harvard John F. Kennedy School of Government. And, finally, Mark Tapscott, Editorial Page Editor of the Washington Examiner. In February of this year, he was named editor of the Editorial Page at the Washington Examiner. Prior to taking this position, he was Director of the Center for the Media and Public Policy at the Heritage Foundation. He has worked as a journalist for more than 20 years and will discuss with us today the effects our bill will have on the world of journalism. I would like to thank each of you for being here. Dr. Bass, you are recognized first. TESTIMONY OF GARY D. BASS, PH.D.\1\ EXECUTIVE DIRECTOR, OMB WATCH Mr. Bass. Thank you, Mr. Chairman. I would ask to have my written statement put in the record. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Bass appears in the Appendix on page 31. --------------------------------------------------------------------------- Senator Coburn. Without objection, all of your written statements will be placed in the record. Mr. Bass. Let me begin by making very clear that with absolutely clear and unambiguous language, OMB Watch supports S. 2590. It is the right bill to do, as we heard from the last panel. The timing is right. This is a good thing to do. It would be great to move this bill quickly through markup and then directly to the Senate floor and try and get something done, hopefully with unanimous consent, and have this behind us and then work on the implementation. I also want to thank you and other Subcommittee staff for working with OMB Watch to improve the bill as we have moved along. I think this has been a very cooperative and constructive process, and I thank you for that. At the same time, I think that I am going to advocate as much as I can for improvements in the bill as we move along. But I want to make very clear that we support the bill as it was even introduced, even before you have added some changes. We want this bill to pass, and we want it to pass soon. And our objective is to strengthen it if we can, but we want it done. So I want to be very clear about that. I also want to note that we support this bill, as the two Senators who spoke on the last panel did, for reasons of the most importance to this country. This is about democracy. This is about openness. It is not just simply a right-left coalition. This is a coalition that cares about openness and accountability and encourages a strengthened democracy. And as you have said, Senator Coburn, all along, strengthened accountability leads to a stronger democracy. And we believe that. We believe that fundamentally. At the same time as we believe this is a theoretical or philosophical view, we are also very frustrated. You cannot get the information. It is just not able to be obtained. And so something needs to be done immediately to get this information in the hands of the public. And I construe ``public'' in the broadest sense. It is Congress. It is policymakers at the State and local level. It is the news media. It is the citizenry. This is going to be used by a number of people in many different ways. Now, having said all this, I want to raise four areas where I would hope we give some concentration, as the bill is already enacted, we get more and better implementation. And I want to point out four areas. One is the challenge is going to be getting this data up in a user-friendly, searchable format. I know, because OMB Watch is now in the throes of trying to put up the two key databases--and we will do acronyms, since you have already mentioned it--FAADS and FPDS. Contracts and the data that deals with grants, loans, insurance, subsidies, we are trying to put it all available through an online service by October 1. And so we are wrestling with this issue of how to do it. I would encourage that we create some kind of citizens panel, require some kind of data testing from OMB so that we ensure that we are getting it in the way that it can be used. The second concern I have is the data quality. All the conversation in the last panel was about obtaining information that is so critically important, I would encourage in the bill we start to ask OMB to make recommendations how to improve the data quality. The third area is to make sure we are getting all the data we need. The issue is, as Senator McCain talked about--a Livestock Compensation Program--we need to be sure we are going to get all of that data. The way the bill might be structured, we need to look at it carefully to make sure we are not going to exclude certain key elements like farm subsidies or flood insurance, because they go to individuals. And the fourth point I would make, which you have already addressed, Senator Coburn, and that is make sure it is implemented. And the thorniest issue will be this issue of subrecipient. I think we are strongly supportive---- Senator Carper. Say that again? Make sure it is what? Mr. Bass. Subrecipient reporting, subgrants, subcontracts. And I think the Chairman has identified some improvements already talked about, and I think those go a long distance in getting us there. The real issue is to touch base with the players who are going to have to implement this and to make sure it can be done in a way that makes sense. We just need to make sure this can be done. I want to emphasize we are supportive of subrecipient reporting. Let me conclude with a notion that this bill is a building block. It is not the be-all and end-all in transparency. A number of things the last panel talked about, like earmarks, mismanagement, are not going to be obtained by just simply legislation that calls for greater disclosure of Federal spending. Similarly, there are many other important issues like tax expenditures. These are all things that need to be done, and they should be added after this bill is passed. And I am hoping that you, Mr. Chairman, and you, Senator Carper, will lead in the efforts to enhance transparency once we move beyond this. So I am very excited about this bill, and I thank you for letting us testify today. Senator Coburn. Thank you, Dr. Bass. Mr. Brenner. TESTIMONY OF ERIC BRENNER,\1\ DIRECTOR, MARYLAND GOVERNOR'S GRANTS OFFICE Mr. Brenner. Thank you, Mr. Chairman and Senator Carper. As you heard, my name is Eric Brenner, Director of the Maryland Governor's Grants Office, created less than 3 years ago by Governor Ehrlich and Lieutenant Governor Steele, and in a short period of time, we have been recognized by the National Governors Association as a ``best practice,'' and we just won a Special Achievement award from the National Grants Management Association. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Brenner appears in the Appendix on page 47. --------------------------------------------------------------------------- I think I can sort of cut to the chase pretty quickly here. We just came out with our third annual report. It lists every single Federal grant received by State agencies in Maryland. This past year, 499 Federal grants went to all of our State agencies, approximately $7 billion. We know from census data that the State of Maryland receives approximately $9 billion in Federal grants, so obviously $9 billiion minus $7 billion, there is another $2 billion floating around that goes to universities, nonprofits, and local governments. As the legislators, governors, and mayors become increasingly familiar with the detail we can give them on the money that flows through us, there is a lot of interest in where the rest of the money going. And there is also a timing aspect. So the first year they were happy to have anything. The second year the interest picked up. And this latest report, the Federal fiscal year 2004 is the most recent data we have. The census produced this December 27, 2005. They came out with Federal fiscal year 2004 data. So it is almost a year and a half late. There are reasons why it took so long, but only 3 weeks later, my little office of three people was able to come up with State fiscal year 2006 and even estimates for 2007 data on Federal funds coming through State Government. And as I am working with legislators in front of the General Assembly, they ask me what is the deal here? Why can't I get this information sooner? And Senator Obama hit on a real-life example from this past legislative session. There was a small nonprofit, and I am going to call it a YMCA. It was not, but it was something like that with national recognition in the county looking for funds. And the legislator said, Can you tell me if this little YMCA is getting any direct Federal grants? Because if they are, maybe we want to give them more money if the Feds trust them to manage the money well. Maybe that is a good thing. Or maybe we want to go to another group and give them money. Or maybe we want to stiff them and we do not want to give them anything, but we would love to help them find out what other YMCAs are getting funds out there. And you are telling me you cannot do this. OK. Once the session is done, go work with your friends in the Federal Government and see if you can move this stuff along a little bit faster, because it really is valuable. There are real live policy decisions that ride on things like this. This was not the first time I was told by legislators or a governor to go back and talk to the Federal folks to get more and better data. Back when I was working for the prior governor in Illinois and Senator Obama was in the General Assembly, I was charged with setting up an Illinois Federal clearinghouse, and at that time the main issue was access to grant notices. At the time I was charged with cobbling together a website that could pull in all new Federal grants notices so State agencies and nonprofits could see what the Feds were offering up. That was about 7 years ago, and at that time I said, Wait a minute, why are we doing this? Shouldn't this all be in one place? And a couple years later of lobbying and cajoling and work from Congress, Grants.gov is now working beautifully and no State has to devote staff to identify what new Federal grants are available. It is out there on the website. Every day you flip on the machine in the morning, and you see what new grants are out there. It was a real big step forward. And yet even in Illinois, when we used to pull the data together, the timing issue would come up all the time. Why do we only know what we are getting through us? Why can't we see what else is going on out there? I think Governor Ehrlich is flattered that other States are beginning to copy our grants office. There really are just five or six or seven like this out there, but there are new ones popping up all the time. I got a call from Delaware in the last 3 months. A woman named Maureen Querey, whom I had never met before, was charged with setting up this office. She is working with Joe Hickey, whom I know really well. He did the training when you were a governor, and he is supposed to help her do training programs on grants management. But first she has got to ask, ``What are we getting? Help me pull the numbers together.'' And that is going to eat up a lot of time. So as much as Governor Ehrlich loves the fact that people are copying our stuff, we would love to see every State have this information and free up my time so I can work more with nonprofits and local officials to better match resources with policy goals. The last question that was addressed a bit--this is the first time I have seen the revisions here, and I am speaking just for the Ehrlich-Steele Administration and one State. But I do work pretty closely with the State associations on this and the handful of other States that have grant offices. And there is a real concern that what is so close to a terrific idea can somehow get bogged down on the issue of the subgrantee reporting. And so many folks have wanted this for so long, and even senior officials at OMB sort of went out on a limb to push for this initially, and this was not popular with some of the Federal agencies. I think they realized a little push was a good thing. In our 499 grant programs, each one is managed differently in a different statute, and we do not have a statewide grants management system, nor does any State. Michigan, I think, will be the first to get there in a year or two, and to merge 25 different grants management systems into one to get this data is going to be difficult. So I would urge continued consultation with the bill's sponsors in the House and OMB. There is a legitimate issue here, and I think speaking for the people on this panel and a lot of the State governments, the bill is terrific and we really want to support it and would hate to see someone who does not like the core concept of the bill use a little detail like ``you mean you want every Medicaid recipient, the amount of the money they got''--there are little ways you could pick at this if you wanted to bring it down, and a little bit of consultation I think can get over those rough spots. Senator Coburn. I assure you we are already seeing that. Senator Coburn. Mr. Tapscott. TESTIMONY OF MARK TAPSCOTT,\1\ EDITORIAL PAGE EDITOR, THE WASHINGTON EXAMINER PROPRIETOR Mr. Tapscott. Thank you, Senator. I appreciate very much the opportunity to be here, and I just want to point out that, as one of your fellow Oklahomans, it is especially great to see you doing all of the things that you have been doing this past year on earmarks. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Tapscott appears in the Appendix on page 50. --------------------------------------------------------------------------- I want to also say, particularly to my colleagues over on the press table, that normally I would be over there with them getting ready to ask you guys questions rather than sitting at this table, hopefully answering questions from you all. But this is on an issue that, like the Freedom of Information Act, I believe is fundamentally important, both as an American citizens and to my profession, my chosen profession. And I think what is going to be possible as a result of the passage of this bill is of sufficient importance that I have encouraged all of the professional journalism organizations to become very vocally in favor of this bill as well. I want to just address the basic question that I was asked to talk about, and that is, What effect would passage of this legislation have on journalism? And I think the closest analogy that I can think of is the effect of having campaign finance data widely available to journalists and to the general public. This began about 20 years ago. As you all well know, there is really no such thing as an anonymous donor these days, and that is very much as a result of the fact that data on who is giving what to whom and which special interests are doing what with their money has become so widely and easily available. One of the effects of that in journalism, obviously, was that it enhanced the public interest in and the power of political reporting specifically. But even more important than that, it empowered investigative journalism about government in a way that had not been previously possible, except on an anecdotal basis. Senator McCain mentioned the fine piece of reporting by that other newspaper in town, the Washington Post. That was basically done as a result of inside sources and anecdotal reporting. It probably would have been done as a matter of course if this database was in existence. And ``as a matter of course'' is a good phrase for what I think would be an accurate description of what would happen to government reporting when this database becomes widely available. We get no comprehensive, systematic daily reporting on where tax dollars are going simply because, as has been documented in abundant detail, it is basically impossible to get much of the information and extraordinarily difficult to get the rest of it. We are in an era when most journalism organizations are cutting costs, unfortunately, cutting staff, editorial staff, unfortunately, and frankly there are just not enough people nor enough time to do the kind of rigorous investigative reporting that government deserves and the American people deserve. This would make a profound difference in that because it, frankly, would make it so much easier to get so much more of the data. And I think that you would see every basic major beat in a newsroom, from the cops beat where the junior reporters start, right up to the investigative staffs, incorporating as a matter of course data from this database. Speaking as a professional journalist of 20 years, that excites me. Speaking as a blogger, which I am also, I am even more excited about what the potential effect on the new media will be of this database. One of my blogging colleagues, Ed Morrissey of Captain's Quarters, has predicted that very soon after this database becomes available, he believes there will be 10,000 blogs coming into existence specifically for the purpose of exploring Federal spending with regard to their particular States or their particular congressional districts. I think, based on my own experience with the Porkbusters bloggers in the blogosphere, that Ed probably is underestimating the number of blogs that will come into being as a result of this. To summarize, I think that just as nobody who is in politics or journalism today can afford to ignore Opensecrets.org, the website where campaign finance data first was made available, we are very close to a time when the Federal spending database will also be of that much importance. And I am sure there will be at least one website called Spendingsecrets.org, and I hope I will have something to do with that. Thank you very much. Senator Coburn. Thank you. I want to ask each of you, the bill that came out of the House excluded contracts. I personally believe that is a fatal error in the bill, and I would like each of your comments on that. Mr. Tapscott. I think having covered Federal contracting on a waste and fraud beat, it makes no sense to me at all to not include contracting data. As a journalist, of course, I want as much information as I can get. But the point of this database is to enhance the public's ability to know where the Federal dollars are going. And in order to understand that, you have to have information about the contracts. Senator Coburn. Mr. Brenner. Mr. Brenner. The State of Maryland gets about $20 billion in Federal procurement each year. We only get about $9 billion in grants. Most States it is the reverse. They get a lot more grant money than procurement and contracts. Two years ago, we did do a real brief document showing which counties it goes to, which companies, and there was incredible interest. We have an intern working hard this summer to try to re-create it. That is all he is doing. He is working really hard to pull this stuff together, and, again, it still will be old data. The need is great. And it is important to recognize that within the Federal Government, the grants world and the contract procurement world are really different. I am not sure how they grew up to be as different as they are. But when you are trying to do some of the things that you and the various sponsors have proposed, it really works very well right away on the contract side. The grant side might take a little more tweaking, but the value of the information is absolutely there. I have got an audience hungry for anything I can give them. Senator Coburn. And that is to make good decisions at the State level. You do not want the data just for the data. You want the data so that you can make a better decision at the State level. Mr. Brenner. Right. Practical example with the base closure, the BRAC process, concluding the more we know where the Federal contract dollars are going, the better counties can prepare school systems, the better they can do roads, the better they can do job training with the welfare-to-work programs. There is a real need for this so we can efficiently use our money, and the longer we have to wait to get that information, the more we are set back. Senator Coburn. Dr. Bass. Mr. Bass. I concur with my colleagues. You must have all venues for expenditures. I would say down the road we also need to add in tax expenditures. But one thing to keep in mind is when we look at GAO and other audits that have occurred, the bulk of the patterns of mismanagement are all identified in the contract side. There have been no systemic patterns on the grant side, although I will say there have been some questions about allocations of funds under various forms of subsidies, particularly in light of Hurricane Katrina. And so I think it is an obvious piece to have both contracts and grants. Senator Coburn. With the recent revelations of congressional contracts and favors, that seems to make no sense that we would not want contracts to be--to have sunshine on the contracts since there is this potential conflict of interest between fundraising and contracts. You all would agree with that? Mr. Bass. Absolutely. If I could just add, Senator, I hate to use a term that I have used in other settings, but what the objective should be is a real accountability matrix to bring all these sources together. Senator Coburn. Right. I have worked in a lot of areas. Under grants, we have had flirting classes and clown demonstrations and all sorts of things. So I think they are both equally liable, although the vast majority of the dollars have been in the contract area. One final question, and then I will turn it over to Senator Carper. We have worked hard to try to make the U.N. accountable for our contributions in terms of both the Oil for Food scandal and all the other--we had a hearing here not long ago where they showed one-third of their expenditures were in waste, fraud, and abuse. It is pretty hard for this government to demand the U.N. be accountable in how they spend their money when we are not. And so that is another reason for it. We cannot claim to want to know how our money is spent elsewhere if we don't know how we are spending our money. So I would make that comment. Senator Carper. Senator Carper. Thank you, Senator. And, gentlemen, thank you very much for joining us and for your testimony, and, frankly, for your interest and involvement in these issues for some time. Mr. Brenner, thank you for your comments about Joe Hickey. When I was privileged to be governor for 8 years, I worked with Joe. Joe was in charge, as you suggested, of training in our personnel area. He traveled more abroad in that role. Mr. Chairman, I don't know how he parlayed that position into as much foreign travel as he made, but he made me look like a stay-at-home Mom or something, a stay-at-home Dad, with regards to his travel. We should have a hearing on him. I do not think he does that anymore, but---- Senator Coburn. Well, we will later. [Laughter.] Senator Carper. He was also a lot of fun. He was fun and he was quite good in his job. I will tell him his name came up in vain here in this Subcommittee. Dr. Bass, I want to come back to you. You were making four points. The second I think involved data quality. The third was getting all the data we need. Would you just review those with me, with us again, please? Mr. Bass. The first one is a user-friendly site, and the problem---- Senator Carper. Even go back before that, but these are four points you made with reference to? Mr. Bass. To strengthening as we move along to either implementation or in the final stages of marking up this bill, there are things that are--I should rephrase this to say you can always improve a bill, but we do not want tweaking and improvements to delay the passage of S. 2590. So the comments I am making are in the notion of a constructive element of how can we strengthen in minor ways this bill as it is moving forward to achieve unanimous consent. Senator Carper. OK, good. Go ahead. Just run through those again, if you would. Mr. Bass. Yes. The four, very quickly, are: A user-friendly website, and one of my biggest concerns is this is very complex data, and as we have found in trying to put up the data, you have Federal shares, you have non-Federal shares, you have obligations versus what is actually spent. It is not easy to penetrate. The objective is we need to do it in a way that the public can really understand what our government is spending money on. It strikes me that one way to do that--and there may be many other ways, but some suggestions I had was create some kind of a citizens panel to watch how OMB is doing this and to give feedback to you on whether this is meeting the need. It might be temporary. It might be during the creation of it. Or it may be every 3 years to assess it. A second would be to data test, to test with users before the site goes live with different kinds of users to make sure it is meeting the need. So that is sort of one. The second is the---- Senator Carper. Well, would you say that is the most important of the four, or is there one that is more important than the other? Mr. Bass. Well, I think they are all equally important because, in order to have it in a user-friendly way, you want to make sure the quality of the data is good. If the data itself is not expressing the kinds of things that you two have said today you want, and the Senators before us talked about, then it lacks utility. I can tell you the data quality needs improvement, and I do think that the public disclosure, the bill itself in passage, will help to improve the quality of the data because, as Mr. Tapscott talks about, there are going to be a lot of reporters and others using this data. And so the government will have to clean up the data. Senator Coburn. Yes, that is a component of the bill. Public feedback is required in the bill, and a response to that is required as well. Mr. Bass. Indeed, and I think that is a critical element to retain. I do think maybe one notion in that response to the public comment, maybe we should ask OMB to comment in its annual report how they will proceed to improve the data quality year after year. That might be a sub-piece of their report. The third thing I talked about, which is really to the heart of what the two Senators in the last panel spoke to, is making sure we are getting all the data we expect we--what we say in the bill, we want to make sure what we are getting. An example: The Livestock Compensation Program that Senator McCain mentioned we may not get because it is going to individuals, or we may not get information about flood insurance that goes to, say, Hurricane Katrina victims where there are some allegations of abuse. So we need to find the balance here to ensure we are getting all the information we definitely want, without harming personal privacy. And the last point I was making is really an issue about the subrecipient reporting. It needs to be done in a way--it should be done, and it should be done in a way that does not create an overwhelming difficulty to have it done. I tend to think of it---- Senator Carper. I am sorry. Say that again? Make sure it is done in a way? Mr. Bass. That it does not create an impossibility to implement. Let me break it into maybe three components. One issue of this bill deals with contracts and subcontractor reporting, which I think can relatively easily be done. Contracts have for-profit motivate built in. You can require the contractor to notify about subcontractors and on down the line. A second kind of category of subreporting is a subgrant to a nongovernmental entity, like a nonprofit. In some of those cases, it may be relatively easy to do that. However, there are paperwork and other kinds of burdens imposed. And as you said, Senator Coburn, you want to do it in a way that ensures it does not create unnecessary burden. The third category is what Mr. Brenner was talking about, and that is, grants that go to State and local governments, which is the largest share of grants. And that is a little more difficult because it is not simply like the community development block grant that Senator Obama talked about. Many of the grants a commingled with State monies or local monies, and it is hard to pull that apart and identify what is which. Senator Coburn. Let me, if I may, I want to answer those. Senator Carper. Sure. Senator Coburn. First of all, to be able to reply and to report on this is going to make every grantee and subgrantee and State and local government better. Mr. Bass. Right. Senator Coburn. Because if they don't have a system to know where their money is going now, they are going to have to have one to report under this. And they should. Every grantee, every contract should know where they are spending their money. And if they do not, they are going to have to have a system to be able to do that, which should be a part of their grant application. That is number one. Number two, and I think it is relatively easy if we are sending 12 percent of the money for some State program, then the answer in that is here is how the money was spent, of which 12 percent of the money was Federal. They do not have to break it out. They can say, Here is the program, you supplied this much money of the total, here is how we spent the money on the program. So it makes States better, so they are going to have to report. If they are going to take Federal funds, then they are going to have to say here is where the money went. They do not have to--there is no judgment on it, but what it does is it creates--this bill is going to create sunshine not just for the Federal Government, but for grantees and nonprofits and for States. It is going to help everybody do better, have better financial control, but it is going to help everybody in this country know where their tax dollars are going to be going. And I do not think that is hard to do. If you can get on Google today and punch anything in and find out all the things associated with it, it cannot be that hard for the Federal Government to do this in terms of the spending of the budget. It is not hard. And there are programs out there now that you can buy to give cross-references for names. I mean, this is not something that has to be reinvented. It has already been invented. And so it is not a difficult process to achieve. Mr. Bass. Well, I think your changes that you are proposing go a huge distance by creating both the study you have and a pilot to really test out the point you are making. And I think Mr. Brenner could probably speak better to the State questions than certainly I could. Mr. Brenner. The fear that is out there that I think the OMB folks have probably expressed is that for this to be carried all the way through to the last dollars, the State governments will end up carrying a large share of the burden to track the dollars as they move through to counties, local governments, and other places. And this year was interesting because Grants.gov is in the process of making sure every Federal grant has to be done online electronically. That was a big deal, and they just sort of imposed that. And there have been some real struggles where you are sitting there and you hit the button and it does not go through, and just like that, you do not have someone to call. So there have been some rough spots. It is getting better, and it will be better next year. So the goal is---- Senator Coburn. It will be hard when it starts. This will not be easy when it starts. Mr. Brenner. No. But, again, I know the National Association of State Auditors, Comptrollers, and Treasurers have some legitimate issues here. And yet for Maryland, Governor Ehrlich made this a second-term priority in looking at all the issues when we set it up. He knew this was going to be a big deal to merge all of these financial systems together. And yet it is a goal we have. So by moving to 2009, that is actually within the timeline we are looking to do it. Concern, again, will be the other States that have not even started to pull together just the basic ``who is getting the money'' piece. So there are legitimate issues, but to see this bill moving is very exciting. As everyone has said today, you would hate to see it pulled down over what I think are some fairly minor issues. Senator Carper. Mr. Chairman, I have asked Dr. Bass to kind of review for us his four points that he thought would further strengthen the bill, and I just want to ask Mr. Brenner and Mr. Tapscott to react, if you will, to what he has laid out and what you think he has suggested that makes sense and where do you think that it maybe does not. Mr. Tapscott. I have worked with Gary Bass on this project for a long time and was, in fact, working on this project alone before Gary and I began working on it. So I associate myself with his first three points. Senator Carper. How about that fourth one? Mr. Tapscott. On the fourth point, I want to point out, I have posted on this issue on my blog many times. Almost invariably when I post something on this, I will be contacted by a private sector computer person who says, ``What is the big deal? We can do this. We do it every day in the banking industry.'' So I am a little skeptical when I hear government people saying, ``Oh, we cannot do that,'' because that is what I hear from people in government all the time. My guess is it is probably analogous to the situation that we had a decade ago in migrating from a previous generation of computer information technology to a more advanced generation. Senator Carper. Mr. Brenner. Mr. Brenner. I never met Gary Bass until today, and yet I spoke to him once and we e-mailed back and forth on the testimony. His written testimony, which is quite a bit longer, has a detailed section on the subgrantee reporting, which I think is, one, pretty accurate; and, two, if I was saying this, it would sound pretty self-serving as here is the State government guy who cannot deliver. But an organization with the integrity of OMB Watch I think should be taken pretty seriously on this. The other fear that is out there is the issue of unfunded mandates being pushed from the Federal Government onto the State government, and that is one way to take a large number of State people who really like this here and even seeing any potential risk in language that was not even intended is a chance to take what should be a 100-percent good-government proposal here and cause some trouble. Grants.gov, it was interesting to me how many years it took to get that going. Again, if I could glue little pieces of it together in State government with me working half-time--and yet it got done. It just took a while. This is a magnitude of complexity way beyond just putting out the new notices, and yet it should be out there, and we will be doing this in Maryland, especially if the governor gets re-elected. And yet it is going to be a lot of work, and everybody recognizes it. You are getting treasurers, you are getting comptrollers, you are getting fiscal people in multiple agencies working together, formula grants, block grants. Each grant is a different story, and we have got a few I could comply with in half an hour and call you and get you all the information run down here. But then as I walk through the whole list of 500, we would squeeze down to the last 10 or 15 that really are difficult, and it would not be from a lack of wanting to comply. Senator Carper. All right. Gentlemen, thank you. Senator Coburn. You would agree, though, Mr. Brenner, that will cause better government in the State of Maryland. Mr. Brenner. As Governor Ehrlich has said from the first day I was hired, he wants the data out there, whether it looks good or bad or something else. And the more information that is out there, the better for everybody. Senator Coburn. And all of you supported the House bill. Is that correct? You did not because it did not have--but it did have subgrant reporting right away, which we have changed. And the final point I want to make before I thank you for being here is OMB has not expressed any difficulties with this bill publicly. They support this bill. They have said so. And so with any change is problems, and change is difficult. Just ask my wife when she talks about me changing. So I know change is difficult. But the fact is it is going to be worth it. We are going to have better government. We are going to have better democracy. We are going to have more transparency to make us more accountable, and it is going to help us solve the problem that Senator Carper and I and everybody else in this room are concerned about: How do we get out of the financial pickle we are in? And the only way we do it is know the details of the financial pickle we have got. I want to thank each of you all for being here. The hearing is adjourned. [Whereupon, at 3:50 p.m., the Subcommittee was adjourned.] A P P E N D I X ---------- [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] <all>