An arm of Congress, the Government Accountability Office (GAO) serves as a “fiscal watchdog” that seeks to improve the financial performance of the federal government and ensure its accountability to Congress and the American people. Over the years, GAO has earned a reputation for fact-based, nonpartisan reviews of government activities while uncovering serious accounts of mismanagement and waste by such key government operations as the Defense Department, Medicare and education. In 2002, GAO took on the Bush White House when it filed suit to obtain records pertaining to an energy task force led by Vice President Dick Cheney. The watchdog agency lost that legal battle when a federal judge ruled the GAO did not have the legal stature to force the Executive Branch to release documents deemed sensitive. The ruling left the GAO’s power in doubt and led some Democrats to sponsor legislation to try and reinvigorate the agency’s capabilities.
GAO began in 1921 as the General Accounting Office. That year, the Budget and Accounting Act transferred auditing responsibilities, accounting and claims functions from the Treasury Department to the new GAO. The agency was created because federal financial management was in disarray after World War I. Wartime spending had driven up the national debt, creating a need for more information and better control over expenditures. The act made GAO independent of the executive branch and gave it a broad mandate to investigate how federal dollars are spent. The act also required the President to prepare an annual budget for the federal government. Later legislation clarified or expanded GAO’s role, but the Budget and Accounting Act continues to serve as the basis for its operations.
Until the end of World War II, GAO primarily checked the legality and adequacy of government expenditures. The agency issued decisions on payment questions and helped process financial claims for and against the government. GAO’s employees reviewed individual financial transactions by checking expenditure vouchers. They also audited and reconciled disbursing officers’ accounts. The work was done centrally, which meant that government agencies had to send their fiscal records to GAO. Legions of audit clerks worked in the great hall of the Pension Building—GAO’s home from 1926 to 1951—reviewing stacks of paperwork documenting government expenditures.
During President Franklin Roosevelt’s New Deal in the 1930s, federal money poured into recovery and relief efforts to fight the Great Depression. More government programs meant more paperwork for GAO to examine. GAO, which started out with approximately 1,700 employees, soon found its ranks filled to 5,000. With the US entry into World War II, military spending triggered a paperwork explosion that overwhelmed GAO’s ability to keep up with central voucher auditing. Even with a staff that grew to more than 14,000 by 1945, the agency still faced a backlog of 35 million unaudited vouchers.
After the war, GAO decided it could best serve Congress and the nation by doing broader, more comprehensive audits that examined the economy and efficiency of government operations. It soon cut the size of its workforce and changed its approach to doing its job. The agency began to shift away from the central auditing it had done for 25 years. GAO transferred some of its responsibilities, such as voucher checking, to the executive branch. Instead of scrutinizing every government fiscal transaction, GAO began to review financial controls and management in federal agencies.
Starting in the late 1940s, GAO also worked with the Department of the Treasury and the Bureau of the Budget (now the Office of Management and Budget) to help executive branch agencies improve their accounting systems and controls over spending. With the move to comprehensive auditing, GAO further reduced the number of audit clerks and began to hire accountants. By 1951, when GAO moved into its new headquarters across the street from the Pension Building, its staff numbered just under 7,000—less than half the number that had been on the payroll at the end of the war.
The 1950s saw a rise in government spending because of the Cold War and the build-up of American military forces in Europe and Asia. GAO’s work increasingly focused on defense spending and contract reviews. Although the agency first began doing field work in the 1930s, it formally established a network of regional offices in 1952. GAO also opened branches in Europe and the Far East. Various national crises affected GAO’s work in the 1960s and 1970s. During the Vietnam War, for example, GAO opened an office in Saigon to monitor military expenditures and foreign aid. And in 1972, some of GAO’s reviews touched on Watergate.
Congress also found that it needed more information on how well government programs were meeting their objectives. Congress asked GAO to evaluate President Lyndon Johnson’s Great Society program in 1967. GAO also examined energy policy, consumer protection, the environment and the economy. In 1974, Congress broadened GAO’s evaluation role and gave it greater responsibility in the budget process. The agency’s staff, mostly accountants, began to change to fit the changing work. In the 1970s, GAO started to recruit scientists, actuaries and experts in fields such as health care, public policy and computers. In 1986, GAO assembled a team of professional investigators, many with law enforcement backgrounds, to look into allegations of possible criminal and civil misconduct.
During the last 20 years, GAO has sought to improve accountability by alerting policymakers and the public to emerging problems throughout government. In the 1980s, for example, the agency reported on problems brewing in the savings and loan industry and repeatedly warned about the government’s failure to control deficit spending. It also worked with executive branch agencies to strengthen financial management. GAO urged federal agencies to modernize outmoded financial systems, prepare yearly financial statements and submit them for audit. As the 1990s drew to a close, GAO did important work on a range of issues, including computer security, conditions at nursing homes, and the choices posed by continuing budget surpluses.
As part of the GAO Human Capital Reform Act of 2004, the GAO’s legal name changed to the Government Accountability Office to better reflects the agency’s work. In addition to the name change, the law decoupled GAO from the federal employee pay system; established a compensation system that placed greater emphasis on job performance while protecting the purchasing power of employees who are performing acceptably; gave GAO permanent authority to offer voluntary early retirement opportunities and voluntary separation payments (buy-outs); provided greater flexibility for reimbursing employees for relocation benefits; allowed certain employees and officers with less than three years of federal service to earn increased amounts of annual leave; and authorized an exchange program with private sector organizations.
How GAO Built Its Dream House
The Government Accountability Office (GAO) is an independent, nonpartisan agency that works for Congress. Often called the “Congressional watchdog,” GAO investigates how the federal government spends taxpayer dollars by conducting audits and other types of investigations.
Headquartered in Washington, DC, GAO has offices in 11 major cities across the country. Its staff includes economists, social scientists, accountants, public policy analysts, attorneys and computer experts as well as specialists in fields ranging from foreign policy to health care. GAO’s workforce is organized largely by subject area, with most employees being in one of the following 13 teams:
The head of GAO, the Comptroller General of the United States, is appointed to a 15-year term by the President from a slate of candidates proposed by a Congressional commission. The commission consists of the Speaker of the House, President Pro Tempore of the Senate, majority and minority leaders of the House of Representatives and the Senate, chairman and ranking member of the Senate Committee on Homeland Security and Governmental Affairs, and chairman and ranking member of the House Committee on Oversight and Government Reform. The commission must recommend at least three individuals to the President, and the President may request that the commission recommend additional individuals.
The
Office of General Counsel
(GC) provides a wide variety of legal services. GAO attorneys assist Congress, federal agencies and GAO analysts in interpreting the laws that govern the expenditure of public funds and the myriad of government programs and activities.
As a legislative branch agency, GAO is not required to submit its contracting information for viewing on USAspending.gov, which is reserved for executive branches agencies. But the GAO does make available some data regarding companies and organizations its pays for goods and services.
- 22% of all contract awards were given to small businesses
- 5% were given to women-owned businesses
- 4% were given to small disadvantaged businesses
- 1% were given to veteran-owned businesses
GAO Unsuccessfully Sues Bush Administration Over Energy Notes
One of the first actions George W. Bush took as president was to create a 14-member National Energy Policy Development Group to be headed by Vice-President Dick Cheney and to include eight cabinet members. The executive branch would ultimately fight a four-year court battle to keep secret the names of people who met with this task force and what was discussed at meetings of the group. On May 17, 2001, Cheney’s task force issued a report calling for expanded drilling on public lands, industry-backed tax breaks and weaker regulatory barriers to the building of new nuclear power plants. The GAO requested documents relating to the work of the energy task force as part of their inquiry into how the Enron Corporation, the leading contributor to George W. Bush’s presidential campaign, influenced the formation of government policy. Cheney refused to comply.
David M. Walker, the head of the GAO, accused the executive branch of making Cheney the head of the National Energy Policy Development Group for the very reason that he could claim executive privilege and thus avoid Congressional oversight. In February 2002, the GAO filed suit against Cheney for refusing to turn over his records. It was the first time in its 80-year history that the GAO had sued a member of the executive branch. They were not alone. The conservative public-interest group Judicial Watch had already requested the documents through the Freedom of Information Act, while the more liberal Natural Resources Defense Council had filed suit over related documents held by the Department of Energy. As court rulings see-sawed between Cheney’s side and that of the document seekers, the Bush Administration became nervous and acknowledged that Enron executives had met six times with members of the task force, and that one of those meetings was a one-on-one session between Vice-President Cheney and Enron Chairman Kenneth Lay on April 17. When a federal judge forced the Energy Department to reveal some documents, they showed that Energy Secretary Spencer Abraham had refused a request to meet with a coalition of 30 environmental groups because of his “busy schedule.” However, in the days that followed, he did find the time to meet with the executives of a half-dozen oil and gas companies, a half-dozen nuclear power corporations and a half-dozen utility companies.
Eventually, John D. Bates, a Bush-appointed federal district judge, dismissed the GAO’s suit on the basis that only a house of Congress or a Congressional committee could file such a claim. Prior to becoming a federal judge, Bates served as a Whitewater prosecutor in the mid-1990s, arguing in a federal appeals court that White House lawyers’ notes of conversations with Hillary Clinton must be turned over to a federal grand jury.
The suit brought by Judicial Watch, which was later joined by the Sierra Club, was accepted by the Supreme Court, but not without controversy. It seems that between the time the Supreme Court agreed to hear the case and the time it actually came before the Court, Vice-President Cheney went duck hunting with one of the Supreme Court justices, Antonin Scalia. Scalia refused to recuse himself from the case, claiming that he “never hunted in the same blind with the vice-president.” Scalia voted with the majority to send the case back to an appeals court, which, in May 2005, ruled unanimously that Cheney’s involvement with the task force was part of his role as vice-president and so he could keep secret the details of his meetings.
In the wake of Walker v. Cheney, Congressman Henry Waxman introduced legislation in 2008 to bolster the legal stature of the GAO (see Suggested Reforms).
GAO Comptroller Doesn’t Mince Words
While leading the GAO, and after, David Walker has never been afraid to tell it like it is. In 2007, Walker wrote a piece for The Futurist, in which he accused the United States of being too short-sighted in its fiscal behavior. “Too many individuals tend to focus on their next paycheck. Too many company executives focus on their next quarterly earnings report. Too many politicians focus on the next election cycle rather than the next generation,” wrote Walker.
That same year, Walker barnstormed the country like a presidential candidate, but instead of asking Americans to vote for him, he warned them about the single biggest issue facing the United States: the national debt. Walker visited college campuses, spoke to lawmakers in Washington and toured 19 states over a year and a half.
He said he hoped the candidates for the White House seriously heeded his warnings.
“If [the candidates] don't make [the debt] one of their top three priorities, in my opinion, they don’t deserve to be president and we can’t afford for them to be president,” he told CNN. “The fact is that we could eliminate the Iraq war tomorrow. We could eliminate every dime of pork-barrel spending. And we wouldn’t come close to solving our problem,” he said.
Walker said it was necessary to balance the budget within the next five years, make a down payment on the $50 trillion imbalance and begin reforming government programs.
“It’s going to take us probably 20 years to do all the things that need to be done,” he said. “But we need to get started now because the clock is ticking and time is working against us.”
After leaving the GAO, Walker continued to issue dire warnings about the current housing and mortgage crises. While the Bush administration proposed shoring up mortgage giants Fannie Mae and Freddie Mac with a $300 billion line of credit, and Congress contemplated another economic stimulus, the question arose: Who will bail out the government?
“People seem to think the government has money,” said Walker. “The government doesn't have any money.”
“The factors that contributed to our mortgage-based subprime crisis exist with regard to our federal government’s finances,” said Walker, now head of the Peter G. Peterson Foundation, a group established to raise alarms about the nation’s budget. “The difference is that the magnitude of the federal government’s financial situation is at least 25 times greater.” Foresight for Government
(by David M. Walker, The Futurist) (PDF)
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Founded: 1921
Annual Budget: $545 million
Employees: 3,300
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Government Accountability Office
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Dodaro, Gene
Comptroller General, Acting
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Gene L. Dodaro has served as Acting Comptroller General of the United States since March 13, 2008. Dodaro received a bachelor’s degree in accounting from Lycoming College in Williamsport, Pennsylvania.
Dodaro has worked for GAO for more than 30 years. Until 1999, he headed GAO’s Accounting and Information Management Division. His significant accomplishments included providing leadership to help government confront the Year 2000 computing challenge by working with the Congress and the President’s Y2K Conversion Council to provide a smooth transition in government operations and services. He also directed the first-ever audit of comprehensive financial statements covering all federal departments and agencies for fiscal year 1997—one of the largest and most complex audits in history. Additionally, he helped conceive GAO’s strategy for improving computer security throughout government and led the updating of standards for internal control in the federal government.
Dodaro was then promoted to chief operating officer, the number two leadership position in the agency, which he held until being appointed acting comptroller.
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