White House Fact Sheet on the President's Ethics Reform Proposals

Today the President sent to the Hill his ethics reforms legislation and signed an Executive order establishing strict ethical standards for the executive branch. The bill and order reflect the President's strong commitment to integrity in government and incorporate many of the recommendations of the President's Commission on Federal Ethics Law Reform, established by President Bush in January 1989. These proposals follow the four principles the President had set forth to guide the Commission:

1. Ethical standards for public servants must be exacting enough to ensure that the officials act with the utmost integrity and live up to the public's confidence in them.

2. Standards must be fair, objective, and consistent with common sense.

3. Standards must be equitable all across the three branches of the Federal Government.

4. We cannot afford to have unreasonably restrictive requirements that discourage able citizens from entering public service.

The President recognizes that the order may need to be amended, depending on what is ultimately enacted as law, but he signed the order today to avoid any delay in implementing ethics reform in the executive branch.

In separate legislation sent to the Hill today, the President proposed a 25-percent pay increase for judges, and the proposed ethics bill itself includes a limitation on receipt by judges of honoraria. The President will be working with the Congress separately on the questions of honoraria for Members of Congress, a possible congressional pay raise, and a pay raise for certain executive branch positions, including specialized jobs like those at the National Institutes of Health.

Governmentwide Ethics Act of 1989

Financial Disclosure

Financial reporting and review requirements would be uniform across the three branches of government.

In place of the current system in which individuals disclose only the category of value of their assets and income, the bill would require individuals to disclose the actual value of each asset and source of income rounded to the nearest thousand dollars. (Where the actual valuation is unknown or not easily determined, a good faith estimate could be supplied. In the case of stock, an individual could report the number of shares held.)

Employees would no longer be exempted from reporting liabilities for home mortgages and loans from relatives other than spouses, parents, brothers, sisters, and children.

Commissioned officers in the Executive Office of the President (not including advisory committee members) would be added to the list of those required to file public financial disclosure reports.

To reinforce the independence of the trustee of a qualified blind trust, such a trustee could not be an individual or an entity owned in its entirety by an individual.

The legislation would create an advisory commission to study ways of simplifying the forms that need to be filled out in the Presidential appointment process and to report back to the President within 90 days.

Conflicts of Interest

The proposal would extend coverage of the general conflict-of-interest statute, 18 U.S.C. 208, to the judiciary and to non-Member officers and employees of the Congress (but not to Members themselves).

Members of Congress would be included in the portion of 18 U.S.C. 208 that prohibits an official from taking actions that affect entities with which he is negotiating for employment.

The Internal Revenue Code would be amended to authorize deferral of tax liability when an individual is required by his/her agency to divest assets in order to avoid conflicts of interest.

The President would be given the authority to grant conflict-of-interest waivers when the national interest so requires.

Advisory committee members would be allowed conflict-of-interest waivers if the appointing official determines, after review of confidential financial disclosure reports, that the need for a member's expertise outweighs the potential of conflict of interest. The proposal would require public disclosure of the waiver and the information from the report about the financial interest necessitating the waiver.

The Office of Government Ethics would receive the authority to issue regulations providing for waivers, across-the-board, for inconsequential and remote financial interests.

Honoraria, Outside Activities, and Gifts

The current statute barring supplementation of the salaries of executive branch officials would be extended to the judicial branch; this would have the effect of barring the receipt of honoraria for speeches, writings, and other appearances in their official capacity by judges and other judicial branch employees.

The legislation would impose a cap -- set at 15 percent of an Executive Level I salary -- on the outside income that could be earned by senior officials in all three branches. (In view of the pending discussion with Congress regarding honoraria, congressional honoraria would not count against the cap.)

The legislation would bar senior officials in all three branches of government from serving on the board of directors of a for-profit enterprise. Requests by such employees to serve on the boards of nonprofit organizations would be subject to case-by-case review to avoid conflicts of interest.

The legislation would include uniform governmentwide rules for agencies and individuals concerning the acceptance of reimbursement of travel expenses.

The legislation would prohibit employees in all three branches, except pursuant to reasonable exceptions provided by regulation, from accepting a gift or other item of monetary value from anyone seeking official action from their agency or whose interests may be substantially affected by the performance or nonperformance of the employee's official duties.

Postemployment Restrictions

The lifetime prohibition against making representations to the Government in a particular matter involving specific parties would be extended to the judicial branch.

The bill would abolish "compartmentalization" of the Executive Office of the President (EOP) for postemployment purposes. Thus a senior employee leaving a job in any agency within the EOP would be subject to a 1-year cooling-off period before he or she could attempt to influence any official anywhere within the EOP.

The existing 1-year postemployment cooling-off period for senior executive branch employees would be extended to cover senior personnel in the legislative and judicial branches. (During the cooling-off period, former employees are generally not permitted to contact their former agencies.) Members of Congress and legislative staff would be barred from contacting Members or staff in either House of Congress during the cooling-off period. Compartmentalization rulings would be possible for legislative staff, but not for Members.

A proposed new provision would limit damaging "side-switching" by Government employees by prohibiting former executive and legislative personnel, for 2 years after leaving the Government, from disclosing specified nonpublic government information, including specified information pertaining to U.S. strategy in international negotiations.

Enforcement and Structure

The independent counsel statute would be extended to cover the Congress. Other changes to the statute would include the selection of an independent counsel from a list of 15 individuals submitted by the Attorney General.

Misdemeanor and civil penalties would be included as sanctions for violations of the criminal conflict-of-interest statutes, while retaining and enhancing felony sanctions for willful violations of these laws.

The Attorney General would be given authority to seek injunctive relief for violations of these laws, and administrative debarment authority against former Government employees who violate the postemployment restrictions would be expanded.

The bill would authorize an exemption from the Federal Advisory Committee Act facilitating the creation of a White House Ethics Council to advise White House and Cabinet officials, in conjunction with the Counsel to the President, on ethics matters.

Campaign Financing

The bill would prohibit the use of excess campaign contributions for personal use and office expenses.

Executive Order

The new Executive order would set forth 14 fundamental principles of ethical conduct for the executive branch.

Full-time noncareer Presidential appointees in the executive branch would be prohibited from receiving any earned income for outside employment during their Presidential appointments.

The Office of Government Ethics would be responsible for administering the order by:

-- Consolidating all executive branch standards of conduct regulations into a single set of regulations, and developing and periodically updating a comprehensive executive branch ethics manual.

-- Issuing regulations (with the concurrence of the Attorney General) interpreting the general statute prohibiting actions in matters in which employees have financial interests (18 U.S.C. 208) and the statute prohibiting supplementation of salaries (18 U.S.C. 209).

-- Issuing regulations (as previously authorized) setting forth a system for nonpublic (confidential) financial reporting for executive branch employees to supplement the public disclosure system.

Agency responsibilities include:

-- Supplementing the standards provided by law, the Executive order, and the comprehensive regulations issued by the Office of Government Ethics. Any supplements must be prepared as addenda to the comprehensive branch-wide regulations, and be approved by the Office of Government Ethics.

-- Consulting with the Office of Government Ethics, where practicable, prior to granting waivers of conflict-of-interest requirements, and providing that office with a copy of any waiver granted.

-- Obtaining approval from the Office of Government Ethics for annual plans for training and awareness activities.

-- Providing mandatory annual training briefings on ethics for all senior officials as well as other designated employees. All Executive Office of the President staff would be included.

-- Assessment of the ethics program in each agency and provision of adequate support, including the use of a separate line item in the budget, where practicable.

The order would provide that the Executive Office of the President may not be compartmentalized for the purpose of the 1-year postemployment cooling-off restriction.

The order reaffirms existing delegations of authority to issue conflict-of-interest waivers for certain Presidential appointees.