executive branch, most of which focused on financial management, Congressional oversight, and reduced costs. Our people testified before Congress 177 times last year and, of course, provided hundreds of informal briefings to various members and the staff. We issued 949 reports. We especially issued a lot of reports on the Defense Department and the Defense budget. We looked at 24 major weapons systems for Congress last year and made some significant recommendations on some of them. For the AV-8B Harrier II program, we suggested a more modern one might be procured and the Navy agreed. The savings from that recommendation will total about $400 million. Mr. FAZIO. Has that been rolled into the 5.9 billion? Mr. FAZIO. Fine. I am glad we made some reductions in weapons procurement. I thought that was going to be verboten. GAO WORK IN TAX ADMINISTRATION AREA Mr. BOWSHER. Our work in tax administration has been building this year. We were not allowed to review the IRS some years back, and then in about the middle 70's legislation was enacted which allowed GAO access to IRS records. Mr. FAZIO. I was not aware of that. Why was that? Mr. BOWSHER. It was one of the areas that GAO had been prevented from auditing. We were also prevented from looking at the Federal Reserve System for many years. Now we can look at Federal Reserve administration, but we can't look at the monetary policy. Mr. FAZIO. Is that the only prohibition that remains? Mr. BOWSHER. Two remain-that one and intelligence. We do not review the CIA. Our policy has always been that, unless we can look at all of it, we don't want to look at part of it. It is too easy to move money around. Mr. FAZIO. Mr. Lewis' experience is similar to mine but we get a lot of mail from people wanting to have an audit of the Federal Re serve. Mr. BOWSHER. Is that right? Mr. FAZIO. Yes, it is sort of traditional. Mr. LEWIS. Particularly the last couple of years. Mr. FAZIO. Is there any bill in Congress that has been introduced to permit you to do so? Mr. BOWSHER. Yes, H.R. 877 was introduced on January 25, 1983, but this same legislation was also introduced in the 97th Congress, which took action on it. Mr. SOCOLAR. We can get into the Federal Reserve banks and can review the Federal agencies' records including bank examination reports, but the agencies have allowed us very limited access to commercial bank records, and we are specifically precluded from getting into monetary policy. Mr. FAZIO. What is the rationale for that? Mr. SOCOLAR. I can only assume that the rationale would be that in the area of monetary policy, the kind of work that we do in relation to the sensitivity of that area caused the Congress to determine our involvement to be inappropriate. Mr. LEWIS. I would think the traditional desire to keep some of the independence of the legislation which now is being questioned by some of us, that history. Mr. BowSHER. I think independence is the key issue on that. Congressman Wright Patman tried for years to get the GAO in to review the administrative part and he finally succeeded. Mr. FAZIO. Mr. Bowsher, please proceed. Mr. BowSHER. In the tax administration area we have done some remarkable work. Many of our recommendations and reports were looked at by Senator Dole and his people in writing this last tax bill trying to close some of the loopholes and improve the administration. of the IRS. In our annual report this year we will cite several examples of our audit work in this area. TAX WITHHOLDING Mr. LEWIS. Did you do any specific study related to that portion of the tax bill which we are now receiving all the cards and letters about, and that is the withholding of interest and dividends? Mr. SOCOLAR. I don't recall anything specific on that. Mr. FAZIO. It is a good time for memory failure if you did. Mr. LEWIS. Some of my people are saying if you want to really cut some money from that source, that you could probably do a lot better if you improve the administration or the reporting of capital gains, tapping those vehicles somewhere. Mr. BOWSHER. Yes, I think the IRS was trying to determine who had money in this country and make sure that it is being reported. I think the Secretary of the Treasury said the other day that if we are ever going to know who is earning money that should be reported, other than wages, it is pretty hard to do it any other way than to have some kind of withholding on bank deposits and dividends. Mr. LEWIS. If they had purposes other than pure revenue Mr. BOWSHER. Well, I don't think that is what he was saying. What he was saying was that we cannot really run good, fair tax administration without having basic reporting of sources other than salaries and wages and that is dividends and bank deposits. I would hope that they would keep the privacy issue very much up in front. Let me go back and check to see what we have done. We will supply that for the record. I know you are getting a lot of mail on that. [The information follows:] GAO has not done any studies which deal specifically with the issue of withholding on interest and dividends. We have, however, done a number of studies dealing with various aspects of IRS' programs and know that noncompliance with the tax laws is a serious and growing problem. A major objective of the tax bill that included the provision for withholding on interest and dividends was to increase the revenue available to the Treasury by improving compliance with the existing tax laws rather than enacting new revenue measures. In this regard, IRS has estimated that about $8 billion in tax revenue was lost in 1981 alone due to nonreporting of interest and dividend income. IRS also has evidence showing that compliance with the tax laws is significantly greater when withholding is applied. Mr. FAZIO. If the Rules Committee decides to make that a separate item for a vote at any time on any vehicle, that is probably going to be repealed. More than a majority of members who have already cosponsored it; so it is going to be a hot issue for the remainder of the next year or two. Go ahead. Mr. BOWSHER. Another area we did quite a bit of work on last year was in connection with nuclear power. Since the Congress had to vote on some of the major program issues in that area, we issued several reports on that subject. We also issued several reports on the infrastructure problem and capital budgeting and gave Congress some options. REVIEW OF GAO JOB STARTS We started about 1,500 projects last year. I continue to look at all of the new starts every Wednesday morning with my top team. I question the need for some of the new starts from time to time and I see to it that others are refocused to insure that these will do the work that we want done. Mr. Fazio. In effect the buck stops with you. If somebody is critical of the direction GAO is going, feels you are overemphasizing one aspect of the Federal structure, or thinks you are being trivial, then its your responsibility to prove otherwise? Mr. BOWSHER. That is right. It really is, and I think it is a very important role that I play. It takes quite a bit of time-most of every Wednesday morning but I think it is important that we do it. We have a fairly elaborate planning process that we use to make sure that we are doing the work that most needs to be done in our issue areas. In addition to that, on a weekly basis, we look at new job starts literally, as they are going into the system. Of course, that includes congressional requests. SHIFTS IN WORKLOAD Mr. FAZIO. I was going to ask you at some point: Could you give us some feel for the shift in workload that has been taking place? There are a certain number of requests that come to you from individuals, some that come from committees, and others I suppose you generate on your own from the work that is being done in related fields. Could you give us a cross-section? Mr. BOWSHER. About 40 percent of our work is requested by the Congress mostly through the committee structure by either the chairman or the ranking minority member. Mr. FAZIO. Is that pretty much consistent? Mr. BOWSHER. Yes, if anything our congressional request percentage is building. I would hope that we could keep it somewhere in the area of 40 percent or perhaps, a little over that. One of our problems is that frequently congressional requests have an urgency as far as timing that necessitates that we pull people off other assignments and move them onto a congressional request. We can handle a certain percentage of that, but if it happens too frequently, it can cause a problem. Mr. FAZIO. Have you seen an increase in the specific legislative mandates that seem to sneak through periodically? Mr. BOWSHER. Not too much. Mr. FAZIO. We have attempted to ward off those which gratuitously give you additional work. Also please update the tables on page 618-627 of last year's hearings. Mr. BOWSHER. I think that has been very helpful and very effective. [The information follows:] SUMMARY OF AUDIT AND EVALUATION STAFF YEARS REQUIRED BY TYPE OF CONGRESSIONAL SUMMARY OF STAFF YEARS EXPENDED BY TYPE OF CONGRESSIONAL REQUESTS IN FISCAL YEARS SUMMARY OF STAFF YEARS EXPENDED BY TYPE OF CONGRESSIONAL REQUESTS IN FISCAL YEARS 1981 AND 1982-Continued Request type and requestor Staff years used 1981 1982 House committees and subcommittees Census & Population-Postoff/CS. Civil & Constitution Rights-Jud.. Civil Service-Postoff/CS. Coast Guard & Navigation-Merchmar. Dept Invest, Oversight, Resea—Agri. Dom/Intl Sci Plan/Anal-Sci/Tech |