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84–330 PDF 2003

ACCOUNTABILITY FOR PRESIDENTIAL GIFTS

HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY POLICY, NATURAL

RESOURCES AND REGULATORY AFFAIRS

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

FEBRUARY 12, 2002

Serial No. 107–146

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

BOB BARR, Georgia

DAN MILLER, Florida

DOUG OSE, California

RON LEWIS, Kentucky

JO ANN DAVIS, Virginia

TODD RUSSELL PLATTS, Pennsylvania

DAVE WELDON, Florida

CHRIS CANNON, Utah

ADAM H. PUTNAM, Florida

C.L. ‘‘BUTCH’’ OTTER, Idaho

EDWARD L. SCHROCK, Virginia

JOHN J. DUNCAN, JR., Tennessee

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

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

JANICE D. SCHAKOWSKY, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

JAMES C. WILSON, Chief Counsel

ROBERT A. BRIGGS, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON ENERGY POLICY, NATURAL RESOURCES AND REGULATORY

AFFAIRS

DOUG OSE, California, Chairman

C.L. ‘‘BUTCH’’ OTTER, Idaho

CHRISTOPHER SHAYS, Connecticut

JOHN M. MCHUGH, New York

STEVEN C. LATOURETTE, OHIO

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

——— ———

JOHN F. TIERNEY, Massachusetts

TOM LANTOS, California

EDOLPHUS TOWNS, New York

PATSY T. MINK, Hawaii

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

DAN SKOPEC, Staff Director

BARBARA KAHLOW, Deputy Staff Director

ALLISON FREEMAN, Clerk

MICHELLE ASH, Minority Counsel

(III)

C O N T E N T S

Page

Hearing held on February 12, 2002 ....................................................................... 1

Statement of:

Harshbarger, Scott, president and CEO, Common Cause; Paul Light,

director, Center for Public Service, the Brookings Institute; and Gregory S. Walden, former associate counsel, White House Counsel’s Office,

President George H.W. Bush, and former ethics counsel for Presidentelect George W. Bush’s transition, currently counsel, Patton Boggs

LLP ................................................................................................................. 81

Taft, William H., IV, Legal Advisor, Department of State ........................... 124

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

Harshbarger, Scott, president and CEO, Common Cause, prepared statement of ........................................................................................................... 100

Light, Paul, director, Center for Public Service, the Brookings Institute,

prepared statement of ................................................................................... 84

Ose, Hon. Doug, a Representative in Congress from the State of California, prepared statement of ........................................................................... 7

Otter, Hon. C.L. ‘‘Butch’’, a Representative in Congress from the State

of Idaho, prepared statement of ................................................................... 78

Taft, William H., IV, Legal Advisor, Department of State:

Information concerning the State Department Protocol Office ............. 133

List of gifts ................................................................................................. 134

Prepared statement of ............................................................................... 127

Walden, Gregory S., former associate counsel, White House Counsel’s

Office, President George H.W. Bush, and former ethics counsel for

President-elect George W. Bush’s transition, currently counsel, Patton

Boggs LLP, prepared statement of .............................................................. 90

(1)

ACCOUNTABILITY FOR PRESIDENTIAL GIFTS

TUESDAY, FEBRUARY 12, 2002

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON ENERGY POLICY, NATURAL

RESOURCES AND REGULATORY AFFAIRS,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 10:32 a.m., in room

2154, Rayburn House Office Building, Hon. Doug Ose (chairman of

the subcommittee) presiding.

Present: Representatives Ose, Otter, LaTourette, Duncan,

Tierney, and Mink.

Staff present: Dan Skopec, staff director; Barbara Kahlow, deputy staff director; Allison Freeman, clerk; Phil Barnett, minority

chief counsel; Kristin Amerling, minority deputy chief counsel;

Michelle Ash, minority counsel; Karen Lightfoot, minority senior

policy advisor; and Jean Gosa, minority assistant clerk.

Mr. OSE. Good morning. I’m going to call this hearing to order,

the Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs. For the record, a quorum is present.

To ensure no unfair advantage in the policymaking process or

other governmental benefits to donors, the American people have

a right to know what gifts were received and retained by their

President. Several laws involving six Federal offices and agencies

govern the current system for the receipt, valuation, and disposition of Presidential gifts.

Today we plan to examine how the current system has worked

and what changes, if any, are needed to ensure accountability. In

February 2001, after press accounts of President Clinton’s last financial disclosure report and some furniture gifts returned by the

Clintons to the White House residence, the Government Reform

Subcommittee on Energy Policy, Natural Resources and Regulatory

Affairs began its gifts investigation. Today we will examine the

findings from the subcommittee’s investigation.

Let’s first look at the current system, how the current system

works. The White House Gifts Unit records all domestic and foreign gifts received by the First Family, including the valuation and

disposition of gifts. Under the Presidential Records Act of 1978, the

National Archives and Records Administration [NARA] accepts

gifts for Presidential libraries and stores Presidential gifts that are

not immediately retained by the President but which can be recalled for possible retention by the President.

Under a second law, the Department of the Interior’s National

Park Service, which we’re now going to refer to by its acronym

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NPS, annually makes a snapshot inventory of public property in or

belonging to the White House residence. In addition, NPS officially

accepts gifts for the White House residence.

Under a third law, the Office of Protocol in the Department of

State, which we’re now going to refer to by its acronym DOS, annually publishes a listing of all gifts, both tangible and monetary,

from a foreign government to a Federal employee, including members of the First Family.

Under a fourth law, the Office of Government Ethics, which

we’re now going to refer to by its acronym OGE, receives annual

financial disclosure reports from the President for gifts retained

over a reporting threshold, currently set at $260, from any source

other than a relative.

Last, the General Services Administration, which we’re now

going to refer to as GSA, has detailed staff to the White House

Gifts Unit and is responsible for updating the reporting threshold

for gifts and for disposing of some gifts which are not retained by

the President or sent to NARA. GSA’s regulations require a commercial appraisal for foreign gifts over a reporting threshold that

a Federal employee, including the President, wishes to retain.

Clearly, the current system is a hodgepodge. No single agency is

ultimately responsible for tracking Presidential gifts. Because of

this split responsibility and to ensure accountability, on March

15th of last year, I introduced H.R. 1081, the Accountability for

Presidential Gifts Act. This bill seeks to establish responsibility in

a single agency for the receipt, valuation, and disposition of Presidential gifts.

In its investigation, the subcommittee examined NPS’s annual

inventory and other records for the White House residence, the financial disclosure reports still in OGE’s files, NARA’s database for

the former administration, and the White House Gifts Unit’s database for the former administration. The investigation revealed startling information about retained gifts, valuation of gifts, missing

gifts, legal rulings about gifts, and other findings. Several charts

disclose details of these findings.

Chart I–A shows that the former First Family disclosed over

$360,000 of retained gifts valued at $260 or more, which were required by law to be disclosed and which were disclosed on their annual financial statements.

In December 2000, the former First Lady received $38,600-odd in

China and sterling silver gifts purchased from Borsheim’s in

Omaha, Nebraska. That would be chart 1–B.

It is clear that the former First Lady was registered at

Borsheim’s, and it appears that she solicited these gifts, because

unlike gifts from Tiffany’s, Neiman Marcus, or other fancy retailers

which only require the name of the intended gift recipient to see

his or her gift registry, Borsheim’s Web site says, ‘‘Friend’s Wish

List—View a friend’s wish list (You will need their e-mail address

and wish list password).’’

This means that 11 donors who purchased these gifts from

Borsheim’s needed to know both the former First Lady’s personal

e-mail address and personal password to purchase items from her

wish list. We’ve got some visuals over here about the actual

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Borsheim’s computer electronic registry we’d be happy to have you

look at.

In addition, the former First Family retained thousands of other gifts valued at less than $260, which are not required to be disclosed. Chart II includes an additional $24,000 and change of gifts

valued at $240 to $259. Forty-nine percent of these gifts were not

appraised or otherwise independently valued.

Charts I and II account for about 2 percent of all gifts retained

by the former First Family. The several boxes on display, which are

right down here in front of us, include the one-page gift records for

the remaining 98 percent of the gifts, each valued by the White

House at $239 or less. And there’s 14,400-odd gift records in those

boxes right there. Retained gifts of $260 or more included a variety of items, rang- ing from a $38,000 glass sculpture and a $25,000-odd Lenox crystal

bowl, to $172,000 in art objects and books, $68,000-odd in furniture

such as sofas, chairs and carpets, and a little under $49,000 in

china and silver. Also included was a little over $25,000 in golf

items, a little under $24,000 in clothing, a little under $6,000 in

jewelry and other types of items. Twenty-six retained gifts of $260

of more were not disclosed on the former President’s annual financial disclosure reports. Sixty-one retained gifts of $260 or more

were not appraised or otherwise independently valued.

Many fair trade items, that is, brand name goods widely sold

which were not appraised or otherwise independently valued,

seemed to have been undervalued. Many were valued by the White

House at less than $260 and thus not subject to disclosure.

Chart III–A includes 26 examples of undervalued items. Some of these gifts, if properly valued, i.e., valued at over $260, should have

been included in the former President’s annual financial disclosure

reports or increased in value.

Chart III–B includes information about 109 Baccarat, Cartier,

Ferragamo, Gucci, Hermes, Steuben, Tiffany, and Waterford gifts

retained by the former First Family. Fifty percent of these were not

appraised or otherwise independently valued.

Sixty-nine percent, according to the committee’s investigation,

were in fact undervalued. Examples include a Ferragamo coat estimated at $800, but correctly valued at $1,600 to $2,000; a Tiffany

16-inch silver link necklace valued at $150 on the gift form, but

correctly valued at $450 to $1,000; and an engraved 7-inch by 8-

inch silver Tiffany frame estimated at $40, but correctly valued at

$250 to $375, plus engraving.

Chart III–C includes examples of nonfair trade items which were

probably undervalued, such as various collector’s items, and we

have a display over here that will highlight those items.

Some gifts were misplaced or lost. Chart IV–B includes 30 examples of such, including a 7 foot 3 inch by 6 foot 2 inch oriental rug

valued at over $1,200 and an inscribed Tiffany silver box valued at

just over $270, both of which were ‘‘on loan to the residence,’’ but

later were reported to have been ‘‘misplaced by staff member, never

conveyed to the President.’’ We’ve got some visuals down here that

show that also.

The White House counsel made some unusual rulings relating to

these gifts, which were oddly reflected in the treatment of those

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gifts, and that’s shown on chart V. For example, White House counsel advised that it would be a bad idea to accept 10 shares of General Electric stock and thus, pursuant to that rule, the gift of stock

was returned. However, 15 shares of Coca-Cola stock were offered

as a gift valued at a little over $1,000, and then accepted. Publicly

traded stocks or cash equivalents and cash gifts cannot be accepted.

When you talk about the furniture that we’ve looked at, there

was $94,365 worth, represented by 45 furniture gifts, 6 of which

were never disclosed in the former President’s annual financial disclosure reports. Now, if you look at chart VI, this is where we show

these furniture gifts. Usually, the chief usher for the Executive residence decides if items should be accepted for the Executive residence and then NPS sends an official thank you letter as proof for

the donor of his or her contribution to the Federal Government.

On March 24, 1993, deputy counsel to the President Vince Foster

directed the chief usher that certain items already received by the

White House and certain items not yet received, such as two sofas

valued at $8,750 each and a $4,600 coffee table, were to be accepted by the NPS for the Executive residence. I want to say that

again. Certain items not yet received were directed by the deputy

counsel to be accepted by the National Park Service.

Then in April 1994, a different counsel to the President, Cheryl

Mills, wrote the director of the White House Gifts Unit about these

three items and many others—these three items being the two

sofas and the coffee table—stating, ‘‘The National Park Service initially thought these gifts to the President were to be accepted for

the permanent White House collection; it therefore sent thank you

letters to each of the donors. Upon discovering that the President

had indicated a desire to have these items go to the Clinton Presidential library, the National Park Service elected not to accept

these gifts; therefore, the Park Service never declared these gifts

as accepted for the permanent White House collection.’’ All three of the furniture items in this example were taken from

the White House residence by the former First Family and then returned to NPS in February or March 2001. In fact, it is illegal to

remove U.S. Government property. Therefore, in February or

March 2001, the former First Family returned 25 furniture items

to NPS. In September 2001, NPS apparently returned two of these

items, a $1,725 easy chair and a $675 ottoman, back to the former

First Family, since neither had been officially accepted by NPS for

the White House residence.

Also, four furniture gifts, including a $9,600 TV armoire and a

$3,895 gaming table, were never disclosed on the former President’s annual financial disclosure reports, since the White House

Counsel’s Office stated that they were accepted prior to the inauguration, even though they were not received in the White House

until July 20, 1993. Which begs the question: How do you accept

a gift that hasn’t yet been delivered?

Last, the former First Family still has 21 more furniture items,

none of which ever appeared on NPS’s annual White House inventory. Nineteen of those items valued at over $38,000 were received

on December 1, 2001, that is, after the election of 2000 and before

the inauguration in 2001.

5

We have on display a visual over here that shows that, and

you’re welcome to take a look at it at your leisure.

Chart VII reveals that President George Herbert Walker Bush

received a little under 42,000 gifts in his 4 years in office, which

is an amount similar in magnitude to President Clinton’s 94,000-

odd gifts in 8 years of office. In other words, 42,000 in 4 years;

94,000 in 8. Those seem consistent. During President Bush’s Presidency, which would be Bush 41, the reporting threshold was $100.

In other words, everything over $100 had to be reported and disclosed. At the beginning of the Clinton Presidency, by virtue of

statute, the threshold increased to $250. As noted above, chart II

includes an additional $24,000 of gifts to the Clintons valued just

below the new threshold. The value of gifts to the Clintons from

$100 to $240 was not totaled. As a consequence, I can’t directly

compare the total value of gifts retained by these two Presidents.

However, it should be noted that there is no evidence of improper

gift acceptance, valuation, or retention during the Bush 41 administration.

In summary, I am concerned by many of the subcommittee’s findings. The total value of gifts retained by the former First Family

creates at least an appearance problem. The fact that so many gifts

were undervalued raises many questions, including whether some

were undervalued deliberately. The fact that gifts were misplaced

or lost shows sloppy management and maybe more. The fact that

U.S. Government property was improperly taken is troubling, and

the fact that, after the election of 2000 and before being subjected

to the Senate’s gift acceptance rules, the former First Family accepted nearly $40,000 in furniture gifts and over $40,000 in fine

china and silver. Public servants, including the President, including Members of Congress, including the First Lady, should not be

able to enrich themselves with lavish gifts. The current system is

clearly broken and needs to be fixed.

I want to be clear today about one particular item. I saw some

press reports today that indicated some people think we’re on a

witch hunt. This is not a witch hunt. Ladies and gentlemen, I introduced my bill back in March of last year, and we have been silent as we’ve done this investigation. We have not sniped. We have

not attempted to disparage people. We have sought the facts. And,

it is clear from the evidence we have gathered that there is something wrong with the system by which Presidential gifts are received, recorded, valued, and disposed of.

We have examined over 41,000 gifts to come to this conclusion.

Now, as an aside, I want to thank my friend, Henry Waxman.

When I went and spoke with him in March of last year, he suggested very strongly to me when I asked him to cosponsor my bill

that I did not have sufficient evidence to basically bring this bill

forward, and at his suggestion we undertook a significant investigation about all of this. We are trying to fix a system that has

six different agencies and departments participating in the recordation, valuation, and disposal of Presidential gifts. This is not what

I would call good management. We need to bring it under one

agency and department, and then we can satisfy the people of this

country that nothing untoward is happening.

6

I want to welcome our witnesses today. I do want to reiterate

that we would not be at this point today had Henry Waxman not

taken the time to sit me down and say, ‘‘You need to build your

evidentiary case.’’ And, I want to thank him publicly for the guidance he gave in that respect.

[The prepared statement of Hon. Doug Ose follows:]

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Mr. OSE. With that, I’ll yield to—for an opening statement to Mr.

Otter.

Mr. OTTER. Well, thank you, Mr. Chairman. And I appreciate the

witnesses coming before us today and look forward to their testimony. I am both pleased and concerned with the necessity of today’s hearing. I am pleased that the chairman and this subcommittee have taken an interest in investigating the processes of accountability for Presidential gifts. However, I am concerned that

those in the highest offices have given us reason to question the

process of accountability by demonstrating that there is a legitimate and obvious need for a more effective and efficient accounting

system.

Nonetheless, I appreciate the opportunity to review the current

Presidential gifts accountability system, and I look forward to the

testimony that we’re going to receive today. And, I only conclude,

Mr. Chairman, by saying that I am sure that the process that we

now have and the litany of events that you just went through during your opening statement is not what was intended by the makers of the legislation that’s governing this, and I thank you.

[The prepared statement of Hon. C.L. ‘‘Butch’’ Otter follows:]

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Mr. OSE. I thank the gentleman. Gentlelady from Hawaii.

Mrs. MINK. I’ll reserve my time until after the witnesses have

testified. Thank you, Mr. Chairman.

Mr. OSE. If I understand procedure correctly, opening statements

cannot be made after the witnesses testify. You’ll have plenty of

time.

Mrs. MINK. I’ll reserve for questioning.

Mr. OSE. OK. That would be fine. Mr. LaTourette.

Mr. LATOURETTE. Thank you, Mr. Chairman.

Mr. Chairman, I want to commend you and the staff of the subcommittee for the fine work that you’ve done in evaluating the gifts

that were received by the former administration over the last 8

years and also looking at the previous administration of George

Herbert Walker Bush and the conclusions that your report brings.

As the House this week talks about campaign finance reform,

and we determine in the House of Representatives what rules and

regulations and laws are going to guide us as we attempt to get

elected and reelected, I think that this is a timely manner for this

subject matter. I think many Americans, regardless of whether the

President is a Republican or a Democrat or who the President happens to be, are probably not aware of the fact that Presidents receive, according to your figures, about $40,000–$45,000 in gifts of

great value during the course of a 4-year term, and a two-term

President, such as President Clinton, close to $95,000 in gifts.

I think they’re unaware, perhaps, that the value of those gifts approaches and exceeds in some instances $1 million by the time

all is said and done. And, regardless of how you feel about Presidents receiving gifts or not receiving gifts, I think that there’s

going to be some testimony before us today that there should be

caps or exclusions or limitations.

And, I for one don’t have any problem with Presidents getting

gifts. I think that’s OK, but I do think that what’s appropriate is

that the public should know where those gifts came from, how

much they’re worth and whether the purpose of the gift is to benefit the country and the White House or it’s a direct gift to a member of the First Family.

And, your legislation, as I understand it, H.R. 1081, does just

that. I was thinking over the weekend as I was reviewing the materials, one of my favorite television programs is a program called

the Antiques Road Show where they sort of line everything up and

people bring things in, and they say, ‘‘Oh, I found this in my basement and it belonged to my great grandma. What do you think it’s

worth?’’ And, always during the course of that show, you find out

that someone has, you know, this nugget that’s worth $50,000–

$60,000.

The question of valuation, I think, is important, and, unless you

have one set of rules and you have one appraiser or one set of rules

by which things will be appraised, I think any administration is

subject to criticism and question. Some of the questions you are

asking in your opening remarks, if you have a—it doesn’t matter

whether the threshold is $100 and then you look at a report and

everything comes in at $99.99, or whether the threshold is $260

and everything is valued at $259.99, I think people can ask questions.

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As I went over the list, I certainly am no shopping maven, but

I did see an Yves Saint Laurent suit, and I think it was valued at

$248, which was below the $260 threshold. Now, I have trouble

going to Penney’s and buying a suit for $248 today, and so it really

boggles the mind that Yves Saint Laurent, unless, you know, you

went to the men’s warehouse or some such place and got a knockoff

sale, that’s an actual—an actual valuation.

So I think, again, for friend and foe of every administration, I

think everybody should feel more comfortable if we have one place

looking at them, cataloging them, telling us how much they are,

whether they’re intended for the White House or for the First Family, and where they go when the President leaves office. And, your

legislation does it. I commend you for drafting it and I also commend you for convening this—for this hearing today. I yield back

my time.

Mr. OSE. I thank the gentleman. Mr. Duncan.

Mr. DUNCAN. Well, thank you very much, Mr. Chairman, for

holding this hearing and for your leadership in calling attention to

this matter that should be an issue of national importance. I’m

sure that most Americans would be very surprised to learn that

former Presidential administrations have kept hundreds of thousands of dollars’ worth of gifts without disclosing them, or disclosing them with a grossly undervalued price.

I’m told that we will hear today that this problem is much worse

than we thought. In fact, staff has just told me that the Clinton

administration accepted gifts, that we know about, totaling

$360,000 and that there were many, many others; that apparently

this is just the tip of the iceberg and that there were many, many

other gifts that were either undervalued so they wouldn’t have to

be reported, or that weren’t reported at all. In fact, I think it’s fair

to say this is unprecedented in American history.

With several different agencies that have jurisdiction over Presidential gifts, there will inevitably be problems with recordkeeping

and disclosure. Is this the case with all government bureacracy

that there is waste, fraud and abuse? I’m not sure, though, that it’s

to the scale that it apparently has gone on in the last few years

at the White House. I always tell people that we would be much

better off with a much smaller, more efficient government, and certainly I think what we will hear today underscores that.

I look forward to the testimony of the witnesses. I’m hopeful that

we can work toward a solution to this problem that will bring consolidation and accountability, and especially honesty to the recordkeeping of Presidential gifts. I feel certain that the administration

that’s in the White House today will not repeat what has gone on

in accepting gifts over the last few years.

Thank you very much, Mr. Chairman.

Mr. OSE. Thank you, Mr. Duncan.

Our practice in this committee is we swear in our witnesses. I

know that Mr. Harshbarger is not here yet. When he comes, he will

be sworn in also. So, gentlemen, if you’d rise.

[Witnesses sworn.]

Mr. OSE. Let the record show the witnesses answered in the affirmative.

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We are joined today on this panel by two witnesses. We have Dr.

Paul Light, who’s the Director, Center for Public Service at the

Brookings Institute.

And, we have Gregory Walden. Mr. Walden, your resume is long.

I’ll suffice it to say that you’re currently counsel at Patton Boggs,

and you served as the ethics counsel for President-elect George W.

Bush. And, you served as the associate counsel in the White House

Counsel’s Office under President George Herbert Walker Bush.

Gentlemen, we have your testimony. We’re going to recognize

each of you for 5 minutes in turn. If you could summarize, we’d be

grateful, so we can get to questions.

Dr. Light.

STATEMENTS OF SCOTT HARSHBARGER, PRESIDENT AND

CEO, COMMON CAUSE; PAUL LIGHT, DIRECTOR, CENTER

FOR PUBLIC SERVICE, THE BROOKINGS INSTITUTE; AND

GREGORY S. WALDEN, FORMER ASSOCIATE COUNSEL,

WHITE HOUSE COUNSEL’S OFFICE, PRESIDENT GEORGE

H.W. BUSH, AND FORMER ETHICS COUNSEL FOR PRESIDENT-ELECT GEORGE W. BUSH’S TRANSITION, CURRENTLY

OF COUNSEL, PATTON BOGGS LLP

Dr. LIGHT. Thank you very much for inviting me today. This is

a tough hearing. It involves a trip down memory lane, or so to

speak, that is sometimes difficult.

Focusing more on the present and looking at the nature of the

system, I think we can all conclude that the system is clearly broken. My colleague here to the left will talk in more detail, I’m sure,

about the regulations governing gifts. From my perspective as a

student of government organization and performance, the disclosure principle is spotty. Valuation is very much in the eye of

whomever happens to be doing the beholding, and the public can

have little confidence that there’s consistency across this six-headed system.

It seems to me that there’s clearly a need for an integrated career-driven disclosure optimal—not disclosure optional—process.

The key point of my testimony is simple, however. I’ve submitted

it, and I’m delighted you’ll include it in the record.

My argument and my testimony are that the priceless gift that

Presidents receive, as well as Members of Congress and career public servants, is public confidence. Confidence most certainly went

up immediately after September 11th, but it appears to have

crested in October, and it’s now in decline. Confidence in the elected officials such as Members of Congress, Presidential appointees,

and Federal Government workers is all down according to a survey

that we conducted last weekend through Princeton Survey Research Associates of 1,090 Americans. Confidence in Members of

Congress is down 10 points since October, Presidential appointees

11 points since October, and Federal Government workers 9 points.

It’s hard to blame the decline on any one event. We did not ask

in the survey what might explain the decline in confidence. It’s

likely a return of natural, healthy skepticism toward government.

Enron, the current battle between GAO and the Vice President,

doubts about campaign finance reform, you name it; there’s a fair

amount of packing in a survey like this. Even as confidence went

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up during September, October, and November, Americans obviously

retained doubts about the motivations and ability of government to

respond to the crisis. All of this information is available through

the Presidential Appointee Initiative Project of the Brookings Institution and can be found at our Web site at

www.appointee.brookings.org.

I doubt that Presidential gifts have anything whatsoever to do

with the decline of trust in government, just as they had nothing

to do with the surge, but I do want to illuminate for the subcommittee two findings in our survey over the weekend. No. 1, few

Americans believe that gifts are given out of generosity or affection

for the President. Just 21 percent of the 1,090 Americans selected

at random that we interviewed said that gifts are given mainly because givers appreciate the work a President is doing. Sixty-three

percent of Americans say that gifts are given because givers are

trying to win favors or influence decisions. That’s an unhealthy

finding. It’s a troublesome finding. It deals with both the present

and the past and is a stain on public attitudes toward what goes

on in the conversations that occur between givers of one kind or

another and their elected officials.

Second, we asked all respondents to give us an estimate of how

big a gift needs to be in order to win favors and influence decisions.

Twenty percent of the Americans we interviewed at random said

that a gift has to be less than $500 in order to influence the President or win favors from the President, and that’s present tense. Remember that this is in a moment where the surge in confidence in

the President is unbelievable, and yet 63 percent of Americans say

that gifts are currently being given to win favors or influence decisions. And 20 percent of those who say that gifts are being given

for that purpose say that it takes a gift of less than $500 to influence the President or win favors from the President. Ten percent

said that the gift had to be between $500 and $1,000 to win influence. Fourteen percent said that the gift had to be more than

$1,000 but less than $5,000, and 32 percent said that it had to be

more than $5,000. There’s a little bit of hope there. A small minority says that the gift has to be very low in order to win influence,

but at least a-third of Americans say it’s got to be greater than

$5,000. So at least they’re saying the price tag is high, but it’s a

deeply troublesome kind of outcome.

For those of us who study trust in government, confidence in government, we hate to see these kinds of findings whenever they pop

up. They show the deep cynicism that Americans hold toward government. Even in a period where Americans have rallied around

government, they still believe underneath that the motivations of

elected and appointed officials are not in the right place.

I talk about three possible solutions to this problem:

An outright ban on gifts. It’s hard to adopt a position like an outright ban, to admit that we’ve gotten to the point where there is

no such thing as a gift any longer. That just strains my ability to

accept the cynicism.

A second solution would be an outright ban at certain points in

term. You could say basically that a President-elect cannot accept

gifts before inauguration. You could say that a President cannot accept gifts after the election, at the end of the second term. I mean,

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you could put limits on when gifts could be accepted, but I suspect

it would just create a mad rush to bring in gifts right after the date

at the beginning and right before the date at the end.

The third option is maximum disclosure on four questions: who

gives the gifts, what did they give, what is the value, an estimated

value using a consistent, clear process for determining, and when

was the gift given?

You could ask for possible disclosure of a fifth question: How was

it given? How we get gifts matters. I don’t know how we would regulate that as to whether the gift is given in person or by mail. I

don’t know whether we want to go down that path.

And we cannot know the answer to a sixth question, which is

why a gift is given. We want to hope for the best from our Presidents and elected officials. We also want to make sure that the

sunshine of disclosure shines brightly on whatever occurs, and that

means a consistent administrative process for the disclosure of

Presidential gifts.

I’ll await your questions and appreciate the opportunity to testify.

Mr. OSE. Thank you, Dr. Light.

[The prepared statement of Dr. Light follows:]

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Mr. OSE. Mr. Walden.

Mr. WALDEN. Thank you, Mr. Chairman, members of the subcommittee. My knowledge of and experience with the Presidential

gift law system comes from my service in the first Bush White

House, where I reviewed financial disclosure statements of White

House officials and also provided regular advice to the White House

Gift Office staff. The views expressed at this hearing are solely my

own.

Accountability is important for several reasons, not the least of

which is there are laws on the books regarding the acceptance, disclosure, and disposition of gifts to the President. But even if no

laws were on the books, it would still be important to have in place

a system for accounting and screening of gifts to prevent any

undue criticism of the President or the First Family because of the

nature of the gift, the timing of the gift, the frequency of gifts, the

identity of the donor, or the value of the gift.

Regardless of their legality, gifts to the President and First Family have the potential for setting off a torrent of public criticism.

There is always the potential for embarrassment because of who

the donor is or what he has done or is about to do, completely unrelated to the nature of the gift. But the criticism may also suggest

venality, where the donor is perceived as seeking favors from the

President. Or the gift is made contemporaneously with the White

House’s consideration of a bill, a policy, or other action likely to

have an effect on the donor or the donor’s business.

I also agree that the system for logging, valuation, screening, acceptance, disposition and disclosure of Presidential gifts could be

greatly improved. Now, I come to this conclusion belatedly, because

from any vantage point in the first Bush’s White House Counsel’s

Office, I did not find any fault with how the Presidential gift system functioned. But evidence of multiple errors and abuses regarding gifts to the former President lead me to question whether the

system contributed in any way to what apparently happened.

There are three general characteristics of the Presidential gift

system, as it has developed over the years, that pose risks: the

sheer volume of gifts, the relative informality of the process, and

the complexity of the system of gift laws and policies. Mistakes and

corruption alike can flourish in any system featuring a mix of these

characteristics.

First, we’ve seen that the President receives about 10,000 gifts

each year, many of which are presented directly in the Oval Office

or the East Wing or at the residence or on the road. In fact, the

events at which a President does not receive a gift of some sort are

few in number. Given the volume of gifts and the manner in which

they are presented, it would not be surprising to find that some

gifts slip through the cracks.

A second vulnerable feature of the system is its relative informality. Necessarily, the President and First Lady, like all White House

staff, are under an honor system to notify the Gift Office of all gifts

they receive, but no self-reporting system is perfect, of course. And

when I was in the Bush White House counsel, there was no mandatory review by the Counsel’s Office of gifts received, as we never

saw any cause for such a review. I would tend to believe that there

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was no Counsel’s Office review of the gifts received in the former

administration because of the multiplicity of errors.

There’s no law, other than the Foreign Gift and Decorations Act,

governing whether a President may accept a gift in the first place.

Now, this is not to say there were no controls in the gift system

during the first Bush White House for gifts valued over the reporting threshold at the time, $100, which the President was inclined

to accept personally. A comprehensive review was conducted during

the preparation of his financial disclosure reports, first by the

President’s personal attorney and subsequently by the Counsel’s

Office. This review was effective in ensuring gifts subject to disclosure were properly described and valued and also served as a second screen for the potential to embarrass the President or give the

appearance of impropriety.

Third, we’ve heard from the chairman how complex the current

system is in matters of laws and policies, and I go into that complexity in greater detail in my prepared statement. Now, given this

intricate web of law and politics, it was and is imperative to staff

the White House Gift Office with experienced and conscientious individuals.

The investigation this subcommittee has conducted reveals that

the Clinton White House failed to register gifts, failed to report

gifts, and undervalued gifts. There is evidence that gifts may have

been solicited, Federal property converted, and false statements

made on the President’s financial disclosure reports.

Now, conversion of Federal property and false statements on financial disclosure reports are crimes. So, it is my view, based on

what has been presented today, that this evidence is serious

enough to warrant a referral to the Department of Justice.

Now, it appears that the system broke down in the last administration. I ask, is it a failure of people, or is it a failure of the system of laws and policies? At first blush, I believe both played a

role, but I hasten to add that whatever shortcomings of the system,

it is ultimately people who are responsible for complying with laws

and policies. The laws and policies on the books should have been

clear enough to ensure compliance.

So at this point I’m not sure that we need legislation to fix what

occurred. I would recommend some modest measures—they can be

legislated or they can be adopted administratively, and they’re detailed in my prepared statement—which I believe would reduce the

risk of error and the opportunity for abuse.

A final point: while Congress is certainly entitled to assert its

oversight authority to ensure the integrity of any Presidential gift

system, it also ought to respect the legitimate privacy interests of

the First Family.

Thank you.

Mr. OSE. Thank you Mr. Walden.

[The prepared statement of Mr. Walden follows:]

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Mr. OSE. Mr. Harshbarger, welcome. Appreciate your making it.

I need to swear you in here as I did the other witnesses.

[Witness sworn.]

Mr. OSE. Let the record show the witness answered in the affirmative.

The others have testified in summary on their prepared statements, which we have received. We appreciate your forwarding

that. We’re going to give you 5 minutes and we’d welcome your

summary also.

Mr. HARSHBARGER. Chairman Ose, thank you, and I apologize for

being delayed. I’m very, very sorry about not being here on time,

and Vice Chairman Otter, I’m glad to be here.

As a former attorney general of Massachusetts, I worked extensively on issues relating to ethical standards for public officials.

Now, as President and CEO of Common Cause, I lead an organization of 200,000 members that has worked for 30 years to make government more open, honest, and accountable. Probably no issue has

been as consistently a part of our agenda, perhaps with the exception of campaign finance reform, than the issue of gifts and public

officials, which has been a concern over the past decade. We

worked hard to pass the congressional gift restrictions.

At its core is an issue of public confidence in their officials and

government, and, of course, it’s also a vehicle that people have used

and abused at various times to find other ways to gain influence

and access beyond any legitimate purpose in those gifts. Various

legislative solutions have both been proposed and enacted, and also

various ethics, laws and rules, rules and regulations relate to that.

A year ago, I guess if we’d have been here—and I think that Dr.

Light and I were here at one point—we would have dealt with the

issue of Presidential libraries and contributions. There had been a

really dark ethical cloud about the question of how the President— in this case President Clinton, the Democratic administration—had

used various vehicles to obtain apparently favors or the perception

of favors, whether it was in terms of the Presidential Library, legal

defense funds, or this issue of getting and receiving gifts and how

they ought to be claimed. And, we were talking at that time in the

context also of the Marc Rich pardon about this culture of influence

that appeared to dominate. It was not partisan. It was not Republicans or Democrats. It was a culture that appears to have dominated this city and many State capitals. And again today, that sort

of dark ethical cloud is looming, this time in the case of testimony

that’s occurring in other places, I know you’re very involved in as

well, about the issues that relate to special interest dominating our

political process, our policymaking process, by purchasing influence, access and ultimately policy, and often simply purchasing

their way out of legitimate government oversight. The ability of

those special interests to lavish gifts on the President, the Vice

President, and their families as a means of influencing the White

House is a major part of the ethical problems in politics today.

Presidential gifts are a part of the culture of influence in Washington in which special interests buy influence and access with

gifts, contributions to Presidential libraries, donations to academic

institutes named after Members, and the most corrupting force in

politics today, the ones to which most parties have become adVerDate 11-MAY-2000 11:33 Mar 07, 2003 Jkt 000000 PO 00000 Frm 00102 Fmt 6633 Sfmt 6633 C:\DOCS\84330.TXT HGOVREF1 PsN: HGOVREF1
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dicted, which is soft money, all undermine Americans’ confidence in

their government and allow special interests to dominate the policymaking process.

However, it seems to us that, to fully understand what’s needed

to clean up American politics, the problem with the White House

gifts cannot be viewed in a vacuum. It’s part of the broader issue

of an entire river of special interest money that’s drowning our political system today. Obviously, you gentleman will face that over

the next couple of days when Shays-Meehan is being debated.

We believe that banning soft money will end the most corrupting

force in politics today, the soft money system, and we do think that

issues that you’re dealing with need to be viewed as part of the

general culture and not simply issues of what are the appropriate

limits on gifts, either foreign or domestic gifts, to an officeholder.

As has been pointed out, if gifts given are for a quid pro quo, it

can be a crime. But the reality is that we have a perception here

the way gifts have been dealt with, and we think that Shays-Meehan, in addition to other things that will be done to shut down this

corrupt soft money system, will also help a great deal in dealing

with this issue.

But, specifically on the topic of gifts, we think it’s important to

recognize the threat that gifts present to the public interest. They

create an appearance of corruption that’s harmful to the public’s

confidence and the Presidency, public officials, and government in

general. Even if the act of taking a gift does not corrupt the public

official’s judgment, the appearance of corruption undermines citizens’ faith in their leaders and their government. Any gift beyond

a small token of appreciation presents a conflict of interest that

may affect a President’s judgment and allow special interests to

overshadow the public interest. Even a President with the best intentions can be inadvertently influenced by gift-givers. More importantly, it creates the perception of influence and that this is one

way to get influence and access.

Members of Congress are not allowed to accept gifts greater than

$50. Executive branch employees can’t accept gifts greater than

$20. However, there’s an exception for the President or the Vice

President in various protocol and etiquette situations.

We believe it’s OK for a President to accept expensive gifts on

behalf of the State, but he or she should be restricted in the types

of personal gifts they can accept. With this in mind, as our testimony makes clear, Common Cause proposes the following policy

changes: Create clear new regulations for Presidential gifts; set a

maximum value for gifts received; publicly disclose all Presidential

gifts; and maintain a centralized, electronic, publicly disclosed inventory of Presidential gifts. These reforms can help clean up an

ethical stain on modern politics, and we urge you to take steps to

deal with that.

Again, last year, this would have been and was the Enron-Andersen of the Beltway. Today there’s another issue, but I think it’s appropriate not to let this one die. It’s part of the culture of influence.

Thank you very much.

[The prepared statement of Mr. Harshbarger follows:]

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Mr. OSE. Thank you, Mr. Harshbarger, for joining us. I was

tempted when you started—I can’t imagine that you had anything

else to do today. Welcome.

We’re going to go to questions now, and we’ll just go 5-minute periods. I do know that Secretary Taft has to be out of here by 12:30

p.m. So if we could be direct with our questions and brief with our

answers, that would be helpful. We will followup with questions.

We’ll leave the record open for the submittal of questions and hopefully the witnesses will be able to respond accordingly.

So I’ll start. The testimony of Dr. Light recommends prohibiting

gift taking during certain periods. Mr. Walden, Mr. Harshbarger,

I don’t know if you’ve read Dr. Light’s testimony, but do you support the prohibited period issue; in other words, after an election

but before being sworn in, for instance?

Dr. LIGHT. I am not inclined to support any prohibition on a particular type of gift to the President at any particular time. I think

we’ve got a unique situation in the last administration with the

election of the First Lady. If there is to be a restriction on someone

going into government, that might be a more reasonable restriction.

Someone elected as President, after the election but before the inauguration, there might be some restrictions placed on gifts, because there could be an appearance problem there. On the way out,

I’m not so sure that ordinarily you would expect an appearance

problem. But the First Lady was not only leaving the White House,

she was entering the Senate, and I think that was a particular situation that may not recur.

Mr. OSE. Mr. Harshbarger.

Mr. HARSHBARGER. Well, it seems to me that you’re dealing here

with perception, and these gifts are theoretically being given to the

President or the Office with some degree of solemnity. If they’re individual personal gifts, there’s no reason to have them treated differently in terms of the President or the Vice President than any

Member of Congress or any other public official, or they create the

very appearance. As you’re going in, they appear to give influence

and access. As you’re going out, I would argue it may even be

worse as we now see the problems.

This has been a period that usually had little focus on it, but as

with so many things done both positively and negatively by President Clinton, his actions are often larger than life. We saw in the

last period of time not only what issues were with the First Lady

as a Senator-elect, but also what was still at stake in the last 3

weeks going out of office in terms of clemency and other actions.

In addition to which, there is always the condition of somebody

leaving public life, getting some rewards apparently that might adhere or benefit them when they go into the private sector as well.

So I think that absolutely having some periods of prohibition

makes sense. But beyond that, it seems to me that, more broadly,

the distinction we’re trying to make is there can be expensive gifts

given, but they’re not given to the President, they’re given to the

Office, and that’s much different than giving them personally. And

personal gifts ought to be limited as they would be to anyone else.

Mr. OSE. The reason I ask this question—and Dr. Light, I’m

going to ask you directly this—is that between December 1st and

January 20th, there were over $80,000 worth of gifts, some fine

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china, some furniture and the like, that were provided to the First

Family, and I’m wondering whether such a prohibition would be effective.

Dr. LIGHT. I think, as I said in my brief statement, you can imagine that people would change behavior to get gifts in before the

banning date. I mean, we know that some State legislatures do ban

fund-raising for campaigns during the legislative session, and

that’s primarily to deal with the appearance problem. In some

States, you’ll adjourn mid-session for a couple of days so that you

can do your fund-raising, and then you’ll come back into session.

That sort of stokes the public’s cynicism about those kinds of bans.

We have the transition into office now covered like a blanket.

This Congress in 1988 passed the Presidential Transition Effectiveness Act, which requires disclosure of every participant and transition activity, as well as the source of funding that covers their

time. We will now look to the last 3 months in office in a new way

in the next transition out, because it has become a much more significant period of time. The Clinton administration made it so.

They took advantage of every opportunity to make policy and make

decisions, and now we will be watching it much more closely. One

could make the argument that we just should basically take the

plunge and say no gifts during that period, or a much smaller level

of acceptable gifts, for example.

Mr. OSE. I want to come back to this question, and my time is

almost expired, but I want to talk about the issue of solicitation

and coordination, because it seems that possibility exists, and I

want to touch on it.

Mrs. Mink for 5 minutes.

Mrs. MINK. Thank you, Mr. Chairman.

I am interested in a paragraph in your testimony, Mr.

Harshbarger, the reference you make to acceptance of gifts, and not

unique to the Clinton White House on Page 4; that President Bush

accepted $122,000 worth of gifts during his 4-year term in the

White House. Does that statement come from your examination of

documents, other disclosure reports that were required to be filed

during President Bush’s term of office?

Mr. HARSHBARGER. Since I handle the broad general overview,

I’m going to turn around right now and ask Steve Rabin who’s here

just from press reports.

Mrs. MINK. Press reports. Do you know whether there are documents that this subcommittee could readily examine to determine

the types and nature of the gifts which were kept by President

Bush and the First Lady when they left office? Is there such a document that could be readily made available so that we could look

at both administrations? Currently there is a great degree of consternation on my side of the aisle, because the emphasis has been

in a singular criticism only of the Clinton administration. I tend to

join that view. So if we had access to President Bush’s administration and the $122,000 worth of gifts that it considered personal, it

would certainly balance the view of this whole matter.

Mr. HARSHBARGER. I think it is possible that the reports came

from financial disclosure reports which may now have been destroyed. I’m not sure if it’s possible. Also, the records that are contained in the report from this committee, may well have found adVerDate 11-MAY-2000 11:33 Mar 07, 2003 Jkt 000000 PO 00000 Frm 00113 Fmt 6633 Sfmt 6633 C:\DOCS\84330.TXT HGOVREF1 PsN: HGOVREF1
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ditional reports as well, but my point is not to try—I think what’s

very interesting here is—and perhaps looking at it a year later is

actually important, because it is removed somewhat from the politics of the situation. I mean, 10, 12 years ago, there was not—I

mean, soft money was not a major issue 12 years ago. That was

just beginning to become one of the ways that this occurred. So it’s

a different climate in that sense, and I hope that the focus here is

yes on this conduct, as an example, but what could/should we be

doing in the future, and whether it was OK before, I think the

problem now is that—— Mrs. MINK. Well, I think it’s only a matter of trying to create a

record that seems to be balanced. My own personal point of view

is that no President or his immediate family ought to accept a dime

worth of personal gifts. I see no reason for an exception to be granted to the White House. All gifts that are tendered to the President

or the First Lady or whoever is occupying the White House, children and so forth, ought to be considered gifts to the Nation, and

they ought to be archived and kept and recorded in a manner that

those gifts that were deemed to be gifts to the Nation are currently

handled. I see absolutely no reason for the personal gifts to be acceptable by decision of the occupant of the White House.

Oh, I have no grief with regard to your recommendations. I think

the ban ought to be total. The legislation is too limited. I’m not for

trying to carve up moments of time of the tenure of the occupant

as safe for gift giving. For heaven sakes, they’re out of office on

January 20th. You could make your gift on the 21st.

So it seems to me that what we’re trying to do, I think, in raising

this issue at this moment, is to consider what is appropriate, and

I find nothing in the consideration of this issue which justifies retention of anything. So, if I could write legislation, I would ban it

totally, and I would make it retroactive through this current President Bush’s administration when he took office in January, because

most of this ferrets out at the end of the administration, and

there’s no harm in making it retroactive. I think that would be absolutely the fair thing to do.

Dr. Light, in your testimony from Brookings, did you look at the

types of contributions that were made in President Bush’s administration, or was your analysis primarily a public opinion poll analysis as to its impact on the public’s judgment when this type of gift

giving is disclosed?

Dr. LIGHT. I don’t believe this question about what might motivate a person to give a gift to the President has ever been asked,

and I don’t think we had reason to do so. I think it’s deeply troubling that such a large percentage of Americans believe that gifts

are being given to curry favor, and I can’t imagine that would have

been the attitude in 1950 or 1960. I can imagine that it would have

been the attitude post-Watergate; that there was a cloud of cynicism that began then, that really didn’t start to break until after

September 11th. We had some movement and confidence in government during 1984, 1985, and we had some movement this past

year, but nothing like we saw after September 11th. And, to note

that in the middle of this particular moment in American history,

so many Americans believe that Presidents are still—that the gifts

are still being given and that Presidents will give favor at such a

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low price, I think is staggering. That requires, I think, dramatic action. I mean, you get to a point in public opinion where you cannot

move around the edges with fine tinkering, where you have to do

something like banning gifts or banning soft money because the

public expects, or the public has become so cynical, that it is only

through a dramatic act that they will perceive progress.

Mr. OSE. The gentlelady’s time is expired. We’ll come around

again if you have more questions.

Mr. Otter for 5 minutes.

Mr. OTTER. Thank you, Mr. Chairman, and thank you, gentlemen for being here today. In light of those last comments that Dr.

Light just made, I can’t help but review exposures in the media on

votes. Being a freshman here, I was kind of shocked at the purpose

suggested in the media as to why I voted for or against certain

pieces of legislation, and what they simply did was went back to

my report and said, well, they obviously got money from there,

from these folks, and so that’s why I voted in favor.

It’s like I didn’t have a life until I was elected, the fact that I

had spent 30 years in industry and understood the importance of

international trade, and that I understood the importance of management and their ability to function. So I don’t know why you

would be so shocked and surprised, and perhaps even borderline

naive, to suggest that your poll says that people who are in public

office are being held in such disregard or disrespect because almost

every time somebody casts a vote, you all go back—Common Cause

included—you all go back and review who gave who what.

Aside from the philosophical basis under which a person might

make that decision, you suggest only because the vote follows the

money. And I’ve often wondered, and I would like to perhaps have

your expression on that right now, if truly we are a culture of influence in Washington, DC, and I would say certainly there is plenty

of reason to believe that, then does the size of the contribution, Mr.

Harshbarger, have direct credibility to what a person—whether it’s

the President of the United States or a Member of Congress—is or

is not going to do, even if they have a lot of personal wealth? Would

that make a difference?

Mr. HARSHBARGER. I think you obviously have touched upon an

issue that, with all due respect, I say one of the concerns I’ve had

since I’ve come to Common Cause has been—aside from the wonderful legacy of this organization, we have often been only critical

and therefore, led to a great extent to some of the sense of cynicism

people have that it is only the money, it is only certain, you can’t

sort of trust broader instincts. I don’t say this critically. I think one

of the great things—one of the benefits, if there was one benefit of

the tragedy of September 11th—was the hope that we could talk

about what we stand for, which is broader participation, more people coming into public service, the nobility of public service, those

kinds of things.

But having said that and having come from elected life, I have

no illusions about how the public perceives this process, and I

think it does matter hugely, the amount and timing of much of

the—of any contributions that people make. I think in terms of how

people perceive the system, in part it’s because people have somewhat lost confidence. The polls, not only Dr. Light’s poll, but almost

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every poll shows that there is a perception that people are not acting in the public interest, but rather in terms of a somewhat more

narrow interest.

I don’t think it’s just the media. I think there’s a lot of other

parts to this. But I do think as we look to this, I think it matters

a great deal how much the money is, what the timing is. I mean— in fact, Mrs. Mink’s question, issue—I mean, we do support an absolute, almost de minimis amount in this area, that does make a

difference. It’s very hard to conceive that if somebody is a friend

who gives you a huge amount of money, they became a friend when

you just came into politics. Suddenly in Washington that’s how you

define a friend; you know, a major contributor.

I do think there’s an issue you’re raising, which is how do you

get people who otherwise in private life have friends and relationships and preexisting contacts. So, I guess my view is that it is a

perception issue, and the Supreme Court looks at it that way, in

the sense of how people perceive these actions, and I think there

is the general theme that de minimis kinds of amounts can make

a big difference here, that at least the burden ought to shift to

prove why it’s not somehow influencing inappropriately. I guess I

just think that people over time have come to believe, not only because of the media, though, that people are influenced more by economic interests than they are by general service and desire to serve

the public interest.

Mr. OTTER. I do want to get more than just one question in here.

Dr. Light, could you respond to that?

Dr. LIGHT. I’ve served as a staff person in both Chambers; here

in the House in the mid-1980’s for Bob Conable, Jr., who was the

ranking member of Ways and Means; and then in the Senate for

Senator John Glenn. I know exactly what you’re talking about, the

faithfulness and public service dedication of these Members. My

worry is that over the years, Americans have become convinced in

part because of the way we cover politics, in part because of the

way we have tried to make an issue of campaign finance, that

we’ve basically said that Members can be purchased for a very low

price, and now Americans believe it. And, apparently they believe

that Presidents can be purchased for a very low price as well, and

I don’t know how you deal with that except through significant action to address that perception.

Mr. OTTER. Mr. Walden.

Mr. WALDEN. I think the response of disclosure, conscientious,

consistent, full disclosure and timely disclosure of gifts is a better

response than any prohibition on gift giving. And, with regard to

any total ban, even the $20 de minimis limit in the OGE standards

and the $50 limit for the House and the Senate recognize a number

of exceptions, including the friendship exception. We can always

see a situation where someone has abused the notion of a friend,

but for anyone who has been in public life for 20 or 30 years, there

are hundreds of true friends that can give gifts and those gifts

ought to be accepted the way any Federal employee, any Member

of Congress can now accept gifts. I don’t want to penalize the President, any President, or First Family by putting in a total ban that

is not across the board with Members of Congress and other Federal employees.

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Mr. OTTER. My time is nearly out, but I would like to say—just

yes or no from each one of you—have you read H.R. 1081? And, if

so, is it a good first step or is it the one that’s going to solve everything?

Mr. WALDEN. I’m not inclined to favor legislation at this time,

but I do think that we need a single entity that is in charge of auditing and registering. I would favor that office to be within the Executive Office of the President—because of the privacy interests of

the First Family—as opposed to in an outside entity, but definitely

we need to make improvements.

Mr. OTTER. Dr. Light.

Dr. LIGHT. You’re going to see the difference between an Article

1 person and an Article 2. I’ve read it. I think you should pass it

as soon as possible.

Mr. OTTER. Mr. Harshbarger.

Mr. HARSHBARGER. Yes. I agree about disclosure. I think a total

ban is not good. I think it’s a very good and important first step.

Mr. OTTER. Thank you.

Mr. HARSHBARGER. Absolutely.

Mr. OSE. Thank you, Mr. Otter. The gentleman clearly understands who’s got the gavel. Mr. LaTourette for 5 minutes.

Mr. LATOURETTE. Thank you, Mr. Chairman. I can remember

when we had a different Speaker, that we were having the discussion on the congressional gift ban, and I don’t remember what it

was when I was elected, but then somebody wanted to make it less

than that and finally the Speaker at the time grabbed the microphone and said, ‘‘I’ve got a great idea, let’s make it zero,’’ and everybody stood up and everybody voted for zero.

And then we went through this era here for about 5 years where

I think, Mr. Chairman, I have 500 coffee mugs and I don’t drink

coffee. I have 500 T-shirts, and I can honestly tell that I have never

voted in accordance with any of the logos displayed on those coffee

mugs or those T-shirts and even this $50 business.

Mr. Otter, I think, was at a point that not only with the media

but Members of the Congress engaged in self-flagellation that I just

think it’s stupid. Anybody, Member of Congress, that can be purchased for $50 or $100 was probably a thief in his former life anyway and doesn’t deserve to be here.

I do think there’s a significant difference between someone who

wants to take you to dinner, and I’m under no illusion that people

who say, ‘‘Would you like to go to dinner?’’ are doing so because

we’re childhood friends; but likewise, I don’t think that they are

under any illusion that I am going to abandon a lifetime of principles and policy because I had a steak with them. I do think that

there’s a significant difference between that and walking out of the

White House with $1 million after 8 years, and it’s the difference

between real money and not much.

I’m concerned about this perception problem. I don’t know who’s

to blame. I suppose when you have enough bad apples in any profession you get tarred of the same brush. I think the media bears

some responsibility, Watergate bears some responsibility, but to

think that all of a sudden after 1974 we all became a bunch of

crooks is not a realistic picture of the Federal Government, and I

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think the people that spread that view are doing a disservice to the

country and to the institutions.

Mr. Harsbarger, you, I have to say, were certainly on message

today when we came in. You not only talked about the gift issue

that the chairman wanted you to talk about, but you talked about

McCain-Feingold, or Shays-Meehan as we call it in the House. And,

you know, I guess I have the same view of—and maybe you can

just answer this question. It’s not the subject of the hearing today,

but my understanding is that Shays-Meehan—and it’s new, what

it looks like—doesn’t ban soft money. So, when we’re talking about

gifts, should we go from, you know, if you could be bought for a

$100 gift, let’s say no gifts to Members of Congress, no gifts to the

President? Why should we say that campaign finance reform that

still permits soft money in this system is OK?

Mr. HARSHBARGER. If I had my—I suppose this is a question of

what is doable, what is practical in terms, what’s realistic in terms

of what you can obtain. I take the view that you should take one

step at a time. You take the step you can get. If you can ban the

most addictive and difficult money, which is the money that the

Federal parties and Federal candidates raise in unlimited amounts

that go directly to candidates in violation of the law, and you can

get that step and you know for whatever reason that there is still

a view by certain people that the State parties need to have access

to money for the purpose it was intended, which was get out the

vote, voter registration, you sort of try to strike as many practical

steps as you can but that you consider to be steps forward. I guess

I look at that.

Back to your question here, I know you didn’t ask me for this,

but on the gifts, I think this is not a question of—I mean, there

are going to be ways around any system that exists. I think you’re

absolutely right. I think there’s no need, though, to have self-inflicted wounds, and I think that it was interesting to me yesterday

listening to Mr. Copeland—you probably had a chance to hear

him—who’s the head of Deloitte Touche, talking about the 300,000

noble good accountants around the country who do audits all the

time and are tainted by the actions of a few. Well, I often feel that

they’re the same people that would be criticizing a police officer

who violated the law and criticizing entire departments, so it goes

both ways.

I don’t think that there’s a way around this, but I do think you

try to achieve what you can and that it is your responsibility, obviously, to make those calls.

Mr. LATOURETTE. I understand that and I appreciate that. I

guess the other thing that troubles me, and this still isn’t the subject of the hearing, is that this whole issue of the Shays-Meehan

bill, the problem with campaign finance reform since I’ve been here

has been, the reason it hasn’t passed is the Democrats want to get

the Republican donors and the Republicans want to get the Democratic donors and some people want to get every donor. When you

don’t have the ability—if the Supreme Court says, as I think that

they will, that this ban 60 days out is not unconstitutional, but you

leave the rest in place, I don’t think you’ve achieved an incremental

step, I think you’ve achieved an unfair step. Hopefully, we’ll have

another round and we can chat about that in a minute.

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Mr. HARSHBARGER. I’d obviously be glad to. And I doubt Chairman Ose wants to talk about that, but we’ll be very glad to discuss

that with you and I welcome your views.

Mr. LATOURETTE. Thank you.

Mr. OSE. Thank you both, gentlemen. Mr. Duncan for 5 minutes.

Mr. DUNCAN. Mr. Harshbarger, do I recall correctly that you

used to be the attorney general of Massachusetts?

Mr. HARSHBARGER. Yes, I did.

Mr. DUNCAN. What I’m wondering about, Mr. Walden said in his

testimony that, regrettably, the investigation this subcommittee

conducted reveals that the Clinton White House failed to register

gifts, failed to report gifts, and undervalued gifts. There’s evidence

that gifts may have been solicited, Federal property converted, and

false statements made on the President’s public financial reports.

He said these are Federal felonies and should be referred to a U.S.

Attorney.

Do you agree?

Mr. HARSHBARGER. Well, as a former attorney general, I don’t

like to lightly either have allegations or referrals made or references made to those kind of—because I think people misinterpret

them. On the other hand, it is my view that one of the major issues

we face in this city, nationally and at the State level, is the lack

of enforcement, and the willingness to enforce, and the capacity to

enforce often by elected and appointed prosecutors and commissions that are set up to do that. It’s one of our critiques of the Federal Election Commission that it is—in fact, one of the problems in

the election law is that there in fact is no meaningful enforcement,

and therefore you can’t expect people in situations where money

and power intersect to comply absent the law.

We see from the SEC that the failure of Chairman Levitt’s effort

to try to set rules that might have enforced or prevented the

Enron-Anderson catastrophe failed for various reasons. He wasn’t

given the power.

So having said that, I think that actions, some of these things;

I think we would have been better off by an independent review,

which I consider the role of the Attorney General of the United

States to be, U.S. attorneys, to conduct reviews even if to conclude

that there is no basis for further review.

So I have no quarrel with the assertion that was made that if

the evidence is such that people have violated, if that’s the real

concern here, then perhaps instead of trying to create new laws, we

ought to make sure that existing laws are enforced. That’s the responsibility of law enforcement, and I would hope that you would

support those efforts by appropriate prosecutorial officials.

I think we’ve got to clean up our own house too, and I think if

the laws are there, if they have been allegedly violated, if there’s

evidence to suggest that review’s appropriate, I have no quarrel

whatsoever with referral from an appropriate agency to prosecutors

to conduct a review.

Mr. DUNCAN. All right. Thank you very much.

Mr. OSE. Thank you, Mr. Duncan. I want to return to this issue

of solicitation and coordination because it seems to me as it relates

to the Borsheim’s enterprise and Mrs. Clinton’s visit there in

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March 2000, that something transpired here that I’m having a little trouble putting my finger on.

Let me just share with you what I understand. There were press

reports of Mrs. Clinton visiting Borsheim’s in March 2000 and departing the store subsequent to that, and then there were subsequent press reports about her having acquired some items while

she was in the store. Then, when we look at the disclosure forms,

we see that commencing on December 1, in serial order, there were

a number of items acquired at Boresheim’s by virtue of a registry

that had been established in Mrs. Clinton’s name, the valuations

ranging as high in some cases into thousands of dollars, all of

which seemed to be directed by someone named Kaki Hockersmith.

She’s the interior designer that Mr. and Mrs. Clinton used to redecorate the private residence when they moved into the White

House, and has also been responsible for redecorating the homes

that the Clintons have acquired in the late 1990’s.

Mr. Harshbarger, from your perspective as a former attorney

general, if someone goes in and establishes a registry and the only

way to access that registry is by virtue of a private e-mail password, and then gifts start rolling in from that registry from third

parties, what kind of conclusions do you reach related to that? Is

that solicitation and coordination? I mean, I’m trying to figure out

legally what the terms mean.

Mr. HARSHBARGER. As Massachusetts attorney general, a man

who enforced the law against members of both parties, which may

be why I’m here as president of Common Cause and not as Governor of Massachusetts, but I mean it is my view that, as I said,

enforcement must rise above the party.

What I did learn in this business, though, and I think that—I

don’t mean to be overly technical—I think when we saw issues, and

we deal with law students, what the definition of ‘‘is’’ is or, with

all due respect, what the meaning of issues like ‘‘purge’’ is. As you

know, they’re very technical terms for purposes of enforcement or

prosecution. So that, if you’re saying was there a joint—was there

in any respect a joint venture set up here, it’s sort of different rules

than the solicitation/coordination rules in fund-raising or something of that type.

In this case, what I see is common sense, practical, now say a

list was set up, you know, friends were invited, as they would for

a wedding or for any other thing, to sort of go off this list. And,

it was probably done with a lot of discussion about it. I just don’t

know more than that. I mean you have the elements of possible solicitation and coordination, absolutely. You could—I suppose this

would—the devil’s in the details here or, as you say, it depends on

the facts of what exactly happened, who said what to whom and

why they did this.

Mr. OSE. One of the things I’m most proud of is that I’ve never

gone to law school and, with all due respect, that’s why I asked the

question. I don’t understand the technical definition of solicitation

and coordination, but it does pique my interest that subsequent to

the election and prior to being sworn in in the Senate, all of a sudden this stuff started rolling in.

Mr. HARSHBARGER. Well, it piqued everybody’s interest at a certain point and——

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Mr. OSE. Well, the—— Mr. HARSHBARGER. The former Attorney General used to talk

about you’re not JD-impaired, which is why you’re able to see the

broader picture here.

Mr. OSE. The gift records we have on these items from December

1 onwards always have this little note, ‘‘per Kaki Hockersmith’’ and

it just seems interesting.

Mr. HARSHBARGER. I’m sure your counsel is also very interested

in it as well in terms of trying to figure this out. Look, I mean

you’ve obviously established—this was—I guess I’ll just say this as

the former attorney general, that I don’t know exactly what, based

on what you’ve done, what’s shown here and what the reports have

been, this was a coordinated effort at various levels. It may have

been innocently on the part of the First Lady. It may have been

the desire of her supporters to help her. It may have been what

many people felt who had given 8 years of their life to the country

and, as they left, needed to take, to have opportunities to function,

and they were simply asking friends or people considering themselves to be friends to provide useful assistance.

My own view is that this is why these get—when you’re sitting

in these positions, when you’re a President, when you’re a Vice

President, when you’re related there, that’s when you come very

close—if not a ban, at least a minimal amount, and take no more

that you take personally. The rest of this should have gone to the

Nation. I mean that the best way to treat this would be not to

say—obviously somebody’s going to come here and testify, a foreign

dignitary comes here, makes a presentation. It’s rude. It’s just

going to cause a major problem for you to refuse to take that, but

they’re giving it to you as sort of in the honor of the Presidency

of the United States. That becomes something—I think Mr. Walden

said that becomes a gift to the country, and that’s what all of these

should be.

Mr. OSE. I do want to say one of things that wears on me that

I don’t think we’ve addressed in this bill is how to address this particular situation. I haven’t figured out, as we go forward, how to

deal with this. I mean—my time’s up but I want to come back. If

you think about how we can deal with this, so——

Mr. HARSHBARGER. There are examples. As you—I hear your

point now. Sorry, I missed what you were asking. I think there are

definitions of solicitation and coordination that exist in a variety of

contexts that certainly we, and if you would be interested with

your counsel to sort of think about what definitions might work

that would address the problem that you’ve identified.

Mr. OSE. Right. Thank you.

Mr. Otter.

Mr. OTTER. Thank you, Mr. Chairman. One more question in

pursuit of trying to arrive at where you’re coming from here, Mr.

Harshbarger, and that would deal with this solicitation and coordination. Knowing the fact or the facts that you’ve been given, and

let’s assume for the moment that the staff of the subcommittee has

done a good job, which they normally do, and the facts are verifiable and are true. In your previous life as attorney general, if you

were presented with those facts, knowing what the law is today,

would you then pursue that as attorney general?

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Mr. HARSHBARGER. Ben and Steve back here are handing— they’re probably dying back here. You’re watching their faces more

than—I can’t see their faces right now. You know, I think on this— I would like to believe that on these facts that, if there were a— you know, this posed a violation of law—that the attorney general,

as attorney general, Republican or Democrat, you would have done,

as attorney general or as district or as agency counsel or as ethics

counsel, that you would have looked at this. My argument would

have been at one level, I thought one of the responsibilities of independent enforcement was to exonerate, to have legitimacy in exonerating people as well as stigmatizing them. That is a hard one to

sell, I know that.

But, I also did believe that if you had a record as an independent

prosecutor and you said, look, Mr. Otter, there are problems here,

you’ve identified the issue, but I don’t believe as a prosecutor who

has done a number of cases that this is a case that should be prosecuted, that would be the best exoneration for the person who is

charged with those—those allegations are made against. That’s one

of my reasons for thinking that sometimes this ought to be reviewed by people who are perceived to be independent, and I guess

my answer would be that as attorney general or as counsel of the

State Ethics Commission, I thought one of my responsibilities was

to look at matters, often times to point out that they weren’t criminal or they weren’t violations of the ethics law, whatever else they

were, but they weren’t subject to—the problem with criminal prosecution for a prosecutor, though, is the very label almost. You

know, ‘‘referred for criminal investigation’’ is hard to get away

from. But, be that as it may, that’s why you often say you’ll refuse

to comment, and do a number of other things.

But I’m tying up your time. I’m not trying to. I think these are

hard calls, but as I’ve looked at this, I think that the need for independent enforcement and investigative sources who are accountable

and responsible to look at these matters is very important. And you

can pass—you know this—you can pass all the laws you want, and

if they’re not going to be enforced, if they’re going to be evaded—

and good lawyers give counsel based on what the expected outcomes are likely to be as much as what that law is—then you’re

going, we’re going to be engaged in a process just as if we passed

this thing over the next couple of days. If it’s not enforced, we

haven’t achieved even a first step.

Mr. OTTER. I would only observe that perception can be just as

damaging before as afterwards, and sometimes when nothing is

done the perception is even worse. So you’re right; you’re dammed

if you do and you’re dammed if you don’t. But, the perceptions that

are left are the things that create this kind of urgency with this

legislation.

But, wouldn’t you all agree, or disagree, that it would be more

convenient and more auditable if we had one place to go to to surrender here on this issue? Instead of six agencies we had one, and

that one agency used the same terminology. Mr. Walden, you said

it ought to be the White House, and somebody else said it ought

to be the Archives, and somebody else said it ought to be the—I

don’t know—the Agriculture Department or something, I don’t

know.

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Everybody has a different idea, but could we agree in a general

way that we should have one place to go to in order to get the information so that every gift is being treated with the same terminology, every gift is being treated in the same way, so that we don’t

have all this perception that’s going on?

Dr. LIGHT. Agriculture would be the National Parks—National

Forest Service. Parks are in Interior. So you’re close.

Mr. OTTER. I meant Agriculture. I didn’t mean Parks.

Dr. LIGHT. I would say that this committee and this subcommittee have always taken their work seriously. You don’t have a hearing like this and not act. I think that we are standing in a moment

in political time where we are in the process of possibly squandering the greatest surge in public trust in government, that we are

at risk of squandering this surge in a way that rivals Vietnam and

Watergate.

Once you have a hearing like this, you must act. If it requires

referral, you must refer. And you have obviously developed a case

for legislation. Much as I admire my friends who come from the executive branch, I think legislation carries a pop and visibility that

you do not get by internal reorganization. That’s why I’ve supported legislation undergirding the Office of Homeland Security

and so forth. I just think Americans pay attention to what Congress enacts. At least I hope they do.

Mr. OTTER. Mr. Walden.

Mr. WALDEN. Gifts that come in to the President right now are

either given to the Archives, GSA, Park Service or accepted by the

President personally. They all come in to the White House in one

form or another and I think we could put in place a system, whether legislated or regulated, where the Executive Office of the President has a single office that conducts these functions, and that it

is audited periodically and perhaps randomly by the counsel’s office.

Mr. OSE. The gentleman’s time has expired. Mr. LaTourette, last.

Mr. LATOURETTE. Thank you, Mr. Chairman. I have to ask a

question about gifts or else the chairman will kick me out, and

then I’d like to get back to Shays-Meehan with Mr.

Harshbarger——

Mr. OSE. The gentleman is always welcome.

Mr. LATOURETTE. Thank you. Regardless of whether you think

that there should be a limit or a window of opportunity, I can remember we talked about windows of opportunity when we were

doing the Marc Rich pardons, and somebody, I think it was Barney

Frank of Massachusetts, suggested that we not let the President

exercise his pardon power between the time he was going to have

the election and a new President was going to come in, and when

he left office, because it seems that Governors and Presidents always get brave with clemency and pardons in that period of time

when they are the lame duck. Maybe that would work or not work.

But I would like to ask you, Mr. Walden, about a class of gifts.

It is easy to say that, you know, a gift can’t be worth more than

$50, but I guess I am wondering about a gift that is more speculative in value. One of the things I like to give people back in Ohio

are Ohio lottery tickets. They cost me a buck, and when they comVerDate 11-MAY-2000 11:33 Mar 07, 2003 Jkt 000000 PO 00000 Frm 00123 Fmt 6633 Sfmt 6633 C:\DOCS\84330.TXT HGOVREF1 PsN: HGOVREF1
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plain I always say, but you just scratch them and you can win

$10,000, so it is really a valuable gift.

The work of the subcommittee has determined that, although

there was some conflicting advice given by the Counsel’s Office at

the Clinton White House that apparently General Electric stock

was bad but Coca-Cola stock was OK, how do you feel about a class

of gifts, regardless of value, but something like stock in either a

foreign or domestic company? If we sort of work through legislatively whether or not, you know, the President should get unlimited gifts as long as there’s full disclosure, or a gift that can’t be

worth more than $500, or a gift can’t be more than $50, how do

you feel about a classification of gift that may fluctuate in value

over the course of time?

Mr. WALDEN. I think a gift of stock is so close to a gift of cash

that it ought to be prohibited. When I was in the Bush White

House, there was a strict policy: No gifts of cash could be accepted.

If they were accepted, they were turned over to Treasury; they

were not accepted personally. I would look at stock as similar to

cash.

Mr. LATOURETTE. And Mr. Harshbarger, Dr. Light, do you have

any different answer than that?

Dr. LIGHT. No.

Mr. LATOURETTE. No? OK. Then, Mr. Harshbarger, back to

Shays-Meehan, could we just talk about severability for just a second, and why is it the position of your organization and others

that, if part of this cobbled-together piece, which you described as

a good first step or you will take what you can get, if part of that

fails under the knife of constitutional examination, why should the

rest survive when it creates an inappropriate balance between the

donors of the major political parties?

Mr. HARSHBARGER. Well, I mean, one of the arguments, I suppose, for Shays-Meehan is that both parties feel that it’s bad for—

it’s going to disadvantage them. There is a sort of an argument

here that everybody feels disadvantaged so maybe it’s time, given

the other problems.

The other benefit is, I think one of the things we have pointed

out is that in my experience as attorney general before, nonseverability was a real exceptional piece of legislation. I mean, it has

only happened 10 times in the last 12 years that there’s been legislation that has been deemed nonseverable. But that’s so exceptional that the reason is why, why does this—other than if you

want to be—from our perspective, if you want to say you’re changing the rules of the game for incumbents? I mean why is it, because

it affects so intimately, at least it is perceived, the system of financing by which people get elected, why is this one different?

Let’s leave it to the Supreme Court, which we have done in the

past. As they would in many cases, people can make their arguments.

We believe the ban on soft money is clearly to be accepted, would

be upheld. There are arguments, obviously, on the balancing issue

on advertisements, and I think many people are—you’re aware

that, you know, 25 years ago people think that the thing got

messed up because the Supreme Court; there was a balance that

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the legislature struck, that Congress struck coming out of that, and

it has therefore ever since been, you know, in balance—on balance.

So I guess my answer would be, in general, nonseverability is a

real exceptional case, and we don’t find that it is, and therefore

those who argue—one could argue that’s an effort to try to defeat

it ultimately, to make that case, because it sort of appears arcane,

appears reasonable, but on the face of it is very exceptional.

Mr. LATOURETTE. I have seen that argument made, and the only

thing I would say—and I know I am not going to convince you— is that if that 60-day window is found to be unconstitutional, in my

opinion at least, all you’ve done is shift the main player from being

the political parties, the national political parties, to the special interest groups that can raise sufficient soft dollars or unregulated

dollars and just beat the crap out of everybody with these adds 60

days up when the parties are—— Mr. HARSHBARGER. That is a very real issue. And as you know

in the States, that’s being fought out now on a number of different

levels. It’s a concern there about the—it’s a real concern of—I mean

Paul, others at Brennan Center, has written a lot about this. I

mean, everybody is concerned about what you do next. But I think

the question is, can you take a step now that makes some sense

and then try to deal with the other issues separately?

And, it also gets used both ways. I mean, the very groups that

you’re saying get empowered also argue this bill prohibits them

from doing everything that you’re saying they’ll get more power to

do. So just vote our way and we’ll be all fine, OK.

Mr. LATOURETTE. And 20 years from now, we’ll change it again.

Mr. HARSHBARGER. No. Senator McCain says it will be—it won’t

take that long.

Mr. OSE. Thank you, Mr. LaTourette. I want to examine something. One of the things that really concerns me is the valuation

process on these gifts, because the potential exists for a clever little

game to go on where the gift gets valued by the person in the gifts

unit as below the threshold so it doesn’t have to be reported. And,

having looked through this information you see below me, I mean

things like an 1828 half dollar coin or a 1793 French gold coin or

an Yves Saint Laurent silk suit. If the game is that you value these

things slightly below the threshold, then there potentially is a host

of gifts that never show up.

Now, how do we address the valuation? How do we, inside the

White House gifts unit, whether it’s by virtue of oversight from

White House counsel or otherwise, how do we address the issue of

gaining a proper valuation of a gift that comes in? I think that’s

one of the critical pieces to this. So, Mr. Walden, when you were

at the White House, how did this work?

Mr. WALDEN. The Gift Office, if it looked at a gift and concluded

this is something that could be sold retail, would call a store that

marketed the gift. Sometimes for gifts that did not seem to have

a clear market value but were manufactured, the call would go to

the manufacturer, sometimes to the donor, and, if all else failed,

it would be a reasonable good faith judgment. But I don’t believe

there was any notion to gin the numbers to avoid reporting. It was

the opposite. If something needed to be reported, and it would look

bad because of who the donor was, the gift was declined.

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But, on valuation, yes, there’s opportunity for abuse. And, I think

you need some sort of external auditing or review function, but I

would say external to the Gift Office, internal to the Executive Office of the President, with occasional oversight from Congress.

Mr. OSE. Dr. Light.

Dr. LIGHT. I do want to note that, if we’re going to have a national lottery for the suit, I’d like to be in it. I don’t think we need

a $2 million bureaucracy to track $250 gifts. I don’t know how you

solve this.

I think Mr. Walden’s approach makes imminent sense, but you

don’t want to sit there calling stores and so forth. I hate to believe

that there’s a deliberateness here in terms of undervaluing gifts to

get them under the threshold. I’d hate to believe that’s true. The

American public, I think, if we were to survey them, would say

that it is true. Which is a sobering fact.

Mr. OSE. I’ll tell you what piques my interest here, and that is

when you have a 1793 French coin valued at $10 or a John Quincy

Adams signed land grant valued at $240 from 1826. I mean, those

are the kinds of things that kind of just jump off the records at

you, and you have to wonder. So, Mr. Harshbarger, do you have

anything——

Mr. HARSHBARGER. Well, I mean, I think that you’re simply

pointing out, that if people want to intentionally deceive, they’ll

find a way to intentionally deceive. And, I think we could have

that—what is it, the—the auction group I think from, what——

Mr. OSE. Or we could have Mr. LaTourette’s TV show——

Mr. HARSHBARGER. The Sotheby’s and Christie’s will come in and

fix it for you. But, other than that, you could also have the ‘‘Road

Show,’’ the ‘‘Antique’’——

Mr. OSE. You mean literally——

Mr. HARSHBARGER [continuing]. Have the ‘‘Antique Road Show’’

come in periodically and take a look at—my tendency is to think

that the bigger problem is the larger gifts, period; that process

needs to be addressed. And, I think the answer to that is you simply say that most gifts that you get—I mean, you said $260, I’d say

$100, and go at that. But we’ve also seen in every system we’ve

ever had—come on, the banks went through this crisis. You see

banks, $10,000 has to be reported. So what do suddenly these

things come in at, $99,999?

Mr. OSE. Are you arguing—are you suggesting that we have a

cap on the value then also?

Mr. HARSHBARGER. No. I’m suggesting you simply say that—I

guess our view was that you pick like a number like $100, and anything else that’s over that is not—cannot be—is just not—can’t be

received as a gift. It becomes something that you simply give to the

country. That’s one.

Mr. OSE. It becomes Federal property.

Mr. HARSHBARGER. That’s right. So $100. If somebody’s going to

value these at $99.98—and I would say Mr. Walden is exactly

right. I mean, any kind of independent auditing here would address this issue in a way that I think would be your protection

here. I mean——

Mr. OSE. Right.

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Mr. HARSHBARGER. But keeping the threshold low is very important. I mean, I think that here—I just—we can’t see—and I know

that you’re trying to do an awfully good job of balancing here, given

the evidence you have, but what you’re looking at here is somebody

pretty much—it looks like they sort of consciously went out of their

way not to hit the right values on this, on the one hand; and on

the second, it does seem to me that setting a threshold lower,

where you get into the $50 or $100, the reason that’s there I think

for most—is usually it’s de minimis. People are trying to find out

what’s the de minimis amount here that you don’t want everybody

to have to record.

Mr. OSE. All right. Thank you. Mr. Otter.

Mr. OTTER. I’d like to pursue that just a little bit because that’s

one of the things that I’m really concerned about. Going back to

your poll, Dr. Light, I can’t remember where exactly the break-even was, but at less than $500 there was a certain group of people in

your poll that felt that they were buying influence. I don’t want

necessarily a poll to establish this, but what I would like to establish is some credibility and some integrity back into the system,

and that a gift can be given in sincerity and honesty and a gift can

be received the same way. I don’t want to create that $2 million

bureaucracy either. So maybe $260 isn’t enough because $261 you’ve got to report,

and so maybe what we need to take a look at along with this, I

still think we need to get down to one place to go to to surrender,

one place that reports the gifts; that way they’re all treated the

same. Whether they’re calling the local haberdasher to find out

what a suit is worth on one suit, then they’ll call that same haberdasher on every one of them. I would hope there would be some

consistency in trying to establish the quality and the value of the

gift.

But I don’t want to lose sight of Mr. Walden’s point, which is the

gifts are generally given for a purpose and that purpose is friendship, we hope. Now, you know, if you give a $100,000 gift, that

might be considerably different. But, you see, we’re treating the

$261 gift the same way as we’re treating the $100,000 gift. Fortunately, I didn’t notice a lot of hundred thousand dollar gifts being

lost or never received by the President, but I think it would be

wonderful if we could get some integrity and some belief back into

the accuracy of the system at the same time we allowed for the gift

exchange.

I was a Lieutenant Governor of Idaho for 14 years and received

a lot of potatoes. No, I’m kidding. But I led a lot of trade missions

around the world. That was one of my jobs, and I never went anywhere but what I didn’t receive a bottle of Tequila in Mexico or—

and probably a very rare kind and a very valuable kind. But I

would have thought, you know, if you go into the local liquor store,

a bottle of Tequila is worth $16 or $10 or whatever it is. I would

have never thought another thing about it. But to have turned

down the Governor of the State of Jalisco and say no, I don’t want

your booze, I think is further than we want to go.

So, I hope that not only will H.R. 1081 get us started in the right

direction and find us one place to go to and one system for managing this, so that we can take some of that judgment in the public’s

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perception out of the system, say here’s the list, you go on your hot

link from the White House right to the gift list, and you know

where it is.

Maybe you’re right. Maybe H.R. 1081 isn’t the end, maybe it’s

just the beginning. But I think it’s an important beginning, and,

if we can achieve both of those, if we can achieve some continuity

in the process and at the same time hopefully some credibility in

the process, then I’m all for it.

I yield back the balance of my time.

Mr. OSE. Thank you, Mr. Otter. Mr. LaTourette.

Secretary Taft, if you will just be patient, we’re going to get to

you here. Mr. LaTourette.

Mr. LATOURETTE. Thank you, Mr. Chairman. Mr. Chairman, I’m

mindful of your earlier observation that Secretary Taft—and being

from Ohio, anybody named William Howard Taft, I’m respectful as

well. And I’m not going to use my 5 minutes.

Mr. Harshbarger, the final world I want to leave with you is

maybe somebody can explain to me why a Member of Congress for

$1,001 under Shays-Meehan, but it takes $2,001 to buy a U.S. Senator in hard money. I don’t get that part either. But we can talk

about that later. I yield back my time.

Mr. OSE. Thank you—— Mr. HARSHBARGER. Boy, I opened myself up here, didn’t I? I

mean then he just yields his time. I can’t even—— Mr. OSE. I’ve been trying to control the discussion to the H.R.

1081 here. I want to thank our witnesses for joining us today. This

has been enlightening. We’ve asked some tough questions. I appreciate your candor. We do have some questions that we may send

to you in writing. We’ll leave the record open for 10 days, so that

you can respond.

Again, we thank you all for coming. This panel is dismissed.

Have a great day.

Secretary Taft, if you would come forward. Mr. Secretary, it’s the

policy of this committee to swear in all our witnesses, so we’re

going to ask you to rise and be sworn in.

[Witness sworn.]

Mr. OSE. Let the record show that the witness answered in the

affirmative.

Joining us today in our final panel is William H. Taft, IV. He’s

the legal advisor to the Department of State.

Mr. Secretary, we have received your written testimony and we’d

appreciate the opportunity to visit with you. So if you could summarize and we’ll get to questions.

STATEMENT OF WILLIAM H. TAFT IV, LEGAL ADVISOR,

DEPARTMENT OF STATE

Mr. TAFT. Very good. Thank you, Mr. Chairman and I would ask

that my written testimony as submitted be put in the record.

Mr. OSE. Without objection.

Mr. TAFT. I do have a quick summary. My testimony will be

about the management of the foreign gifts that are received, gifts

from foreign governments. So it’s a little different system from

what we have on the domestic side, which you’ve been discussing

so far.

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There has been concern about foreign gifts to government employees from the earliest days of our country. The Constitution prohibits any person holding an office of profit or trust under the

United States from accepting any present, emolument, office, or

title from any foreign State without the consent of Congress. The

current era of regulating foreign gifts to employees dates from 1977

when the Foreign Gifts and Decorations Act substantially revised

the rules and procedures on receipt and disposition of gifts. This

was the consent of Congress to certain gifts, which we operate

under today. The act significantly decentralized administration of

the disposal of foreign gifts and decorations that do become U.S.

Government property. Each agency became responsible for receiving from its employees those gifts and decorations from foreign governments not meeting the statutory criteria for retention by the recipient. Each agency also became responsible for disposing of such

property in accordance with the law. At the time the statute was

enacted, the Department of State published guidance for the rest

of the government on how to write implementing regulations, as it

was directed to do in the statute.

State Department implementing regulations delegate the authority for the discharge of the responsibilities of the Secretary of State

to the Chief of Protocol, and the Office of Protocol has primary responsibility for administration of the act within the Department of

State. Since 1989, the Office of Protocol has had a Gift Unit to

carry out these functions, and this unit serves as the central processing point for all gifts received from foreign governments by employees of the Department of State. It is responsible for the official

records of all gifts given by and to State Department employees.

Joining me here today is Ms. Nancy Pilon who actually directs

the Gift Unit. She’s right behind me. The act sets out a number

of rules on when and how gifts from foreign governments to government employees are to be handled. An employee may not request or otherwise encourage the tender of a gift from a foreign

government. An employee may only retain for personal use a gift

from a foreign government if it is of minimal value or less. That

dollar figure, $100 in 1977, is now $260. Thus, an employee may

accept for personal use any gift from a foreign government that is

worth $260 or less.

An employee may also accept a gift from a foreign government

of more than minimal value when it appears that to refuse the gift

would likely cause offense or embarrassment or otherwise adversely affect the foreign relations of the United States, but such

a gift when accepted by the employee becomes the property of the

United States. Each agency takes these gifts above minimal value

and uses them for official use or transfers them to the General

Services Administration. GSA in turn can make the gifts available

to appropriate recipients inside and outside the government, for

public display perhaps, or it can sell the gifts, although the sale is

done only with the concurrence of the Secretary of State, saying

that it’s not going to cause offense and taking into account any consequences.

The Foreign Gifts and Decorations Act also permits employees to

accept, retain and wear decorations given by foreign governments

for various reasons.

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Finally, I would like to highlight one of the other responsibilities

in the Foreign Gifts and Decorations Act specifically assigned to

the State Department. In accordance with the act, the Department

asks other agencies to compile each year a listing of all statements

that have been filed by its employees when depositing a gift from

a foreign government of more than minimal value or when accepting certain travel or travel expenses from a foreign government.

The Secretary of State then publishes a comprehensive listing of all

of these statements in the Federal Register, and, obviously, that

then becomes publicly known.

I, as mentioned before, have my slightly longer written statement

and I appreciate your having taken it for the record. Thank you,

Mr. Chairman. I will be glad to take any questions you or other

members of the subcommittee may have.

[The prepared statement of Mr. Taft follows:]

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Mr. OSE. Thank you Mr. Secretary. If I might just delve into a

couple of things. We had testimony earlier the evidence that we’ve

uncovered or found indicates that a President receives somewhere

between 10,000 and 12,000 gifts per year. How many gifts per year

does the State Department have to deal with?

Mr. TAFT. Mr. Chairman, I’m not sure that I have the number

at hand, but if I could provide the precise number for the record,

I think that would be good. It is in around—certainly 1,000 would

come in if you include the President, members of the family, Vice

President, the Secretary of State; and then, of course, there are

other agencies as well which I do not know about.

[The information referred to follows:]

The Protocol Office in the State Department handled about 600 to 700 gifts to

Secretary Powell from foreign government sources last year of more than minimal

value It also handled about 100 gifts of more than minimal value to other State Department officials from foreign government sources last year.

Mr. OSE. So there are quite a few that come in?

Mr. TAFT. There are.

Mr. OSE. I mean, it’s not just one a month kind of thing?

Mr. TAFT. No, it is not.

Mr. OSE. And then the second question related to the first is the

total valuation of those gifts, that the State Department actually

has an appraisal system; so we could followup with that also.

Mr. TAFT. Yes. In fact, for the previous year, the year 2000, the

list has already been published. The list for 2001 will be available

shortly, as soon as we get the information from all of the different

agencies.

[The information referred to follows:]

Attached is the list of gifts to federal employees from foreign government sources

of more than minimal value, as reported to the State Department.

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Mr. OSE. You’re referring to national publication in the Federal

Register?

Mr. TAFT. Federal Register.

Mr. OSE. So it’s made a part of the public record, so if anybody

has any question as to where the source was, what the valuation

was, and what was done with the item, it’s right there.

Mr. TAFT. Right. The circumstances of the gift, exactly, and its

value.

Mr. OSE. So the system exists whereby the public’s interest in

disclosure can be addressed as it relates to foreign gifts?

Mr. TAFT. I think this is exactly the purpose of the 1977 statute

and the regulations which have been issued under it.

Mr. OSE. OK. What sort of checks and balances exist within the

State Department system to ensure that complete records are kept,

made and kept, on the gifts that each Federal agency under your

jurisdiction receives?

Mr. TAFT. Within the State Department, the regulations are in

place, and each embassy is familiar with them. There’s some gifts

that come there, and the Secretary has his Gift Unit in the Protocol

Office which regulates very carefully the gifts that he receives.

Each employee is also required to report gifts over $260.

With regard to the other agencies, they have their own systems

and their own regulations that they have in place and that they’re

required to follow. We do not in the State Department review, for

example, the operation of the Department of Transportation—— Mr. OSE. Right.

Mr. TAFT [continuing]. And how it functions. That’s something

that the Department of Transportation and their inspector general,

those other officials in that Department, are responsible for. We do

our own.

Mr. OSE. Within the State Department’s Gift Unit within the

Protocol Office, how do you go about determining valuation, or

value, I should say?

Mr. TAFT. We have an appraiser whom we use to appraise the

value of the gifts.

Mr. OSE. Is that appraiser a career person or an appointee?

Mr. TAFT. I believe he’s actually under contract with the Department.

Am I right about that? Yes, he’s just a contractor.

Mr. OSE. Private party?

Mr. TAFT. Yes.

Mr. OSE. Third-party nongovernmental?

Mr. TAFT. Yes. And we have a contract with him and when we

have an item to be appraised, that’s the business he’s in.

Mr. OSE. Licensed by some State or something?

Mr. TAFT. I believe he’s a District of Columbia resident and up

on Wisconsin Avenue somewhere.

Mr. OSE. All right. So we actually go outside the agency for the

valuation process?

Mr. TAFT. That’s right.

Mr. OSE. And then that person provides a written appraisal, if

you will, gives it back to the Department, and then the Office of

Gifts within the Department deals with it accordingly?

Mr. TAFT. That’s right.

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Mr. OSE. What I’m trying to get at is whether or not we can in

fact have a system that provides the information. What you’ve just

told me is we have a professional appraiser, we have clear rules,

we have an annual publication in the Federal Register, and that

we put out in the public domain all of this information for anybody

who’s interested.

Mr. TAFT. We believe we have that system, and while we don’t

want to be overly confident, we believe it actually operates as anticipated. There will be, I suppose, some small slip-ups here and

there, but the system is there, it’s in place, and I think we follow

it very well.

Mr. OSE. Thank you Mr. Secretary. Mr. LaTourette.

Mr. LATOURETTE. Mr. Chairman, I don’t have any questions. And

thank you, Secretary Taft, for being here. I yield back.

Mr. OSE. All right. I just wanted to establish that in fact we can

do this either as a government or an agency. I am quite pleased

to hear that you are doing it successfully. I know of no evidence

whatsoever to contradict what you’ve told us, period, and I’ve

looked. So——

Mr. TAFT. Well, Mr. Chairman we’ve been doing it for 23 years

under the statute, and I guess we’ve gotten fairly good at it.

Mr. OSE. Thank you, Mr. Secretary, for joining us today to establish in fact that a system to record, value, and dispose of these

gifts—it’s possible to create that to the level that will satisfy the

voters of this country, the residents of this country, as to whether

or not their officials are properly reporting these gifts. I’m very

grateful to you.

I think we’re 3 minutes prior to your time line, so thank you

again.

Mr. TAFT. Thank you, Mr. Chairman. I appreciate your having

me as a witness and also your letting me go at the time we’d

agreed. Thank you very much.

Mr. OSE. All right. Now that the panels have been dismissed, today’s hearing clearly demonstrates that the current system for the

receipt, valuation, and disposition of Presidential gifts is broken

and needs to be fixed.

Today’s witnesses, all four of them, stressed the need for accountability, both for domestic and for foreign gifts. The first panel was

clear that they support some sort of change in how we’re currently

approaching these problems. The total value of gifts retained by the

previous administration appears unseemly and it creates at least

an appearance problem. The fact that many gifts were not disclosed

or were undervalued raises legal and other questions, per the testimony of Mr. Walden and Mr. Harshbarger and Dr. Light. The fact

that many gifts were misplaced or lost just baffles me. I don’t know

how you can lose a 7 by 6 foot rug, for instance.

The fact that U.S. Government property was improperly taken

troubles me, and the fact that there exists between an election, and

either swearing in or inauguration, a period of time during which

the rules are quite vague and seemingly unenforceable creates considerable consternation on my part. The fact of the matter is public

servants, including the President, should not be able to supplement

their government salaries with lavish gifts at any time whatsoever.

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The purpose of our bill, H.R. 1081, is to put in the public domain

some sort of structure and disclosure so that these gifts cannot be

obfuscated.

I thank everybody for participating in today’s hearing. We’re adjourned.

[Whereupon, at 12:34 p.m., the subcommittee was adjourned.]

[Additional information submitted for the hearing record follows:]

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