left. He has stayed, and I think at some personal discomfort and inconvenience.

Senator HATFIELD. So again, it's another personal handicap we have imposed on Commissioner Thompson.

Well, I appreciate your comments. Thank you.

The CHAIRMAN. Thank you, Senator Hatfield.
Senator Cannon?

Senator CANNON. Let me ask you about your recommendations concerning encouraging party and grass roots activity. Would you go through that a little, just explain what you mean by that?

Mr. TIERNAN. Yes. The statute now allows the two major national parties to participate in the Presidential general election, but that is the extent of party participation, unless they delegate to the State or local units of the party some authorization or expenditures on behalf of the candidate.

We think that is very restrictive. We had continual complaints during the election. If you recall, there was an instance where billboards had to be painted out because a local candidate for Congress or Senator had included the Presidential candidate on the sign. We think this is just a little bit too restrictive.

We would like to suggest that the committee provide some flexibility; we have made the specific recommendation that an additional limitation of 2 cents per voting population, or a minimum of $20,000 per State, be provided for the State parties to participate in the general election.

Senator CANNON. What about the issue of the congressional State candidates to be able to give something?

Mr. TIERNAN. We also specifically recommended that an incidental or isolated appearance by a candidate for the U.S. Senate or the Congress appearing with a Presidential candidate would not be treated as an expenditure or a contribution by the Presidential candidate.

You know, we think it's a natural thing that is going to happen in a campaign. If the Presidential candidate shows up in the State and the Senator is running, he is going to be on the same platform. If the Senator has a rally and invites the President to show up, we think it's the natural thing to do, and that should not be included as an expenditure by the Senator on behalf of the Presidential candidate.

Senator CANNON. You say that the FECA should be amended to permit congressional State candidates to give occasional isolated or incidental support to their party's Presidential nominee without such expenses counting.

Mr. TIERNAN. That's right.

Senator CANNON. You referred to an appearance there where there might not be any expenses. But are you going beyond that? Are you thinking about

Mr. TIERNAN. Well, we had the situation in 1976 wherein Koch was a congressional candidate in New York, and he made a button and put Carter's name on it-"Carter-Koch." That's an expenditure on Carter's behalf and would have had to be reported. As you recall,

we

Senator CANNON. So you anticipate that kind of a situation as well? Mr. TIERNAN. Yes. And we think that that should be exempted. Senator CANNON. I must say I agree on that, too.

Thank you, Mr. Chairman. I think that's all I have.

The CHAIRMAN. Thank you very much, Senator Cannon.

Mr. Chairman, as I said, we will submit some questions in writing. We would appreciate the answers coming back as quickly as possible, because we hope to have a markup of the bill in the next couple of weeks.

Mr. TIERNAN. I have indicated to counsel that we'll try to get them back by the first of the week, probably by Monday or Tuesday. The CHAIRMAN. That would be perfect. I promise you, it will not be that 10-pound pile of documents that you gave us earlier.

Mr. TIERNAN. Thank you very much.

The CHAIRMAN. Thank you, gentlemen.

Our next witnesses, I thought we would have them all come up together so we can get the benefit of their combined views. This will be Mr. Morley Winograd, president of the Association of State Democratic Chairpersons: Mr. Fred Wertheimer, senior vice president of Common Cause; and Mr. Russell Hemenway, national director of the National Committee for an Effective Congress.

If you would all come forward, with Mr. Winograd leading off, we would be very appreciative, indeed.

I would add that full statements, addendums, anything else that you care to submit, will be inserted in the record in full, and I would hope you would synopsize your thoughts so that the committee can get on with the question, which is what really changes the ideas, because statements—at least in my case-are absorbed better with my eyes than my ears.

STATEMENT OF A PANEL CONSISTING OF MORLEY WINOGRAD, PRESIDENT, ASSOCIATION OF STATE DEMOCRATIC CHAIRPERSONS; FRED WERTHEIMER, SENIOR VICE PRESIDENT, COMMON CAUSE; AND RUSSELL D. HEMENWAY, NATIONAL DIRECTOR, NATIONAL COMMITTEE FOR AN EFFECTIVE CONGRESS

Mr. WINOGRAD. Thank you, Senator Pell. I have earlier submitted testimony. I will be brief in my summation of that material.

I am testifying on behalf of the Association of State Democratic Chairpersons, and this matter currently before the committee is of great interest to our association.

We believe that Congress, in its rush to reform our electorial process following the disclosure of the Watergate hearings, paid insufficient attention to the role of political parties in that process. This committee's efforts to remedy their earlier oversight are to be commended.

In easing the reporting requirements, the draft bill recognizes that most political committees are not sophisticated organizations, but are loose associations of individuals who willingly give of their spare time to engage in our Nation's political life.

And as every candidate knows, it is from these individuals, primarily volunteers, that our political system draws its vitality. To the extent reporting and recordkeeping requirements deter volunteer participation in Federal elections, our political system suffers.

In this area, the association would like to advance one idea not cur

rently found in the committee draft bill, which we believe to be of value.

It has been our experience that local political party committees have become reluctant to engage in Federal-election related activity. They generally do not have legal and accounting assistance available, and local committees, therefore, have chosen not to run the risks of Federal regulation.

This, in turn, leads to less party identification with the candidate, and all of the evils that that creates. One step which the association recommends to reverse this trend is to change the triggering requirement for registration and reporting for State and local party committees which neither directly contribute to nor make expenditures on behalf of Federal candidates.

Instead of having to register and report as soon as the committee receives contributions, or makes expenditures totalling $1,000, the association recommends that such committees be allowed to accept, without being subject to the registration and reporting requirements, contributions which in the aggregate do not exceed $5,000 in any calendar year. This would allow local party committees to take advantage of the proposed and present exemptions from definition of expenditures without having to go through the burdens of registering and reporting. For example, a local party committee could distribute slate cards which are exempted from the definition of expenditure without having to register and report, provided the committee has not received contributions totaling more than $5,000 in any calendar year. This amendment would give our local party committees, especially the smaller county committees, a role in Federal elections free from the burden of the Campaign Act and would do so without doing violence to the legitimate goals of the Campaign Act.

To comment briefly on other aspects of the bill, we are very happy to see your draft contemplates a role for State party organizations in Presidential elections, because during the 1976 campaign we justifiably felt frozen out of the Presidential campaign. By giving us the ability to spend 2 cents times the voting age population, the committee will take a great step toward remedying the earlier oversight.

We would also like to commend the changes that the draft bill proposes to encourage volunteer activity, and to the extent the law encourages volunteer activity, we would consider it a success no matter what else happens. We again commend the committee on those amendments in the draft bill.

It is the politics of party, the politics of coalition and accommodation, which is our Nation's best defense against the divisiveness of special interest politics. These amendments will encourage a better relationship between our political parties and their candidates, and between our parties and their members.

In closing, I would urge that the committee in amending the Campaign Act seek a system of regulation that encourages rather than discourages people from participating in our electoral process. Nothing is accomplished if in our eagerness to rid our electoral system of corruption we rid it of its lifeblood, an active involved citizenry. Thank you.

The CHAIRMAN. Thank you very much, Mr. Winograd.

I would like to ask Mr. Wertheimer if he would give his summary now. I am very grateful that Chairman Tiernan is staying here, and we hoped you would for the question period, because we may want to ask the FEC some questions, too.

FRED WERTHEIMER

Mr. WERTHEIMER. Thank you, Mr. Chairman.

Let me say at the outset we appreciate the work that the chairman, the former chairman, and this committee have done in the campaign finance area over the years. We believe it has been excellent work.

We generally supported the provisions in S. 926 in the last Congress that were designed to simplify and correct problems in the reporting area, and our support continues in that area.

In my testimony we outline a number of specific changes that we think should be made. I want to touch on a few of them. They have been before this committee before.

We believe that the provision in section 441 (b) that allows corporations and labor unions to use their funds to pay for administrative costs of political action committees, while others cannot, is a discriminatory provision and should be eliminated. We hope this act will bring into conformance the legislation that deals with surplus campaign funds with the rules of Congress which presently prohibit the conversion of campaign funds for personal use. Those rules apply to Members of Congress but do not apply to challengers and do not apply to retiring Members.

We think the random audit provisions of the act, the provisions that allow random audits, are very important. This committee in the last Congress resisted the House's effort to eliminate the power of the Commission to conduct random audits. We hope you will continue that position.

We support, as we have in the past Congress, the various provisions referred to by Mr. Winograd and Chairman Tiernan that deal with the mistake that was made in the 1974 law in not providing a role for the State parties in Presidential elections, the 2 cents per voter role. We think that provision is an important provision and should be added, as well as the other provisions that this committee has backed in the past to deal with the role of parties at the State and local level in Presidential and other campaigns.

I would like to say a few words about the Federal Election Commission. To date, we feel the Commission has fulfilled its basic purpose, that purpose being to establish that campaign finance laws that were on the books had to be complied with. I think candidates are taking those laws seriously. I think contributors are taking those laws seriously.

There also have been serious problems, however, problems that have caused credibility problems for the Commission. Our feeling is that unless those problems are dealt with, the future ability of the FEC to effectively oversee laws will become open to very serious question.

The battles that have gone on over appointments to the Commission have worked to politicize the Commission to providing the public with the spectacle that personal and party loyalty is the test for becoming a member of the Commission-and sometimes it's one form of party loy

alty to some members of a party, and another form of party loyalty to other members of the same party-rather than a test of whether the individuals are basically committed to enforcing and carrying out the law.

We do not think there is any justification for the delays that have gone on with respect to the confirmation process for Mr. Reiche. We recognize the work this committee has done on the nomination, and we think the Senate should take that nomination up and act on it as soon as it can.

Very appropriate criticisms have been raised with respect to the auditing procedures of the Commission, particularly with regard to the timeliness of those auditing procedures. The Commission has brought in outside help and have hired Arthur Andersen to take a look at their auditing procedures. We commend them for that.

There have also been questions of delays raised in the enforcement area. We, ourselves, have been involved in one case where we filed a complaint before the Commission in October of 1976 against the American Medical Association. No action was taken. We filed a second complaint along the same lines in 1978, and to date no action has been taken. We are presently in court suing the Federal Election Commission, whose position is that this matter is still under investigation.

It has gone through two elections now, and without the court suitand we don't know what the timing of that will be-we could wind up going through three elections without a very basic question being resolved, a question dealing with whether the contribution limits on the books are being violated or not.

The timeliness issue, the questions of appropriate allocation of resources, auditing procedures, all deserve and need very careful consideration. The Commission has been in existence now since 1975. I think we're at a very critical point for the Commission. As I say, it has served its basic purpose. Prior to the existence of the Commission, campaign finance laws were not enforced and they weren't complied with. I don't think we have that record today.

But the future is a different question. Sufficiently serious questions have been raised about the functioning of the Commission, that those questions must be dealt with or else we face the chance that the Commission will not be taken seriously in the future, and the whole system of campaign laws will break down.

One final point. As we said before to this committee, we believe and still believe there are fundamental problems in the system for financing congressional races. Those are problems that will not be solved until a new alternative system for financing elections is adopted. We think it is essential to enact a new public financing system for congressional races and to bring under control and reverse the growth of the PAC movement in American politics.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you. And as a dues-paying member of Common Cause, I thank you for your testimony.

We would now like to hear from Mr. Hemenway, representing the National Committee for an Effective Congress, with which certainly this Senator has had a long and pleasant association.

Mr. Hemenway, your full statement will be put in the record, if you care to summarize.