Frankly, I don't see the necessity. That might largely be academic. Mr. DANIELSON. It's inherent in the difference between the two bodies. Mr. MAZZOLI. That is exactly right, Mr. Chairman. Mr. PREYER. We recommend our lower category of value in that respect. As you are aware, gifts valued at less than $35 are excluded entirely from reporting-a reasonable de minimis exemption. Mr. Chairman, I want to make the point also, in closing, that Mr. Kastenmeier made, that time is running short and a adjournment will soon be on us. After your committee and other complete their work, we must take a governmentwide disclosure package to the floor and, after passage, resolve our differences with the Senate-passed S. 555 in conference. If a strict timetable can be accommodated, and I know this is putting a real burden on your subcommittee-if a strict timetable cannot be accommodated, we would not be able to make disclosure a reality until the spring of 1979, which would be beyond the next congressional election. There would be disclosure requirements for Members of Congress under the rules of the House at the next election, but it would not apply to candidates. I know you have a difficult assignment to attempt to complete, and I will try to hasten to make conclusion to allow you to get on with it. I'm sure from your experience on the select committee you appreciate that disclosure legislation may not be the best way to win friends personally or politically, but it's a necessary job and I commend you and wish you well in your efforts in this field. Mr. DANIELSON. Thank you very much, Chairman Preyer. I appreciate your taking the time to come here and help us. I'm greatly appreciative of your comparative table that we now have to work with. Actually, this subcommittee has heard most of this testimony in the last Congress. Many of us heard it in your committee this year. I could almost say that. I can't think of a subject that has been kicked around more in general conversation than financial disclosure. Your practical suggestions will be a great deal of help to us. I hope we get on with it and meet the target date of September 20 that we set for ourselves. That is it. Thank you. Mr. MAZZOLI. Mr. Chairman, I have no questions. I would like to commend the gentleman from North Carolina for his strong support of these bills and his leadership through our select committee, and to perhaps pursue one thing momentarily because we have to leave. I think the gentleman mentioned today about the potential of audits and the fact that the select committee felt that random audits were not necessary. I agree. The gentleman is aware and knows full well that the GAO is supposed to make a response. Perhaps a couple of minutes on that phase of the auditing question would be in order. Mr. PREYER. I have stated that I think the committee as a whole felt that random audits would be counterproductive and would be unnecessary. We did provide-and I think the gentleman from Kentucky was instrumental in bringing this provision out—that the GAO would audit the disclosure bill and would, in the course of that, make recommendations as to whether they thought a random audit would be necessary. They would review the program as to its effectiveness and whether it's being operated the way it's supposed to be operated, and as a part of that, they would make recommendations to us about further recommendation on a random audit. I shouldn't probably come down too hard as to imply we have closed our mind to that subject. Mr. MAZZOLI. The gentleman is correct; the subcommittee did reach that position. But I do think it's important that GAO will at least have an opportunity to tell us if the random audit or any kind of audit system is feasible. I thank the gentleman for his help. Mr. DANIELSON. Thank you, Mr. Preyer. We again have a crisis on the floor. After attending to it, I hope the subcommittee will report back quickly. [Recess.] Mr. DANIELSON. Our next witness will be Hon. Charles Wiggins from California, who was also on the Preyer committee. There being a quorum present, would you proceed. TESTIMONY OF HON. CHARLES E. WIGGINS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA Mr. WIGGINS. I do not have a prepared statement, but I accept the chairman's invitation to proceed ad lib. Mr. Chairman, we are talking about the possibility of enacting a statute which will require disclosure of certain assets, liabilities and transactions by certain government personnel. Because any statute requiring disclosure of personal assets, liabilities, transactions or business associations will necessarily impact important expectations of privacy, we ought to agree at the outset that any such requirements should be imposed only if there is a clear showing of need in order to serve some important and compelling public interest. The point of beginning, therefore, is to examine the need for the legislation. I wish to suggest to my colleagues that there is no modern history of pervasive conflicts of interest involving officials of the executive, legislative, or judicial branches. There is no recent record of widespread corruption with respect to senior governmental officials. This is particularly true with respect to judges. The judges have been operating for years under canons which have served their needs and the interests of the public well. This whole movement toward disclosure is, I think, in part a post-Watergate reaction, but, of course, Watergate was not a story of personal conflicts involving improper economic gain by the individuals involved. Nothing in the legislation before this subcommittee would in any way touch the Bert Lance situation. My conclusion is that there is not a demonstration of need justifying the adverse impact which necessarily will fall upon constitutionally protected rights of privacy. Therefore, my first recommendation is that you not report any bill at all, because of the absence of a showing of need justifying an intrusion into constitutionally protected rights. And I suggest, Mr. Chair man, that if you do not heed this advice-I frankly do not expect that you will-that your work product will be counterproductive, rather than productive. I don't know the number of individuals covered by the proposed bill in the executive branch, but I speculate it is in the tens of thousands. Tens of thousands of reports will be filed and reposed in some agency theoretically, reports available for public inspection. In fact, available for scrutiny by members of the press. And they will examine those critically and create apparent conflicts where, in fact, none exist, all of which will, in my judgment, erode public confidence in a government which deserves the confidence of the people. I assume that my advice will not be heeded and we will proceed nevertheless. Therefore, I recommend that any bill reported be narrowly drawn. Disclosure should only be required to that extent as will serve the purposes of the statute. Namely, the discouragement of conflicts involving major, rather than simple, trivial governmental and private interests and to this end I further recommend that certain categories of assets and liabilities and transactions be excluded entirely because the possibility of a conflict with respect to such categories is so minor as compared to the burden upon privacy that the privacy ought to predominate. For example, I don't believe that it is anybody's business other than the owner as to the nature and extent of any real property owned by a governmental official which is not held for production of income. I'm talking about houses, cabins, and the like. I don't believe there is any significant potential for conflict involved in the ownership of a residence or recreational vehicle or recreational cabin and there should be no showing with respect to such items. In addition, all commonly held items of personal property which are not held for the production of income should be exempted. I'm talking about cash for example. Everybody has a bank account. Everybody has some cash in a bank. I suggest it is nobody's business as to how much that is, since the potential for conflict is miniscule and the potential for invasion of privacy interest is great. I make the same argument with respect to jewelry, car, insurance. Frankly, all transactions with respect to such items other than perhaps gifts should be excluded as well. The standard ought to be that, if the ownership of a category of assets or the existence of a category of liabilities involves no significant risk of a major conflict, then the privacy interest of the individual ought to predominate. Various legislative efforts have been subject to legal attack. Most of these attacks have focused upon the alleged overbreadth of the statute. I concede that most challenges have been unsuccessful. A reading of those cases comes down to simply this: That the courts recognize the power of the legislative branch to legislate in this field and yield to its infinite wisdom with respect to the details of the legislation. I suggest we should not strive here for a law which simply tests the outer reaches of our power. Rather we should narrowly draft a statute which reflects sound policy and commonsense. Now, in pursuit of that goal, which, I believe, the chairman and the members share, please do not accept the legislative efforts out of other committee's, the Senate as a point of beginning. Write upon a fresh slate. Rethink the concepts involved as to whether it is necessary, whether a public interest is served by the disclosure of many of the items in the infinite detail required by the pending bills. If this committee does so, I may not support its efforts even then, but at least, it will report a bill that we can be proud of. I don't have that view with respect to legislative efforts that I have seen heretofore. It requires far more detail than is necessary to insure any important public interest. Mr. DANIELSON. Your timing is excellent, Mr. Wiggins. Mr. Mazzoli. Mr. MAZZOLI. No questions. Mr. DANIELSON. Mr. Moorhead. Mr. MOORHEAD. I have an hour and a half of questions for him. Mr. MOORHEAD. I have a number of questions I wanted to ask. Will you be able to come back? Mr. WIGGINS. I'm at your disposal, of course. I think we have a couple of minutes. Mr. MOORHEAD. Under section 5 (d) of H.R. 7401, the reports must be retained for seven years. Is this necessary for a candidate who has run one time and not been successful? Do you feel it is necessary to have his privacy violated for that long a period of time? Mr. WIGGINS. I do not. If he's an unsuccessful candidate. More than that, we should re-think the original premise that a candidate who is not an official has a potential for conflict of interest as to whether he should be required to expose himself at all. The way candidates are covered is because we said, by golly, if we have to do it, then he has to do it. I don't think that rationale is adequate for including them at all. Mr. MOORHEAD. The bill requires disclosure of direct or indirect transactions in securities. Could you give us an example of an indirect security transaction? Mr. WIGGINS. I cannot. I presume regulations would have to be promulgated fleshing out the meaning of indirect transactions. I suppose we are talking about transactions in which the principal does not play a direct role and his financial interests are managed through third parties. I presume that is so, but I would remind the gentleman that there are criminal penalties for relying upon any advice if it is wrong. I think some specificity in this area is required. Mr. MOORHEAD. I think there are a lot of people interested in the spouse privacy issue here. What happens if the spouse files a separate tax return? Is there a confidentiality with respect to her return, is that protected, or will that be necessarily modified under the Preyer bill? Mr. WIGGINS. Under the Preyer bill, we do treat husband and wife as a certain entity, and that is a commonsense way of treating them. There is no requirement the tax returns be disclosed in any manner. If the wife chooses to file a separate return, it will not be required that she disclose the details of that return. But the transactions which give rise to the income reported on the return would perhaps be required to be disclosed. Mr. DANIELSON. We are down to a little less than 7 minutes în which to record our votes. The committee will stand in recess. I have no questions for the gentlemen, since I have worked with him. on other committees. It is up to Mr. Moorhead. Mr. WIGGINS. I would be happy to return. Mr. MOORHEAD. That is fine. [Recess.] Mr. DANIELSON. The subcommittee will again come to order. Is Mr. Volkmer here, Mr. Dodd? [No response.] Our next witness is Alan Campbell of the Civil Service Commission. You may proceed. We will, without objection, receive your full statement in the record. [See p. 716.] You may proceed in any way you wish. TESTIMONY OF ALAN K. CAMPBELL, CHAIRMAN, U.S. CIVIL SERVICE COMMISSION Mr. CAMPBELL. Accompanying me are Carl Goodman of the Civil Service Commission and David Reich, our ethics counselor. You have before you H.R. 6954, the "Ethics in Government Act of 1977," a bill which embodies the President's proposals for strengthening the ethics program for officers and employees in the executive branch of Government. It has been introduced under the cosponsorship of your subcommittee chairman, Congressman Danielson, Judiciary Committee Chairman Rodino, and Representative Schroeder. The bill is an important part of the President's legislative program, and we are grateful to the committee for its timely consideration of this vital legislation. The Civil Service Commission fully supports establishing a system of public financial disclosure and strengthening the enforcement of high ethical standards throughout the executive branch. The President was pleased to see that the Senate passed a similar bill, S. 555, which covers the entire Federal Government, and we support such an effort in the House as well. The administration worked closely with the Senate on the development of this legislation, and we have given our support to many of its provisions. With the support of both of you, Chairmen Danielson and Rodino, we are looking forward to the enactment of governmentwide legislation before the conclusion of this session of the Congress. Today, let me first briefly review the provisions of the bill, and then I will highlight a few major points that are important elements of this legislation. I shall direct my remarks to title I of H.R. 6954 concerning public disclosure and title II creating the Office of Government Ethics in the Civil Service Commission. Title I introduces the concept of public disclosure of the financial statements of all top personnel in the executive branch. It would include the Offices of the President and Vice President, all Presidential appointees, and employees in the grade of GS-16 and above, including comparable officers in the Foreign Service and the uniformed services. The financial statements of the President and Vice President, those of Cabinet and other high-ranking officials within the White House, and full-time members of Commissions and Boards would be filed with the Director of the Office of Government Ethics to be created in the Commission. The financial reports of other officials and employees |