U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

44–930 CC 1997

PRESIDENTIAL AND EXECUTIVE OFFICE FINANCIAL

ACCOUNTABILITY ACT OF 1997 AND SPECIAL

GOVERNMENT EMPLOYEE ACT OF 1997

HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, 

INFORMATION, AND TECHNOLOGY

OF THE

COMMITTEE ON 

GOVERNMENT REFORM 

AND OVERSIGHT 

HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS

FIRST SESSION

MAY 1, 1997

Serial No. 105–54

Printed for the use of the Committee on Government Reform and Oversight

(

(II)

COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT 

DAN BURTON, Indiana, Chairman 

BENJAMIN A. GILMAN, New York 

J. DENNIS HASTERT, Illinois 

CONSTANCE A. MORELLA, Maryland 

CHRISTOPHER SHAYS, Connecticut 

STEVEN SCHIFF, New Mexico 

CHRISTOPHER COX, California 

ILEANA ROS-LEHTINEN, Florida 

JOHN M. MCHUGH, New York 

STEPHEN HORN, California 

JOHN L. MICA, Florida 

THOMAS M. DAVIS, Virginia 

DAVID M. MCINTOSH, Indiana 

MARK E. SOUDER, Indiana 

JOE SCARBOROUGH, Florida 

JOHN B. SHADEGG, Arizona 

STEVEN C. LATOURETTE, Ohio 

MARSHALL ‘‘MARK’’ SANFORD, South 

Carolina 

JOHN E. SUNUNU, New Hampshire 

PETE SESSIONS, Texas 

MICHAEL PAPPAS, New Jersey 

VINCE SNOWBARGER, Kansas 

BOB BARR, Georgia 

ROB PORTMAN, Ohio 

HENRY A. WAXMAN, California 

TOM LANTOS, California 

ROBERT E. WISE, JR., West Virginia 

MAJOR R. OWENS, New York 

EDOLPHUS TOWNS, New York 

PAUL E. KANJORSKI, Pennsylvania 

GARY A. CONDIT, California 

CAROLYN B. MALONEY, New York 

THOMAS M. BARRETT, Wisconsin 

ELEANOR HOLMES NORTON, Washington, 

DC 

CHAKA FATTAH, Pennsylvania 

ELIJAH E. CUMMINGS, Maryland 

DENNIS J. KUCINICH, Ohio 

ROD R. BLAGOJEVICH, Illinois 

DANNY K. DAVIS, Illinois 

JOHN F. TIERNEY, Massachusetts 

JIM TURNER, Texas 

THOMAS H. ALLEN, Maine 

HAROLD E. FORD, JR., Tennessee 

———

BERNARD SANDERS, Vermont 

(Independent) 

KEVIN BINGER, Staff Director 

DANIEL R. MOLL, Deputy Staff Director 

JUDITH MCCOY, Chief Clerk 

PHIL SCHILIRO, Minority Staff Director 

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY

STEPHEN HORN, California, Chairman 

PETE SESSIONS, Texas 

THOMAS DAVIS, Virginia 

JOE SCARBOROUGH, Florida 

MARSHALL ‘‘MARK’’ SANFORD, South 

Carolina 

JOHN E. SUNUNU, New Hampshire 

ROB PORTMAN, Ohio 

CAROLYN B. MALONEY, New York 

PAUL E. KANJORSKI, Pennsylvania 

MAJOR R. OWENS, New York 

ROD R. BLAGOJEVICH, Illinois 

DANNY K. DAVIS, Illinois 

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California 

J. RUSSELL GEORGE, Staff Director and Counsel 

ANNA MILLER, Professional Staff Member 

JOHN HYNES, Professional Staff Member 

ANDREA MILLER, Clerk 

DAVID MCMILLEN, Minority Professional Staff Member 

MARK STEPHENSON, Minority Professional Staff Member 

(III)

C O N T E N T S 

Page 

Hearing held on May 1, 1997 ................................................................................. 1

Statement of: 

Mazur, Edward J., vice president, administration and finance, Virginia 

State University, and former Controller, Office of Federal Financial 

Management, Office of Management and Budget; and Cornelius E. 

Tierney, director, center for public financial management, George 

Washington University School of Business and Public Management ...... 45

Mica, Hon. John L., a Representative in Congress from the State of 

Florida ............................................................................................................ 22

Potts, Stephen, Director, Office of Government Ethics, accompanied by 

Jane S. Ley, Deputy Director, Office of Government Ethics; and Gregory S. Walden, counsel, Mayer, Brown & Platt, and former Assistant 

General Counsel in the White House .......................................................... 72

Letters, statements, etc., submitted for the record by: 

Horn, Hon. Stephen, a Representative in Congress from the State of 

California: 

House bills ................................................................................................. 2

Prepared statement of ............................................................................... 19

Maloney, Hon. Carolyn B., a Representative in Congress from the State 

of New York, prepared statement of ........................................................... 35

Mazur, Edward J., vice president, administration and finance, Virginia 

State University, and former Controller, Office of Federal Financial 

Management, Office of Management and Budget, prepared statement 

of ..................................................................................................................... 48

Mica, Hon. John L., a Representative in Congress from the State of 

Florida: 

Examples of savings .................................................................................. 37

List of nonpaid volunteers ........................................................................ 25

Prepared statement of ............................................................................... 28

Posey, Ada L., Acting Director, Office of the Administration, Executive 

Office of the President, prepared statement of ........................................... 13

Potts, Stephen, Director, Office of Government Ethics, prepared statement of ........................................................................................................... 74

Tierney, Cornelius E., director, center for public financial management, 

George Washington University School of Business and Public Management, prepared statement of ........................................................................ 58

Walden, Gregory S., counsel, Mayer, Brown & Platt, and former Assistant 

General Counsel in the White House, prepared statement of .................. 78

(1)

PRESIDENTIAL AND EXECUTIVE OFFICE 

FINANCIAL ACCOUNTABILITY ACT OF 1997 

AND SPECIAL GOVERNMENT EMPLOYEE 

ACT OF 1997 

THURSDAY, MAY 1, 1997 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, 

INFORMATION, AND TECHNOLOGY, 

COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 2 p.m., in room 

311, Cannon House Office Building, Hon. Stephen Horn (chairman 

of the subcommittee) presiding. 

Present: Representatives Horn, Sessions, Davis of Virginia, 

Sununu, and Maloney. 

Staff present: J. Russell George, staff director and counsel; Anna 

Miller and John Hynes, professional staff members; Andrea Miller, 

clerk; and David McMillian and Mark Stephenson, minority professional staff members. 

Mr. HORN. The Subcommittee on Government Management, Information, and Technology will come to order. 

Today, the subcommittee reviews two pieces of legislation that 

would bring increased accountability to the Executive Office of the 

President. Both bills were part of the original Presidential and Executive Office Accountability Act of 1996, which passed the House 

by an overwhelming margin of 410 to 5 last September. I was a cosponsor of that bill, which was authored by Mr. Mica, who will be 

a witness today. 

Unfortunately, time was short at that point and several provisions of the House-passed bill, including those we are considering 

today, were removed prior to the passage in the Senate. 

[The House bills follow:]

2


g:\graphics\44930.001
3


g:\graphics\44930.002
4


g:\graphics\44930.003
5


g:\graphics\44930.004
6


g:\graphics\44930.005
7


g:\graphics\44930.006
8


g:\graphics\44930.007
9


g:\graphics\44930.008
10


g:\graphics\44930.009
11

Mr. HORN. Too often, the financial activities and the back-room 

advisors of the White House have remained hidden in the shadows, 

regardless of administration. The continuing spate of allegations 

about mismanagement at the White House have been frequent reminders of the need for serious statutory changes in the way the 

White House is run. 

The Presidential and Executive Office Financial Accountability 

Act of 1997 establishes a Chief Financial Office and a Deputy Chief 

Financial Officer, as well as a Chief Financial Officer for the Executive Office of the President. The Special Government Employee 

Act of 1997 updates the definition of a, ‘‘special Government employee,’’ to cover unpaid, informal advisors. 

The Chief Financial Officers Act of 1990, the CFO Act, was intended to help executive branch agencies improve their financial 

operations. It has been effective in doing so, although much remains to be done. And we know that two agencies, the Department 

of Defense and the Internal Revenue Service, are still in deep financial difficulty and probably will not be able to submit their balance sheets to us by the mandatory ruling of the law, which would 

be September of this year. 

It is abundantly clear that the Executive Office of the President 

could benefit from the fiscal discipline imposed by the Chief Financial Officer Act. 

The Chief Financial Officer Act would bring accountability to the 

financial operations in the White House. If there had been a Chief 

Financial Officer in the White House, the unorthodox accounting 

practices that prevailed in the Travel Office and which were used 

by the White House to justify the firing of longtime employees who 

had done no wrong, would never have been permitted. A Chief Financial Officer would have provided the Travel Office managers 

with the guidance and expert advice they sorely needed. 

A Chief Financial Officer acts as a control to prevent abuses of 

power, whether minor, as in petty stealing, or serious, as in destroying records of national interest. Those are financial records. 

Other examples of egregious waste and abuse in the Executive 

Office of the President have been directly traceable to these deficient accounting controls. We learned in the last Congress, for instance, that the White House Communications Agency had 

unvalidated obligations of $14.5 million. The Department of Defense’s Inspector General reported that the White House Communications Agency paid only 17 percent of its bills on time. Taxpayers got stuck for penalties and interest on the other 83 percent 

of its obligations. 

The Presidential and Executive Office Financial Accountability 

Act of 1997 would make the White House more accountable for its 

own operations by establishing an Office of Chief Financial Officer 

in the Executive Office of the President. The Chief Financial Officer, which is found in other Federal agencies, including the Departments of Defense, Justice, and the Central Intelligence Agency, 

would review and audit the White House’s financial systems and 

records. A system of internal control would be established to prevent and correct errors. 

12

The Special Government Employee Act of 1997 is important for 

similar reasons. Foremost is the need for accountability and adherence to conflict of interest and other disclosure requirements. 

The White House has a history of using informal advisors who 

are present in the White House on an ongoing basis and regularly 

affect public policy. Since this is the week that we are establishing 

a monument to President Franklin Delano Roosevelt, we should remember that Harry Hopkins, one of his most important advisors, 

actually lived in the White House through most of the Second 

World War, and yet these individuals are utterly unaccountable to 

the public. The laws have changed substantially since the end of 

the Second World War, with ethics statements that all the rest of 

us file, these people need to file. Who actually works in the White 

House, who is whispering in the President’s ear are always daily 

grist for the media and certainly of concern to many citizens. These 

are questions that all Americans have a right to ask and to have 

answered fully and openly. Too often advisors to the President remain hidden in the shadows. 

This bill will shine light on those back-room advisors by providing clearer guidelines for special Government employees. It will 

expand the definition of ‘‘special Government employee’’ to cover 

unpaid, informal advisors to the President so that they come under 

the same conflict of interest and financial disclosure statutes as 

regular White House staff. 

Hearings before the full Committee on Government Reform and 

Oversight in the last Congress demonstrated that certain associates of the President used their access to President Clinton, the 

First Lady and the staff of the Executive Office of the President to 

promote their own business interests, even to the extent of encouraging the termination of career employees of the White House. 

This proposal would amend the current definitions to make it 

completely clear that in the future, similarly situated informal advisors would be, ‘‘special Government employees,’’ who come under 

the conflict of interest and other disclosure requirements. This includes a functional test that focuses on what the advisors actually 

do and on whether or not they are actually involved in the Government’s deliberative processes. The bill will help put a stop to 

abuses of power, the unelected and the unaccountable. 

We welcome our guests today, Representative John L. Mica, Republican of Florida, who in the last Congress introduced H.R. 3452, 

the Executive Office Accountability Act, and is a strong supporter 

of accountability in the Federal Government. He will explain to us 

why the two bills are sorely needed. 

We had invited Ada L. Posey, Acting Director, Office of the Administration, Executive Office of the President, to testify on the 

proposed legislation and how the provisions would affect the Executive Office of the President. Unfortunately, she is unable to attend 

today but has submitted a written statement for the record. 

[The prepared statement of Ms. Posey follows:]

13


g:\graphics\44930.010
14


g:\graphics\44930.011
15


g:\graphics\44930.012
16


g:\graphics\44930.013
17


g:\graphics\44930.014
18

Mr. HORN. The second panel will feature two witnesses testifying 

in support of the Presidential and Executive Office Financial Accountability Act of 1997. Edward J. Mazur is the vice president, administration and finance, Virginia State University, former Controller, Office of Federal Financial Management, Office of Management and Budget. Mr. Mazur was the first Controller to be appointed after the passage of the Chief Financial Officers Act and 

oversaw its implementation in the executive branch agencies. 

Cornelius E. Tierney is the director, center for public financial 

management, George Washington University School of Business 

and Public Management. He has authored authoritative texts on 

Federal Government accounting and auditing, was formerly chairman and National Director of the Governmental Practice Section of 

Ernst & Young. He was instrumental in the drafting of the Chief 

Financial Officers Act and in guiding its subsequent implementation. 

The last panel will provide testimony on the Special Government 

Employee Act of 1997. Testifying are Gregory S. Walden, counsel, 

Mayer, Brown & Platt, and former Assistant General Counsel in 

the White House, and Stephen Potts, Director, Office of Government Ethics, accompanied by Jane Ley, Deputy Director. 

I am glad to see you all here today and am looking forward to 

hearing your testimony. For the record, I should note that Mr. Sessions arrived during my opening statement and a quorum is 

present and ready to do business. 

We will now start with our colleague, Mr. Mica, the author of the 

legislation the President approved last year, and he will tell us 

what remains to be done. The gentleman from Florida is recognized 

for as much time as he would like. 

[The prepared statement of Hon. Stephen Horn follows:]

19


g:\graphics\44930.015
20


g:\graphics\44930.016
21


g:\graphics\44930.017
22

STATEMENT OF HON. JOHN L. MICA, A REPRESENTATIVE IN 

CONGRESS FROM THE STATE OF FLORIDA 

Mr. MICA. Well, I thank you, Mr. Chairman. I really couldn’t 

start without commending your leadership. I know they often do 

this in a laudatory fashion before hearings, but you certainly deserve a great deal of the credit and responsibility for the passage 

of the legislation that we passed last time. 

As you know, we sit on the panels in Congress and we sit on the 

investigations and we conduct various investigations. Sometimes 

that’s where the action ends, but you were able to help push 

through some changes and reforms that we saw as a result of what 

was disclosed in those hearings about the way the White House operated. 

And I think that the essence of the difference that really delineates the United States from banana republics or Third World 

countries; that we conduct that oversight and we make the 

changes. 

And as you said, part of the changes were incorporated in the 

legislation we passed together, but there are a couple of elements 

that are missing and I would like to speak to them today. 

The subjects covered by the bills which you have outlined really 

are identical to provisions included in the Presidential and Executive Office Accountability Act that I sponsored last year. Despite all 

of our hard work, the Senate did not go along, and the need for 

those items still remain today. 

Like many Americans, I have become concerned about the operation, management, and financing of the White House, which even 

to the casual observer today, lacks accountability and the White 

House often operates without responsible restraints. 

These bills address significant problems that our hearings and 

investigations have uncovered. As you know, one creates a financial 

officer to improve the financial management at the White House. 

The other would clarify the term ‘‘special Government employee.’’ And I think that that need—still remains and should be addressed 

by the legislation proposed here. 

Hearings during the past Congress showed that the White House 

financial operations lacked both accountability and structure. The 

Travelgate hearings, which we participated in, highlighted some of 

the shortcomings in White House fiscal responsibility. 

Mr. Chairman, had there been a Chief Financial Officer at the 

White House back then, it is my belief that that officer would have 

reviewed the Travel Office’s financial management practices and 

many of the problems the White House experienced and problems 

that came up and were uncovered as a result of our hearings could 

have been detected and any deficiencies would have helped the 

Travel Office managers to correct them. 

Long-term White House employees unfortunately were used as 

scapegoats, and then the matter ended up before the Congress and 

a huge reimbursement was required before the matter was closed. 

But much of that could have been avoided. 

Likewise, Mr. Chairman, hearings before the subcommittee on 

which I serve, National Security, International Affairs, and Criminal Justice, revealed very serious deficiencies at the White House 

Communications Agency. 

23

Accounting controls were so poor that the Agency recently had 

paid $14 million in unvalidated obligations. Equipment and services that it no longer needed were paid for, along with items that 

were never even delivered to the Agency. They also paid for many 

of these same items twice. 

An audit by the Department of Defense IG also found that the 

Agency paid only 17 percent of its bills on time, causing the taxpayers to pay interest and penalties on the remaining 83 percent. 

These incidents, unfortunately, are not just ancient history, Mr. 

Chairman, but enduring reminders. Similar scandals, I predict, will 

arise in the future in the White House. 

The objective of this special Government employee legislation is 

to require more public accountability by so-called volunteers or people who just pop up at the White House directing, influencing, or 

becoming involved in policy development or operations of the White 

House and then we have no standard or ability to demand responsibility or accountability from these individuals. 

These individuals often advise the President and employees in 

the highest responsibilities of the Executive Office of the President. 

They function as Federal employees, even though they are not formally employed. As chairman of the House Civil Service Subcommittee, that gives me a great deal of concern. They are not subject in many instances to financial disclosure, ethics requirements 

and even the barest minimum standards of accountability and responsibility that we have set for Federal employees. 

Once again, Mr. Chairman, the Travelgate hearings revealed 

Congress must take action. I was particularly dismayed by the activities of Harry Thomason, which came to light in our investigation. Our hearings revealed Mr. Thomason, a Clinton operative, an 

unpaid volunteer, had office accommodations around the halls of 

the White House, participated in meetings with employees, actually 

staged many of the White House events involving the President, 

and we saw attempts where he tried to, in conflict—potential conflict of interest situations—influence a policy set by the White 

House. In short, he acted as if he was a White House employee but 

he was, indeed, a walking conflict of interest. 

Mr. Thomason advocated the dismissal of the Travel Office employees and promoted an air charter company in which he had an 

interest, a business interest. Clearly, if he had been a Federal employee or some designated employee, this would have fallen into 

that realm. 

Mr. Chairman, without an adequate definition of special Government employee, this activity is unacceptable by any standard. Unfortunately, it has become standard operating procedure at this 

White House. 

More recently, we discovered that the White House has used the 

services of some 41 volunteers who were actually drawing salaries 

from private organizations. More than half of them were paid by 

the Democratic National Committee. The rest were paid by other 

organizations, various organizations, who could have had potential 

conflicts of interest. Some of them even had grants from the Federal Government. 

24

The positions these volunteers held were not menial, and I have 

a list of some of their positions for the record. I will be glad to provide them. 

Among the people to whom these volunteers, so called—— Mr. HORN. Without objection, that will be inserted in the record, 

Mr. Mica. 

[The information referred to follows:]

25


g:\graphics\44930.018
26


g:\graphics\44930.019
27

Mr. MICA. Thank you, Mr. Chairman. 

Among the people to whom these so-called volunteers reported 

were such high key level administration officials as Harold Ickes, 

then Deputy Chief of Staff, Melanee Verveer, Deputy Chief of Staff 

to the First Lady, Jack Quinn, then Chief of Staff to Vice President 

Gore, and Alexis Herman, then Assistant to the President. 

Mr. Chairman, when individuals who depend on a private organization for their livelihood are put on—placed on the White House 

staff, opportunities for such conflicts of interest unfortunately 

abound. 

The most obvious question, of course, is who is the master? Is it 

the President, for whom they ostensibly work, or is it the person 

who signs their paycheck? 

When paid employees of private organizations develop Government policies, opportunities for promoting self-interest are plentiful. The disclosure of these so-called volunteers reinforces the conclusion we reached last year, Mr. Chairman: The laws defining special Government employees must be tightened and clarified. The 

American people must know that volunteers who perform the functions of Federal employees are subject to all the same rules, regulations, conflict of interest and ethics laws, and requirements we impose on other Federal employees if we are to maintain confidence 

in our Federal Government, and particularly at the highest level of 

our Government, the Executive Office of the President. 

Mr. Chairman, we do not allow this in the Congress in our policy 

development. We should not allow it in the White House, the highest office in our land, that, again, is charged with immediate response on national security issues and numerous other responsibilities, again at the very highest level. 

The reforms that your bill proposes are long overdue. They are 

minimal as far as requirements for responsibility and accountability. I look forward to working with you, Mr. Chairman, in any 

way I can assist. I still have the highest, very highest, regard for 

the work you did last time. When others said that legislation 

wouldn’t pass, you worked tirelessly, right up to, I think, the last 

day of the session, and secured at least some reform that brought 

the White House at least partially under the same laws as everyone else, which we found not to be the case in our previous investigations. And the rest of the job remains to be done. 

I am determined to work with you, your subcommittee, to get 

this badly needed legislation enacted. 

Thank you, again. 

[The prepared statement of Hon. John L. Mica follows:]

28


g:\graphics\44930.020
29


g:\graphics\44930.021
30


g:\graphics\44930.022
31

Mr. HORN. Well, I thank you very much for your kind comments, 

and the credit is to you. I saw you work the floor to get, what, 100-

and-some signatures on your bill before it was ever introduced? 

What was it, 106, something like that? 

Mr. MICA. Well, we did have bipartisan support. 

Mr. HORN. Right. 

Mr. MICA. And people understood the problem, that Congress 

was required to live under the same laws as everyone else. It is a 

simple thing to explain to folks. And the White House should be 

required to live under the same laws as everyone else. 

Now, Mr. Chairman we have a situation where we have these 

people running around the White House influencing policy. We 

can’t do that here in the Congress. They should not be able to do 

that there. So we must institute that. 

When you don’t have a Chief Financial Officer in the White 

House, how can you expect financial accountability and responsibility? We as the Congress, we as an investigation and oversight 

subcommittee, saw what went on in the White House. It was a financial mismanagement menagerie that we should not allow to 

continue. And we have seen that the White House is not a small 

potatoes operation. It is huge, with hundreds and hundreds of employees, and with thousands of detailees and with money spent, 

hard earned taxpayer money spent, in a totally unacceptable fashion for which there is no accountability. 

So the other measure, the Chief Financial Officer and Financial 

Accountability, should be instituted. It doesn’t matter whether it is 

Bill Clinton, George Bush or some future President. That is the 

least we can do as a Congress to ensure that taxpayer funds are 

properly expended. 

Mr. HORN. Well, I know your time is pressed, but I would 

like——

Mr. MICA. No, I have time. 

Mr. HORN [continuing]. If you have time, I would like my colleagues, starting with Mr. Sessions, who was the first to arrive, to 

be able to ask you questions if that’s acceptable. 

Mr. MICA. I can stay for the next 6 hours. 

Mr. HORN. Very good. OK. 

Mr. Sessions, the gentleman from Texas, is recognized. 

Mr. SESSIONS. Thank you, Mr. Horn. 

Mr. Mica, thank you for being here today. Certainly the intuitive 

nature that you have in dealing with this subject is one that is interesting to me, and I have got just a few questions. Would the 

First Lady fit under this? 

Mr. MICA. Well, the First Lady is already covered by, I would 

imagine, covered by certain responsibilities. But this deals with, 

again, folks who are wandering around the White House doing official functions in the guise of volunteers or without any accountability. 

I think the First Lady does fall under certain requirements and, 

again, specifically this isn’t geared at the First Lady’s office. 

Mr. SESSIONS. OK. Would this be geared, in your opinion, at people who have been—who are known in the press as FOB’s, ‘‘Friends 

of Bill’’? 

32

Mr. MICA. Well, again, I am not interested in doing this just because there is one President, one administration, or one First Lady. 

We have got to think beyond that. A Chief Financial Officer is long 

overdue in the White House, whether it is a Republican President 

or a Democrat President. The use of—— Mr. HORN. Excuse me. I think we ought to define at that point, 

when we say ‘‘White House,’’ it is the Executive Office of the President. 

Mr. MICA. Yes. 

Mr. HORN. Which includes the White House, the Office of Management and Budget and about 10 other agencies. 

Mr. MICA. Exactly. It goes beyond that. So I think that that is 

a basic requirement. 

The definition of ‘‘special Government employee’’ is just to get a 

handle on this, on people who are influencing policy, who are in the 

White House, who have access to information and yet no accountability, no responsibility, no conflict of interest, no financial disclosure. 

And I just happened to cite some from this administration. The 

White House Communications Agency, which we investigated, was 

just as horrendously operated under the last administration as this 

administration. So these are a couple of areas that we have an opportunity and a responsibility, as a Congress, to get a handle on. 

Otherwise, again, this is what separates us, as I said, from the 

Third World countries and the banana republics. They don’t change 

it. They look the other way and the stuff goes on. 

Here, we bring it to light. We air it in the public. We work in 

a bipartisan fashion to correct it and improve the system. That’s 

the only intent. 

Mr. SESSIONS. Well, what my comments are really meant to say 

is, does this address situations that we see today? The intent of the 

legislation is meant that if there is someone who is in the White 

House, who is either formally or informally assuming some role 

where they either have authority or responsibility, or perceived authority or responsibility, they are influencing Government and 

that’s what the intent of this is about. 

Mr. MICA. This is for today and tomorrow. 

Mr. SESSIONS. Absolutely. But it addresses situations that exist 

today. 

Mr. MICA. Situations that we have seen. 

Mr. SESSIONS. Or that we are aware of. 

Mr. MICA. Yes, that we are aware of, yes. 

Mr. SESSIONS. That we are aware of. 

Would you believe that—and I am looking at the Special Government Employees Act of 1997, page 3, line 14, No. C, Serving Involuntarily. Are there any time constraints that’s given in that? Or if 

someone is in there and they are serving involuntarily, they would 

automatically comply as opposed to 130 days? 

Mr. MICA. Well, we are trying to put—we are trying to put 

some—— Mr. SESSIONS. Reasonableness. 

Mr. MICA. Yes, some timeframe and some reasonableness to this. 

You can’t hire, in your congressional office—or have a volunteer 

unless they are connected with an educational program. And some 

33

of that may be justified by the same standard. But bringing folks 

in off the street who are paid by some other organization or have 

a potential conflict of interest, we have to have some parameters 

and some definition. 

Mr. SESSIONS. But that quite probably would be day one? 

Mr. MICA. The provision that you cite affects the military only. 

I think it is the 130-day. 

Mr. SESSIONS. OK. Thank you, Mr. Chairman. 

Mr. HORN. I thank you. I now recognize the ranking minority 

member, ranking Democrat, Mrs. Maloney of New York, if she has 

an opening statement or would like to combine that with questioning. Let’s start, since we have two more also, 10 minutes to a 

side. 

So the gentlelady is recognized. 

Mrs. MALONEY. Thank you, Mr. Chairman. At this moment, on 

the floor is the housing bill on another committee, the Banking 

Committee, on which I serve and I have several amendments on 

that bill and I am going to have to go to the floor. But I do want 

to add my voice, with yours and others, today as we consider the 

Presidential and Executive Office Financial Accountability Act and 

the Special Government Employee Act. Both of these bills were 

originally included as provisions of H.R. 3452, the Presidential and 

Executive Office Accountability Act, which is now Public Law 104– 331. 

These provisions were unfortunately deleted from H.R. 3452 

prior to final passage by the other body, by the Senate, last year. 

H.R. 3452 extended certain labor and civil rights laws to the White 

House, much as the Congressional Accountability Act did for Congress. 

I believe this is a very good idea, and the majority worked with 

us in a bipartisan manner to pass that legislation, and I thank the 

chairman. The Presidential and Executive Office Financial Accountability Act would require the appointment of a Chief Financial Officer in the Executive Office of the President. The Chief Financial Officer Act of 1990, brought needed improvements to the 

executive branch by requiring sound financial management practices, automated financial systems, and annual reports to Congress. 

Putting a Chief Financial Officer in the Executive Office of the 

President is a good idea and one which the White House supports 

in principle. The Special Government Employee Act would change 

the definition of a special Government employee to require a functional test. This bill mirrors an amendment I offered last year to 

H.R. 3452, with the support of the chairman, and has the support 

of ethics experts from both sides of the aisle. 

Persons covered under the definition would be required to comply 

with the criminal conflict of interest and financial disclosure statutes. Under this bill, a special Government employee is an individual who works less than 130 days in any year and performs a 

Federal function. A Federal function would include providing regular advice to high level officials, including Members of Congress, 

and conducting meetings involving such persons as part of the Government’s internal deliberative process. 

As the committee report on H.R. 3452 makes clear, this definition is intended to exclude informal ‘‘kitchen cabinet’’ advisors. 

34

Mr. Chairman, I support both of these provisions. I supported 

them last year and I continue to support them. While neither of 

these bills has yet been introduced, the draft legislation I have 

seen is quite promising and I just am glad to be here with you. And 

I just congratulate my colleague, Mr. Mica. 

[The prepared statement of Hon. Carolyn B. Maloney follows:]

35


g:\graphics\44930.023
36

Mrs. MALONEY. One of the things I did want to ask Mr. Mica, 

both your statement and Chairman Horn’s actually made references to financial problems encountered by the White House 

Communications Agency. And I would simply just like to note for 

the record that that Agency is not part of the Executive Office of 

the President and would not be covered by this legislation. We are 

considering today the White House Communication Agency as 

under the statutory authority of the Department of Defense. So I 

just wanted to make that clear. 

Do you want to comment on that? 

Mr. MICA. Well, I would say that the lady is correct in addressing 

the point that she made. However, we found that some of the folks 

that were directing operations of—there is almost—there are over 

1,000 military assigned to the White House, and we found the special employees directing some of these folks, which also raises a 

number of eyebrows. 

We also found a mix of accounts in the way money was spent, 

some attributed to the White House and some attributed to the defense agency. In fact, there were numerous instances where money 

could be saved if we had had, I think, a Chief Financial Officer 

working with the Agency to see where economies could be made. 

And I would be glad to provide for the subcommittee some specific 

instances where this legislation would have saved substantial 

money if there had been some structure and organization from the 

White House to that Agency. 

Mr. HORN. Without objection, that exhibit will be put in the 

record at this point. 

Mr. MICA. Thank you. 

[The information referred to follows:]

37


g:\graphics\44930.024
38

Mrs. MALONEY. I would like a clarification. Does your bill—the 

Special Government Employee Act, would that apply to Members 

of Congress? 

Mr. MICA. Well, no, I don’t—I think we are already covered. 

Mrs. MALONEY. No, we are not. 

Mr. MICA. Well, we are covered under certain accountability and 

disclosure—— Mrs. MALONEY. But not with respect to the Government Employee Act. 

Mr. MICA. On the 15th, we will be filing disclosure. In fact, we 

do have some accountability. But I would imagine, I am not an attorney, if you got into a situation where you had a Member of Congress influencing policy and spending time at the White House, 

there may be provisions that they would fall under in addition to 

their current responsibility. But I can’t see somebody from the Congress serving in both of those capacities. 

Mrs. MALONEY. But we certainly influence policy in the House, 

influence policy in a lot of ways, so possibly it should apply to us 

now. 

Second, the Chief Financial Officer, we don’t have a Chief Financial Officer for Congress. Do you believe we should have a Chief Financial Officer for Congress, too? And wouldn’t that be consistent 

with the spirit of the Congressional Accountability Act? 

Mr. MICA. Well, I think that it may be statutorily time to include 

some type of a provision. I just joined the House Oversight Committee yesterday, and that may be a topic for discussion. I know 

that the new majority has put certain safeguards in by rules or by 

their structure and some of that may require a statutory provision. 

Mr. HORN. I congratulate the gentleman on his appointment to 

that committee, and I hope his visitors center will also be implemented. I looked with joy upon your appointment. 

And I think Mrs. Maloney makes an important point. We do 

have an Inspector General who was of great help when he went 

through all of the accounts. And as you know, we had the first 

audit since 1788, when we took over in 1995. But the point is welltaken on a Chief Financial Officer. Maybe you can pursue that 

with the same tenacity and focus you have done this legislation. 

Mr. MICA. We will take them one at a time, Mr. Chairman. 

Mrs. MALONEY. Just for clarification. 

Mr. MICA. Yes. 

Mrs. MALONEY. Certainly Members cannot be special Government employees in advising the White House, but they can hire or 

use them themselves in policies that we are developing in the 

House. So maybe it should be expanded to cover the House, too; 

Congress, too. 

Mr. MICA. Well, you may have a very good point, that we may 

want to extend the same thing to the House as we learned from 

the White House—I am sorry, the Congressional Accountability 

Act. If we have gaps there that should be filled, we may want to 

address that. 

At this juncture, though, we do have the experiences we have 

seen from several White Houses that we should institute a Chief 

Financial Officer; that we should clarify the definition of a special 

Government employee there. 

39

It is not as easy, the way the Founding Fathers set up this legislative mechanism, to influence 218 and 60 in the Senate. We do 

have one Chief Executive Officer and one Chief Executive Office. 

We want that to run at as high a standard as we can possibly set. 

I do want to end, though. I had commended Mr. Horn for his 

leadership on this issue, and I want to take a moment to commend 

Mrs. Maloney, because you cannot achieve any legislative success 

without bipartisan cooperation. And you have certainly been a 

leader in making the progress that we have made and I look forward to working with you. 

And if there are amendments, corrections in this legislation, I am 

committed to work with you. And if there are other avenues we can 

pursue to improve the operation of the Congress, now with my 

powerful appointment to the House Oversight Committee, I am 

committed to work with you. 

Mrs. MALONEY. Thank you. 

Mr. HORN. I thank the gentlelady for the good questions. And I 

now yield 10 minutes to the gentleman from New Hampshire, Mr. 

Sununu. 

Mr. SUNUNU. Thank you, Mr. Chairman. I will consume far less 

than 10 minutes. 

Thank you, Mr. Mica, for your participation today and your testimony. It is of terrific value to the committee, I am sure. 

A couple of quick questions about the implementation of the CFO 

at the White House. First, who would the individual report to and 

who would they be accountable to directly, and what kind of a communication might exist between that individual and, say, the GAO? 

Mr. MICA. Are you talking about a Chief Financial Officer? 

Mr. SUNUNU. Chief Financial Officer, yes. 

Mr. MICA. Well, first of all, you statutorily create the position so 

it does have some requirements. There are certain structures already within the Executive Office of the President for operations. 

But this individual would be pinpointed by law as being responsible for the financial operations and management in the White 

House. 

So that’s basically the position you are creating and the responsibility and the charge. 

Right now, who is responsible? 

Mr. SUNUNU. Are you asking me? 

Mr. MICA. Well, I point that out. 

Mr. SUNUNU. That was my next question to you. 

Mr. MICA. We do have—I guess, the President is, and that individual would also report to the President. But we do have——

Mr. SUNUNU. He would report to the President as opposed to the 

Chief of Staff? 

Mr. MICA. Right. But we do—I am sure that there will be internal—there is enough flexibility in the law to allow a proper structure as far as chain of command and reporting. 

Right now, it is sort of like it is the responsibility of the President but no one in particular. So we are creating a position with 

specific responsibility, accountability and, again, somewhere where 

we can pinpoint this. 

40

As I point out, too, the White House is not a small operation. It 

is huge. It has got hundreds of employees, Executive Office of the 

President. 

Mr. SUNUNU. 1,500 or so full-time? 

Mr. MICA. Yes. And it deals with millions and millions of dollars 

and operations. When you bring in Defense and other supporting 

agencies, it is a mammoth operation. So we are just trying to, 

based on the experience we have seen over several administrations, 

ensure that there is some system of, again, financial responsibility 

and accountability. 

Mr. SUNUNU. And I would imagine it has varied a great deal 

from administration to administration, and even from department 

to department. 

But in general terms, who has picked up the responsibility or 

who has been given the obligation of fulfilling some of these financial requirements within the White House? 

Mr. MICA. In the past, it has been sort of an arbitrary decision 

of the President in the structure that is developed by each administration. There is a certain amount of responsibility, through various offices and agencies. I guess OMB and some of the others 

would get involved. 

But, again, there is no specific financial officer required now. 

That’s the big change that this makes and pinpoints responsibility. 

Mr. SUNUNU. With regard to the concern over volunteers and 

clarifying what would constitute a volunteer or a special employee, 

in the reviews and hearings that you have participated in, could 

you give an example of a fairly clear-cut conflict of interest that 

could exist with that type of personnel in the White House? 

Mr. MICA. Well, I will give a couple. For example, we looked at 

some of the organizations that paid volunteers who have done substantial business with the Federal Government. For example, the 

National Council of La Raza, received over $1 million in Federal 

grants between the fourth quarter of 1995 and the third quarter of 

1996. Likewise, I believe it is called Montefiore Medical Center, I 

am sorry, received some 58 grants during that period of time for 

hundreds of thousands of dollars, and several of these organizations had so-called volunteers operating at the White House. 

So those are a couple of examples. I also cited several others in 

my testimony. But there are specific examples where there is a potential conflict of interest, where folks who are dealing with the 

Government and are receiving grants or assistance from the Government, are placing folks in there to do work. 

It just isn’t right. It doesn’t meet the smell test, as you would 

say. 

Mr. SUNUNU. And the current administration is supportive of 

this clarification? 

Mr. MICA. Of the clarification? Well, I am not sure. 

Mr. HORN. That was the comment of the ranking Democrat, and 

there are a couple of questions I will be exploring with Mr. Walden 

when he is on the witness stand, on the definition of special Government employee. That’s one of the reservations. No problem with 

the Chief Financial Officer Act and—or she had understood that 

both bills were now supported by the administration. But I think 

we want to tighten up that special Government employee definition 

41

so that we aren’t getting in individuals that the President might 

want to talk to every day by telephone. 

Mr. MICA. Absolutely, and a cabinet member, or Members of 

Congress, or others. 

Mr. HORN. I am thinking of ones that are not Government employees. 

Mr. MICA. I am sorry. When I said ‘‘cabinet,’’ I meant informal. 

Mr. HORN. Ex-cabinet members? 

Mr. MICA. Informal cabinet. But what you are trying to do is ensure that someone who is around the White House, who is directing 

personnel, who is directing activities——

Mr. HORN. Exactly. 

Mr. MICA [continuing]. Who looks like a Federal employee, who 

barks like a Federal employee, who gives commands like a Federal 

employee, who has access like a Federal employee, or even a political appointment, is accountable. 

I don’t care who the President has in there, but a little bit of financial disclosure, a little bit of compliance with that because they 

understand that if they are there in the highest office in the land, 

that they do comply with some of these things that shows that we 

are all operating at the highest standards. So whether it is in the 

White House or the Congress, we have got to set that highest 

standard. And that’s the intent. 

Now, if the language we have now or we have proposed now 

doesn’t do that, we are willing to work with them. This isn’t geared 

just for this administration. 

Mr. HORN. Right. 

Mr. MICA. It is geared for the future. And we want to do the 

right thing. Maybe you could talk to your staff to give us some 

guidance. 

Mrs. MALONEY. Could I just ask a question quickly? 

Mr. HORN. Certainly. 

Mrs. MALONEY. I certainly support the intent of both of them, 

and I would like you to know that the White House is not opposing 

these two bills. I don’t know if they are supporting them or not. 

Just to clarify it. 

I would support the special Government employee functional definition, but I think it has to be clarified because I think a President 

should be able to talk to whomever they want. If President Clinton 

wants to talk to George Bush 130 days out of the year for advice, 

I don’t think George Bush should have to disclose and be treated—

I just think that needs to be defined better. 

And I would like to ask on the Chief Financial Officer, do you 

see one Chief Financial Officer for the White House or do you see 

one in every single office of the White House? Do you see one 

chief—how is that defined? 

Mr. MICA. I think that you will end up probably with one Chief 

Financial Officer so we have some accountability, and then that individual can appoint other people. But you have pinpointed responsibility for the finances under that activity, and then sub-activities. 

Again, I think you can’t get to—you need to leave enough flexibility but you want that accountability and responsibility pinpointed. That’s how I envision the position. 

42

And again, I don’t want to tie the hands of this administration 

or future administrations. Just, again, try to get some handle on 

this and some accountability. 

You ought to call some of these folks in and ask them who is 

doing what and who is responsible for what? And you would see 

folks pointing this way and that way. There is nobody. 

The President is in charge, but I mean, granted, whether it is 

Bill Clinton or George Bush, or whomever the future President 

may be, he is not the financial officer from a practical standpoint. 

But he is going to take the heat for it. 

So I think that some things that this administration has gotten 

in trouble for could have been avoided if there had been in place 

someone who was responsible, who was pinpointed with that financial responsibility and we can avoid problems in the future by instituting this. So I am willing to work with anyone. We don’t want 

to tie anyone’s hands. I try to avoid using this administration as 

an example, and I am sure we can find other problems in other administrations. But our job is to make the thing work right. 

Mrs. MALONEY. OK. I look forward to Mr. Walden’s testimony. 

His written testimony last year led me to drafting the special employee functional definition, and I just—maybe he can help us clarify it more so that it fits your description and more of what I want. 

I have to go back to the floor. Excuse me. I apologize, Mr. Chairman. 

Mr. MICA. Thank you. 

Mrs. MALONEY. I apologize to Mr. Walden. I was looking forward 

to hearing your testimony. 

Mr. HORN. Thank you. 

The gentleman from New Hampshire. 

Mr. SUNUNU. I yield back the balance of my time, Mr. Chairman. 

Thank you. 

Mr. HORN. All right. 

Mr. SUNUNU. Thank you, Mr. Mica. 

Mr. HORN. I now yield 10 minutes to the gentleman from Virginia, Mr. Davis. 

Mr. DAVIS OF VIRGINIA. John, let me just ask you, what is wrong 

with being able to, theoretically, for a congressional office, where 

you are not allowed to do this, or the Office of the President to be 

able to utilize volunteers, people who want to come in and help 

stuff envelopes, answer mail and the like? 

Mr. MICA. Well, first of all, I think you violate some labor laws. 

Mr. DAVIS OF VIRGINIA. But conceptually, outside of this? 

Mr. MICA. Conceptually. 

Mr. DAVIS OF VIRGINIA. Why should taxpayers have to pay to 

hire people when we can have volunteers to do some of this? 

Mr. MICA. Again, I would like to have volunteers, too. I think it 

could be useful, but it does violate the laws. 

Mr. DAVIS OF VIRGINIA. I agree. 

Mr. MICA. Paying folks minimum wage. 

In a position like the Executive Office of the President, where 

you have folks that might have some potential conflict of interest, 

and there are many, I mean——

Mr. DAVIS OF VIRGINIA. Well, you could do disclosure. 

43

Mr. MICA. I mean, there are thousands and thousands of grants 

and largess or some decision coming out of the White House can 

greatly impact an industry or an association or an activity. So you 

don’t want that appearance where someone is coming in and volunteering. And I, as chair of the House Civil Service Subcommittee, 

can go investigate what Federal employees are doing or you can 

look at certain White House employees; but these people are not 

accountable. They are not accountable under conflict of interest. 

They are not accountable under ethics. They are not accountable 

under financial disclosure. 

They are nice to have around probably, but it just doesn’t meet, 

like I said, the smell test. 

Mr. DAVIS OF VIRGINIA. Well, I went to lunch with a CEO in my district who is the head of a company. It is about a $300 million 

a year company. And we were talking and he gets paid $1 a year. 

Now he has some options that if he turns the company around and 

things of that nature, but his salary is zip. He has made money in 

life. He likes the challenge. A lot of people used to come to Government for the challenge. There were a lot of dollar a year men who 

would come down, lend their expertise, didn’t ask for anything out 

of there. 

There is nothing wrong with having people who could file under 

the disclosure law, but I think we ought to be encouraging people 

who want to give something. They are going to be accountable to 

somebody along the way. I just want to make sure we get the proper balance as we go through there. There is absolutely nothing 

wrong with people wanting to help their Government and be willing to work for nothing, whether it is volunteer or whatever. I 

think we make a mistake not looking at it in that way. 

Mr. MICA. Mr. Chairman, there are plenty of opportunities and 

no one has access to more appointment opportunities for volunteer 

positions than the President of the United States. 

I recommend to you the ‘‘plum’’ book, I recommend to you the 

countless commissions, boards, task forces, all kinds of groups that 

the President appoints so they can participate. They can even influence policy through those legislative or created——

Mr. DAVIS OF VIRGINIA. John, I think the point—— Mr. HORN. Appointing advisory committees. 

Mr. MICA. It is working in the White House, access to staff, 

whether it is a military staff, access to resources, access to national 

security information, access to influencing policy in that fashion in 

the guise of being a Federal employee. 

Mr. DAVIS OF VIRGINIA. I understand. 

Mr. MICA. People who are volunteering information to the President, Counsel to the President, suggestions——

Mr. DAVIS OF VIRGINIA. But there are tons of people who never 

see the President who can be out there working in some of these 

offices. 

Mr. MICA. It doesn’t mean moving in, getting a phone, directing 

staff and policy, though, and having no responsibility. I would even 

be glad if they would sign up under $1 a day or something but 

meet these—the same criteria. 

Mr. DAVIS OF VIRGINIA. I am not quarreling with the disclosure 

requirement. I just think sometimes we lose sight, we spend so 

44

much time and effort making sure somebody is not in conflict, some 

imaginary conflict that we can’t utilize some of the great talent 

that’s out there that really wants to help and has no hidden agenda. So it is a proper balance. I am not sure that the bill doesn’t 

reach that balance. I just want to say, coming from the other direction, we don’t want to lose sight of the fact that there are people 

who can contribute a lot sometimes and we end up discouraging 

sometimes by overregulating what volunteers can do. 

That’s not to say that this legislation doesn’t do some very good 

things and I am not going to support it. But I just want to kind 

of get that off my chest. 

Mr. HORN. I understand the gentleman’s concern, but the intent 

of this legislation is not to stop in any way the right of the President of the United States to communicate and get the advice of any 

person he wants to get. 

Mr. DAVIS OF VIRGINIA. Right. 

Mr. HORN. What it is trying to stop is when a friend of any President, as the gentleman from Florida said, is roaming the halls of 

the White House giving orders to Government employees and there 

is no accountability with that individual. 

Mr. DAVIS OF VIRGINIA. Right. 

Mr. HORN. But people assume, knowing a close relationship to 

the President, in either a campaign or as a personal friend or they 

read the society pages, they assume that’s an order from the President. 

Mr. DAVIS OF VIRGINIA. And it probably is sometimes, and sometimes it is not. 

Mr. HORN. It might well be. But those are the people we need 

to have some accountability. I am really not concerned about the 

wonderful people that help in the mail room in administrations regardless of party. 

Mr. DAVIS OF VIRGINIA. Right. 

Mr. HORN. Those are devoted volunteers. 

Mr. DAVIS OF VIRGINIA. Right. 

Mr. HORN. I don’t believe they are paid anything. 

Mr. DAVIS OF VIRGINIA. They are not. 

Mr. HORN. If I remember on that. But with the thousands of letters the White House receives every day, there is nothing wrong 

with volunteers helping on the mail. 

Mr. DAVIS OF VIRGINIA. Right. 

Mr. HORN. Now, we, for example, are restricted from having individuals, unless they are interns tied to an academic program. 

Mr. MICA. Right. 

Mr. HORN. I think there is now a provision where you can have 

2 or 4 people over 65 as a senior intern or something. But we have 

been fairly tight on that. There is nobody roaming around giving 

our office orders. 

Mr. DAVIS OF VIRGINIA. We have a lot of people in our office giving orders. 

Mr. HORN. Well, they give us orders. 

Mr. DAVIS OF VIRGINIA. OK. I appreciate your comments, John. 

I think it is thoughtful. I think from a Federal employee’s perspective it has some safeguards built into it. I just want to make sure 

we get it in the right balance. 

45

Thanks. I yield back. 

Mr. HORN. I thank the gentleman. 

Are there any further questions from anyone on the panel? If not, 

we thank the gentleman from Florida for his usual concise, focused 

comments and we appreciate it. 

Mr. MICA. Thank you. 

Mr. HORN. Thank you. 

We will now go to the second panel and that’s the panel with Edward J. Mazur and Cornelius E. Tierney. If you will please come 

forward. As you know, with the exception of Members, who we assume tell the truth—and when they don’t, we don’t talk to them 

again—you gentlemen will raise your right hands. 

[Witnesses sworn.] 

Mr. HORN. Both witnesses have affirmed, the clerk will note. If 

it is OK with you, we will start just as the outline is on the schedule. 

Edward J. Mazur is the vice president, administration and finance, Virginia State University, former Controller, Office of Federal Financial Management, one of our favorite agencies, and Office 

of Management and Budget. 

STATEMENTS OF EDWARD J. MAZUR, VICE PRESIDENT, ADMINISTRATION AND FINANCE, VIRGINIA STATE UNIVERSITY, 

AND FORMER CONTROLLER, OFFICE OF FEDERAL FINANCIAL MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET; AND CORNELIUS E. TIERNEY, DIRECTOR, CENTER FOR 

PUBLIC FINANCIAL MANAGEMENT, GEORGE WASHINGTON 

UNIVERSITY SCHOOL OF BUSINESS AND PUBLIC MANAGEMENT 

Mr. MAZUR. Mr. Chairman and members of the subcommittee, 

good afternoon. 

Mr. Chairman, I strongly support the central thrust of the Presidential Executive Office Financial Accountability Act of 1997. But 

I would like to offer this afternoon a few modifications that I believe would make the legislation more effective and perhaps more 

thoughtfully tailored to the operating circumstances found in the 

Executive Office of the President. 

Mr. Chairman, as long as the Congress or the American public 

intend to hold our President responsible and politically accountable 

for what happens fiscally in the White House, then he needs to be 

provided with help and someone who will clearly shoulder questions about fiscal accountability, as they might arise in the future. 

The President of the United States, whose duties are awesome 

and from whom we expect so very, very much and toward whom 

our society appears to have little tolerance for error, should have 

available to him in the Executive Office of the President a Chief 

Financial Officer who would have two basic requisite credentials. 

First, the person must have a proven understanding of what constitutes sound accounting and financial controls and appropriate financial management practices. 

Second, the person must have confidence in the authority granted to them by the legislation you are now contemplating, and the 

self-confidence to provide thoughtful, balanced and decisive advice 

46

concerning the financial activities of the Executive Office of the 

President. 

In short, Mr. Chairman, the person must have the confidence 

and the judgment, when required, to say no. 

I am very much of the mind that the Executive Office of the 

President is unique, in contrast to almost all other areas of the 

Government. Its role in national security is undeniable and, accordingly, my proposed modifications reflect two core beliefs. 

First, the President truly needs and will benefit from a Chief Financial Officer who can focus undivided attention on the financial 

management practices of the EOP and be responsive to the President. 

Second, the Congress cannot afford to lay out in public the business and the structure of the White House in such a free flowing 

manner that it could be used by individuals in this world who 

would wish to do harm to the operating heart of our Government. 

In short, Mr. Chairman, if some overworked staff member in the 

White House mishandles a financial matter, I don’t think we need 

to tell the world about it, but we certainly need to fix the problem. 

With this in mind, my recommended modifications to the legislation are as follows: That the idea of establishing an Inspector General in the EOP be permanently set aside and that the legislation 

include, instead, a provision that would require the EOP to secure 

the services of an outside public accounting firm to perform an 

audit in conformance with the standards promulgated by the Controller General. 

Second, that the legislation be modified to provide that this outside public accounting firm be selected by a committee, chaired by 

the Deputy Director for Management in OMB, and comprised of the 

Chief Financial Officer of the Executive Office of the President, 

OMB Legal Counsel, the Controller of the Office of Federal Financial Management, the Assistant Controller General for Accounting 

and Financial Reporting Division of the U.S. General Accounting 

Office, and the Vice Chair of the President’s Council on Integrity 

and Efficiency, which is the group of Inspectors General. 

Three, that the legislation clearly set a requirement for the Chief 

Financial Officer to prepare annually financial statements under 

guidelines issued by the Office of Management and Budget, consistent with the provisions of the Chief Financial Officer Act. 

As an aside, Mr. Chairman, I believe that we can have one set 

of statements for all 12 areas, combining their operations. 

The fourth modification, that the outside auditor engaged by the 

Executive Office of the President address its audit report directly 

to the President and provide copies to the Chief of Staff of the 

White House, the Chief Financial Officer of the EOP, the Director 

of the Office of Management and Budget, and either the Senate 

and House committees with oversight responsibilities for the Central Intelligence Agency or the oversight committees of jurisdiction, 

if that report is received under a seal of confidentiality. 

The fifth modification, that the legislation clarify that all accounting, financial reporting and financial analysis functions now 

in existence in the Executive Office of the President be transferred 

in full, together with all associated staff, to an organization under 

the responsibility of the Chief Financial Officer of the EOP. 

47

Sixth, that the proposed legislation restrict access by the Chief 

Financial Officer to information, policies, communications, and 

records that relate to the processing of the EOP financial transactions, the maintenance of all budgets affiliated with EOP as set 

forth in the budget of the U.S. Government and other associated 

financial affairs in EOP, unless that restriction of access is waived 

by the President’s Chief of Staff. 

And the final or seventh modification would be that the full duties of the Deputy Director for Management of the Office of Management and Budget, as contemplated in the CFO’s Act, apply to 

the selection of the Chief Financial Officer of the EOP. 

These modifications, Mr. Chairman, I believe would provide adequate internal controls in the EOP and a Chief Financial Officer, 

with the confidence and the background to ensure that the fiscal 

affairs of the EOP are always carried out in a responsible manner. 

These modifications would also ensure that a person selected for 

the Chief Financial Officer position would have clear authority and 

a higher probability of carrying out his or her duties successfully. 

I would be avoiding the issue if I did not speak, although just 

for a second, on the White House Travel Office matter. The inefficiencies and inadequacies of internal controls and other operating 

deficiencies in the White House Travel Office could have been readily addressed by a Chief Financial Officer if one had been in place 

at the time. 

The identification of fiscal and operating deficiencies is something that all CFOs throughout Government consider as a normal 

part of their efforts, as is an expeditious resolution or correction of 

such deficiencies. Such matters do not have to become politically 

explosive when they are viewed as the responsible and timely improvement of inadequate conditions. 

In closing, Mr. Chairman, the bottom line is that I believe that 

we cannot afford to have our President distracted in any way by 

how financial transactions and other fiscal matters are handled in 

the Executive Office of the President. Someone must accept the responsibility, as provided in this act, to keep fiscal matters straight 

and to be the one to step forward and be politically accountable to 

the Congress if something appears to be going wrong. 

I really appreciate the opportunity to be here this afternoon and 

would be happy to answer questions later. 

[The prepared statement of Mr. Mazur follows:]

48


g:\graphics\44930.025
49


g:\graphics\44930.026
50


g:\graphics\44930.027
51


g:\graphics\44930.028
52


g:\graphics\44930.029
53


g:\graphics\44930.030
54


g:\graphics\44930.031
55

Mr. HORN. I thank you for your very full and helpful written 

statement that you have submitted to the committee, and your 

summary of that statement. I am sure we will have a lot of questions as we discuss it. It is very helpful. 

Our next panelist is Cornelius E. Tierney, the director, Center of 

Public Financial Management, George Washington University 

School of Business and Public Management. 

Dr. Tierney. 

Mr. TIERNEY. Thank you very much, Mr. Chairman. Thank you 

for the opportunity to provide some comments and views on this 

legislative hearing dealing with the Presidential and Executive Office Financial Accountability Act of 1997. 

I understand this proposed legislation to be an initiative to apply 

the major provisions of the CFO Act, as amended, to the Executive 

Office of the President. 

I must admit my initial reaction was one of surprise that the Executive Office of the President had not voluntarily complied with 

the CFO Act of 1990. I was not aware that during any of the hearings, studies, discussions, that preceded the passage of the 1990 

act, or held subsequently by any party, that anyone thought that 

the Executive Office of the President, particularly those operating 

entities, would not come into compliance. 

In 1982, and later in 1987, I chaired two non-Federal initiatives 

that examined the Federal Government’s financial management 

processes—its managers, systems, controls, policies, procedures, 

and practices in the financial arena. The recommendations of those 

studies are among some of the major provisions of the CFO Act of 

1990 and as amended. 

These studies document the very serious problems, the weakened 

nonfinancial management practices and, at times, the lack of accountability that was permitted to exist within the Federal Government for years, for decades and the better part of two centuries. 

With respect to the proposed legislation, I would like to offer the 

following half dozen summary comments. 

First, I had noted the research by the Congressional Research 

Services legal analysis to point out some of the involvements of the 

entities in the EOP with issues of national security, confidential 

policy matters, and it discussed issues as arrogation, encroachment 

and aggrandizement, et cetera. 

These points do not seem relevant to, and I do not feel they 

should be viewed as obstacles or impediments to the implementation of good financial management. 

Somewhat related, I do not believe the proposed act is an intrusion by a CFO or making the CFO a party to any secret or confidential or intelligence deliberations or national security discussions. I guess I think it is somewhat of a stretch for anyone to assert that the adoption of sound financial management practices by 

the EOP entities would somehow disrupt management functions or 

somehow interfere impermissibly with the performance of a constitutional function. 

Second, as drafted, the proposed legislation exempts both the 

proposed chief and the deputy financial officers from the qualification standards promulgated by OMB. I sincerely hope that these 

exemptions are not viewed as condoning a diminution of the deVerDate 0ct 02 2002 08:28 Oct 05, 2002 Jkt 077629 PO 00000 Frm 00059 Fmt 6633 Sfmt 6602 W:\DISC\44930 44930
56

sired quality of financial management and these financial executives. I don’t believe meeting these criteria would ever be a significant hurdle to the type of candidate that would aspire to such a 

position as the CFO of the Executive Office of the President. 

Third, achievement of effective financial management practices, 

sound controls, requires a commitment to high integrity, strong 

ethical values, by the most senior executives. There is a premise 

in the accounting profession that effective controls, sound financial 

practices, full accountability, is established by the ‘‘tone at the top.’’

If those at the top are not concerned, then few others will worry 

either. In the Federal Government the tone has to be set by the 

Executive Office of the President. 

Fourth, some may raise the issue of whether the appointment of 

a CFO to the Executive Office of the President might intrude or 

somehow disrupt the performance of financial management activities as currently practiced there. Once again, I find it difficult to 

envision sound management practices as being an intrusion or a 

disruption to any activities. 

Additionally, we should keep in mind that technically and financially the Executive Office of the President is a relatively simple financial management operation. 

Fifth, the relative insignificance of budgets, and I use that advisedly because they are about $200 million, depending on how one 

counts the dollars, to other entities and other Federal operations 

should not be a factor for not complying with this proposed legislation. I think, regardless of size, the leadership expressed by the Executive Office of the President will be seen as the example or the 

standard that other financial managers would follow. 

Last, not mentioned yet is the issue of tenure. The short tenure 

itself of senior Federal executives is another reason for ensuring 

that financial management controls are sound, consistently applied 

and regularly monitored. The National Academy of Public Administration has reported on many occasions that in the executive 

branch, senior financial management leadership changes, on the 

average, are every 18 months. This turnover of short-timers seriously undermines the stability and the dedication needed to ensure 

that jobs started are completed, and that there is uniformity and 

consistency of financial practices. 

No private concern or nonprofit could long tolerate the tenure—

turnover ratio that is prevalent among senior financial executives—Federal executives. For this reason, I see the appointment 

of a Deputy CFO at the EOP, having the qualifications outlined in 

the act, as significantly addressing that management void or gap 

related to tenure in office. 

In summary, the Chief Financial Officer Act of 1990 began the 

important and enormous task of making internal controls and accounting and reporting systems the safeguards they were intended 

to be. Further success will require the unswerving commitment of 

all professionals in protecting, preserving and accounting for Federal resources. For these reasons, I believe and endorse and accept 

the conditions set forth in the proposed Presidential and Executive 

Office Financial Accountability Act of 1997. This act, adopted by 

the Executive Office of the President, will send a clear message 

57

that sound and practiced financial management is a high priority 

of the Federal Government. 

Mr. Chairman, this completes my oral comments. I have separately provided a more detailed paper on this issue. Thank you 

very much. 

[The prepared statement of Mr. Tierney follows:]

58


g:\graphics\44930.032
59


g:\graphics\44930.033
60


g:\graphics\44930.034
61


g:\graphics\44930.035
62


g:\graphics\44930.036
63


g:\graphics\44930.037
64

Mr. HORN. We thank you for that helpful testimony. And as you 

know, your full statements are automatically put in the record once 

we introduce you, and then your summary follows that. 

Let me ask a series of questions of both of you. And don’t feel 

bashful about chiming in. I would like this to be a dialog, not just 

questions and answers. So if one of you disagrees with the other, 

say so. It will be helpful. 

I guess one question to begin with is: Why do you think the Executive Office of the President has not voluntarily complied with the 

Chief Financial Officers Act? OMB is complying with the Government Performance and Results Act. Should it not have complied 

with the CFO Act before now? What is the feeling on that? 

Mr. MAZUR. I could speak to the time I was there, which was 

about a 19-month period. And with all the other parts of the CFO 

Act to attend to at that time, it did not come up. It was not very 

actively considered or discussed, that I can think of. 

The White House was something that appeared to operate. They 

have a long number of years, under some processes, for operating. 

It wasn’t until, I think, the Travel Office issue hit and one had a 

chance to sort of see how everyone started scurrying that you got 

a sense that there wasn’t one person to come forward. So I think 

this legislation is timely. 

Mr. HORN. Do they ever borrow the staff from OMB? And now 

I am asking you for sort of a historical understanding or institutional memory on this and what you have heard about it. This is 

strictly hearsay. 

Have any Presidents borrowed some expert in finance from OMB 

to go look around the place and make sure that things are accounted for? 

Mr. MAZUR. When I was there, I could not—I can’t recall any 

general request to take a broad look around. Again, I think at the 

time we were pretty busy getting a lot of the major agencies set 

up and perhaps it was omitted for that purpose. 

Certainly, when the Travel Office issue hit, there were a couple 

of fellows who worked for me, respected professionals, who did go 

over and spend some time and reported their findings to, I think, 

the Director of Administration and perhaps a couple of others, and 

tried to be helpful with suggestions. And I would imagine that 

might still take place from time to time. 

Mr. HORN. Speaking of the Director of Administration, the Office 

of Administration in the White House has argued that the Executive Office of the President cannot reorganize to have one Chief Financial Officer and prepare one set of statements to be audited. Instead, the Office of Administration in the past, and this is last year 

when we were in these discussions, argued in favor of surrogate 

Chief Financial Officers in each of the 12 divisions of the Executive 

Office of the President and the preparation of 12 sets of financial 

statements. 

Now, 7 of these divisions have fewer than 45 full-time equivalent 

employees. Let me just put in the record here the full-time equivalent to get an understanding of this. Office of the Vice President, 

21 full-time equivalents; Office of Policy Development, 30 full-time 

equivalents; Council of Economic Advisors, 28 full-time equivalents; 

Council on Environmental Quality and Office of Environmental 

65

Quality, 16 full-time equivalents; National Security Council, 44 

full-time equivalents; Office of the National Drug Control Policy, 38 

full-time equivalents; Office of Science and Technology, 35 full-time 

equivalents. 

I am not sure this represents the whole executive branch, and I 

want to take a look at the White House office who obviously has 

387 full-time equivalents as of fiscal year 1996, and I guess we 

don’t have the updates for fiscal year 1997 because we are in that 

year right now. We are past 1996. But we will put the actual 

amount in the record at this point without objection. 

You have got the Executive Residence at the White House, 86. 

We have mentioned the Vice President; we have mentioned Economic Advisors; we have mentioned Environmental Quality; we 

have mentioned Policy Development; National Security Council; Office of Administration happens to have 182 full-time equivalents; 

Office of Management and Budget, 522 full-time equivalents; Office 

of the National Drug Control Policy, we mentioned; and Office of 

Science and Technology we mentioned; Office of the U.S. Trade 

Representative, 159 full-time equivalents. 

Anyhow, the summary for fiscal year 1996, the full-time equivalents, is 1,548. Now, a lot of people as we know, and this goes back 

certainly to at least the Roosevelt administration, maybe a few before, are detailees from the various departments. Now, I think Congress has tried to slow that down or stop it at various times, but 

am I correct that my understanding is there is still a number of 

people that are detailed over to the Executive Office of the President one way or the other? 

Mr. MAZUR. I don’t have a current understanding of that. My 

general understanding when I was here was that that was something that happened—something that probably happened from time 

to time. I did not see a lot of that with my own eyes. 

But your earlier question was, why might they be opposed to 

having one set of financials? I am a little perplexed by that. I think 

from a technical point of view, and Mr. Tierney probably could 

speak better to this, I can’t envision any impediment at all to 

bringing together a set of financial statements or a combined set 

where you would see the financial activity of each 1 of those 12 activities and then pulled into one. As Neil pointed out, I don’t believe it is very complex and sophisticated vis-a-vis the fiscal affairs 

of some of our larger Federal agencies, a lot of salary, a lot of travel, and a lot of supplies and things like that. 

I suspect the opposition probably comes from tradition and perhaps the notion that each one of these separate units is a bit—although within the EOP, a bit independent, but that is just a suspicion on my part, but I can’t think of any technical impediment. 

Mr. TIERNEY. As to why the noncompliance, I guess when I read 

the proposed legislation, Mr. Congressman, I was rather stunned. 

I had led a major study effort by the Association of Government Accountants and a much more detailed one by the American Institute 

of Certified Public Accountants (CPA) back in the 1980’s, and many 

discussions here on the Hill with people in the Executive Office of 

the President, OMB. There was not a whisper that it would not 

comply, so I was really surprised. 

66

With respect to the borrowed staff, just coincidentally I got a 

phone call before coming up here from a long-time colleague saying, 

what are you going to do this afternoon, and so I mentioned it to 

him. And he said, do you remember—I hadn’t—but one of the problems, the only problem I saw with the Executive Office of the President once this gentleman reminded me was that cost accounting 

was an enormous effort. 

There was a study about 17 years ago with volunteer assistance 

from CPAs, certified public accountants, and the American Institute of CPAs, where they did a study of the Executive Office of the 

President to try to find out what was the cost—the President was 

interested in the cost of running the White House at that time. 

The cost accounting was complex, to say the least, because there 

were no records, but everyone knew that the Air Force jet costs 

money, the Interior, the Parks Service costs money, the Secret 

Service, the Marine Guard, and it went on and on; an estimate of 

maybe several hundred, maybe over 1,000 people. None of this cost, 

of course, is recorded in the books of the Executive Office of the 

President. 

The work was substantially completed, although I think I am 

correct in saying a report was never issued on this because of the 

‘‘detailee-type’’ issue. 

So that was the only thing that I saw was complex because the 

individual agencies were reluctant to release the cost or pleaded 

that they did not have the cost of loaned personnel. But I have to 

admit, I had to have my memory refreshed about 2 hours ago on 

that. 

Mr. HORN. That was either the Carter administration—— Mr. TIERNEY. It was, yes. 

Mr. HORN. And I wonder if that study is in the papers of President Carter in his fine library in Atlanta? 

Mr. TIERNEY. I know the study was substantially completed. I 

am not sure, maybe a draft was prepared. No report was ever 

issued because being certified public accountants, they just couldn’t 

come to conclusion of the costs. It was elusive to say the least. 

Mr. HORN. Well, I will ask the staff to contact the Carter Library, which is one of my favorite libraries, I have spent a lot of 

time there, and see if we can’t find that document somewhere. It 

would be interesting to see. It was probably the first and the last 

President to ever ask that question. 

Mr. TIERNEY. Well, he is the only one that I know. 

You ran down a list of the people, and, of course, to a lot of people 1,000 full-time equivalents is a big staff. When you look at the 

groups, they are kind of bunched into a couple of organizations, 

and it seemed like maybe the major ones could indeed have a financial statement, and the others could be treated as an office. I 

don’t see it as a very complex accounting or financial management 

issue, but I do see the issue as enormously important. I quite honestly would hate to have it get out that the Executive Office of the 

President is not complying with the CFO Act. I don’t know what 

that would do to the financial mindset of the financial managers 

in the Federal Government. 

Mr. HORN. I suspect they all know that. 

Mr. TIERNEY. I didn’t. I was surprised to learn that. 

67

Mr. HORN. Do we know how many funds that the President has 

complete discretion over in terms of, say, the hospitality fund or 

whatever? I think the President ought to be left with discretion in 

some of those areas. I suspect he has got an Intelligence fund 

somewhere, unless that pot is over in the CIA and audited by the 

CIA people. 

But I am trying to divide this thing into some manageable ways, 

because it just seems to me one Chief Financial Officer could advise all of these agencies, and maybe a Deputy and a very small 

staff, because this is not a major problem in the number of people 

with financial transactions, I would think. 

Mr. MAZUR. If I may make a comment? 

Mr. HORN. Sure. 

Mr. MAZUR. The budget that was submitted in March under the 

Office of Administration on page 63, I guess it is, the appendix 

talks about the Office of Administration’s mission is to provide 

high-quality, cost-effective administrative services to the Executive 

Office of the President, and that wording does not limit it to any 

of those 12 that you have cited. And it says, ‘‘these services as defined by Executive Order 1202(a) of 1977 include financial,’’ and 

then it goes on to say, ‘‘personnel, library record services, information management systems support, and general offices services.’’ The question that was asked earlier of Congressman Mica was 

where would this CFO go? There is no unit—there is no physical 

unit with people in it called the Executive Office of the President 

from a funding point of view. It is really these 12 separate areas 

that are funded, but the Office of Administration, already delegated 

with that responsibility, would seem to be the likely place to house 

a Chief Financial Officer and a Deputy. And what I am envisioning 

is that this legislation would, in effect, cause that office functionally to be split. Not uncommon is the split that often takes place 

in the agencies with the creation of the CFO. If you remember, a 

lot of those were preceded by assistant secretaries for administration. Well, those things were split out, and you have your CFO focusing on financial systems and financial matters and reports, and 

then you have an Assistant Secretary still continuing on with a lot 

of the other things. 

Mr. HORN. You are generally right on that, but I must say I still 

boil when you see some departments, such as Treasury, merge the 

two offices, and when I see the basket case of the Internal Revenue 

Service within Treasury, and you wonder where is the CFO. The 

fact is there is no single CFO. It is merged under the Assistant 

Secretary for Management, and if I had a case like that, there 

would be a full-time CFO, and that was the congressional intent. 

Mr. MAZUR. And I think——

Mr. HORN. That is why we have to change that law maybe in the 

process. 

Mr. MAZUR. Or make it tougher, right, because there are distributions of responsibilities. 

But in this case, if you could look to one person that would work 

collegially within the White House to clarify and set policies. Lately 

in the news, you read about funds coming into the White House 

under various circumstances. Well, and perhaps they have rules 

and procedures for how they handle these things, and a lot of good 

68

Americans get excited and enthused and all the best intentions, 

will send checks in with notes saying, we love you, here, use it for 

good purpose or for that, or it is a gift, or fix the rug in the Roosevelt room, whatever it might be. There are 1,548 individuals over 

there in the White House, and if suddenly somebody thrusts something in their hand, they ought to know exactly what they do with 

that, and hopefully it would involve turning it over immediately to 

a CFO, who would send it back or move it to where it needs to be 

and maintain logs along the way. 

I don’t think it is necessarily going to be the most sophisticated 

financial management environment, but one that is going to take 

discipline and a confidence in the CFO to use the authority judiciously and professionally but firmly to bring in line anything of an 

activity that relates to finance that is not correct today. 

Mr. HORN. I think that is a good suggestion. And do you see the 

CFO role as a mixture of, say, vice president for finance and controller? 

Mr. TIERNEY. Yes, certainly. 

Mr. HORN. What function am I missing there? Are they also the 

business manager? 

Mr. TIERNEY. I think I also see a systems responsibility. Instead 

of just accounting or financial, I think they go hand in hand with 

systems, the information systems, because then you have the ability to define what costs shall be. How do you account the costs? 

How do you report the costs? 

Mr. HORN. Does that mean we also need a chief information officer in the White House? 

Mr. TIERNEY. No, I wouldn’t go—I think if the CFO just had the 

responsibility, because under the CFO Act there is information systems responsibilities. 

Mr. HORN. As I remember, some of the recent administrations 

that have gone into the White House could not believe how arcane 

and antique some of the computer systems were. 

Mr. TIERNEY. Yes. 

Mr. HORN. It seems to me the President of the United States 

ought to have the latest version, the latest generation. 

Mr. TIERNEY. Well, it would seem so. He of all people is somebody that could afford it. 

Mr. HORN. He could sure reprogram some money without objection by Congress. What the President gets is what the President 

wants in the Executive Office of the President. 

Mr. TIERNEY. On that point, I think the challenge—I think it is 

a relatively simple—it is not a complex operation. But I think the 

talent that one might see applying for the CFO or the Executive 

Office of the President, I think you are going to see some quality 

professionals, certainly capable of handling the task if there was 

one established. 

Mr. HORN. Well, let me look at a few more things I wanted to 

pursue. Some were in your testimony, and I want to make sure I 

have hit a few items that I have noted here. 

Really, one of the proposals they made to us last year was, well, 

we don’t like the idea of one Chief Financial Officer, but we would 

like to have one in every division. It doesn’t make sense to me, 

frankly, to have one in every division. But I tell you this is someVerDate 0ct 02 2002 08:28 Oct 05, 2002 Jkt 077629 PO 00000 Frm 00072 Fmt 6633 Sfmt 6602 W:\DISC\44930 44930
69

thing that does concern me and I think ought to concern the President. How would you ensure that the confidentiality of information 

contained in the financial statements is maintained if you contract 

out an audit to either an independent accounting firm or even to 

OMB, which is prepared to do audits, or even do you need to contract out the audits there? 

Mr. MAZUR. In my testimony I proposed having the audit prepared by an outside firm. 

Mr. HORN. Having the committee select that, as I recall. 

Mr. MAZUR. Yes, and the reason I did that was, first of all, I 

thought it might possibly add to the benefit of the Congress and 

perhaps even to the benefit of the President through that independence even more credibility to the results. 

In addition, I do not see personally the Executive Office of the 

President being a place that could effectively use an Inspector General staff of several individuals. Typically for an audit of financial 

statements in the case of what we are talking about here, a couple 

of hundred million dollars and 1,500 people, we are talking about 

a relatively small group of individuals coming in for a few months 

at most and getting it done and issuing their report on internal 

controls, and off they go. 

There are firms that work throughout Government today, and I 

am certain that there are rules of confidentiality both within the 

firms that exist. As an old CPA, I can remember those and certainly security clearances and other things that could come to bear 

and preserve that confidentiality. 

My notions of confidentiality in terms of sharing the financial report are more, again—I don’t think it does the country any good 

that if somebody over in the White House, inadvertently or whatever, can’t get 2 and 2 together to equal 4, it is a problem that 

needs fixing. I don’t think that is something that we need to share 

with the whole world, and the Congress needs to be assured that 

it is going to be fixed and fixed on a timely basis. 

Mr. TIERNEY. If there is a security issue, I don’t think that is a 

valid one. I do know major firms, their senior management, the 

management committee of the major CPA firms, I know are automatically cleared to secret and top secret. For many years I held 

a top secret security clearance because I was consulting with Government, doing their audits, and the entire staff held very high security clearances. 

Those types of responsibilities have been handled by independent 

accounting firms for decades, and I have never heard a leakage on 

that. So I don’t think that would be—security, I don’t believe, is an 

issue, a real issue. 

Mr. HORN. Mr. Mazur, I noticed in your testimony on page 5, 

your point 6, that the proposed legislation restricts access by the 

Chief Financial Officer to information, policies, communications 

and records that relate to processing of EOP, Executive Office of 

the President, financial transactions, the maintenance of all budgets affiliated with the Executive Office of the President in the 

budget of the U.S. Government, and other associated financial affairs of the Executive Office of the President, unless that restriction 

of access is waived by the President’s Chief of Staff. 

70

And I was curious what type of situations are you worried about 

there? And is the President’s Chief of Staff the proper one to do 

that? 

Mr. MAZUR. It is a supposition on my part, but if I remember correctly, the legislation calls for the President to designate for himself a head of agency. My personal sense was that might be the 

Chief of Staff. 

The idea here is that in reading some of the background information, particularly the letter that was received by the committee 

about the possible interference with the President’s authority, that 

it would be important and a positive thing to reduce any fears in 

the White House that this particular position was going to be focusing on financial matters. And, yet, if in pursuing the development 

of policy—and as I mentioned this before, the President receives 

thousands of letters every day, and I will bet you if you went over 

there, there are a dozen of them that for some reason or another 

have checks in them. What do you do with that? How is it handled? 

I think in establishing policy that might affect or influence how 

some of these 1,548 folks might handle unique situations they get 

themselves in, I think the CFO would want to be able to do that 

and might need the release of the Chief of Staff in order to sit and 

have discussions relative to those issues. 

So, it was an attempt to balance out concerns for too great of an 

encroachment against the need to have access and thought the 

Chief of Staff would want to be the responsible person. 

Mr. HORN. Do you have any comment, Dr. Tierney, on that? 

Mr. TIERNEY. No, I hadn’t thought about that. I thought more of 

the executive branch budget-type issues and the preparation of this 

plan. Those are things I think that Congress and the President 

have already worked out over the years. 

Mr. HORN. Now, the Office of Administration, obviously, Mr. 

Mazur, you must have worked with it fairly closely, I would think, 

when you were in OMB. 

Mr. MAZUR. Not closely, but somewhat. 

Mr. HORN. I just wondered what your feeling as to how effective 

that office is in setting up some standards, systems, policies to advise people who are very busy in all of these offices? These are all 

7-day-a-week offices, and the question is is there any sort of system; and when one President leaves, usually everything, including 

the policy manuals, are taken with him unless they work out something with the incoming President or the incoming President asked, 

I’d appreciate knowing how you did it? And President Eisenhower 

had McKinsay & Co., go and do a study of everything in the whole 

executive branch. 

Mr. MAZUR. President Bush was in town in my city several days 

ago and speaking to a group, and one of the first things he said 

was to note his praise for the White House staff, the permanent 

staff that was there. 

I was not there enough in that unit at all to form any opinions 

as to their expertise, but I will give you a supposition. The supposition is that probably the whole thing now works. There is a mechanism there. I sense that there are probably long-term employees 

and even directors of administration. I knew the last one who was 

either full or acting, Frank Reeder. He used to be a suite-mate of 

71

mine, an absolutely superb public servant, and I am sure while he 

was there for 19 months, he tried to do a good job and tried to have 

the job done better. 

The point of your legislation, though, is that with a couple of 

hundred million dollars around and 1,548 individuals, let’s guarantee that there is speaking to these issues in the EOP a person 

clearly with the competence and the experience necessary to speak 

with authority about financial affairs. 

And, you know, I told a little story in my testimony about an exciting conversation I had one time with Senator Robb. 

Mr. HORN. I enjoyed reading that, that you ruined his Christmas 

holidays. 

Mr. MAZUR. It was. Because when he pushed back as we were 

debating that issue vigorously and said what he said, which is that, 

you are ruining my Christmas vacation, if I wasn’t sure of my vision of financial management or my authority or my responsibilities, I could have just as easily sort of wilted, picked up my papers, apologized for ruining his vacation and left the room. 

I didn’t. We stayed the course and debated the issue further. He 

arrived at a wonderful decision, and he is one of the finest financial-management-oriented Governors we have ever had. 

You have to have someone who, in the heady environment in the 

White House, with all of these wonderful talents and egos to go 

with it, is going to recognize when someone is off base on something and will have the force of confidence to say no. 

I have said no to Governors. I have said no to Attorney Generals. 

It wasn’t a common thing, but you had to be prepared to do it and 

stand at least the moment of displeasure when you did it. That is 

the kind of person you need. 

This does no good to the President of the United States or to the 

Presidency to have anyone in the United States think that there 

is anything other than the highest effort and the highest of integrity going on in the White House, and that is why I decided to accept your invitation, and I am pleased to be here to speak about 

this thing. We need to help our President and future Presidents 

just not have any question at all about what goes on over there and 

how it is done. 

Mr. HORN. You are absolutely right. And it seems to me any 

President that takes that office, the first thing they ought to do is 

have the conversation that you and Governor Robb had. 

Some of you have heard this story, but my first day as a university president I called in the controller and I said, look, there is a 

business manager that you report to, and there is a vice president 

for administration, finance, that he reports to. And I said, I don’t 

give a hoot about the hierarchy; when you see something cross your 

desk that would be a headline in the L.A. Times, you walk around 

both of them into my office. He did that 2 weeks later and saved 

my scalp by just saying, hey, this does not make sense. 

And you need some sort of system like that where people say, it 

doesn’t matter who the heck it is burning, let’s tell the boss about 

it. And usually the boss is the last to know in a large bureaucracy, 

which, frankly, was two or three times the size of the White House 

full-time equivalent. But that is just basic wisdom, and you learn 

72

over time, and I am amazed some of the Presidents have not 

learned it. 

And that is one of the problems down there. They come in. A lot 

of them have run very little, but—if they came from the Senate, 

a Senate office, if that, and if they went to the Senate, they probably had a law office. And they were maybe the managing partner, 

or they were maybe a loner, and so they are not used to running 

things in a complicated organization, and that is one of the problems. We ought to institutionalize a few of these functions by making them responsible and responsive to the President if he takes 

the heat when something goes wrong down there. 

I thank you both. It has been very helpful testimony, and it has 

raised a number of questions that I think we need to have answered before we can go back to the drafting board, if you will, and 

before we put these bills in. So I thank you very much for coming. 

We will now go to panel three, and that is Stephen Potts, Director, Office of Government Ethics. He is accompanied by Jane A— I assume it is pronounced Ley, Deputy Director, Office of Government Ethics; and Gregory S. Walden, who has been here before, 

counsel for Mayer, Brown & Platt, former Assistant General Counsel in the White House. 

Mr. POTTS. Mr. Chairman, it is Ms. Ley. 

Mr. HORN. If you would raise your right hand? 

[Witnesses sworn.] 

Mr. HORN. All three witnesses have affirmed. And if it is OK 

with you, we can start with Mr. Potts. You are the first one on the 

panel three list. And Ms. Ley, the Deputy Director, is accompanying you. So welcome, we are glad to hear from the Office of 

Government Ethics. 

STATEMENTS OF STEPHEN POTTS, DIRECTOR, OFFICE OF 

GOVERNMENT ETHICS, ACCOMPANIED BY JANE S. LEY, DEPUTY DIRECTOR, OFFICE OF GOVERNMENT ETHICS; AND 

GREGORY S. WALDEN, COUNSEL, MAYER, BROWN & PLATT, 

AND FORMER ASSISTANT GENERAL COUNSEL IN THE WHITE 

HOUSE 

Mr. POTTS. Thank you, Mr. Chairman. I want to thank you very 

much, first of all, for the opportunity to testify today on a draft bill 

entitled the Special Government Employee Act of 1997. 

This draft bill would amend section 202 of Title 18 to clarify the 

definition of ‘‘special Government employee.’’ In doing so, it also, 

for the first time, sets forth the standard definition of ‘‘officer’’ or 

‘‘employee.’’

We believe with the clarity changes discussed in my written testimony that the draft you provided us does accurately reflect the 

present text and interpretive gloss given the term ‘‘special Government employee’’ and the terms ‘‘officer’’ or ‘‘employee.’’

The term ‘‘special Government employee’’ and the concept it represents was introduced into the Criminal Conflicts of Interest Code 

way back in 1962. Since then the term has been used widely in all 

aspects of the executive branch ethics program. In addition to the 

criminal conflict statutes, it is used in public financial disclosure 

law, the confidential financial disclosure regulations of the executive branch, the civil ethics statutes of Title 5 U.S.C., appendix, 

73

and finally the executive branch administrative standards of conduct. 

In most of these statutes or regulations, there is a specific reference to 18 U.S.C. section 202, as the primary source of the term. 

Consequently, we have a very real interest that any amendments 

to section 202 and the definition of ‘‘special Government employee’’ continue to reflect long-standing interpretations. 

Again, the draft bill which we reviewed does this, as well as 

make the definition more easily read. And accordingly, we are 

pleased to support both of those concepts. 

That would complete my oral statement, and I would like to have 

my more complete written testimony submitted for the record, and 

I am happy to answer any questions Mr. Chairman. 

Mr. HORN. Well, we appreciate that. And we appreciate your support. We obviously look to you to give us the correct language if we 

are ever in error in some of this. You can be sure that we will be 

checking with you. So I thank you for coming. And stay with us 

so that we can have a dialog after Mr. Walden finishes. 

Mr. POTTS. Thank you. 

[The prepared statement of Mr. Potts follows:]

74


g:\graphics\44930.038
75


g:\graphics\44930.039
76

Mr. HORN. So we now have Mr. Walden, and your book we have 

all taken a look at on Best Behavior: The Clinton Administration 

and Ethics in Government. And we appreciate that bit of scholarship, and we hope you are not losing too many clients as a result 

of that, but welcome. 

Mr. WALDEN. Thank you, Mr. Chairman. My name is Gregory 

Walden. I am counsel with the law firm of Mayer, Brown & Platt. 

The testimony I will provide today, however, is solely my own, and 

it is based largely on my experience as Associate Counsel to President Bush where I served as day-to-day ethics advisor to the White 

House staff. 

I am pleased to endorse the bill before you as it is the same provision which passed the House last year as part of H.R. 3452. 

This legislation is needed because the current statutory definition of ‘‘special Government employee’’ does not provide fair notice 

that informal advisors who act as de facto Government staff are 

subject to the criminal conflict of interest provisions and financial 

disclosure obligations. Clearer standards as to what conduct triggers application of the conflict of interest laws are needed in order 

to safeguard the public interest against improper access and influence by outside consultants on behalf of private interests. 

Initially, the Clinton administration failed to appreciate the serious ethics concerns resulting from its heavy reliance on outside 

consultants. Only belatedly did the White House recognize that it 

needed to take steps to alleviate the public’s suspicion. The current 

administration’s difficulties and the likelihood that future administrations will also stumble confirm my conviction that reform is 

needed. 

The bill would not change the substantive definition of ‘‘special 

Government employee’’ as that term has been interpreted and applied by the Justice Department and the Office of Government Ethics. But the DOJ and OGE interpretations are not well-known 

even, I suspect, within the ethics community. The functional test 

enunciated in these interpretations, which looks to whether and to 

what extent the informal advisor is performing a Federal function, 

apparently has not been the subject of frequent application or further elucidation for the benefit of agency management and ethics 

officials. Consequently, informal advisors are currently at risk of 

becoming a special Government employee without knowing it. 

Perhaps more significant, the public confidence in the integrity 

of Government decisionmaking suffers when outsiders are free to 

act as de facto Government staff without being subject to the ethics 

restrictions intended to maintain the public’s trust. 

The bill before you does about as good a job as any in addressing 

a problem without creating additional ones or raising questions as 

to its possible over- or underinclusiveness. Indeed, the restructuring of section 202 and the codification in Title 18 of the definition of ‘‘officer’’ or ‘‘employee’’ are additional improvements in the 

clarity of the law. 

That said, codifying the functional test will not obviate the exercise of judgment and fact-specific determinations. The bill adopts 

the functional test by providing that advisors or consultants who 

are not expected to work more than 130 days in any 365-day period 

are SGEs if they perform a Federal function under authority of law 

77

or an executive act. The bill defines ‘‘Federal function’’ to include 

supervising, managing, directing, or overseeing other Federal employees, obligating Federal funds, or conducting or organizing 

meetings, or regularly providing advice to Federal employees as 

part of the Government’s internal deliberative process. 

The bill properly excludes representatives who are appointed for 

the very purpose of representing a private or non-Federal interest 

on an advisory committee or board. The bill also properly excludes 

independent contractors, although not expressly, because they are 

not under the supervision of any Federal employee, and supervision 

is a requirement in the bill. 

The provision with the most play in it, yet perhaps the most important clarification of the law, is the regular advice trigger. The 

word ‘‘regular’’ is intended to exclude the single visit or occasionally 

held meetings. The term ‘‘deliberative process’’ is well-known to executive branch agencies. It consists of inter- and intra-agency discussions and written communications which lead to an agency decision. 

By confining this provision to the Government’s internal deliberative process, the provision is intended to exclude situations 

where outsiders meet with or call up Government officials to complain, explain, lobby or ask for help. 

Frequent Hill contacts by lobbyists or a constituent would not 

make that person an SGE unless he or she were to function as a 

de facto staffer regularly participating in meetings closed to the 

public in which legislative policy, strategy and tactics are discussed. 

Again, the occasional internal meeting in which an outsider is invited to participate would not by itself make the outsider a special 

Government employee. 

So I do not think that this bill would chill the regular exchange 

between the President and outside advisors or between Members of 

the House or Senate and their constituents or other members of 

the public. 

I thank you for the opportunity to provide these views and remain available to answer any of your questions. 

Mr. HORN. Well, we thank you both for your statement, which is 

in the record, as well as the summary. 

[The prepared statement of Mr. Walden follows:]

78


g:\graphics\44930.040
79


g:\graphics\44930.041
80


g:\graphics\44930.042
81


g:\graphics\44930.043
82


g:\graphics\44930.044
83


g:\graphics\44930.045
84


g:\graphics\44930.046
85


g:\graphics\44930.047
86


g:\graphics\44930.048
87


g:\graphics\44930.049
88


g:\graphics\44930.050
89


g:\graphics\44930.051
90


g:\graphics\44930.052
91


g:\graphics\44930.053
92


g:\graphics\44930.054
93

Mr. HORN. You heard, perhaps, the discussion of the ranking 

Democrat, Mrs. Maloney of New York, and her concerns. What is 

your reaction to that? 

Mr. WALDEN. I don’t believe the bill as drafted poses any threat 

to the regular exchange of communications between the President 

and outside informal advisors, with this caveat: It is one thing for 

any President to call up a friend or someone on the outside and to 

speak with that person on a regular basis on issues of Government 

policy. It is quite another thing to invite that same person inside 

the White House to participate in meetings with other White 

House or executive branch staffers, where those meetings are held 

to arrive at a Government policy or decision. 

If that is done on a regular basis, there really is no functional 

distinction, no factual distinction, between the outside advisor and 

the full-time Government employee. And in those situations, the informal advisor should be deemed a special Government employee 

and subject to the ethics laws as if he or she were a full-time Government employee. 

This bill will not, however, chill the exercise of the President soliciting advice from outsiders or Members from soliciting outsiders. 

As an example, if the President wanted to—any President wanted 

to, on a weekly basis, have the president of the AFL–CIO in on 

Mondays and the president of the Chamber of Commerce in on 

Tuesdays, 52 weeks a year, for one-on-ones to get their outside 

views on what labor wants or what business wants, I do not believe 

that would make them special Government employees. 

Mr. HORN. What would they have to do to become a special Government employee? Suppose the President said, boy, I’d sure like 

that carried out, and expressed his interest, and one of these gentlemen or women, as they walk out of the White House, go in to 

see the assistant to the President in charge of that area and say, 

by the way, Pete, the boss and I were just talking, and he wants 

this done. Does that trigger the special Government employee? 

Mr. WALDEN. Well, it might if it is done on a regular basis. Certainly, the way I would read the bill, if the President is deputizing 

an outside consultant to supervise or carry out a Federal policy by 

supervising or directing other Federal employees, then that is covered by the bill, and it ought to be covered by it. 

Mr. HORN. Is that directing or just giving the assistant a hot tip 

about what the boss plans to do? 

Mr. WALDEN. Well, this goes back to what I said before, that 

even the best crafted bill is not going to obviate the exercise of discretion or fact-specific determinations. And mere conduit information perhaps would not trigger the requirement that someone be 

supervising or directing, but again, with high-profile friends or associates of a President communicating Presidential wishes and desires to lower level officials, I think implicit in that is that it is not 

simply a communication of information, but that the President has 

deputized that person to carry out a Presidential directive. 

Mr. HORN. Well, let’s say in his chat with the President, the 

President says, as Roosevelt certainly had, the problems—since 

this is the week for his monument to go up—the arguments between, say, Louis Howe, informal advisor, and Harry Hopkins, informal advisor; the habit he had of setting agencies and Cabinet 

94

Secretaries against each other in competition in the case of Hopkins of WPA and Ickes of PWA as he walked out and talks to the 

President, and he says, hey, I have a problem with a bunch of 

these guys. One wants to do this, and the other wants to do that. 

And maybe if they did it strongly enough, I could get this other 

character who is too important to me politically for me to really 

turn down, but I could accept something someone else does. And 

in a sense it is a tip that, hey, why don’t you mobilize this person—

he didn’t say it directly—and get that person to really get moving 

and get his staff working on the right memoranda and paper and 

all the rest so I can sign off on this thing. Does that conversation 

make any difference? 

Mr. WALDEN. A single conversation, I don’t believe, would give 

me or should give us a problem. I would want to know whether 

that is a single occurrence or whether, after the tip or the information is provided, whether the outsider stays in the matter and follows up to see that that is carried out. If there is followup, it looks 

as if the person is again acting as a supervisor. But if, after that 

one meeting with the President, the person on the way out goes 

over to the Old Executive Office Building, knocks on the door and 

says, I just had a meeting with your boss, and this is what he 

wants done, and I have a plane to catch, and that is the end of it, 

and that informal advisor doesn’t come back and doesn’t follow up 

on the issue, I don’t think that makes the person a special Government employee. 

Mr. HORN. Suppose he dictates a memorandum for the assistant 

to sign on his way to the airport or before he leaves for the airplane. Does that dictation of a memorandum, which looks like now 

the assistant is recommending it, does that trigger the special Government employee? 

Mr. WALDEN. If that is done on a regular basis, I think yes. 

Mr. HORN. What you are saying is that there needs to be a pattern and practice of behavior. 

Mr. WALDEN. That is right. 

Mr. HORN. Not just one or two instances. 

Mr. WALDEN. That is right. I think regularity modifies the provision of advice and the conduct of meetings. I think if you are obligating funds or you are supervising, I don’t believe there is a regular—I don’t think ‘‘regular’’ in the bill as drafted right now modifies supervision or direction or management, but I believe that is 

implicit in the bill. Again, if it is just passing along information, 

it probably doesn’t amount to supervision because there is no followup. 

Mr. HORN. Suppose the President has a retreat at Camp David 

for the Cabinet, and at one retreat, maybe he does this every 6 

months, he has in the president of the AFL–CIO, for example, and 

they are sitting there arguing over everything in terms of what the 

policies ought to be, not just in labor, but health and human services, education. The AFL–CIO has a broad agenda. And in another 

6 months he brings in the head of the U.S. Chamber of Commerce, 

same thing. He is an active participant while the Cabinet is away 

with their shirtsleeves thinking, where do we go from here? Does 

that trigger anything? 

95

Mr. WALDEN. Well, if it is done on a single-time basis, I don’t believe it does under the bill as drafted. 

Mr. HORN. So they have to suffer through two or three retreats 

on a regular basis? 

Mr. WALDEN. Well, I don’t know if a number fairly can be placed 

on this. I think you have to look and see again what is actually 

being done by this advisor or consultant. Is it something that without the person knowing the identity and profession of the person, 

an outside observer, coming into the room not knowing anybody 

where they work, would say, oh, yes they are all Federal employees. If the outsider is acting as if he is a Federal employee—and 

I hate to say you know when you see it, because that was the 

standard that Potter Stewart used to define obscenity. This bill is 

far more precisely drafted, and I endorse it on that basis, but there 

is still play in it, and there is still flexibility, and it still depends 

a lot on the facts. 

I don’t believe that anyone would be prosecuted for violating the 

conflict of interest laws in a situation where the application of the 

special Government employee definition to that person would be 

subject to reasonable dispute. 

Mr. HORN. Of course. It is dubious if anyone would be prosecuted 

for anything if the President is the appointee of the U.S. attorney. 

I doubt if somebody is going to bring charges, right? We have a real 

problem there in any administration. Your friendly U.S. attorney 

gets a call from the President and says, what are you doing to my 

boy, et cetera. So maybe it is not a worry on this. 

I am curious on the degree to which this applies to congressional 

staff, and are there different examples that perhaps have you had 

experience from or that can you frame that relate to congressional 

staff doing something like some of the examples we have talked 

about in relation to the Executive Office of the President? Any feelings on that, gentlemen? Ms. Ley. 

Mr. WALDEN. Well, I would just say that the current law applies 

to special or Government employees retained to advise the legislative branch as well as the executive branch, and this bill would 

continue application to both the executive and the legislative 

branches, I think there may be some different concerns or considerations involved as to the extent to which this definition applies to 

outside advisors who participate on the Hill. But as currently drafted, I again do not believe that it would affect the routine and regular requests that Members and staff make to outsiders to provide 

advice, perhaps even to submit draft legislation for the review of 

a committee or a Member. 

Mr. HORN. Before my time here, starting in 1993, there were 

well-known cases of where spouses who were not on the payroll 

pretty much ran the congressional office; either the spouse that 

was the elected Member who was along in years, perhaps senile, 

and spouses just ran the place. Now, does that trigger the special 

Government employee? 

Mr. WALDEN. I believe it would. If the spouse of a Member were 

functioning as de facto administrative assistant or Chief of Staff, 

I don’t believe there is any. 

Mr. HORN. Any instances in the Office of Government Ethics? 

96

Ms. LEY. Actually it might trigger the definition of a full-time 

Government employee, not just a special Government employee. 

Mr. HORN. What is the trigger, the number of hours a week? 

Mr. WALDEN. 130 days within any consecutive 365-day period. 

The virtue of this legislation as drafted is that by defining ‘‘officer’’ and ‘‘employee’’ and ‘‘special Government employee’’ similarly, 

with the one distinction, or the one major distinction, of time 

served. If you are full-time, then you have the full panoply of ethics 

restrictions. If you are a special Government employee, you have 

the conflict of interest restrictions and some financial disclosure obligations, but other ethics restrictions to a lesser degree. 

Mr. HORN. As you know, our ethics filings in office staffs are different than the executive branch, as I remember, in the sense that 

you pick one person—it is automatically triggered by a certain salary level, but you can pick another person that is less than that 

salary level, or you could put them all in for that matter, but it is 

much more discretionary than I think it is in the executive branch. 

Have you ever been consulted on cases like this? 

Mr. POTTS. I am not sure what you mean, consulted. You are absolutely accurate, Mr. Chairman, in describing our system as the 

financial disclosure system being pretty much dictated by the statute we operate under, even down to the categories of the financial 

worth of the assets that are disclosed. 

So, we really don’t have a lot of flexibility in establishing our 278 

financial disclosure form. Then we do have a separate, less burdensome confidential disclosure system, which we developed for lower 

ranking employees, and which is not available to the public, but is 

available within the agency to supervisors to make sure that, for 

example, the procurement officer doesn’t have a conflict of interest 

in contracting. 

Mr. HORN. You mentioned, I think, in your testimony, it goes 

back to about 1962. Was that Bayless Manning’s book on conflict 

of interest in the Kennedy administration? Is that the origin of the 

office primarily? 

Mr. POTTS. I am really not sure. I think it was really more certain kinds of scandals and whatever, that it occurred. In fact, I 

would say in my office when I arrived 6 years ago, the initial way 

staff would describe certain provisions in the ethics laws was that 

was the Meese amendment or something like that. 

Mr. HORN. Sure. 

Mr. POTTS. Usually these amendments in the acts really were a 

reaction to certain kinds of scandals that had erupted. 

Mr. HORN. Ms. Ley, any comments? 

Ms. LEY. I was just going to say I think that term arose in 1962 

out of this whole period of time previous to that for the, quote, ‘‘dollar-a-year men,’’ and they decided that there needed to be some 

concept of people who provided less than full-time or intermittent 

services to the Government either on a paid or unpaid basis, and 

that they should be—if they were carrying out Federal functions 

and had met the three-part test—that they should meet the conflict 

of interest restrictions. 

Mr. HORN. Interesting. 

Mr. Walden. 

97

Mr. WALDEN. There was a question earlier by another Member 

about the use of volunteers in the White House. 

Mr. HORN. Right. 

Mr. WALDEN. Unless the law has changed since I worked there, 

I would like to offer this: The Bush White House had a number of 

volunteers who worked at administrative responsibilities, such as 

White House mail, because I think the President each year would 

get something like 10,000 letters, or maybe that is 10,000 gifts, and 

maybe it is 100,000 or a million letters, but I think it is more than 

what the taxpayer would want to pay for full-time employees to go 

through mail. 

And so there were a number of volunteers. The volunteers—the 

retaining of those volunteers didn’t violate any law because the 

minimum pay requirements do not—did not at that time, and perhaps still do not, apply to the White House office, and that was a 

determination made by the Justice Department’s Office of Legal 

Counsel, so there was no legal prohibition with retaining volunteers. 

The point of this bill is that if those volunteers are not simply— well, those volunteers, if they are working and performing a Federal function, something that would ordinarily be done by a Federal 

staffer, then they would be subject to the definition of ‘‘special Government employee,’’ but it would not be onerous to them because 

their responsibility is such they would never really be in a conflict 

situation. They would not have to worry about divesting or 

recusing. And they would also probably not be—it would not be 

necessary for them to file even a confidential financial disclosure 

requirement. 

So I don’t think it is a problem. I don’t think that this bill would 

in any way prohibit or restrict the White House’s ability to retain 

those volunteers. I think there is a problem, however, as Congressman Mica said, when you have not someone just simply answering 

mail, but serving in a policy function and working full time and 

having their salary paid from an outside interest. 

Mr. HORN. Should we add an exception for those performing routine clerical functions? Would that cover the White House mail and 

perhaps tours and other things that volunteers might do there? 

Mr. POTTS. If I might add, I want to support what Mr. Walden 

said, because I don’t think that would be necessary. It wouldn’t be 

harmful to have that because it wouldn’t be necessary for the reasons he stated. 

Right now, the vast majority of Federal employees do not file either a public or a confidential financial disclosure statement. It is 

only triggered by certain categories, either by rank or by responsibility, such as being a procurement official or something. 

So I would agree that there would not be, under this, any kind 

of onerous financial disclosure responsibilities or other potential liabilities under the ethics laws imposed on special Government employees that were volunteers as such. 

Ms. LEY. If I may, though, I don’t know that you would want to 

necessarily put in a specific exemption for volunteers, because if 

you found a volunteer who was giving tours—and, please, Mr. Walden, correct me if I am wrong—if you found a volunteer giving 

tours, but making sure that anybody who took his tour had to pay 

98

him, who was selling that access to the White House, you certainly 

would want to have some statute somewhere to say, no, this is 

wrong. 

Mr. HORN. I suspect anybody that gave a tour and charged for 

it would be out on their ear within about 10 minutes. 

Mr. POTTS. I would hope so. 

Mr. HORN. You might be right. 

Mr. POTTS. Mr. Chairman, I wanted to go back and just pick up 

on one point just to make sure, because I know this is something 

that all three of your panel members feel should be done. And I am 

addressing the draft statute on page 4, lines 17, 18, and 19. And 

I believe Mr. Walden referred to this phrase as—and this is talking 

about that you are a special—to be a special Government employee, 

you have got to provide regular advice, counsel or recommendations 

to the President, et cetera, Member of Congress, or Federal or District of Columbia officer or employee, or conducting meetings involving any of those individuals. And then it has the parenthetical 

phrase, as part of the Federal or District of Columbia government’s 

internal deliberative process. 

Our joint concern is that that phrase is really meant to modify 

both the first part of that statement as well as the phrase, conducting meetings involving any of those individuals. 

Currently it might be a little ambiguous as to whether the last 

phrase, as part of the Federal or District of Columbia government’s 

internal deliberative process, only modifies ‘‘conducting meetings,’’

but it should also be redrafted to make it clear that it covers the 

first part of that, providing regular advice, counsel, et cetera. 

Mr. WALDEN. And I think as redrafted, it would respond to the 

concerns expressed by more than one Member, I believe, perhaps 

the ranking member, that we do not want to, by this legislation, 

chill the regular communication between the President or Members 

and outsiders. 

Mr. HORN. Now, obviously, someone is going to raise the problem, is there a spouse situation here? I assume under the ethics 

laws whatever the President files, the spouse is involved in that, 

and there is no worry about that this is directed at any spouse, 

male or female. 

Mr. POTTS. Right. The public financial disclosure statement that 

must be filed by high-ranking, including the President, Government officials, Federal Government officials, in the executive 

branch is a filing which covers the assets, for example, of the filer, 

spouse and dependent children. 

Mr. HORN. Right, and does it go beyond dependent children at 

all to others? 

Mr. POTTS. No. 

Mr. WALDEN. I think there is a concern outside of financial disclosure with the application of section 208, which is the conflict of 

interest statute. The President is exempt from the application of 

section 208, as are Members of Congress, as are congressional staff. 

It is an open question in the sense that it has never been resolved 

by a court as to whether the First Lady is covered by section 208 

either as a full-time Government employee or as a special Government employee. 

99

I believe, and I wrote this in my book, that when the First Lady 

was delegated the responsibility for supervising the health care legislative task force effort, she became a special Government employee for that purpose. Of course, that avoids the question of 

whether any First Lady in their traditional role of supervising 

White House staff, other Federal employees, is a full-time employee. 

I think this issue deserves consideration by Congress because it 

is likely to come up in the future in an increasing manner, and we 

ought to be very clear as to whether the First Lady is covered or 

not covered by the criminal conflict of interest laws. 

Mr. HORN. Well, the First Lady, as you suggest, has headed a 

Federal staff assigned to her for, what, six administrations at 

least? When did it go back? I don’t know if Eleanor Roosevelt had 

any staff, but didn’t Mrs. Truman at least have a secretary? Usually the staff and the First Lady work together, and should we exempt that type of Federal function and strictly get into it if there 

is a policy aspect? 

Mr. WALDEN. There may be a policy reason whereby the traditional function of First Ladies, that is, somewhat diplomatic, somewhat ceremonial, would not—a First Lady who confines herself or 

a First Spouse confines himself to those traditional responsibilities, 

perhaps as a policy matter—should not trigger the full panoply of 

the ethics restrictions, although there would be financial disclosure 

obligations on the President, and therefore, as Director Potts said, 

it would cover the First Lady or the First Spouse. 

But I do think that we are likely to see again, and I think we 

have in the White House right now, although there is no analog, 

I guess, to the Health Care Task Force in 1993 and 1994, I believe 

that Mrs. Clinton is functioning and giving regular advice. 

This is not to be critical of Mrs. Clinton. It is simply that if she 

is being treated, and others in the future are being treated, as de 

facto Chiefs of Staff or assistants to the President and chairing 

meetings and supervising the conduct of White House policy, then 

I believe as a policy matter they ought to be subject to the ethics 

restrictions. 

Mr. HORN. Besides the First Spouse, do we have any sort of automatic de facto staff that you have seen in looking at the House and 

how it functions? Are there other positions that fall into being de 

facto staff? 

Mr. WALDEN. I think in the early days of the first term of the 

Clinton administration, there were several former campaign officials who were involved on a regular basis in meetings to determine the President’s economic policy and other matters. I base this 

on public reports and on several books on the first term of the Clinton administration. 

I think, and I wrote this in my book, I think Paul Begala, probably because of the regularity of his presence in White House meetings and because he was tasked by the President to come up with 

proposals and strategies, was a special Government employee. But 

I am not so sure about James Carville and Stanley Greenberg and 

Mandy Grunwald. Although they were in on a regular basis, they 

may have been only at political strategy meetings. I think their involvement was a lot less. 

100

I would say that, again, based on public reports, Dick Morris, in 

1995 or 1996 was probably a special Government employee. I don’t 

know what he is doing right now. It’s a very, very interesting question, if you are simply a broker between branches of Government, 

what that makes you. But I certainly think that based on what he 

did in 1995, inside the White House, and 1996, he should have 

been treated as a special Government employee. 

And I think the White House—— Mr. HORN. Now, is that because one could say some of these individuals are in private enterprise, they are representing clients besides the President and might well be considered special interest 

advocates, lobbyists, or whatever? Would that automatically trigger 

a financial disclosure, an ethics disclosure of some type? 

Mr. WALDEN. The fact that an outside advisor might have outside interests and is expected to have outside interests and perhaps 

clients, that is the concern that justifies applying the ethics laws 

to that person because of the definition of a special Government 

employee. But in determining whether or not someone is a special 

Government employee, you would not look to what they are doing 

on the outside. You would look to what they are doing on the inside. 

Mr. HORN. Now, some would argue over the years that whether 

you are a Member of Congress or President of the United States, 

you stand for election, and that the people ought to decide those 

questions if an ethical question is raised in the campaign. Is that 

enough, or is more needed? 

In other words, the right to know, you freely don’t know fully unless you have a signed statement, and even then people can lie, but 

there are punishments for lying on those. So what is your feeling 

that in the case of the President, why does he need to have any 

of his advisors, who might well be lobbyists—and we know a lot of 

people have left the White House in both Democratic and Republican administrations and become some of the key people in this 

city, that are legislative advocates. And presumably when they 

come up here in Congress, they are supposed to file that they are 

backing or opposing a particular bill. Who looks at it? None of us 

do. 

I have thought maybe we ought to have them get a button on 

them when they come in, I am for H.R. 1012, and I get $100,000 

a month for doing it. And then we could sort of weigh it one way 

or the other. But none of us really have the time to go tracking 

them down as to have they filed the statements and all the rest. 

The law, as you know, on lobbying disclosure up here has been 

filled with loopholes that really a lot of the most active lobbyists 

are State and local governmental officials. In fact, we have a room 

full of them today, and we had a whole—several rooms of them for 

the last few days. It is sort of the week for governmental officials. 

Now, because they are governmental, they really don’t have to 

file on a lot of these things. I don’t know if the executive branch 

is the same way, but I would suspect mayors, Governors are pretty 

intense in trying to get something done. 

What do you think on some of those problems? 

Mr. POTTS. Well, if I could comment, I think from some of the 

underlying purposes of our ethics program, throughout the GovernVerDate 0ct 02 2002 08:28 Oct 05, 2002 Jkt 077629 PO 00000 Frm 00104 Fmt 6633 Sfmt 6602 W:\DISC\44930 44930
101

ment, but especially in my area of the executive branch, what we 

are trying to do is to give citizens reason to have confidence that 

decisions that are being made in the executive branch are not being 

motivated and improperly influenced by selfish reasons, selfish financial gain. 

And the technique here is really transparency. I guess it is somewhat similar to the way the SEC operates. It doesn’t dictate what 

you do, but what you do, you have to disclose. 

And that is certainly the instance with the President. And in his 

instance, where, as Greg has pointed out, he is not subject to 208, 

which is the conflict provision, we rely there on the citizens to, you 

know, throw a rascal out if they have—if they are acting as President just to feather their own nest. 

With the other officials that are subject to 208, and this comes 

up immediately, for example, with a Presidential nominee, the 

White House and the agency and my office finally does an ethics 

scrub of the financial disclosure statement of the nominee to find 

if there are any conflicts disclosed with the job that that nominee 

is to assume upon confirmation. 

And I would estimate in maybe 30 percent of the cases we find 

there is some either small or large conflict, and we then negotiate 

an ethics agreement with the nominee, which the nominee would 

agree to either divest, set up a blind trust or, you know, some other 

means of resolving those conflicts of interest upon confirmation. 

Mr. HORN. Yes, Mr. Walden? 

Mr. WALDEN. I think with regard to the President and, to a lesser extent Senators and Members of Congress, they stand for election, and their activities are closely watched by would-be opponents, by critics, by gadflies and by the media. This clearly is the 

case with the President. 

So that if there is any allegation or suspicion that the President 

is engaged in a conflict or maybe doing something improper, it is 

likely to be seen and reported and publicly alleged, but not so with 

the White House staff and with lower ranking officials who operate 

perhaps largely outside the public view. There we do need structures in place to ensure that they do not willingly or unwittingly 

run afoul of the ethics laws. 

Mr. HORN. Well, your comments have been very helpful. There 

might be a few questions that staff will followup with that relate 

to specific drafting or something as we reread it for the 10th time 

that we are not quite clear on ourself as to the scope. We plan to 

put the bill in within the next week, and we certainly appreciate 

all the advice and help you have given us. Thank you very much 

for coming. 

Mr. POTTS. Thank you, Mr. Chairman. 

Mr. WALDEN. Thank you. 

Mr. HORN. You are welcome. 

Let me just thank the staff that have helped prepare this hearing. We start with the staff director, J. Russell George, who is modestly sitting over there, without which nothing would get done; 

Anna Miller on my left, the professional staff member responsible 

for this particular hearing; John Hynes, who is not here, professional staff member for communications; Andrea Miller is our 

clerk, who does a terrific job; and the minority we have David 

102

McMillen and Mark Stephenson, professional staff members; Jean 

Gosa is clerk; and our court reporters, Mindi Colchico, I guess it 

is pronounced, and Joe Strickland. Thank you very much. 

The hearing is adjourned. 

[Whereupon, at 4:30 p.m., the subcommittee was adjourned.]

Æ