National Conference on Fraud, Abuse and Error Remarks at the Conference Sponsored by the Department of Health, Education, and Welfare.

First of all, let me say that I'm very grateful to all of you for being willing to attend a conference so important as this one. As you may surmise, I get a lot of invitations to make speeches and to attend conferences and conventions. I particularly wanted to be here because of the importance of the subject and because Joe Califano has been in charge of the program and the origin of the idea.

Joe is a superb Secretary, as you well know. When I first asked him to be Secretary of HEW, I said, "There are a couple of things I'd like for you to do. One is to stay away from controversial subjects"- [laughter] —"and to carry out specific assignments with complete success."

This past week I asked him to go to the Democratic midterm conference to explain my position on a comprehensive health program. And the last thing ! told him was, "Be sure that when the conference is over Senator Kennedy does not get the headlines." [Laughter] So, you can see how deeply indebted I am to him.

I am delighted to join with you today in this crucial conference, and I want to commend Joe Califano, as I have done privately, for taking the lead in the efforts of my administration—the lead in the efforts of my administration—to root out fraud and waste and abuse from this Government. This administration has declared war on waste and fraud in Government programs. We've declared War, and with your help we will win that war.

We're concerned with more than saving dollars, as crucial as that is today. We must continue to restore and to rebuild the trust that must exist in any democracy between a free people and their government.

My administration took office after a painful and difficult period in American history. The experience of Vietnam, of Watergate, revelations of wrongdoing in our intelligence communities, the resignation of a Vice President and a President, the indictment and conviction of top Government officials—these events hit the American people like hammer blows, over and over again. Each of those blows shattered just a little bit more the trust and confidence of the American people in their Government and in their elected officials.

Cynicism and distrust eat away at the vitality of a democratic nation. Abraham Lincoln once said, "With public confidence, everything is possible; without it, nothing is possible."

Over the past 2 years, slowly and steadily we have begun to restore the trust and confidence of the American people. But it's not enough for people to have confidence in the good intentions and the personal integrity of those who hold public office. The American people must also know that government is capable of doing its job. Fraud and abuse and waste undermine that precious confidence.

Those who rob from government rob from every steelworker, every farmer, every teacher, every store clerk, every truckdriver in America. Under this administration, those who rob from the American people, as the Attorney General has so clearly expressed, will be prosecuted to the full extent of the law.

I do not believe that Americans want to go back on the premise of a better life and a fairer society. The heart of America is too big for that. It would contravene my very concept of the principles of government. The American people will not accept callousness toward those among us who are aged or sick or jobless or who are lacking in influence or in education or in opportunity. But neither will the American people accept a massive bureaucracy that is too clumsy or too poorly managed to do the job.

Of course, most of the funds we spend in Federal programs benefit the people for whom they are intended. As a known or suspected part of the total Federal budget, losses through fraud, abuse, and error may be small. But as part of their tax bill to the average American, these losses are huge, and they are demoralizing. The real damage of fraud and abuse cannot be measured just in dollars and cents, for the value of people's trust and faith in their institutions of self-government are priceless.

If we are to be successful in our efforts to make government work better, one myth must be dispelled at the outset—the myth that the values of compassion and the values of efficiency are somehow in opposition to each other. This is just as absurd as imagining that a physician's medical skills are the enemy of their dedication to curing disease. Nothing could be more totally or more dangerously wrong.

When a program is poorly managed, when it is riddled with waste or fraud, the victims are not abstractions, but flesh-and-blood human beings. They are the unemployed teenagers who get shut out of a job. They are the senior citizens who are deprived of adequate medical service. They are the schoolchildren who go without nutritious meals or the taxpayers whose hard-earned money goes down a drain.

When I lived in Plains after retiring from the naval service, I was able to expand my own small family business, processing peanuts because I was able to obtain a Small Business Administration loan when I could not raise private funds. And there are thousands of Americans, many of them members of minority groups or women, who dream of starting a business of their own and seeing it grow and thrive and having that pride of personal independence and accomplishment. It's a cruel hoax to these Americans to see those dreams destroyed by those who abuse and defraud the Small Business Administration.

Those of us who believe that our society has an obligation toward its weakest members, we have the greatest stake in improving the management and efficiency of programs that are designed to meet that obligation. This is especially true when the battle against inflation makes it impossible to bring vast new resources every year to bear on our social problems. There is no room any longer for waste. At such a time as we have now, indeed at any time, efficient management is in itself an act of compassion, for it unlocks new resources to be used for human

ends.

There's a second myth, the myth that it is somehow more compassionate, more committed to appropriate another billion dollars of the taxpayers' money than it is to streamline existing programs so that they deliver an extra billion dollars worth of service. In fact, the latter is preferable in every way. Of course, it saves money, but it does more than that.

Efficient management increases political support for programs which quite often are not popular among those who pay 'the taxes to support it. It gives the lie to those who prefer to believe that programs that meet human needs cannot work. It inspires and it boosts the morale of government employees who are deeply frustrated when they see their own 'hard work frittered away through waste and fraud. That's one of the most demoralizing things that can happen to a dedicated worker in private or public life.

I did not select that $1 billion figure at random. This is the amount that Joe Califano has vowed to save in fiscal year 1979, this year, by cutting deeply into waste and fraud in the Department of Health, Education, and Welfare.

Joe's efforts and those of thousands of others working with him at HEW are already showing good results. Project Match is sifting out those on the Federal payroll who are illegally receiving welfare benefits. The project is very new, but it has already repaid its million dollars in costs twice over. Project Integrity is nailing down the thieves and con artists among health care providers.

Thanks to tough management of the student financial aid program, the number of student defaulters is falling instead of rising for the first time in the 10-year history of this program. And the backlog, which hit 400,000 last March, is projected to be at zero at the end of 1980.

The credit for these successes belongs to an active partnership between the Federal Government and the States and the localities.

Similar efforts are under way in other parts of the Federal Government. The Labor Department is attacking the abuses in the CETA program, and Congress is 'helping. The Agriculture Department is fighting illegal trafficking in food stamps. At the Small Business Administration and the General Services Administration, we are cracking down on fraud and theft. At the Department of Justice, the prosecution of fraud within our Government is now a very high priority.

The headlines generated by these activities do not always make pleasant reading, but these headlines are a sign not that things are getting worse, because corruption and fraud is being exposed, but that they are being improved, because we are determined to continue with that correction and that exposure.

When I campaigned for the Presidency for 2 years all through this Nation, I promised the American people, in response to their importunities, a compassionate and a competent government. I've not swerved from the goal. I did not underestimate then nor do I underestimate now the difficulties. But our expanding attack on waste and fraud is just one facet of a long-term effort to improve the functioning of government, an effort that began the day that I took office. That effort has made progress on many fronts.

I've used the appointment power to place the best people I could find at the top of the departments and the regulatory agencies—reform-minded leaders who are free of the conventional orthodoxies about regulation and administration.

I've embarked on reorganization of the Federal Government, this, as a top priority, to eliminate the waste caused by duplication and bureaucratic overlap.

I submitted, .as you know, and the Congress passed the first sweeping reform of the civil service system in its centurylong history. This civil service reform gives the departments and agencies a chance to strengthen their total management systems. It gives us the ability to deal firmly with those few who are dishonest or incompetent, and it increases the rewards for the vast majority who are efficient and effective and properly accountable. It's a major step toward building a Federal work force dedicated throughout their normal day's work to competence and integrity at every level.

A year ago, we instituted a program of special recognition for Federal employees at all levels. And we suggested improvements in their lives if they made improvements in doing their government work if their suggestions produced savings of $5,000 or more. We expected good results, but the results have been astounding. In 1 year, 1,380 people in 29 departments and agencies contributed improvements that brought savings already of $210 million—more than the total average income taxes of more than 95,000 American families. These results show that good management and effective use of incentives are as effective in reducing waste and fraud as are enforcement and punishment.

The civil service act provides greatly increased cash awards in itself, both from agencies and from the President, for employees who make significant suggestions, improve government operations, reduce paperwork, or perform special acts or services in the public interest.

We've waded into the thicket of pointless redtape and regulations that waste the time of citizens and of State and local officials. For example, we inherited more than 1,700 separate planning programs and requirements in various grant and aid programs. We are chopping away at these overlapping requirements and have eliminated or consolidated already more than 300 of them just in the last year. We're still at it, and HEW is setting the pace.

Last year, I asked the heads of the departments and agencies to improve their audit coordination and to increase their reliance on State and local audits whenever possible. A governmentwide effort, led by the Office of Management and Budget and the General Accounting Office, has now come up with a breakthrough in auditing federally assisted programs—a single guide to replace the almost 100 now in use.

We need to bring the same kind of simplicities to our public assistance programs. Today, the welfare system of just one State eats up 3 billion pieces of paper each year and has a thousand different forms. One woman seeking economic aid in another State had to spend 300 hours in 1 year just filling out paperwork to document her needs.

For this reason, I'm asking today Jim Mcintyre and Joe Califano to head a major effort to simplify and to streamline the hundreds of complex eligibility requirements which contribute $3 billion each year to the cost of public assistance and other human service programs—an administrative cost over and above what actually goes to the recipients. We will move to simplify these procedures where it really counts, not only at the Federal but at the State and local level.

Where we have the tools to root out fraud and abuse, we have already put them to work. Where those tools did not exist, we are now creating them.

Perhaps the most important new tools in the fight against fraud are the Inspectors General created in six departments and six other agencies of the Federal Government by an act of Congress, which we strongly supported and which I signed into law 8 weeks ago. The Inspectors General will be a powerful new tool for the discovery, the prevention, and the elimination of fraud. They have broad powers and a significant degree of independence.

I will choose these Inspectors General carefully. I want them to match the high standard set by Tom Morris, the first Inspector General that I appointed at HEW, who has helped save the American taxpayers one-half billion dollars since the beginning of 1977.

I've already directed Jim Mcintyre to oversee the systems which the Inspectors General will run. I want to be sure that in each department covered by the law, the auditing and investigative functions are meshed in a smooth and effective way.

And today I'm taking a further step. I have already directed that significant features of the Inspectors General program be extended not just in those 12 departments and agencies but throughout the Federal Government. Each agency and department will prepare a plan for eliminating waste and fraud in its own activities and will designate a single official to be responsible for and to oversee the preparation and the implementation of that plan. I've assigned the Office of Management and Budget responsibility for overseeing this effort.

I'm looking to the Attorney General to ensure that investigations by Inspectors General and their counterparts in other agencies and bureaus are effectively coordinated with other investigative and prosecutorial activities, so that criminal matters receive immediate and efficient attention.

The fight against waste and fraud will require the best efforts of us all—everyone in this room, every Federal, State, and local official, every citizen of our country. New programs and better enforcement will certainly help. But our most important weapon in this struggle is the vigilance and the dedication which we bring to it. I call on all who work in government to join me in this battle.

The stakes are very high. If we succeed-and I believe we will—we will have kept faith with the millions of men, women, and children whose human needs our society has pledged to meet. And we will have kept faith with ourselves. For the ultimate beneficiary of the success of this effort will be democratic self-government in America, this Nation that all of us love.

Thank you very much.