Views on GAO's Service to the Congress: Interview with Former Senator William Proxmire

Published by the Government Accountability Office on 1990-10-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United   States   General   Accounting   Office


October   1990
                 Views on GAO’S
                 Service to the
                 Interview With
                 Former Senator
                 William Proxmire

                 United   States   General   Accounting   Office

GAO              History Program

October   1990
                 Views on GAO'S
                 Service to the
                 Interview With
                 Former Senator
                 William Proxmire
 Published by the United States General Accounting Office,
 Washington, D.C., 1990

ii                                                           GAO/OP-M-OH

          The History Program of the General Accounting Office uses oral history
          interviews to supplement documentary and other original sources of
          information on GAO’Spast. These interviews help provide additional
          facts and perspectives on important past events. Transcripts of the
          interview, as well as the audiotapes and videotapes, become important
          historical documents themselves and are used in the preparation of
          written histories of GAO,in staff training, and for other purposes.

          Although the transcripts are edited versions of the original recording,
          we try to preserve the flavor of the spoken word. It should be under-
          stood that the transcripts reflect the recollections, impressions, and
          opinions of the persons being interviewed. Like all historical sources,
          they need to be analyzed in terms of their origins and corroborated by
          other sources of information, The transcripts in themselves should not
          necessarily be considered definitive in their treatment of the subjects

          Senator William Proxmire, Democrat of Wisconsin, served in the TJnited
          States Senate from 1957 until 1989. He frequently called on GAOto con-
          duct studies and provide information. The Senator gained a reputation
          for holding the government fully accountable for its expenditures and
          for probing into the efficiency of government operations. He enlisted
          GAO’Sassistance in many reviews of the Defense Department procure-
          ment policies and practices, bank regulatory activities, and housing

          In an interview on May 15, 1990, the Senator commented on GAO’Spast
          service to him and the Congress and expressed his views on how GAOcan
          best continue to carry out its mandate in the future.

          Werner Grosshans /
          Assistant Comptroller General
            for Policy

William Ffmcmire

              iv   GAO/OP-M-OH
Biographical Information

                   Senator Proxmire began his political career 1950, when he was elected
William Proxmire   to the Wisconsin State Assembly.

                   He was elected to the United States Senate in 1957 in a special election
                   to fill the seat left vacant by the death of Senator Joseph R. McCarthy.
                   He was reelected in 1958, 1964, 1970, 1976, and 1982.

                   Senator Proxmire has the longest unbroken record in the history of the
                   Senate in answering roll call votes. From April 1966 until his retirement,
                   there were over 10,000 roll call votes. He did not miss a single vote.

                   He earned his undergraduate degree from Yale University in 1938 and a
                   master’s degree in business administration cum laude from the Harvard
                   Graduate School of Business in 1940 and a master’s degree from
                   Harvard in public administration.

                   Senator Proxmire was the Chairman of the Senate Banking, Housing,
                   and Urban Affairs Committee and a member of the Appropriations Com-
                   mittee and the Joint Economic Committee.

                   Since his retirement from the Senate early in 1989, Senator Proxmire
                   has been an international speaker, writes a syndicated column that
                   appears in more than 50 papers across the United States, airs a weekly
                   cable TV segment, and authors various articles.


                  Henry Eschwege retired in March 1986 after almost 30 years of service
Henry Eschwege    in GAO under three Comptrollers General. He held increasing responsibil-
                  ities in the former Civil Division and became the Director of GAO'S
                  Resources and Economic Development Division upon its creation in
                  1972. He remained the Director after the Division was renamed the
                  Community and Economic Development Division. In 1982, he was
                  appointed Assistant Comptroller General for Planning and Reporting.

                 Werner Grosshans is the Assistant Comptroller General for Policy. He
                 began his diversified career as a government auditor in 1958 in the San
                 Francisco Regional Office and held positions of increased responsibility;
                 he was appointed Assistant Regional Manager in 1967. In .Iuly 1970, he
                 transferred to the I7.S. Postal Service as Assistant Regional Chief
                 Inspector for Audits. In this position, he was responsible for the audits
                 in the 13 western states. In October 1972, he returned to GAO to the
                 Logistics and Communications Division. In 1980, he was appointed
                 Deputy Director of the Procurement, Logistics, and Readiness Division
                 and, in 1983, he was appointed Director of Planning in the newly cre-
                 ated National Security and International Affairs Division. In 1985, he
                 became Director of the Office of Program Planning, where he remained
                 until 1986, when he assumed responsibility for GAO'S Office of Policy,

                 Roger R. Trask became Chief Historian of GAO in July 1987. After
Roger R. Trask   receiving his Ph.D. in history from the Pennsylvania State University,
                 he taught between 1959 and 1980 at several colleges and universities,
                 including Macalester College and the University of South Florida; at
                 both of these institutions, he served as Chairman of the Department of
                 History. He is the author or editor of numerous books and articles,
                 mainly in the foreign policy and defense areas. He began his career in
                 the federal government as Chief Historian of the T.J.S.Nuclear Regula-
                 tory Commission (1977-1978). In September 1980, he became the
                 Deputy Historian in the Historical Office, Office of the Secretary of
                 Defense, where he remained until his appointment in GAO.

                 vi                                                            GAO,‘OP-l&OH

William Proxmire                                                                               iv

Biographical                                                                                   V

Information         William Proxmire                                                           V

Interviewers                                                                                   vi
                    Henry Eschwege                                                             vi
                    Werner Grosshans                                                           vi
                    Roger R. Trask                                                             vi

Interview With                                                                                  1
Senator William     Introduction                                                                1
                    Calling on GAO for Assistance                                               3
Proxmire, May 15,   Defense Procurement Activities                                              5
1990                Golden Fleece Award                                                         8
                    Government Bailouts                                                        10
                    Cost Accounting Standards for Contractors                                  11
                    Responsiveness to Requests                                                 12
                    Interest in Federal Productivity, Housing, and Supersonic                  13
                    Preserving Independence and Objectivity                                    17
                    Improving GAO’s Effectiveness                                              18
                    Problems for GAO or Others to Address                                      22
                    Conclusion                                                                 24

Index                                                                                          25

                    vii                                                         GAO,‘OP-l&OH


AFL-CIO    American Federation of Labor-Congress of Industrial
CElO       Congressional Budget Office
CIA        Central Intelligence Agency
CRS        Congressional Research Service
DIA        Defense Intelligence Agency
DOD        Department of Defense
GAO        General Accounting Office
HUD        Department of Housing and Urban Development
NFL        National Football League
OMB        Office of Management and Budget
OPM        Office of Personnel Management
OTA        Office of Technology Assessment

viii                                                         GAO/OP-M-OH
Interview With SenatorWilliam Protie
May 15,199O

Mr. Eschwege       Thank you for meeting with us today to talk about your tenure in the
                   Senate as it relates to your activities involving the General Accounting
                   Office. With me is Mr. Werner Grosshans, the Assistant Comptroller
                   General for Policy, and Dr. Roger Trask, who is the Chief Historian for
                   the General Accounting Office. Senator, you spent about 32 years in the

Senator Proxmire   Thirty-one years, 4 months, and a few days.

Mr. Eschwege       Your period of service coincided with my service at GAO, which started
                   about the same time that you came to the Congress in 1957. You had a
                   lot of contact with GAO, and you were one of our best customers and we
                   liked that. We hope we can talk about that today and get information
                   from you as to how you saw some of the issues on which you wanted
                   help from GAO in carrying out your mandate in the Senate. One of the
                   things that I’d just briefly like to touch on is how you as a newcomer
                   first became aware of GAO and some of the people in it and how you
                   began to utilize GAO'S services.

Senator Proxmire   Well, I especially became aware of GAO in the late 1960s. That’s about
                   the time the Joint Economic Committee became particularly active. I
                   was on the Committee, and we wanted to make a study of the economics
                   and the efficiency of the Department of Defense (DOD) and so forth. GAO,
                   I understand, had been under very harsh criticism and had been a little
                   defensive about its vigorous inquiry into defense spending and waste in
                   the Defense Department. Some Members of the Congress had been very
                   critical of GAO because of some of its conclusions. I took the opposite
                   position, saying that I thought that we were wasting money on defense
                   and that I thought GAO could be very helpful.

                   We asked about a number of defense projects, including the C-5A trans-
                   port plane, on which there was a $2 billion overrun; there was a great
                   deal of controversy about that. We asked GAO to make a study. We asked
                   it to make studies of other defense problems, and I found in every case
                   that the work of GAO was objective and accurate. We found, as the situa-
                   tion developed, that again and again and again GAO'S findings were on
                   target, GAO was a professional operation, and it had considerable pres-
                   tige with the Members of the Congress, I could use GAO studies as the
                   factual basis of my criticism to try to improve defense procurement and
                   get considerable support, understanding, and agreement on the part of

                   Page   1                                                     GAO/OP-N-OH
                   Interview  With   Senator   Wiiiam   Proxmire
                   May 15,199O

                   Members of the Congress and the press. I felt that it   was a very useful
                   way to operate. 1 can’t for the life of me understand   how the Congress
                   was able to get along without GAO, particularly with    the situation as
                   complicated as it is. Without GAO, we wouldn’t have     a reliable source of
                   factual and reliable information.

                   The one criticism that some members of my staff recall more vividly
                   than I do-1 discussed this with them before our interview today-was
                   that the General Accounting Office would sometimes take a long time on
                   its investigations. When I thought the investigation should be completed
                   in a week or 2 or 3, it would sometimes take a year and even more. By
                   the time we got the information, some of the policies had changed. That
                   situation, and it’s a very serious situation--I guess that it existed
                   because the resources, of course, of any organization are limited and
                   there were all kinds of demands on GAO'S time-was one that did con-
                   cern us. But except for that, the accuracy and the condensation of the
                   report in the beginning so t,hat Members of the Congress who were very
                   busy could read at least that, if they didn’t read the whole report, were
                   all very, very helpful.

Mr. Eschwege       You probably had some contacts with Comptroller General Staats and
                   his successor, Charles Bowsher.

Senator Proxmire   Yes. Now, when Mr. [Joseph] Campbell left GAO, he had been battered
                   quite a bit by criticism. Staats came in and maintained his independence
                   very effectively, I thought, and made these detailed investigations when
                   there just seemed to me to be no real answer. There was a growing con-
                   cern, public and congressional, about the cost of defense activities.

Mr. Eschwege       You’re right about the criticism that GAO got in some hearings that were
                   held in 1965, and it had an effect on the GAO staff as well, as you can
                   imagine. We did change our approach to the way we looked at defense
                   activities, going from single findings and single reports, especially on
                   defense contracts, to reports on a broader, more evaluative type of
                   audit. You were instrumental there too in getting us to look more at the
                   major weapon systems and similar things.

                   Page   2                                                         GAO/OP-l&OH
                     Interview  With   Senator   William   Proxmire
                     May 16,199O

Calling on GAO for
Dr. Trask            One thing that we’re interested in is how you decided when you were
                     going to utilize GAO. What prompted you? Was it always a special issue?
                     Did requests from constituents play a role, or were any individual
                     requests made?

Senator Proxmire     Once we got two or three reports that gave us answers that we hadn’t
                     been able to get anywhere else, it seemed to me that this was a reliable
                     agency to use, because of its integrity. GAO obviously had no ax to grind.
                     The only other source of information, really, had been the Defense
                     Department itself. Of course, DOD is always going to defend its mistakes.
                     It, is subject to a lot of lobbying. Other Members of the Congress,
                     including their staffs, are likely to be biased by the states they
                     represent, and they want to defend the procurement in Massachusetts,
                     Wisconsin, New York, California, Georgia, or wherever, because these
                     procurements involved their constituents and their constituents’ jobs.
                     That’s more important to many Members of the Congress than almost
                     anything. You can understand why. It’s a human reaction.

                     But GAO had no bias, in my view, It just wanted to tell you the truth.
                     They had no investment in it. GAO had no stock. Obviously, there was no
                     conflict of interest of any kind, and GAO was professional. Here were
                     people who understood defense. They were selected, as I understand it,
                     on the basis that they’d had experience, for example, with defense mat-
                     ters and they understood manufacturing processes. They understood
                     business. They understood the capital markets. They understood what it
                     costs to do these things, and, therefore, they were in a position to either
                     support the Defense Department if Defense was right or to say that it
                     thought that there were other approaches that might be more econom-
                     ical; that was the reason why GAO was valuable.

Dr. Trask            Did you ever find any occasion to use GAO on issues other than defense?

Senator Proxmire     Oh, yes.

Dr. Trask            You spoke mainly about defense.

Senator Proxmire     That’s right. I spoke on defense because it just happened that I got into
                     it at the time and that was particularly controversial, I was on the

                     Page   3                                                       GAO/OP-N-OH
                   Interview  With   Senator   William   Proxmire
                   May 15,1990

                   Banking Committee for all my years in the Senate and chaired the Com-
                   mittee for 8 years. I served for a B-year term, and then the Republicans
                   came in, and at the very end of my tenure, I was Chairman again for 2
                   years. I was concerned about the savings and loan situation and about
                   housing matters and other matters. We called on the General Accounting
                   Office often for work in those particular areas. I was also on the Appro-
                   priations Committee and was the Chairman, many years ago, of a Sub-
                   committee on Foreign Assistance.

                   One of the studies, I recall, that I called for was a comprehensive look at
                   foreign aid. Previously, foreign aid was always considered something
                   that only the State Department was concerned about. Well, a lot of agen-
                   cies are engaged in foreign aid. The Treasury Department is involved; so
                   is HUD [Department of Housing and Urban Development]. GAO found for
                   us that the foreign aid program was a $20 billion operation. It was far
                   bigger than anybody had thought before. That was the kind of cross-
                   agency operation that the General Accounting Office could review and
                   that would otherwise fall between the cracks because so many of the
                   Appropriations Subcommittees and the regular committees felt that
                   they had a jurisdiction that applied only to a particular agency. GAO
                   came in on this cross-agency basis and made a very useful study.

Dr. Trask          Did you use other congressional agencies or congressional staff to do
                   any studies, or did you rather consistently call on GAO? What about the
                   CBO[Congressional Budget Office], WA [Office of Technology Assess-
                   ment], and CRS [Congressional Research Service]? Some of them were
                   established a little later, of course.

Senator Proxmire   Yes, we called on those agencies. The executive agencies had a responsi-
                   bility to the executive branch, to the administration, to whoever was
                   President of the United States, which had to take precedence, and they
                   often had a bias. GAO, as I understand it, was a congressional investi-
                   gating agency and had across-the-board jurisdiction, tremendously
                   varied resources, and expert resources. Therefore, I did call on GAO far
                   more than I did on other agencies, but I called on some of the others too.
                   We often would ask an agency, of course, to give us its justification for
                   spending certain funds.

                   For years, I was Chairman of the subcommittee of the Appropriations
                   Committee that handled HUD. Unfortunately, I didn’t get some of the
                   information that I wish I had gotten about things that were going on
                   before 1980, but I understand that we could have gotten much more

                   Page   4                                                       GAO/OP-16-OH
                      Interview With   Senator   Wii   F’roxmire
                      May 16,199O

                      information than we did. I didn’t call on GAO to make as much of an
                      investigation about the HUD situation as I wish I had.

Mr, Eschwege          I guess we were talking here about what we call the sister agencies-the
                      Office of Technology Assessment and the Congressional Research Ser-
                      vice and, to a lesser degree, the Congressional Budget Office. These are
                      legislative offices that might have been useful to you in your work.

Senator Promnire      No. In most cases, these agencies seemed to have a particular responsi-
                      bility to a special congressional committee, such as the Budget Com-
                      mittee or the Energy Committee. I didn’t feel that they had the same
                      kind of broad ability to get in wherever I wished and make an

Defense Procurement
Mr. Grosshans         Senator Proxmire, you’ve already alluded to the fact that the Joint Eco-
                      nomic Committee was very much involved in the defense procurement
                      activities. Of course, one of the key areaS in which you got very heavily
                      involved in the late 1960s was the C-5A procurement, the Lockheed situ-
                      ation. You also had individuals like Ernie Fitzgerald who, I think, helped
                      you as part of the Committee staff in delving into some of those issues,

Senator Proxmire      He always worked for the Air Force, of course. He never was even
                      detailed to our staff although he was an unusually independent person.
                      That got him into some trouble. He was extremely able. He won an
                      award in 1967 as the employee of the year of the Air Force. Then, when
                      he told our Committee that the overrun would be $2 billion on the C-5A,
                      the Air Force tried to fire him and, of course, as you know, he went to
                      court, got a pro bono public lawyer, and won. He’s still working for the
                      Air Force.

Mr. Grosshans         What prompted the interest on the C-5A?

Senator Proxmire      Well, when President John Kennedy was a Senator, he was on the Joint
                      Economic Committee. He said it was the “best fun Committee” of the
                      Senate. You can get into any subject. You can get into the economics of
                      sports or the NFL[National Football League], for example. You can get
                      into the economics of the underground economy and whatever turns you

                      Page   6                                                      GAO/OP-WOH
                   Lnteniew  With   Senator   Wiiam   Proxmire
                   May 15,199O

                   on. Well, the biggest game in town, as far as spending was concerned-
                   discretionary spending, at least-was in the Defense Department. Of
                   course, this had enormous economic implications.

                   One of the things we did, for instance, was to require an appearance by
                   the CIA [Central Intelligence Agency]; every year both the CIA and the DIA
                   [Defense Intelligence Agency] would testify on the Soviet economy.
                   Nobody else was requiring such appearances, Still nobody else does but
                   the Joint Economic Committee. We got invaluable information that
                   helped us in our military and other policies. We got into defense prima-
                   rily because, as I say, it was the biggest discretionary game in town. If
                   you’re going to save money to hold down spending, obviously that’s one
                   you have to look at hard.

Mr. Grosshans      I guess the C-5A procurement was an ambitious undertaking. As you
                   may recall, it was the first big total package procurement process that
                   was touted to be the new way of procuring major weapon systems. Part
                   of the problem in that procurement was that the aircraft was not state
                   of the art. As a result, the Defense Department was expecting an awful
                   lot in terms of performance of that aircraft. As a result of that, of
                   course, it did get into major cost overruns.

Senator Proxmire   One of the concepts that Fitzgerald had pushed, and is still pushing, I
                   guess, is the so-called “should cost.” You get expert engineers in and
                   they figure out how an operation should be run. On that basis, they can
                   calculate whether the projections are accurate or not, and, therefore,
                   you can be in a much better position to evaluate the overruns as they
                   come along.

Mr. Grosshans      You probably don’t remember, but I did that “should cost” study for
                   you. That was one of the specific requests of GAO that you made back in
                   1969. You also asked for a profit study. Hassell Bell [GAO] did the profit
                   study. You held hearings on December 31, 1970.

Senator Proxmire   You’ve got a much better memory than I do.

Mr. Grosshans      I was there.

Senator Proxmire   Twenty years ago.

                   Page   6
                   Interview With   Senator   William   Proxmire
                   May 15,199O

Mr. Grosshans      That’s right. I asked you about Ernie because Ernie was sitting with you
                   up there and with the staff during that particular hearing. So this situa-
                   tion certainly gave the impression that he was working with the Com-
                   mittee. Of course, he was advising Dick Hoffman and others of your
                   staff all along. What were your overall expectations on the profit study?

Senator Proxmire   Well, there’s no question that profit, of course, is the driving force that
                   energizes the American system and makes it more efficient than others.
                   Profit should be adequate. On the other hand, there are all kinds of
                   ways that clever bookkeeping can conceal the actual profits, and we
                   wanted to know whether they were excessive. There’s no justification,
                   certainly, for any company to become rich from a deceptive accounting
                   system. If a company can do a better job at a lower cost, it deserves a
                   good solid profit, but we wanted to know what the profits of defense
                   contractors were. Unless we could get that kind of evaluation from
                   experts, we wouldn’t be in a position to tell. GAO seemed to be qualified
                   to give us that information.

Mr. Grosshans      As you may recall, we’ve updated that study twice since then, as
                   recently as a couple of years ago, and things haven’t changed a whole
                   lot. There’s generally less of an investment on the part of defense con-
                   tractors than their counterparts contracting with the private sector. As
                   a result of that, if you compute profit on the basis of return on invest-
                   ment, Defenses contractors show up very, very well. Of course, they’ve
                   always argued that you ought to compute it on the basis of either cost or
                   sales. On that basis, they were pretty much or reasonably well in line
                   with their counterparts. But I guess that the real issue that we felt
                   needed to be addressed was how to compute profit. Do you compute
                   profit on the basis of sales or a return on investment?

Senator Proxmire   You probably need to compute it on both bases, but it seems to me that
                   what drives the system is return on investment. It seems that people
                   don’t care whether sales are high or low, provided they get a return on
                   their investment. That’s why they invest their money. If you have an
                   operation in which you can have very high sales and not much in the
                   way of profits, then you still have to provide greater leeway, so there
                   will be an adequate return on investment. On the other hand, if the oper-
                   ation has lower sales but makes a high return, then it seems to me you
                   still cannot justify a system that encourages more profits.

Mr. Grosshans      I think the hearings that you held in those days focused very well on
                   this issue. It’s interesting that 20 years later we’re still debating about
                   return on investment. I did quite a bit of work during those days at

                   Page   7
                      Interview  With   Senator   Wiiam   Proxmire
                      May 16,1!390

                      Lockheed Missiles and Space Company in Sunnyvale. Of course, 99
                      percent of this company’s output was for the government, and practi-
                      cally all the facilities were government-furnished, including the build-
                      ings. So if you computed return on investment, Lockheed was making
                      nearly a 190-percent return.

                      If you computed profit as a percentage of cost of sales, then you had a
                      completely different figure. Some people argue today that profit should
                      be computed in this way.

Senator Proxmire      Well, it seems to me that to the extent that Lockheed was using govern-
                      ment property, there was no sense allowing a return that is comparable.

Mr. Grosshans         Exactly. You were also very interested in independent research and
                      development costs and to what extent they could be charged to govern-
                      ment contracts. Do you recall any of those issues?

Senator Proxmire      Not right offhand. I’d have to think about those issues. I haven’t
                      thought about them for 15 or 20 years.

Mr, Grosshans         We also did quite a bit of work for you during the Vietnam War. Was
                      there any particular interest that you were pursuing during that period?

Senator Proxmire      Well, there was one great frustration, of course, that everybody suffered
                      and we’re revisiting now, in view of the end of the Cold War. That frus-
                      tration is that there was no peace dividend after the Vietnam War. It
                      was an enormously expensive war, although it was a so-called minor
                      war. We spent billions and billions of dollars, We had testimony from top
                      economists, who promised that we could expect a substantial peace divi-
                      dend. We would have either lower taxes or improved social programs or
                      a combination of both. But there was no peace dividend.

Golden Fleece Award
Mr. Grosshans         You were, of course, very active in a number of other areas in the over-
                      sight of DOD including commissary pricing policies and development of
                      golf courses.

Senator Proxmire      They were naturals for my Golden Fleece Awards. They were things
                      that people could understand.

                      Page   8                                                       GAO/OP-1fhOH
                   Interview  With   Senator   William   Proxmke
                   May 15,199O

Mr. Grosshans      Would you like to say anything more about the Golden Fleece Award,
                   what it resulted from, and some of the challenges that you had?

Senator Proxmire   Well, the Golden Fleece Award resulted, frankly, from a speech I gave in
                   Appleton, Wisconsin, a very conservative town, to the Chamber of Com-
                   merce. When I finished, people said, “Proxmire, you talk a lot about
                   holding down spending. Why don’t you do something about it‘?” So I
                   decided I would start the Golden Fleece Award. Every month, I would
                   give an award to the most ridiculous, inane, disgusting waste of the tax-
                   payers’ money in the preceding month, and we got lots of candidates. I
                   don’t think I used GAO so much to obtain candidates. Many of them were
                   small agencies, but some were quite big.

                   I gave an award to the Transportation Department, which had the big-
                   gest overrun at that time of any department, including the Defense
                   Department, a $100 billion overrun, But that was an exception. I gave it
                   to one agency, for instance, that spent $103,000 to try to find out
                   whether sunfish that drink tequila are more aggressive than sunfish
                   that drink gin. So, they could have come to Milwaukee and gotten all
                   kinds of human volunteers for that program.

                   Then I gave one to the Department of Agriculture for spending
                   thousands of dollars on research on pregnant pigs. They wanted to find
                   out whether pigs confined because of their pregnancies could have their
                   tensions eased by requiring them to jog an hour and a half a day on a
                   treadmill. Agriculture found out that pregnant pigs couldn’t talk.

Mr. Eschwege       Are you still giving these awards?

Senator Proxmire   Oh, yes. I give an award every month. A fellow who was previously on
                   my staff does research for me. I write the release on each award.

Mr. Eschwege       How do you release it? By press release?

Senator Proxmire   I have a syndicated newspaper column that goes to about 50 papers,
                   mostly small papers. Twenty of them are in Wisconsin, but my column
                   also is in the New York Post, the Cincinnati Enquirer and the Denver
                   Rocky Mountain News. We get into some of the papers around the
                   country, This is a twice-a-week column, and one day a month, I
                   announce the award.

Mr. Eschwege       I see. I’m sure GAO would be interested in knowing about these awards;
                   maybe it already knows.

                   Page   9
                      Interview With   Senator   William   Proxmire
                      May 15,199O

                      A particular request involved two of our Comptrollers General. The
Government Bailouts   request was addressed to Mr. Staats, and it had to do with the New York
                      City financial crisis. Do you recall that?

Senator Proxmire      Yes.

Mr. Eschwege          The reason I say it involved two is that Chuck Bowsher, the present
                      Comptroller General, was working for Arthur Andersen on New York’s
                      problems. I just wanted to discuss GAO'S involvement a little bit. I think
                      maybe, initially, you weren’t entirely happy with our response to the
                      request. You had wanted GAO to do a completely independent audit of
                      that New York City crisis, but when we arrived on the scene, we found
                      that a lot of people were already involved. But we got you to agree,
                      finally, that we would serve instead in a monitoring role and report to
                      you on how well things were being done. I hope that satisfied you. I
                      don’t know how much of that you recall.

Senator Proxmire      I can’t remember any dissatisfaction at all with GAO on that or for that
                      matter in other areas. I was supportive of the first effort to help New
                      York, but I was opposed to the second effort. Only three of us, [Senators]
                      [John] Tower and ,Jake Garn and I, voted against it. Here was a city that
                      had banks that had a couple of hundred billion dollars. They had more
                      than that; they had huge, huge assets. All New York City needed was a
                      billion and a half. That’s all it got from the federal government. I
                      thought that the private sector could have taken care of that and should
                      have taken care of it.

                      It was a very bad precedent, I felt. Fortunately, we haven’t had many
                      bailouts. We’ve had some. But, I think, come the recession, we’re likely
                      to have a barrel full of them because people can say, “Well, you bailed
                      out New York; you bailed out Lockheed; you bailed out Chrysler; why
                      shouldn’t you bail us out ?” Of course, once you start bailing out, there’s
                      no end to it.

Mr. Eschwege          Speaking of bailouts, I think that you got involved in the savings and
                      loan situation with GAO very early on. You raised some questions about
                      consolidating the bank regulatory agencies, and we reported to you on
                      that. Also, you were concerned over the management of assets back in

Senator Proxmire      What was the recommendation of GAO on consolidation? I’ve always
                      favored that.

                      Page   10
                   Interview  With   Senator   William   Proxmire
                   May 15,199O

Mr. Eschwege       You’ve got me. I don’t have the answer, but I will try to find out.

Senator Proxmire    Any one of the individual regulators wouldn’t object if it got the whole
                    ball of wax [responsibility], but none of them wanted to give up their

Mr. Eschwege       I think that is a natural reaction.

Senator Proxmire   I thought we ought to give the responsibility to the Federal Reserve
                   Board. I thought that the Board was probably the most professional and
                   effective organization.

Mr. Eschwege       Well, let me check into that, and I will add it to the record.’

                   The Comptroller General also was the Chairman of the Cost Accounting
Cost Accounting    Standards Board. There was a GAO study that concluded that it was fea-
Standards for      sible to provide uniform cost standards for defense contractors. But, you
Contractors        recall, Admiral [Hyman G.] Rickover was very much instrumental in
                   that. Of course, you, Congressmen [Henry B.] Gonzales and Wright
                   Patman, and others were instrumental in establishing the Board by law
                   in 1910. Do recall some of those activities and the standards that came
                   out of the Board as a result of that?

Senator Proxmire   I thought that the Board was a very successful and proper operation. We
                   needed cost accounting standards to be uniform. We still do need them.
                   We’ve got a Tower of Babel here. People are talking about different
                   things, and we don’t have the uniformity that we ought to have.

Mr. Eschwege       There was a sunset provision that made the Board go out of existence in
                   1980, and I know that you were trying to revive it. You had almost suc-
                   ceeded; then something happened, apparently.

Senator Proxmire   We lost control of the Senate.

Mr. Eschwege       Yes, I think that in 1980, some people tried to weaken it. I also think-
                   while not quoting you, I am paraphrasing you correctly-that       you were
                   concerned that the proposals that were put forth would be too favorable
                   to industry. Therefore, nothing happened until about 1988. There was a

                   ‘On January 31, 1977, the Comptroller General issued a report to the Congress entitled Highlights of
                   a Study of Federal Suprrvision of State and National Banks (OCG-77-1). GAO did not recommend
                   consolidation but called for establishing a mechanism for more effective coordination among the three
                   regulatory a@mries.

                   Page   11
                    Interview   With   Senator   Wiiam   Proxmire
                    hlay x3,1990

                    law passed to give the function to the Office of Federal Procurement
                    Policy, but my understanding is that it’s not off the ground yet.

Senator Proxmire    Ten years later.

Mr. Eschwege        Well, this would be 10 years after the demise of the Board, but more
                    than 2 years after the enactment of the new legislation, which took 8
                    years to bring about. Mr. Staats, you know, was in charge of that orig-
                    inal Board, which included professional accountants and industry
                    people and so on. By law, that Board had to be staffed with certain
                    types of people.

Responsiveness to
Mr. Grosshans       Maybe I could interject at this time. You’ve been a very good friend of
                    GAO over the years and have been very supportive. You have helped us
                    out in many areas, but on some occasions, you also let us know when
                    you weren’t happy with our results,

                    Going back to 1970, you requested GAO to conduct the profit study that
                    we have talked about, periodically report on major weapon systems,
                    study the feasibility of using the “should cost” method in procurements,
                    develop a military procurement index, and compile a defense industrial
                    personnel exchange directory. Mr. Staats testified before your Com-
                    mittee and basically said that we would we be willing to do the “should
                    cost” study under existing legislation and to do the profit study. But he
                    also said that we would need some additional legislation to get access to
                    the right type of data and that the other three projects ought to be done
                    by DOD.

                    I would like to remind you of the statement that you made during that
                    testimony, and I’m quoting:

                    “We would like to call you our watchdog, but, in view of your response to this Com-
                    mittee’s recommendation, I just wonder if we should.”

                    I don’t know whether you recall that or not, but I think that’s a good
                    indication that while very supportive of GAO, you really did hold our
                    feet to the fire. Eventually, of course, we did do the profit study, and I

                    Page   12                                                             GAO,‘OP-M-OH
                         Interview  With   Senator   William   Proxmire
                         May l&l996

                         think that we did monitor very closely DOD'S reports on the weapon sys-
                         tems. Do you have any comments on these matters? Also, some of your
                         people that we worked with, like Richard Kaufman, of course, were
                         very, very supportive.

Senator Proxmire         Yes, Kaufman probably did a lot more work on that than I did. I can’t
                         remember much about that, except that I was very supportive of Mr.
                         Kaufman’s position. I talked to Kaufman yesterday or the day before
                         about this interview. In general, he felt that in the situation that you’re
                         discussing here and in all other respects, GAO had been extremely
                         responsive, responsible, and professional. He, more than anybody, was
                         critical of the time that it took to get reports. I wish I could say more to
                         you than     that.

Mr. Grosshans            He was a tough taskmaster for some of us that worked with him. I did a
                         lot of work for him.

Senator   Proxmire       Well, the other person that I and my staff found most useful was Ron
                         Tammen, my administrative assistant.

Mr. Grosshans            Yes, I’ve worked with him some. He used a different approach

Senator   Prom-ire       Yes. He was very good and very bright.

Mr. Grossham             Absolutely. He was a real gentleman in the way he approached people.

Senator   Proxmire       He was also very respectful of GAO.

Mr. Grossharw            Yes, it was a joy working with Ron over the years.

Interest in Federal
Productivity, Housing,
and Supersonic
Dr. Trask                Another issue that interested you was measuring productivity in the
                         federal sector. You had some discussions with Mr. Staats about 1970,
                         and after that, he took leadership in setting up a joint study team, which

                         Page   13                                                        GAO/OP-164HI
                   Interview With   Senator   WiUIam   Proxmlre
                   May 15,199O

                   consisted of GAO and OMB [Office of Management and Budget] and the
                   Civil Service Commission, to look at developing productivity measures.

Senator Proxmlre   How are you doing on that now‘?

Mr. Eschwege       Well, right now it’s not the highest priority, because GAO has so many
                   other issue areas, as we call them, to worry about. About 80 percent of
                   GAO'S staff resources are now devoted to congressional requests. In other
                   words, we used to do most of our work on our own. Nowadays, with 80
                   percent used on requests, that leaves us 20 percent or less to do some
                   self-initiated work. Now, that’s not all bad because we have more cus-
                   tomers like you now than we ever had before and we work closely with
                   the committees and some individual Congressmen. But I’m not sure
                   we’re doing very much on productivity in GAO. How the federal govern-
                   ment is doing, I don’t know.

Mr. Grosshans      Being mindful of productivity is part of our daily work. 1 think some of
                   the initial efforts that the Senator was interested in were some indexes
                   of productivity used by various agencies.

Senator Proxmire   That’s harder to measure in the government than it is in the private
                   sector. The private sector measures productivity in terms of the amount
                   of output obtained for a certain amount of input. That’s pretty hard to
                   do in the government because, as you know, a lot of that input and
                   output doesn’t really produce anything. The private sector has a profit
                   line, a dollar line, and a net profit line that it can use as a disciplining
                   force to achieve productivity goals and that make quite a difference.

                   It would be very helpful if we could introduce productivity    measure-
                   ments in the government.

Mr. Eschwege       That early study that Dr. Trask talked about came to a conclusion that
                   we could develop measures for about 60 percent of government activity.
                   I admit that developing such measures is very hard; GAO internally has
                   struggled to do this, and I think that GAO is doing better.

                   Let me just mention a few other things. Just like Mr. Grosshans, I testi-
                   fied before you on some housing matters, and one that you might
                   remember, in particular, was the Clifton Terrace housing project.

Senator Proxmire   I remember the name. I don’t remember much about Clifton Terrace.

                   Page   14                                                       GAO/OP-l&OH
                   Interview With   Senator   William   Proxmire
                   May 15,199O

Mr. Eschwege       It was a project out here on 13th Street. You brought in some of the
                   tenants to the hearing; the project was just a mess because the people
                   that took it over just didn’t take care of the facilities. I’m not talking
                   about the tenants; I’m talking about the owners or the people that man-
                   aged it.

                   The case wound up in the courts, I found out later; they wanted me as a
                   witness, but somehow I never heard from them anymore. It just bears
                   out your interest in the housing area. You were very much concerned
                   about mortgage defaults and multifamily housing projects.

                   The other thing that we helped you on a little bit early on was your
                   concern about developing a supersonic transport plane. I bring it up
                   because it’s in the news again today.

Senator Proxmire   Yes. I felt that in the first place, supersonic transport ought to be han-
                   dled by the private sector. But the overwhelming majority of people
                   who would benefit from a supersonic transport are business travelers,
                   and I thought they ought to pay for it. I don’t see any reason why the
                   average taxpayer should pay for somebody to fly out of Europe or Asia
                   a little more quickly. The cost is enormous. But I was fighting a losing
                   battle. We got 10 votes against it the first time it was brought up on the
                   floor. Of course, Senators Jackson and [Warren] Magnuson, two real
                   powerhouses, were pushing it hard, plus the President of the United
                   States, the AFL-CIO [American Federation of Labor-Congress of Industrial
                   Organizations], and the banks. So, it was hard to find anybody who
                   would oppose it.

                   Then the environmental people came in, and whether their objections
                   were sound or not, they bought a lot of support and they got a lot of
                   editorial support. People who looked at it from a financial standpoint
                   recognized that it was a real loser. Fortunately, we didn’t promote the
                   supersonic transport, and, of course, the supersonic transport has been a
                   terrible loser for the French, the British, and the Russians. I think we
                   saved the government billions of dollars by opposing that.

Mr. Eschwege       It might very well have become another environmental problem if we
                   had tried to build it even commercially because, as I understand the situ-
                   ation, no one has found engines that are quiet enough. The supersonic
                   transport present.s a noise pollution problem.

                   Page   16
                     Interview  With   Senator   William   Proxmire
                     May 15,1999

Senator Proxmire     For once, we had the brains to let other counties make mistakes for a
                     while; if they’ve got a supersonic transport plane that’11 work, then we
                     can copy it.

                     But we’ve been doing the opposite on practically all projects. We take
                     the initiative and spend all the money; most of them strike out;
                     regarding the few that do work, others will say, “Fine, we’ll go along
                     with it.” I’m amazed that the French and the British, as you say, have
                     just decided that they’re going to build another, much more expensive
                      supersonic transport with the same kind of risks.

Mr. Eschwege         One thing that cropped up every now and then was your concern about
                     federal employees taking annual leave while on official travel. Do you
                     remember that one at all? Do you feel pretty strongly about that to this

Senator Proxrnire    Yes, that was another concern. I don’t know if I got GAO involved in it or
                     not, I was concerned not about federal employees so much but about the
                     fact that Americans living abroad were allowed to have a very substan-
                     tial income without having any tax liability at all.

Mr. Esehwege         We got involved in this issue. I don’t know whether it was pursuant to a
                     request from you.

Senator Proxmire     We had been pressing for answers on this issue right along. It just
                     seemed to me that it was obviously a situation that was grossly unfair to
                     other taxpayers.

Mr. Eschwege         What was your concern about annual leave? Was it a matter of whether
                     employees would have as a primary objective to go on leave and just
                     find themselves something to do to justify it? For example, someone had
                     some work to do in, let’s say, Denver for 3 days and then decided to take
                     leave for the rest of the week out there before coming home. Of course,
                     the person wouldn’t charge per diem for the leave days.

Senator   Proxnire   Well, our concern was that an employee would manufacture some phony
                     excuse for going out there and say, “Haven’t you got something? I’m
                     going to go up and see my friends and do a little skiing and have some
                     fun. I don’t want to buy a ticket. If the government’s going to buy the
                     ticket for me, I’ll go.” That seemed to me to be a likely area of abuse,

                     Page   16
                    Interview        WithSenator   William   Proxmhe

Independence and
Mr. Grosshans       Senator Proxmire, you’ve already alluded to the strength of GAO'S inde-
                    pendence and objectivity. You were looking for these characteristics
                    when you asked for one of our products. Of course, we take great pains
                    to preserve that independence, but it does get tough at times, When we
                    deal with people like you, their staffs are, at times, very demanding and
                    expect certain outcomes from GAO. Do you have any particular views on
                    that? At times we feel like we’re leaned on pretty heavily to come out
                    with a particular conclusion.

Senator Proxrnire   Well, I feel very strongly that you should lean right back. I think that
                    it’s absolutely absurd for anybody to expect a particular outcome and
                    that if the person gets an outcome that is disappointing it’s ridiculous to
                    change it. What you want is the truth no matter what the outcome is.
                    You may have a constituent, for example, whom you like and rely on
                    and who may be a big contributor, but if the findings of GAO are adverse,
                    that’s the way the cookie crumbles. You’re doing, I think, a great dis-
                    favor if you try to change the findings in any way. So, I’d respond, “This
                    is what we found; that’s it.” I know that sometimes that’s difficult and
                    sometimes people are going to resent it, but I think that in the long run,
                    you have to do it, absolutely.

Mr. Grosshans       One particular criticism that made a lasting impression on me concerned
                    the shuttle debate. Senator Barry Goldwater inserted in the Congres-
                    sional Record a question about how many shuttles GAO had built and
                    what expertise we had to comment on shuttles, but I guess criticism
                    comes with the territory.

Senator Proxrnire   Well, that’s right and I like Goldwater. I think Goldwater was a terrific
                    Senator. It’s funny: his best friend in the Senate was Hubert Humphrey,
                    and the two guys couldn’t have been farther apart on policy. But he’s an
                    honest, decent fellow, and if he put that comment in the Record, then so
                    be it. I don’t think that it reflects poorly on GAO'S honesty or compe-
                    tence. When you’re criticized, I think, you ought to feel good. It means
                    you’re doing your job.

Mr. Grosshans       Do you have any concerns at all about              GAO'S   doing too much work for
                    any one individual Congressman?

                    Page        17                                                            GAO/OP-16-OH
                   Interview With   Senator   WiUinm
                   May 16,199O

Senator Froxmire   I was one that asked you to do a lot of work. My experience was that too
                   few Members of the Congress recognized the enormous value of GAO as a
                   professional agency that would give us the truth and a detailed study. If
                   we did disagree with a report, we were free to use it as much or as little
                   as we wanted. Others might use it and use it against one’s position, but
                   so be it. By and large, we were greatly served by knowing what the facts
                   actually were, what the truth was, and what we should do.

Mr, Grosshans      One of the big changes that we’ve seen over time is a much greater
                   awareness of GAO, a much greater and more widespread use of GAO on
                   the Hill. A couple or three committees once received 50 percent or 60
                   percent of GAO'S testimony. Today, that’s completely changed. There is a
                   much more even approach among congressional committees in asking
                   for GAO'S work. Of course, as Henry already mentioned, we’ve had a tre-
                   mendous change in the way we do our work. In other words, about one-
                   third of our work had been done pursuant to congressional requests and
                   two-thirds of our work had been devoted to self-initiated studies. Today,
                   it’s over 80-percent request work with very little self-initiated work.
                   Does this change concern you?

Senator Proxmire   Well, the government will save money in the long run and do a much
                   more efficient job in this trillion-dollar-a-year operation if GAO has more
                    resources. You ought to ask for more resources. The fact that you get
                   only 20-percent discretion is not enough, because the Members of the
                    Congress do have a bias. They have a joint bias; sometimes the biases
                    are different. I am concerned that you have a dwindling ability to do the
                   job. As I indicated earlier, even in serving Members of the Congress, you
                   have to delay your responses and that’s unfortunate.

Improving GAO’s
Dr. Trask          Do you feel that GAO was always effective in its communication with the
                   Congress through its reports, briefings, testimony, and other products?

Senator Proxmire   Yes, I think so. I think that the General Accounting Office has been artic-
                   ulate. It has been willing to testify. It is probably called on more now
                   than in the past. I don’t know what the record actually shows, but GAO
                   should be called on more. As always, a Chairman who can get a report
                   that confirms a position is going to call on GAO to testify, GAO is an

                   Page   18                                                      GAO/OPTl&OH
                   Interview With   Senator   Wiiiam   Proxmire
                   May 15,199O

                   agency that the Congress can call on and get something handled by inde-
                   pendent, honest, and competent staff.

Dr. Trask          Are there any ways for              GAO   to improve, or is there any need for

Senator Proxmire   Yes, I think the main area for improvement is to increase your
                   resources. What would you do if you had 100 percent requests from the
                   Congress or if demands on you required 20 percent more resources than
                   you currently have? If you couldn’t make the responses you’d like to
                   make, then you’d have to set priorities. Presumably, you’d give the
                   senior Members of the Congress priority, Although that would be a nat-
                   ural thing to do, it would be wrong; there also are the newer Members
                   who should be served. Then you’d have to start setting priorities on the
                   basis of subcommittees, and there would be a tendency to accommodate
                   a subcommittee that would raise a big fuss, like the one that [Con-
                   gressman] John Dingell might head. You would be accommodating a
                   fellow who is outspoken and tough and has a reputation for power in
                   the Congress, rather than trying to determine what the priorities ought
                   to bc. So, I tk,ink it would be too bad if you couldn’t handle all requests.
                   Of course, any agency can get too big, but I don’t think that there’s any
                   danger of GAO'S doing that. It is a very substantial agency, I understand.
                   You’ve got 6,000 employees?

Mr. Grosshans      Five thousand, and we’ve been close to that level for the last 20 years.
                   For the record, I think we ought to mention that Comptroller General
                   Bowsher has tried to get a modest increase of about 200 or 300 staff. Of
                   course, with the current situation-the  pressure on the budget-even
                   that has been difficult.

Senator Proxmire   Well, it’s tough on the budget, but on the other hand, we have a global
                   economy as never before and we have global mobility of capital. The
                   other day I saw figures showing that in the last 12 years we’ve had a
                   tenfold increase in American investment abroad in buying and selling
                   securities and a twentyfold increase in buying and selling here. Now,
                   when you get that kind of operation, you have to be an international
                   agency; you have to have people who can speak different languages.
                   You have to have people who can specialize in all kinds of areas. In the
                   long run, there’s no question that GAO saves money. I don’t know if you
                   have any indication of how much you’ve saved over the years.

Mr. Grosshans      Yes, a couple of years ago, we ran to an all-time high of $23.4 billion.
                   Last year the figure was somewhat smaller.

                   Page   19
                   Interview With   Senator   Wiiiam   Proxmiw
                   May 15,199O

Senator Froxmire   That figure would amount to approximately $5 million for every

Mr. Grosshans      That’s about right.

Senator Proxmire   You ought to st.rike for more money. [Laughter]

Mr. Eschwege       Of course, it’s not only money that we’re trying to recover. There are so
                   many other things, such as program operations and regulatory activi-
                   ties, that need to be looked at to see what impact they have on the pri-
                   vate sector.

Mr. Grosshans      I thought that you were going to mention that there were a lot of pro-
                   gram improvements and service improvements that GAO could bring
                   about in government operations that weren’t really readily measurable.

Senator Proxmire   Well, I think that the figure is going to go up. The government has gotten
                   so big, and program and service improvements are one way to help get
                   the budget under control.

Mr. Grosshans      Did you have a feeling that our work was reasonably balanced‘? We did a
                   lot of work for you, and a lot of that may have been much more finan-
                   cially oriented because of the type of issues you were pursuing and
                   maybe because of your position on the Banking Committee.

Senator Proxmire   Yes, I had the feeling that GAO never had an ax to grind, and nobody
                   (that I know of) has ever alleged that, even people like Goldwater and
                   others. While certain Members of the Congress may say that you don’t
                   have a particular skill that they want. with respect to the Air Force or
                   whatever, I think that you to a great extent have it. Obviously, you are
                   not beholden to anybody. You’re not bought and paid for.

Mr. Grosshans      Did you feel that the emphasis we placed on program evaluations versus
                   financial management activities was appropriate?

Senator Proxmire   Program evaluations compared with what?

Mr. Grosshans      With financial management or accounting issues-financial      statement

                   Page   20
                   Interview With Senator William Proxmire
                   May 16,1!Ml

Senator Froxmire   I never looked at that. It seemed to me that my answer would depend on
                   the nature of the 80 percent of your requests that come from the Con-
                   gress, I think that if the Congress is asking for only management evalua-
                   tion, you have to give the Congress that.

Mr. Grosshans      You never had the feeling that GAO was not adequately responding to
                   financial-type requests that you had?

Senator proxmire   No, I never had that feeling.

Dr. Trask          Let me inject a question here. Just after the election of 1988, GAO put out
                   a series of 26 transition reports that were supposed to provide advice to
                   the incoming President and the new Congress on all kinds of issues.
                   Some of them were department-oriented; some of them covered broader
                   issues, for example, the budget. There was a very good response to these
                   reports, generally, but there was some criticism, in particular criticism
                   suggesting that GAO was getting into policy issues or political questions.
                   How do you feel about that?

Senator Proxmire   In 1989, of course, I wasn’t in the Congress. I didn’t have the same par-
                   ticularly focused attention, but it seems to me that the transition series
                   was a good initiative.

Mr. Eschwege       It was actually based      on GAO   work; so, it did not come out of the clear
                   blue sky.

Dr. Trask          In this same category, GAO does general management reviews now,
                   which are very broad-based looks at agencies. Some of them have been
                   controversial, especially those that have been more critical. In one case,
                   the agency responded rather angrily to GAO'S report

Mr. Grosshans      By and large, they have been well-received. For example, we are talking
                   about the central agencies, like OPM [Office of Personnel Management],
                   which was critical, and OMB, which responded very favorably to GAO'S

Senator Proxmire   I think that’s an indication that you’re doing your job.

                   Page 21                                                              GAO/OP-l&OH

Problems for GAO or
Others to Address
Mr. Grosshans         By way of wrapping up, are there any particular issues that you would
                      like to comment on or state for the record? Are there any comments you
                      have for GAO on either how we communicated or how we worked with
                      you and your staff? Are there any particular changes in legislation that
                      you think are needed that would affect GAO'S authority, or do you have
                      any suggestions or comments on the overall role of GAO?

Senator Proxmire      One of the most difficult problems in government is one that GAO
                      couldn’t touch with a lo-foot pole and wouldn’t want to, but it seems to
                      me that we do need some expert advice on it. That is what we can do
                      about the system of electing Members of the House and the Senate. It’s
                      wrong, wrong, wrong. I mean you have a situation now in which you’re
                      spending from $4 million to $7 million to elect a U.S. Senator and the
                      candidate has got to spend all his or her time raising money. The contri-
                      butions that come to congressional candidates are coming from people
                      who don’t care at all about their principles or personality or intelligence.
                      What they care about is the power of the elected official. If he or she
                      happens to be in a position of power on a committee or whatever and
                      can get them a little break on their taxes or on the environmental protec-
                      tion or whatever, they’ll make a contribution, That’s where the money
                      comes from, and the money is what solidifies the incumbents in office.
                      It’s a very, very hard thing to get at. I suppose, if GAO got into this issue,
                      it would get into all kinds of trouble, but somebody’s got to do it.

Mr. Eschwege          On the basis of your own experience, you’ve been able to get reelected
                      without accepting such contributions. I’ve been reading about the small
                      amount of money you spent on your campaign.

Senator F3-oxmire     In the last campaign, I spent $145, and I think other Senators can do
                      that. There’s an enormous advantage in incumbency.

                      People that voted for you once probably are going to vote for you again.
                      They know who you are; you have a.ccessto the media; you have a staff;
                      you have a newsletter; you have at least $3 million to $5 million to begin
                      with-all   advantages as an incumbent. Ninety-eight percent of the
                      House incumbents running for reelection win. I suppose the system for
                      electing Representatives and Senators is a tough issue to get into. I bring
                      it up because I just happen to be working on it at the moment.

                      Page 22                                                          GAO/OF-N-OH
                   Interview With   Senator   William   Proxmire
                   May 15,199O

Mr. Grosshans      You may recall, Senator, that we were actually drawn into part of that
                   in the mid-1970s under the federal elections laws. GAO had a small office
                   that monitored the finances of the presidential campaign at the time. We
                   also have gotten drawn into the outcomes of elections, such as the
                   Indiana situation in which GAO was asked to recount the votes received
                   by candidates for a House seat. GAO does get involved in a number of
                   different issues.

Mr. Eschwege       But we wouldn’t get involved in these issues on our own. We’d have to
                   be asked by the Congress because we don’t really think these issues are
                   the normal type of work we should be doing.

Senator Proxmire   Then there’s another problem. It’s a tough one that relates to the way
                   that we stimulate the economy. We now have a grand conference
                   between the Congress and the administration on what can be done about
                   the deficit. The argument is that if we cut spending and increase taxes,
                   we will undermine an already weak economy. Some people-Paul
                   Volcker and Alan Greenspan-say that if we do that, they will lower
                   interest rates, which they can do. I think that we don’t know the dimen-
                   sions of the problem; maybe GAO could help in addressing it. We already
                   have a very heavily indebted private sector. Lowering interest rates
                   would entice households and businesses to borrow more money and
                   make the private debt bigger than it is now. This increased debt would
                   make us more vulnerable to a recession, maybe so vulnerable that we
                   would move into a depression, which I think would be very likely in the
                   event the next recession hit. I don’t know what we’d do about that. I
                   think that in spite of the fact that Volcker and Greenspan are giants and
                    are right concerning most things, they’re probably wrong on this. I think
                    that they ought to lower interest rates, but I don’t know if GAO can get
                    into that kind of an issue.

Mr. Eschwege        We do have economists, but I don’t know if that’s a proper role for   GAO.

Senator Roxmire     Incidentally, another tricky area that you might or might not be inter-
                    ested in getting into is the argument that because we have the global
                    economy I referred to a minute ago, the Federal Reserve Board may not
                    be able to lower interest rates. With lower interest rates, the foreign cap-
                    ital we’ve been depending on wouldn’t come in. Why should the Japa-
                    nese, the Germans, and the others invest in this country if we lowered
                    interest rates and didn’t give them as much of a return?

                    Furthermore, our capital would go out; there is a terrific increase in
                    people investing in foreign securities. The Federal Reserve-and it’s

                    Page   23
                   Intmview   With   Senator   Willlam   ProXdre
                   May 16,1990

                   changed enormously in the last few years-could not lower interest
                   rates today without an exodus of capital that would also undermine the

Mr. Eschwege       We have some access to the Federal Reserve, but there are limitations on
                   how much we can review it. Elmer Staats was able to get some legisla-
                   tion that allowed us to review some Federal Reserve activities, but it did
                   not cover reviewing monetary policy.

Senator Froxmire   That’s something that maybe I can help you with; maybe we can discuss
                   that with the people with whom I used to serve on the Banking Com-
                   mittee and in the House.

Mr. Eschwege       Well, we certainly thank you.

Senator Proxmire   Thank you. I enjoyed this discussion very much.

Mr. Eschwege       Thanks for giving us your time to explore these issues. I know our dis-
                   cussion will be very useful because, after all, GAO'S main purpose in life
                   is to serve the Congress. Whom else should we talk to but you, who have
                   been one of GAO'S best customers and who are now far enough removed
                   from the day-to-day congressional activities to give us a very objective
                   assessment of how GAO can best serve the Congress?

Mr. Grosshans      Thank you very much for giving us your time. It was good to see you

Senator FVoxmire   Thank you.

                   Page24                                                        GAO,'OP-S-OH

                                                                         Houslna and Urban DeveloDment. DeDartment of. 4, 5
Agnculture, Department of, 9                                             HumDhyev. Hubert H.. 17 ’        ’
Air Force, Department of, 5, 20
American Federation of Labor-Conqress of tndustrial Organizations        iackson Henry M. 15
   (AFL-CIO), 1.5                                                        Joint Ecdnomic Cdmmlttee, 1, 5-6
Annual leave usage during travel status, 16-l 7
Appleton, WI, 9                                                          K
Appropnations Committee,     U S. Senate, 4                              Kaufman, Richard, 13
                  ._                                                     Kennedy, John F., 5
E&l, Hassell I3 , 6                                                      i
Bowsher, Chattes A., 2, IO                                               Lockheed Aircraft Corporation, 8, 10
C-5A transport plane cost overrun, 1, 5-6                                Magnuson, Warren G., 15
California, 3                                                            Management and Budget (OMB), Office of, 14,Zl
Campbell, Joseph, 2                                                      Massachusetts, 3
Central lntelllgence Agency, 6
Chrysler bailout, 10                                                     !ational Football League (NFL), 5
Cincinnati Enquirer, 9                                                   New York, 3
Civil Service Commisslon, U.S., 14                                       New York City financial crisis, 10
Clifton Terrace housing project, 14-15                                   New York Post, 9
Cold War. 8
Congressional Budget Office (CBO), 4-5                                   P
Congressional elections, 22                                              Patman, Wnght, 11
Congressional Record, 17                                                 Peace dividend, 8
Congressional Research Service (CR.?), 4-5                               Personnel Management (OPM), Office of, 21
Cost Accountinq Standards Board, 1l-12                                   Productivity in the federal sector, 13-f4
                                                                         Profit study (GAO), 6-7, 12
                                                                         Program evaluation, 20-21
Defense Department of, l-3, 5-6, 8-9                                     Proxmire, William, tenure in Senate, 1; early contact with GAO, 1, 3;
Defense’lntelligence Agency, 6                                              GAO characterized, l-4; use of other congressional agencies and
Dinqell. John D., 19                                                        staff, 4-5; C-5A procurement, 5-7; Golden Fleece Awards, 8-10;
E                                                                           government bailouts characterized, 10; comment about GAO in
Eschwege, Henry, vi                                                         1970, 12, supersonic transport plane characterized, 15-16;
                                                                            comment on GAO’s relatrons with conaressional staff. 17-1P.
F                                                                           GAO’s resources characterized, 19; GAO’s responses to re&ests
Federal Procurement Poltcy, Office of, 12                                   characterized, 21
Federal Reserve Board, 11,23-24
Financial management, 20-21                                              R
Fitzgerald, A. Ernest, 5, 7                                              Rickover, Hyman G., 11
France, 15-16                                                            Rocky Mountain News, Denver, 9
-.-...“..                                     .--..
garn Jake 10                                                             Savings and loan associations, 10
General Adcounting Office (GAO), characterized, I-4; profit study, 6-    “Should cost” application in procurement, 6, 12
  7; savings and loan associations, 10; Proxmire’s 1970 comment,         Staats, Elmer B., 2, IO, 12-13, 24
  12; retatlons with congressional staff, 13, 17; use of by individual   State, Department of, 4
  Congressmen, 18, resources, 19-20; savings resulting from work,        Supersonic transport plane, 15
  20; balance of types of tasks, 20; elections work, 23                  T
General manaqement reviews (GAO), 21                                     Tammen, Ron, 13
Georgia, 3     -                                                         Technology Assessment (OTA), Office of, 4-5
Golden Fleece Awards. 8-l 0                                              Tower,;ohn G., 10
Goldwater, Barry M., 17, 20                                              TransitIon reports (GAO), 21
Gonzalez, Henry B., 11
Greenspan, Alan, 23                                                      Transportation, Department of, 9
Grosshans, Werner, vi, 1, 6                                              Trask, Roger R., vi, 1
                                                                         Treasury, Department of, 4
Hoffman, Richard, 7                                                      U
Housing, 14                                                              Unron of Soviet Socialist Repubks, 15


                                                  Page   25

M/ted Kingdom, 15-16 _.-
-.                         __   __   ~__.--         __   W
v                                                        Wtsconsin, 3
Vietnam War, 8
Volcker. Paul A., 23

                                       Page    26
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