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Catching the important issues.

The Committee on Government Liaison (CGL) is a unique committee with a unique name. But what does it do, members of Financial Executives Institute often ask? What does "government liaison" mean?

As one committee member said, CGL "catches important Washington issues that might otherwise fall between the cracks"--in other words, issues that don't fall under the purview of other FEI committees, such as taxation, corporate reporting, employee benefits, and so forth.

For example, CGL was deeply involved in preparing the FEI position paper on long-term economic growth that was issued in January. The committee also helped Congress shape legislation for the Chief Financial Officers Act of 1990, which establishes financial controls for all government departments and agencies. And CGL will continue to pursue passage of product liability and tort reform legislation, as well as support the OMB as "the last bastion of defense" in controlling unnecessary regulation.

"Our greatest accomplishment in my three years as chairman was the influence we had on the CFO Act," says John J. Higgins, the controller of Continental Bank, who stepped down as committee chairman in March. "Since then we have assisted in its implementation, especially by recommending candidates for the CFO positions in each department and federal agency."

"Our committee has always been respected by both parties in the administration and Congress," says Buel T. (Tod) Adams, vice president and treasurer of CBI Industries, who has replaced Higgins as chairman of CGL. "They recognize we don't have an axe to grind. We promote neither industry interests nor those of individual companies."

CGL has moved strongly into governmental issues following a reorganization in 1991. Until then, it was comprised of three subcommittees, which covered legislation, regulation and oversight matters. As a result, subcommittee responsibility overlapped and members had to become familiar with a number of issues.

Under Higgins, the committee was increased to its full complement of 40 members, which enabled the group to create smaller, more focused subcommittees to address major issues. Now the committee can be more proactive in each of these specialized areas.

Where do CGL's issues come from? The initial stimulus for the position paper on economic growth came from a presentation to CGL in December 1991 by two of President Bush's economic advisors. "They would not admit we were in a recession," Adams recalls, "and when we challenged them on it, they asked us to indicate what we thought should be done."

Realizing that tax issues were also involved, FEI President P. Norman Roy created an ad hoc committee comprised of three members of CGL and three members of FEI's Committee on Taxation. The ad hoc group focused on its area of expertise: federal fiscal policy. Its paper was debated over the summer and fall, and approved by FEI's Executive Committee in January.

CGL's main subcommittees are:

* Federal Fiscal Policy: Robert Hogan, secretary and treasurer of Associated Materials, chairman.

Hogan and his subcommittee drafted in March 1992 what he calls a "rogue paper." This laid the initial foundation for FEI's economic growth position paper. "There were a number of proposals floating around Washington on fostering long-term growth," Hogan says.

"We have said we want FEI to be an independent voice in the financial arena, and here was a chance to use our expertise."

For Hogan, the position paper is only a start. "I'm 60 percent satisfied with the final product," he says. "But I expect we'll be developing detailed proposals in the area of taxation and in line with President Clinton's request for spending cuts. It's not good enough to describe what you think should be done unless you also have a proposal on how to do it."

The subcommittee has also collaborated with the Heritage Foundation in promoting the idea of a nonpartisan, blue-ribbon group that would develop a consensus on cutting government spending. "I'm hoping this will become our No. 1 achievement," says Hogan, getting real spending cuts in our federal budget, not just a cutback in budget increases."

* Federal Financial Management Reform: Richard Obetz, controller of IBM Credit Corporation, chairman.

This subcommittee has been monitoring the implementation of the CFO Act passed in 1990 and has been assisting in identifying candidates for the 23 CFO and 23 deputy CFO positions in the federal government. There were 14 CFO positions and 15 deputy CFO slots filled last year, according to the report by the Office of Management and Budget (OMB). The subcommittee also reviewed OMB's five-year plan and addressed the need for financial systems and accounting standards in the federal government.

The CFO positions will be refilled as government staffing turns over in the new Clinton administration. The subcommittee will be working with agency officials and OMB and legislative representatives to fill the vacancies with candidates who have a strong financial background, says Chairman Obetz. "Our mission is to get FEI's name in front of the new administration," he says, "and to help identify capable people who will one day produce financial statements that can actually be audited."

* Government Regulatory Activity: Martin J. Mulholland, retired as director of accounting services of Eaton Corporation, outgoing chairman; T. Eugene Blanchard, senior vice president and CFO of Dyn Corp, new chairman.

The cost of regulation to business is estimated to be more than $400 billion annually. "This significantly impacts our competitiveness in a world economy," says Mulholland, who is stepping down as subcommittee chairman. With the Bush administration opposed to many regulatory controls, the subcommittee focused in recent years on supporting the efforts of the President's Council on Competitiveness and the Office of Information and Regulatory Affairs (OIRA).

"The new administration will challenge us to be more proactive," Mulholland says. "With the demise of the Competitiveness Council and the potential cutback in OIRA funds, no one now is speaking out for business in the regulatory process. We recognize legitimate regulation, but there has to be a more intelligent way to put balance into regulation."

* Product Liability and Tort Reform: Tod Adams, outgoing chairman. Cornelius F. Griffin, vice president and CFO of Richton International Corp., new chairman.

FEI participates in the Product Liability Coordinating Committee, a private-sector affiliation that promotes uniform federal product liability legislation. "Given the different laws in most states, a plaintiff can shop around for the most favorable jurisdiction for his case," says Chairman Adams. "Our group feels there should be a level playing field."

Proposed legislation to create uniform product liability standards lost by one vote in the Senate last year. New legislation in 1993 is expected to include Democratic support.

Other CGL subcommittees cover antitrust policy, corporate criminal law, education policy, environmental and energy policy, financial industry reform, securities industry reform, union issues and so forth.

Of all the issues CGL is looking at, which does Adams find most intriguing? He goes back to what he calls the "sleeper" in the economic growth position paper. "If you reform the tax system," he says, "so it is based on consumption in one form or another, as opposed to income, this country will have made a major change. And it will be beneficial, for it will promote both productivity and savings. In the long term, it will have as much impact as anything we recommend in our position paper."
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Title Annotation:From FEI; Financial Executives Institute's Committee on Government Liaison
Publication:Financial Executive
Date:Mar 1, 1993
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