Mr. Kastenmeier. It would be under control, for example, if you had a dependent, let's say a child, and you, as a father, were the operator of a trust in his behalf and you had to buy and sell securities for your dependent, you would have to file even under that. You would disclose that even under the Senate bill.

But, if, for example, your son had a newspaper route and earned $200 a year, and that money did not come under your control, why, you would not have to disclose that, your direct control. So, they make that distinction. Whether you would want to go along with that or not would depend, of course, on you, on what the committee decides.

Those, I think, are the principal ones. I personally think most of their provisions—and, it is very similar to the House—are acceptable.

I do not like the categories, though. I think the categories—they have a category greater than $100,000, which still leaves a very great deal undisclosed by having categories of that sort.

Mr. Flowers. Most of us would like to get in that category, somehow.

Mr. Kastenmeier. Yes; exactly. But—many of the other provisions, I think—for example, if you own a house, they provided that the filer—and, we are talking about people in the executive branch as well as Congress—need only disclose the city wherein that house is located to preserve some degree of confidentiality as far as street address. That, pertaining to the assets which comprises the house in which you live, not other sorts of real estate assets.

Mr. Steelman. Mr. Chairman, there are two points that I would like to make. My colleague has covered virtually all the differences except one. And, that is the effective date of the House legislation would be 30 days following enactment of the legislation.

The Senate bill would take effect January 1, 1977.

Mr. Flowers. Right.

Mr. Steelman. And, perhaps I misunderstood, Bob. Did you say, with reference to the House bill, that we required GS-16

Mr. Kastenmeier. $25,000 or GS-16. Of course, obviously GS-8 does not really—one of the difficulties with our figure of $25,000 is that it— if it is maintained indefinitely in the future—it becomes somewhat obsolete as salaries tend to rise.

Unfortunately, there is no formulation that is perfect because you have policymakers who ought to be reached who are much less than GS-16, perhaps even make less than $25,000. And, you will include a lot of people whose activities in Government really do not require public disclosure, but there have to be some arbitrary lines. And, the Senate and House bills tend to reflect these arbitrary lines.

And, if you can refine them any further, we, of course, invite you to do so.

Mr. Flowers. Under your legislation do you have any estimate as to the total number of people that can be covered in all the categories?

Mr. Kastenmeier. Yes; and, these are very imprecise figures, I must say, because it depends whether we are talking about all persons, military officers plus all civilian personnel and all branches. But, we think at least—the GAO estimates presently, that there are over 174,000 in that category.

Now, the Senate bill at GS-16, or greater, would probably cover on an order of 15,000 to 25,000 persons. So, whether there will be a charge of too much bureaucracy, 25,000 or more, or whether the countervalue of covering people, who, in many cases, make decisions in various agencies who are less than GS-16 but make $25,000, that is something your committee will have to wrestle with, it seems to me.

Mr. Flowers. Is there any provision in your legislation to require candidates for Federal office to file?

Mr. Kastenmeier. Yes, Mr. Chairman. As a matter of fact, all candidates for Federal office, candidates for Congress, for the Senate, and the Presidency and the Vice-Presidency are also similarly covered.

Mr. Steelman. Mr. Chairman, with respect to the question of how many would be covered, I am sure someone will ask, "How much will this cost?"

We have asked the General Accounting Office to give us an estimate of what this would cost each year. And, depending on the number of those covered—and, there is some dispute over just exactly how many, but if it is 100,000 or in that range, the GAO estimates that the cost would be about $2.75 per person, $2.75 per person that is required to file, and that the total annual cost would be in the neighborhood of $300,000.

Mr. Flowers. That is for their accumulation of the records?

Mr. Steelman. Administration and paperwork.

Mr. Flowers. $275 per person?

Mr. Steelman. No, $2.75, and the total cost annually, the administrative cost, would be $200,000.

Mr. Flowers. I would like to hold them to that $2.75 per person. I bet that will be a cost overrun. But, that

Mr. Steelman. Well, perhaps we could ask the General Accounting Office to audit themselves for the first time in history, if they should engage a cost overrun.

Mr. Flowers. They will have to file too, will they not? They will be included?

Mr. Steelman. Yes; they would.

Mr. Flowers. The gentleman from California—let me announce to the subcommittee that we have, as of 10 minutes after 11—15 minutes for a live quorum call. I do not think we can get through with everybody. Why do we not adjourn for the time it takes to go over and come back?

[A brief recess was taken.]

Mr. Flowers. The gentleman from California, Mr. Danielson.

Mr. Danielson. Thank you, Mr. Chairman.

In order to save time, I am not going to ask questions. But, I am going to make two statements that, if either of the witnesses wish to take a shot at, they are invited to do so.

No. 1, I am a little concerned why every time the Congress comes up with a new plan there seems to be a knee jerk decision to assign the responsibility to the Comptroller General. The Comptroller General has done a fine job, but I think if we continue to burden his office with this, that, and the other thing, we may destroy his effectiveness. And, it is one of the few effective agencies we have.

So, I want to consider, during the markup of this bill, and the testimony, maybe we should create somebody else to be the governmental policeman for these intrabureau activities. He can use GAO as a pattern if he wishes.

No. 2,1 note that in section 2 of the bill you apply this measure to the executive, judicial and legislative branches, and up on lines 2 and 3 of page 2, you refer to any candidate for nomination for or election to Federal office at the time he becomes a candidate and so forth.

That is commendable and I do not fight it. I just wonder if wo have not overlooked another category of equal importance. I am thinking of a nominee for appointive office. Occasionally the President nominates someone to be head of the Securities and Exchange Commission or the Commodities Commission, or whatever it may be, a Federal court.

Now, he is not a candidate for nomination and he is not a candidate for election, but he is nominated by the President and must be confirmed by the Senate.

I will, at the appropriate time, offer such an amendment. If you have any comment on that which can be made very briefly, I invite it.

Mr. Steelman. I would like to say, Mr. Danielson, I would support such an amendment on your part and would consider that to have been an oversight, at least on my part.

Mr. Danielson. Thank you.

Mr. Steelman. With respect to the first question you raised about the General Accounting Office, I think the reason the Congress continues to load down GAO with additional tasks is because of the fine, independent job they have done over the years.

And, it is for that reason that I, for one, am not hide-bound to the

E reposition that the GAO has to have this job. But, our interest is in eing sure that there is some independent agency with which these are filed.

Mr. Danielson. I understand. And, I do not quarrel with your using the reference. My only concern is that we have a good organization in GAO. Why ruin it by using it as catchall for every Government requirement? The name I am going to suggest is frivolous perhaps but we ought to have a morality commission around here, I guess, to take care of all these self-analysis problems. I yield back the balance of my time.

Mr. Flowers. I thank the gentleman. The gentleman from California, Mr. Moorhead.

Mr. Moorhead. One thing that I was wondering about in the legislation, when you discussed the differences between the Senate bill and the House bill, where they categorize areas. Is it your concept that under this legislation that each piece of property would be listed with a value?

Mr. Kastenmeier. Yes; you would have to assign a value to property. The rules and regulations, of course, would have to be evolved by the General Accounting Office as to whether the property is at present and fair market value and the like.

I think it is important that this legislation not be unduly burdensome on those who file. And, that is the reason, I suspect, why the Senate went to categories, to get away from the notion that if you have a piece of property, you do not require an appraiser for it.

And, furthermore, the Senate, may I add parenthetically—I might have mentioned it before—does not include household effects, personal jewelry, clothing and the like, for the same reason, to get away from trying to appraise personal effects.

Mr. Moorhead. What your old pair of pants is worth?

Mr. Kastenmeter. That is right. And, those are considerations which you must give. The categories are designed also, it seems to me, to avoid explicit identification that your home is worth $68,000 or some other figures. Figures, I suppose, can be arrived at either if you wanted to give guidance to the General Accounting Office, you could suggest that cost identified in terms of year or present assessed evaluation converted to fair market value, which most assessments are readily

Mr. Moorhead. There are tremendous differences. And of course, you know in California here, market value has been going up at a very, very rapid rate. It is impossible for anyone to tell—other than by what he paid for the property—what it is worth; unless he sells it, to find out what the market can bear and how much it can bring.

If you use the assessor's evaluation, of course, that would be one thing, but that is usually a little low.

Mr. Kastenmeeer. It is unless in that particular jurisdiction there is a reasonable conversion so that people understand.

Mr. Moorhead. I do think that it is enough of a workable problem that we ought to get some kind of a formula that would not be too much of a burden and still would solve the purpose of having the requirement in there.

Mr. Kastenmeier. I entirely agree with the gentleman from California. And, you will not be able to expect everyone who files to have an appraisal conducted of that person's property.

One other thing I might have mentioned and that is that the Senate has something the House bill does not have. It has an auditing procedure, by the General Accounting Office, of a portion at random, I gather, of a certain percentage. I think it is 5 percent of those who filed.

We do not have that in our bill. Whether you want an auditing procedure conducted at random or on some other basis to confirm that the person who is filing is accurate and gave the fair market value of assets, th at is something you have to consider.

Mr. Moorhead. We may have to spend more money on that asset than it is worth. As long as the asset is disclosed, it would be up to those people looking at the property, if they did, to make the determination.

Another thing that I am interested is coverage of the military. I know in the Senate bill they cover generals, but no one below that rank. But, your legislation would go down to colonels. I wonder whether there is any real importance in going down below the commanding officer level?

Mr. Kastenmeier. That is a difficult decision. There are few guidelines to proceed on in terms of making that judgment, except that full colonels or comparable personnel in the—that is a captain in the Navv, they often have very important duties in connection with the public trust not merely leading a group of men. Accordingly, we had included them.

Furthermore, I suppose that we ought to point out that a colonel presently makes about $34,000; a major general over $40,000 a year. This would exceed, considerably, the $25,000 and in the case of the general, even the GS-16 level.

So, I personally would suggest that a colonel be covered although, very candidly, there are 15,000 colonels and something between 1,000 and 2,000—perhaps more than that—but, in that category of brigadier generals. That would be quite a few less, obviously, that would be required to file. That would be a judgment before the committee.

Mr. Steelman. If I might add, my understanding is that the colonels are, in many cases, commanding officers of Air Force bases, for example, and other facilities. It should be pointed out that when Alexander Haig was appointed assistant to Secretary Kissinger, he was a colonel. He has the rank of general now, but he was a colonel at that time.

Mr. Moorhead. Some of the bases have colonels as commanders but they are in charge of property. Usually, the commanding officers over troops are of the rank of general.

Mr. Steelman. Our intention in this entire piece of legislation is to cover anyone whose responsibilities could generate potential—whose responsibilities and thereby decisions with respect to procurement, contracting, or whatever, could generate potential conflicts of interest.

And, in many cases it is our feeling that colonels are put in that position.

Mr. Moorhead. Thank you very much.

Mr. Flowers. Let me caution the members of the subcommittee. I admit that I have taken a good deal of time on questions, too.

The gentleman from Kentucky.

Mr. Mazzoli. Thank you, Mr. Chairman. I won't intrude too much on the time.

Bob, does this cover foreign investments that a member might have or that any person would have?

Mr. Kastenmeier. Yes; it covers investments as assets and income derived therefrom or transactions during the course of a year involving a certain amount.

Mr. Mazzoli. All right, so assuming that a member might have enough, he could not get in one of these Cayman Islands tax dodges or something like that?

Mr. Kastenmeier. No; the size of the real estate matters not. It would be covered.

Mr. Mazzoli. Alan, you mentioned the blind trust. Is it your idea, assuming that you supply information to us, that the blind trust would be identified as a blind trust or the assets put in the blind trust would be identified from time to time and revealed?

Mr. Steelman. No ; it is my feeling that every person covered under this piece of legislation would have to disclose the described information in the piece of legislation, and that if they get a "high" off of having a blind trust, they can go have a blind trust. But the point that I wish to make is that this arrangement generally blinds only the public. It does not blind either the trustees or the

Mr. Mazzoli. That is what I am wondering because actually if you put in a blind trust a great block of stock, in—say for example you're a defense contractor and you are on the Armed Services Committee, does this proviso that you intend to put forward reveal the identification of the company in which stock is held, or just simply the fact that the individual has $1 million worth of stock in the Defense contract or put into blind trust, or have you thought

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