Senate Hearing, 109TH Congress - What You Don't Know Can Hurt You: S. 2590, The Federal Funding Accountability and Transparency Act of 2006

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S. Hrg.

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WHAT YOU DONT 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

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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

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CONTENTS
Opening statements:
Senator Coburn .................................................................................................
Senator Collins (ex-officio) ...............................................................................
Senator Carper .................................................................................................

Page

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3
4

WITNESSES
TUESDAY, JULY 18, 2006
Hon. John McCain, a U.S. Senator from the State of Arizona ............................
Hon. Barack Obama, a U.S. Senator from the State of Illinois ...........................
Gary D. Bass, Ph.D., Executive Director, OMB Watch ........................................
Eric Brenner, Director, Maryland Governors Grants Office ...............................
Mark Tapscott, Editorial Page Editor, The Washington Examiner Proprietor ...
ALPHABETICAL LIST

OF

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WITNESSES

Bass, Gary D., Ph.D.:


Testimony ..........................................................................................................
Prepared statement ..........................................................................................
Brenner, Eric:
Testimony ..........................................................................................................
Prepared statement ..........................................................................................
McCain, Hon. John:
Testimony ..........................................................................................................
Prepared statement ..........................................................................................
Obama, Hon. Barack:
Testimony ..........................................................................................................
Prepared statement ..........................................................................................
Tapscott, Mark:
Testimony ..........................................................................................................
Prepared statement ..........................................................................................

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18
50

APPENDIX
Article submitted by Senator McCain from the Washington Post dated July
18, 2006 .................................................................................................................
National Taxpayers Union, prepared statement ...................................................

56
63

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WHAT YOU DONT 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
SD342, 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
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a websitethat anyone can access for freedisclosing 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 dont 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 merchants 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:
half a million dollars for a Teapot Museum in North Carolina;
half a million dollars in defense money for the Arctic Winter
Gamesthat is money designed to defend this country;
half a million dollars for the Museum of Glass in Tacoma,
Washington;
half a million dollars for the Fort Dupont Ice Arena in Washington, DC;
more than $2 million for the Appalachian Fruit Laboratory
in West Virginia; and

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$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. Lets 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 Presidents 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 doesnt 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 opposethat 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

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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 unlesswhat 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 sayyou quoted Thomas Jefferson. One of the things thatI 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.

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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.
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 atand I know you
didthe front page of this mornings Washington Postand if you
dont 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 skyall 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 governments
sprawling system of entitlements for farmers, which topped $25 billion last year.
Mr. Chairman, the important pointand I would ask that this
entire article be made part of the record.2
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.
1 The
2 The

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prepared statement of Senator McCain appears in the Appendix on page 27.


article referred to appears in the Appendix on page 56.

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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 dont 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.
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 Americas
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 rel1 The

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prepared statement of Senator Obama appears in the Appendix on page 29.

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atively 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 countrys 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.

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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 Chi-

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cago 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 dont think is going to be a tremendous burden on their part.
Senator COBURN. If they are not already supplying that information or dont know the information, they should be.
Senator OBAMA. Absolutely. I mean, I dont 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 lets say it costs maybe a couple hundred thousand dollars to
set this up. Compare that with the knowledge of some of the ways

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10
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

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11
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 officeand this was true when I was
a State legislatoris 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 dont 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 overpaymentsthat 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.

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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
knowsthey 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.

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One other aspect that I would add to thisand I think this dovetails into some of the legislation that has been proposed to shed
light on what is happening with earmarks and so forthis 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 Fed-

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eral 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 Governors Grants Office, the office of Governor Bob Ehrlich. Mr. Brenner became Director of the Maryland Governors 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 Obamas 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.
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
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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 userfriendly, searchable format. I know, because OMB Watch is now in
the throes of trying to put up the two key databasesand we will
do acronyms, since you have already mentioned itFAADS 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 abouta Livestock
Compensation Programwe 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

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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
GOVERNORS GRANTS OFFICE

Mr. BRENNER. Thank you, Mr. Chairman and Senator Carper. As


you heard, my name is Eric Brenner, Director of the Maryland
Governors 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.
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
cant 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
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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? Shouldnt 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 cant
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 bitthis 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

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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 bills 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 gotthere 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.
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
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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 Captains 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 publics 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.

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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 recreate 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 beto 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 otherwe 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 account-

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able 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 dont 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 dont 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 areI 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 thatand 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.

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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 wewhat 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 wayit 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

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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 dont 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 tothere is no judgment
on it, but what it does is it createsthis 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.

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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.

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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-timeand 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 havebut 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.]

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