[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]



 
                 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









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                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       MAJOR R. OWENS, New York
ILEANA ROS-LEHTINEN, Florida         EDOLPHUS TOWNS, New York
JOHN M. McHUGH, New York             PAUL E. KANJORSKI, Pennsylvania
STEPHEN HORN, California             PATSY T. MINK, Hawaii
JOHN L. MICA, Florida                CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia            ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
BOB BARR, Georgia                    DENNIS J. KUCINICH, Ohio
DAN MILLER, Florida                  ROD R. BLAGOJEVICH, Illinois
DOUG OSE, California                 DANNY K. DAVIS, Illinois
RON LEWIS, Kentucky                  JOHN F. TIERNEY, Massachusetts
JO ANN DAVIS, Virginia               JIM TURNER, Texas
TODD RUSSELL PLATTS, Pennsylvania    THOMAS H. ALLEN, Maine
DAVE WELDON, Florida                 JANICE D. SCHAKOWSKY, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
ADAM H. PUTNAM, Florida              DIANE E. WATSON, California
C.L. ``BUTCH'' OTTER, Idaho          STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia                      ------
JOHN J. DUNCAN, Jr., Tennessee       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          JOHN F. TIERNEY, Massachusetts
CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
STEVEN C. LaTOURETTE, Ohio           PATSY T. MINK, Hawaii
CHRIS CANNON, Utah                   DENNIS J. KUCINICH, Ohio
JOHN J. DUNCAN, Jr., Tennessee       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







                            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 President-elect 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


                 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 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 
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, 
ranging 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 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.
    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.
    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:]
[GRAPHIC] [TIFF OMITTED] 84330.065

    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.
    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.
    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 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, 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 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 addicted, 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 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 additional 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 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 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.
    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 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.
    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 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----
    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?
    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.
    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 complain 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 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.
    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.
    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 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.
    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.
    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.
    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.
    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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