Hank Brown: the Senator with a CPA's view of Washington.

Hank Brown was always interested in accounting. As an undergraduate it was his major at the University of Colorado and through an accounting internship he worked for Eastman Kodak while in college.

Brown had planned to join a CPA firm

after graduating in 1961 but instead he volunteered

for a four-year stint in the Navy,

including a year in Vietnam (and earned an

Air Medal with two gold stars, a Naval Unit 

Citation, the Vietnam Service Medal and

National Defense Medal).

Returning home in 1966, he entered law

school at the University of Colorado, working

part-time for Arthur Andersen's Denver

office to help pay his bills. Again, he

intended to join a CPA firm after receiving

his law degree in 1969, but instead he accepted

a position with Monfort, Inc., the

nation's largest cattle feeding operation.

Hank Brown never lid find permanent

employment as a CPA but he obtained commendable

employment elsewhere: Last

year he was elected to the Senate from Colorado,

becoming the first U. S. Senator who

is an accredited CPA.

A "CREATIVE ACCOUNTING PRIZE"

FOR CONGRESS?

"If we ever give out prizes for creative accounting,

Congress will certainly head the list," remarks Brown, during an interview in which he lamented the lack of a basic understanding of accounting by those who set the nation's fiscal policies. "The very bizarre system that Congress uses does exactly what it's designed to do," says Brown. "It obfuscates the unfortunate fiscal policy the nation has."

It's one of the things Brown would like to see changed, and he may get the chance. Brown was recently appointed to the Budget Committee, which he terms "a great forum to work from to straighten out fiscal policy."

The 51-year-old Republican, a native Coloradan, is well-acquainted with the need to "straighten out" the nation's endemic problems, fiscal and otherwise. Regarded as moderate on social issues while fiscally conservative, Brown arrived in Washington in 1980 as a U.S. Representative from Colorado's largely agricultural 4th District.

By 1988 the Almanac of American Politics had deemed Brown "one of the most effective Republicans in the House," partly for his work on the Ways and Means Committee, and the National Taxpayers' Union named him a "taxpayer's friend." On an office shelf Brown displays the line of "Golden Bulldog" statuettes he's received from a group called Watchdogs of the Treasury.

Brown also gained a reputation for both his courtesy and tenacity-qualities that have helped him on several occasions to negotiate legislative compromises between liberals and conservatives.

His interests range to other matters as well, including conservation. He shepherded through Congress legislation guaranteeing federal protection for Colorado's Cache La Poudre River and helped expand the boundaries of the Rocky Mountain National Park.

Commuting between the Senate and Greeley, Colorado, every week to be with his family-his wife Nan and their three children-leaves Brown with little spare time, although he admits to a love for skiing whenever he can find the time.

THE VALUE OF "PRATICAL EXPERIENCE"

One of the biggest problems with Congress is too many members never had the chance to work for a living, Brown is convinced. "It's had disastrous consequences in terms of national policy," he says. "It's not that they're evil or bad people, it's that they simply don't have the practical experience to understand the effect of what they do."

He gives as an example what happened when Congress required companies to adopt the calendar year for tax purposes. "The suggestion that you're going to have everybody on the same fiscal year is ludicrous," he asserts. "Anybody who has an ounce of practical experience understands that. The unfortunate thing is there are not enough people with practical experience at the Treasury or in Congress."

Brown himself does not lack "practical experience." From 1969 to 1980 he worked for Monfort, the Colorado-based cattle operation (later acquired by ConAgra, Inc.), which at the time had some 2,000 employees. He began as the company's corporate counsel and after two years moved to the business side, becoming vice-president in charge of corporate development.

He helped set up over 20 branches, along with distributing companies around the country, and took over international operations. His last job at Monfort was in charge of the lamb division, itself an $85 million a year business.

Encouraged to enter politics, Brown was elected to the Colorado state senate in 1972. In 1980 he was elected to the U.S. House.

While serving in Congress, Brown earned a master of law degree from George Washington University in 1986 and passed the CPA exam (all four parts in one sitting) in 1988. He is a member of the Colorado Society of CPAS.

"I'm convinced you ought to learn throughout your-life," remarks Brown. "And the review course for the CPA exam was probably the best educational experience I've had. It was an enormous asset, particularly in dealing with tax policy on the Ways and Means Committee."

After his election to the Senate last November, Brown promptly landed choice committee assignments-in addition to the Budget Committee, he sits on the Judiciary and Foreign Relations committees. FISCAL GAMESMANSHIP VERSUS A ZERO-BASED BUDGET Brown brings an accountant's-eye view to the way Congress handles fiscal matters. "We need to develop some consistency in our approach to the budget," Brown argues. "We write budgets with one frame of reference and appropriate our bill with a different frame of reference, so it's very difficult to see whether what we've appropriated fits within the budget limit Congress has passed."

Brown refers to Congress's practice of describing budgets in terms of current law (that is, authorized spending limits) instead of passed-year expenditures (what was actually dished out). "When we develop budgets on the federal level the comparison is always to what we might have spent, not what we spent the past year."

"We increased spending by well over 100% in the past decade," he reflects. "While every year the budget was described as a 'cut in spending,' there wasn't a single year we cut spending." The confusion, he points out, is because what Congress calls a spending cut is actually a "cut" in a proposed increase'

Brown strongly supports proposals for a zero-based budget (he refers to it as "truth in budgeting") that would reference changes in spending policy to what was spent the previous year, rather than to "an ethereal amount that might be spent in the coming year."

"That fundamental change would give a much clearer picture to Americans of what we're doing with the federal budget," he says, and would help "eliminate some of the gamesmanship. "

And, of course, there's the size of the federal budget, which Brown continues his long fight to trim. "The on-budget deficit this year will be something in the neighborhood of $1,500 for every man, woman and child in the country," he declares. "You would have to have a tax increase for every working American in excess of $3,000 to bring the budget into balance. The numbers are absolutely astounding."

Among the many programs he characterizes as "so wasteful they almost defy the imagination" are those "to subsidize tobacco production while urging people not to use it"-he compares this to supporting both sides in a war-and "coming up with $100 million a year so bees won't lose interest in flowers," referring to subsidies to the honey industry.

Brown argues with much conviction that while such programs are often backed by strong lobbies, a balanced-budget amendment would force the government to set priorities.

"It may be difficult to end the tobacco program, but at the point you have to choose between money for Head Start and money for tobacco subsidies, it will be easy to eliminate the tobacco subsidy." The key element, he points out, is "forcing Congress to choose."

U.S. ACCOUNTING STANDARDS AND THE GLOBAL ECONOMY

Brown's accounting expertise also helps him deal with issues involving the globalization of the world's economy, an issue he confronts on the Foreign Relations Committee. "The accounting profession has been way ahead of government," he observes. It's clear American accounting concepts have come to set the standard around the world."

He attributes this success to "the superiority of the accounting practice in the United States, the intigerity it brings to business and management operations. It's interesting that one of the first things the Soviets asked to learn about was our accounting system. And I think justifiably so, because it's the basis for making sound management decisions."

Brown also thinks the trend will continue. "You'll see the European Community move towards accepting our standards," he predicts, "and I think you'll see the rest of the world as it develops come to embrace those standards as well."

"REAL" TAX REFORM

On matters closer to home, Brown shares an acute interest in many matters of great importance to the accounting profession, including tax reform. "The 1986 act gave tax simplification a bad name," says Brown. "Real tax simplification has to involve an understanding by Congress that the tax code should not be the tool by which we try to micromanage the economy."

Brown returns to an old theme when he talks about ideas for remedying the situation. "One solution is to begin having people with practical experience spend a few years of their career serving in the Treasury or serving on the staffs of congressional committees. We've gotten so specialized and so complicated that government is remiss in being able to administer what we pass."

He would also like to see the administrative cost of new tax laws figured into the true cost of the legislation.

While Brown supports reducing the capital gains tax to stimulate investment, he recognizes that Congress is unlikely to act on any tax cut soon. He's more optimistic, however, about the chances of passing basic indexing, with some thresholds. "Everyone I talk with, Democrat and Republican, sees the merit of not taxing people when there's no real gain," Brown says.

A VARIED AGENDA

On other issues, Brown is equally forthright. He strongly supports reforming civil penalities under the Racketeer-Influenced and Corrupt Organizations Act (RICO). "I'm very hopeful we'll get a modification of that law," says Brown. I think RICO should be focused on punishing criminals." On the savings and loan crisis, he says while taxpayers will have to come up with the money for the bailouts, Congress has yet to address the underlying problems.

"I'd like to see insurance premiums based on the risk of the portfolio and the capitalization so an incentive is provided for institutions to build their own capital and assess risk when they make loans," he says. "A lot of the S&L problems came from institutions that had only 1% of capital-way undercapitalized-and continued to get insurance."

He is also an advocate of co-insurance for the FDIC for deposits above $100,000, to provide "an element of private concern" and "introduce market forces that are sorely needed" to get the banking system back on firm ground.

PERSISTANCE WORKS

"The way you accomplish something here is not necessarily to get on C-SPAN," Brown reflects. The way you accomplish something here says more about persistence than anything else."

He continues, "I think all CPAs understand the valuable suggestions they come up with in their audit reports or management reviews have to be sold.' Having a good idea isn't enough, and in Congress you're dealing with some unusual egos."

A successful legislator, according to Brown, is one who knows how to get others to think his good ideas were someone else's-the person he's trying to persuade. He observes, "The way things are sold here is with persistence and hard work, rather than an elegant speech on the floor."

Another vital factor in getting legislation through, he noted, is mobilization of public opinion "and the involvement of groups like the AICPA."

CPAs IN POLITICS

As for more CPAs becoming involved in politics, Brown enthusiastically supports the idea. "I think members of the profession would find it a very valuable experience and one of the more fulfilling things they can do in a career." Whether CPAs chose to run as a candidate or simply to work on campaigns, "it's part of a professional responsibility that is not only much needed by our country but one of the more fascinating things they can do."

THE POLITICAL PROCESS

Also on the subject of polities and citizen involvement, Brown would like to see a move toward more direct donations to campaigns rather than contributions by organizations. He also favors term limitations. "The House and the Senate were far different bodies when the country was established," he notes. "People came and served a brief period of time and went home. It was not thought of as a lifetime career. It was not thought of as the place someone makes his fortune in the world."

This again returns Brown to a familiar theme. "You now have people in Congress whose major experience in life is in public office, not in earning a living in the private sector." All of which, he says, is to the detriment of the system.

If term limits are established, what might he do after the end of his Senate career? Brown responds: "I hope I'd still be capable of doing something productive. I have hopes that I would still be capable of doing something useful."

He might, of course, consider becoming a practicing CPA.