of ethics should be made applicable to all who work for the United States Government.

S. 2295 is a bill to promote public confidence in the legislative, executive and judicial branches of the government of the United States. Power is vested not only in the legislative branch, but is given as well to the judicial and the executive under the Constitution.

Policy making decisions affecting all citizens emanate from elected and appointed public officials in all branches, departments and agencies of the government. Whether elected or appointed, persons in policy making positions should be required to file public statements identifying assets, holdings in securities and commodities, liabilities and other financial transactions where possible conflicts of interest can exist.

The filing of annual statements with the Comptroller General, who must maintain them as public records available for inspection by interested persons, would, in my opinion, be clear proof of the government's intent to function "in the sunshine" and would receive broad public approval.

I urge your favorable consideration of S. 2295.

STATEMENT BY HON. HUGH SCOTT, A U.S. SENATOR FROM THE STATE OF

PENNSYLVANIA

Mr. Chairman and Members of the Committee: The issue of financial disclosure has been with us for quite some time. The first real disclosure debate was in 1964. At that time, the Senate was considering S. Res. 337, the disclosure proposal reported out by the Senate Rules Committee. Senator Case offered a most comprehensive amendment to the proposal which would have required the annual listing of all assets with a market value of $5,000, liabilities over $5,000, capital gains in excess of $5,000, and the source and amount of each gift exceeding $100. The amendment failed, and instead the Senate adopted another amendment which called for the recommittal of the resolution to the Rules Committee with instructions to report out a joint resolution to establish a commission on ethics, which would investigate methods of preserving high ethical standards in all branches of government. In other words, the disclosure issue had been effectively sidetracked. I was one of the Senators who strongly supported the Case amendment, just as I was one of six Senators who voluntarily disclosed my financial assets long before it was in vogue. I say this to impress upon you my earnest and real desire to see financial disclosure become more than a policy of just a few Senators.

Financial disclosure legislation is, by its very nature, controversial. So, too, was election campaign reform. That legislation was termed by many as premature, unworkable, and unnecessary. Senator Kennedy and I thought otherwise, and fortunately so did a majority of our colleagues. Today, the Federal Election Commission is a reality, clearing up much of the confusion as to campaign funding, the use of office support funds, and finally seeking to validate what funds may be used for what purposes.

It is time now to make a reality of financial disclosure. Too often in the past, the reform was merely procedural and not substantive. Too often, the measures were stopgap in nature and too often the coverage was narrow and ill-defined. The need is for basic, comprehensive, governmentwide disclosure requirements. I do not belittle those honest attempts in the past to effect the passage of such legislation. But we proceeded in the past according to the needs of the past. Today, the scope must be wider. What was adequate yesterday will no longer do. The bill before you, S. 2295, is a good bill. Its requirements are reasonable and, at the same time, informative. While it is far from inquisitorial, it provides the information the public has a right to know, i.e., the official's income, gifts in excess of $100, identity of assets valued in excess of $100, transactions in securities and commodities in excess of $1,000, and purchase and sale of real property having a value in excess of $1,000. And the best feature is that these requirements would apply to all three branches of government-legislative, judiciary, and executive. Following defeat of the Case amendment in 1964, I was quoted as saying, "Public reaction will be that after a great deal of talk and a great deal of breastbeating, what the Senate finally did was to do nothing at all". The chance to make a great contribution to good government is here. This time, I sincerely hope we take advantage of it.

Chairman RIBICOFF. Mr. Cohen, you are safe until the next vote. There will be 12 more of them today, and so if you will proceed at your own peril.

TESTIMONY OF DAVID COHEN, PRESIDENT OF COMMON CAUSE, ACCOMPANIED BY MIKE COLE, LEGISLATIVE DIRECTOR, AND ANN MCBRIDE

Mr. COHEN. OK, Mr. Chairman.

Thank you very much, and thank you for holding these hearings. If I may, I would like to submit my statement for the record, with some additional appendixes that are not terribly long.

Chairman RIBICOFF. Without objection, the entire statement will be incorporated in the record as though read, at the conclusion of your testimony.

Mr. COHEN. I would like to summarize very briefly, Mr. Chairman, first of all, I want to say, I am glad to be here to be able to say publicly that the rest of the Government Operations Committee has been just outstanding this year, and on the sunshine legislation, the work on the lobbying disclosure legislation, and I believe your work on financial disclosure, and your comments with Congressman Kastenmeier when he testified, I think earns you the right to be called the proaccountability committee in this Congress. I say that because everyone has heard over and over again about the lack of confidence that people have in the system, and that is true, and we all know it, and all know the reasons why. One of the things that is not stated, and is not recognized enough, is that people do want the system to work, if it will only change, and as Lou Harris has shown in his work, that if we can get the system to work, if we could show to the people who are listening and who understand what is going on, and having the public officials level with them, that we can begin to build the kind of confidence in our system it should have, and even the respect for government and its decisions.

Now, there are a whole variety of ways of beginning to reverse that tide. No one piece of legislation will do that. They are all part of an approach, and an approach of openness, of assuring that our Government is unbought, and financial disclosure is one key way, and if I may, Mr. Chairman, what I would like to do is just outline, not only the need for full public disclosure, because it is the only way citizens can know if any real or apparent conflicts of interest exist, and recognized the existing financial disclosure requirements, presently, are totally inadequate to provide this kind of accountability. In the executive branch there is no public financial disclosure at all, and while there is some public disclosure, required of members of the House of Representatives, it is very limited.

On the amount of public financial disclosures, required of Senators is even more limited, and in the executive branch, you just cannot pick up the Wall Street Journal day in day out, and find reports from the General Accounting Office that report obvious conflicts of interest, and it happens day in and day out, so all of this lack of public disclosure has resulted in a breakdown of enforcement, with respect to existing bans on conflict of interest.

Now, what is needed is a new law, and there are many bills before your committee, and these bills have many constructive provisions in them.

What I would like to do is merely outline the major items that I think any good financial disclosure bill should contain.

One is coverage. In coverage, it applies to all elected officials. There should be no distinction among elected officials, and it also should apply to high Federal employees in the executive branch, who are compensated at more than $25,000 annually, or who exercise responsibilities equivalent to GS-16 rating, and by all military officers in pay grade of 6 or higher.

There ought to be precise and clear filing requirements, so that those who assume office are asked to file within 10 days, and candidates indeed ought to file within 10 days of becoming a candidate, and Presidential appointees should file once, Presidential appointees will require confirmation to file within 10 days of getting nominated.

In other words, we see filing as an important part of the confirmation

process.

Now, the contents of the report should contain useful information based on the public need to know, and I would like to say, in outlining the information, it should include sources and amounts of income of over $100, the identity and value of gifts, and gratuities, but it should exclude gifts between members of the immediate family, the identity and value of assets over $1,000, the identity and amount of liabilities of over $1,000, including the names of creditors and in terms of payment and transactions and securities, commodities, and property over $1,000, including the monetary value of amounts.

We believe that reports should cover the assets and sources of income and held solely by the spouse and persons filing the report, as well as covering those holdings held jointly.

I did not say that we think income tax returns should be filed. That is because we do not believe income tax returns should be made public. We have resisted this in our various efforts at working in the financial field, not only at the Federal level, but at the State level.

We share with you, Mr. Chairman, the very points you made, about medical deductions, charitable contributions, and other matters that affect personal privacy, and indeed, Mr. Chairman, Senator Percy, and Senator Javits, we are working in the State of Florida for a financial disclosure provision to be included in that State's constitution by initiative.

We are working with Governor Askew in this regard, and there the legislature has balked at dealing with the question of public financial disclosure, and Governor Askew's original recommendation was to include a mandatory filing of income tax returns.

We worked at persuading, we demonstrated by argument, persuasion, that if it were mandatory, it would be an invasion of privacy, and indeed, we helped change the provision of the initiative that would be before the voters of Florida, so we are serious about what we said, about income tax returns.

We are equally serious about the provisions that we called for, because we think these are what are necessary, to developing an accountable system, and one that the public can have confidence in the quality of the decisions being made.

In categories of amounts, we believe the public financial disclosure should reflect the value of the items disclosed, as well as their identity and the categories should be drawn tightly enough to give the true picture of the value of the items.

We suggest the following categories are appropriate and they are right in the statement, and they include precise ranges: $1,001 to $10,000; $10,001 to $25,000; $25,001 to $50,000; and over $50,000. And then we have the $50,001 to $100,000, and those with over $100,000.

Let me say a word about enforcement. Our highest priority is that the enforcement agency be independent.

That means independent of the House, independent of the Senate, and independent of the executive branch. That is our first priority.

Our second priority is that we recognize, that the enforcement agency should be effective, and effective does not rely either on criminal penalties for enforcement. Those are not the only alternatives.

Criminal penalty should be there obviously, if there are criminal violations, but it is important to develop a system of civil compliance through use of civil proceedings, and as between what outside agency should do it. We do not think a new commission has to be created. That is the last thing that is needed in this country right now, and if we had to state a preference at this point, we think the Controller General is preferred over the Federal Elections Commission, but either one makes sense to us.

Now, if I may, Mr. Chairman, I would just like to summarize briefly the items dealing with the independent, the question of depoliticizing of the Justice Department.

I feel very strongly that it is important that we recognize that partisan campaign style politics have to be removed from the Justice Department. We have had a sad history on that, and it did not begin with Richard Nixon.

If you trace it out, our Attorney Generals, since the Truman administration, we had Howard McGrath, you had Herbert Brownell, Robert Kennedy, and Mr. Mitchell, and all four of these men had high positions, indeed, three of them were campaign managers of Presidential campaigns, and we are all familiar, over and over again, with how often the U.S. Attorney's Office is used as a political appointment.

Sometimes they are outstanding exceptions, certainly in New York State they have been, and I know of James Thompson, who is an outstanding exception, I know of John Newman who was, and there are probably others I don't know about, but the pattern is so strong in the U.S. Attorney's Office, that we are saying that we would hope that not only the Attorney General, but all Presidential appointments in the Justice Department should not be people who have been highly involved in the political campaign.

We think that the recommendations in order to save time, of the American Bar Association Committee, have been an outstanding public service.

We also think that the suggestions of Senator Percy and Senator Baker as to beefing up the Justice Department, with a special division on corruption is highly important and that such a new division should be created.

I think we would also want the committee to consider and support establishing a special mechanism for a temporary special prosecutor,

when experience demonstrates the need for such a situation, that would call for a prosecutor.

Now, you can have a lot of different suggestions as to how this ought to be done.

We think the committee can find a way.

One thing we want to say is that we concur with the ABA special committee, that provides for the appointment of such a temporary special prosecutor.

We think that one place to draw a service from, and whether or not such a prosecutor should be appointed, comes from calling on retired judges, that this is a great place to draw on special kinds of service, and I think it would be a useful tradition to build on.

Let me say in closing, Mr. Chairman, I hope that this committee can act on this legislation, as comprehensively, and as promptly as you acted on the sunshine legislation, and as you acted on the Government lobby disclosure legislation.

We are in this fight all the way, and we are ready to work with you, and the members of your committee, in developing workable effective legislation, so that we can begin to reverse the tide, and people can say, this is a Government I am proud of, I respect its decisions, I know they are being made honestly and fairly.

Thank you.

Chairman RIBICOFF. Thank you, Mr. Cohen.

Your appendix, I have no personal problem with it.

I am glad that Common Cause feels like myself, and Senator Case, and Representative Kastenmeier, that the confidentiality of the income tax return should be preserved.

The only question I have is with respect to the nature of the description of the assets, and specifically the present market value.

If you had shares of stock, or something that had a market value there is less of a problem. But let us say 10 years ago you acquired 1.5 percent interest in a substantial piece of property, and the remaining 98.5 percent interest ownership in the property was scattered among 25 or 35 people. I see no interest in going out and getting an appraiser to see what that property is worth. Getting an appraiser would be very expensive.

Should I be required at my own expense, every year to get a real estate appraiser to see what the present market value of my 1.5 percent interest is?

The only way I can do that is by appraising the entire property. Would you be willing to accept present market value, or your costs? Mr. COHEN. The other area we think it could fit in is the categories of amount.

In other words, the section we dealt with on categories is very applicable in this instance.

Chairman RIBICOFF. And on pages 1, 2, and 3, No. 2, assets of over $1,000, nature and description of the assets, present market value, that would require a burden on maybe other members.

Mr. COHEN. Indeed, it may be, and that form was designed solely for the Presidential candidates, and who in this instance are taking special care, plus in response to your question as to how public policy should be formulated, we would hope that that area could fit in under the categories of amount, so the ranges there, one would have to take it on an annual basis.