(FORTUNE Magazine) – YOUR SECRETARY sounds a bit flustered. The White House is calling. The White House! Brain revving like a sewing machine, you pick up the phone and are told the Administration is looking for a person to fill position X, and your name has surfaced. Would you be at all interested? Say you would like to think about it, and think hard. The next call may be from a Cabinet Secretary, or if the job is exalted enough -- gulp -- from the President himself. Your first emotions of pride and patriotism need to be tempered by some more practical considerations: Are you prepared to put your life and your finances on public display in fishbowl-on-the-Potomac? Can you afford to take a government job, even for only a few years? Recently the soiled-laundry list of Washington turpitude and scandal -- Michael Deaver, John Tower, Jim Wright, the Department of Housing and Urban Development -- has provoked ever tighter interpretations of the federal ethics laws. The current level of persnicketiness has left recent appointees stunned. Says a key aide to a Cabinet Secretary, fresh from the costly and nerve- racking vetting: ''I really feel that if average Americans knew what you went through, they would say, 'That's not what we intend.' '' Even as ethical barriers to public service have risen, pay for policymakers and senior civil servants has sunk far below the norms of corporate America. Adjusted for inflation, senior managers' salaries in government, linked historically to Congress's, have plummeted over the past 20 years. Except for a few dozen top jobs, maximum pay ranges from about $70,000 to $82,500. Of several hundred people approached for senior jobs in the Bush Administration, fully 40 have refused service on financial grounds alone. The 51% pay raise recommended by a presidential commission last winter would have done little more than restore purchasing power lost since 1969. When Congress shot it down, reacting to voter outrage, the salary increases for several thousand senior civil servants died too. These key managers have themselves been voting, with their feet. Among the very best -- those who have won presidential merit awards -- the average quit rate in 1986 and 1987 ran at 24% annually, with 75% of the departees going to industry. More than five months into the Bush Administration, almost 20% of 200 upper- level Cabinet jobs that require presidential appointment are still vacant. Though that's about as full up as the Reagan Administration was at the same point, the average period between nomination and confirmation has doubled in the past 20 years, to more than three months. The incentives for avoiding Washington may well increase. Sleaze has led to paranoia. President Bush has already proposed a new ethics bill, and congressional task forces are busily designing reforms of existing ethics laws. Lawmakers say that the ethics laws are sure to be revised, next year at the latest. The danger is that Congress will weave a bad law that further tangles the existing web of restrictions on public servants. As for pay increases, both President Bush and House Speaker Thomas Foley have recommended them, but politics rather than sound personnel policy are likely to shape the final legislation. At peril is one of American government's historical strengths: the cross-pollination brought about by the periodic swapping of roles between bureaucrats and businessmen. DONALD J. ATWOOD got his phone call just before Christmas, a feeler for the No. 2 job at the Defense Department, that of deputy secretary. Vice chairman of General Motors, Atwood, 65, was looking forward to retirement after 29 years at GM. An interview with John Tower followed, well before Tower's own nomination as Secretary of Defense collapsed. After a few more phone calls, the last from President Bush, Atwood said yes. His reasons for coming to Washington, like those of nearly all the past and present public servants interviewed for this article, were laudable. What government and particularly the Defense Department need, says Atwood, are ''people who have an understanding of how a business operates and how it is managed.'' Atwood knew that his pay would be only $89,500, vs. $625,000 last year at GM, and that he would probably have to sell his GM stock. (He owned or had + options on some 140,000 shares last year.) But he was unprepared for the other sacrifices he was asked to make. All his stocks had to go: AT&T, Exxon, Kodak, even Disney. (Companies that do more than $25,000 a year with the Defense Department are off limits.) GM cashed out his stock options and other incentives, normally paid over a period of years, at their present value. All these transactions meant capital gains taxes. Atwood declines to put a figure on his losses, but they easily came to $1 million. That's not all. The ethics enforcers -- full-time, federally paid attorneys working with the General Counsel, at the Office of Government Ethics, and in the Defense Department -- were uncomfortable because Atwood would be receiving a GM pension and other normal retirement benefits. The theory, Atwood recalls with an edge to his voice, was that if there were a recession GM might be forced to shore up the pension fund, ''and that if the recession were deep enough, I would be in a position to give General Motors contracts to prevent it from going bankrupt so it could fund the pension fund and I could receive my pension.'' The solution: Atwood had to buy an insurance policy, guaranteeing payment of his pension in the event of GM's insolvency. ''The ethics team thought that was such a good idea that I then had to take out a second one to cover my life insurance benefits and a third one to cover my health care benefits.'' Appointees must sever professional and social as well as financial connections with their past. For John E. Robson, deputy secretary of the treasury and former chief executive at G.D. Searle, one of the more painful steps was resigning from his directorships. He had to give up not just posts on five corporate boards but also several nonprofit positions, including a trusteeship at St. John's College in Annapolis, Maryland, that he had held for 17 years. No laws or rules forbid nonprofit service, but the Administration's ethics counselors, says Robson, ''encourage you to become more or less monastic in your approach.'' As a potential nominee, you should consider the extent of the financial disclosure you must make. The basic form for executive branch employees requires the listing of any asset valued at more than $1,000, or that generated $100 or more in income during the current year and the last calendar year combined. These include but are ''not limited to stocks, bonds, tax shelters, bank accounts, real property, mutual funds, commodities futures, personal businesses, and partnership interests.'' You can exclude your personal residence, unless you rent it out, but must list precious metals as well as the cash value of your life insurance policies. Once you've added up your assets, you check off one of six boxes, from ''$1,001-$5,000,'' to ''over $250,000.'' In separate sections you must list liabilities of more than $10,000, (not including the mortgage on your home); any agreements or arrangements with employers such as pensions; positions held outside the government, including nonprofit and educational posts, and details of any compensation in excess of $5,000 paid by one source. For ambassadorial appointments, you, your spouse, and your children over 12 must also take an AIDS test. THE SENATE confirmation committees have financial disclosure forms of their own, which must also be filled out. These ask for much of the same information, but sometimes in more detail and always in entirely different ways. Robson hired two lawyers and a big accounting firm to do the paperwork. Says he: ''I've tried to look at the forms objectively, but it got to be a difficult chore. You find yourself asking, Why is this information going to be important either to public knowledge or to my behavior.'' The basic financial disclosure report, including home address and phone number, is available for review or copying at the Office of Government Ethics in downtown Washington -- by anyone, be he Soviet spy, gossip columnist, or brother-in-law. The curious merely attest that they will not use the highly personal and detailed financial information for commercial or criminal purposes or for soliciting money. America got along without detailed ethics laws until the 1960s. The Kennedy Administration introduced basic rules prohibiting executive branch employees from making policy on matters in which they had a financial interest. Simple disclosure of such information as creditors' names was required in 1965, but only by top officials.

Watergate was the watershed in ethics laws. Congress imposed financial disclosure rules for Senators, Congressmen, and senior staff in 1976 and in 1978 passed the Ethics in Government Act, requiring the financial disclosures that are still in force. The law also set forth rules restricting employment of executive branch officials after they leave government, the broadest of which is a one-year period during which former government employees may not lobby the agency at which they served. Willfully ignoring the disclosure rules is punishable by a fine of up to $5,000. Postemployment violations carry criminal sanctions of up to two years in jail. Congress wants to go even further. A bill passed late last year would have widened the postemployment restrictions, banning a variety of contacts between former officials and the government. Ronald Reagan vetoed it, noting that it was confusing (it set different standards for three categories of senior Administration officials and different ones for Congress) and that it seemed more likely to punish people for their service to the nation than to prohibit unethical conduct. Another bill, setting forth postemployment restrictions for Defense Department officials involved in procurement, did pass. It carries felony sanctions of up to five years in jail. A more sweeping bill is now pending in Congress. It would ban Defense Department officials from working for any major defense contractor for two years after leaving government. Accepting compensation of $250 or more during that time could lead to a fine of up to $250,000. Congressman Les AuCoin (D- Oregon), a supporter of the bill, says the aim is to attract managers ''who are more interested in the national interest than their own career interest.''

Congressman AuCoin, meet Chief Executive Norman R. Augustine, the highly regarded chairman of Martin Marietta, which derived 80% of its $5.7 billion in sales last year from government contracts for such products as the Titan space boosters. An aerospace engineer who has spent a third of his 30-year career in government service, Augustine, 54, is said to have turned down positions in both the Reagan and Bush Administrations. He won't talk about that, but he will say this: ''I've concluded that there's no way I can serve in government.'' The conflict-of-interest laws are ''sufficiently vague and subject to ex post facto interpretation. They've got criminal sanctions. No one wants to be the test case ten years down the road. I certainly don't.'' Moral mania creates other kinds of risks for presidential appointees. The test of an action, statement, or behavioral quirk is no longer whether it is right or understandable, excusable or trivial. The test, and it is put exactly this way to potential appointees: How would it look on the front page of the Washington Post? Says E. Pendleton James, a chief headhunter in the Reagan White House, now running his own executive search firm: ''What worries me is that we're going to wind up with a government of wimps -- people who've never done anything controversial, never tried a new idea, never taken risks.'' The spotlight can paralyze those who have nothing to hide. Robert Fulton, Oklahoma's secretary of social services, was chosen in February for the top welfare administration post in the Department of Health and Human Services. Fulton agreed to come to Washington, fired up with plans to ''show that Republicans could do something about the welfare crisis.'' But the right-to- life lobby, already incensed because it felt Bush's HHS secretary, Louis Sullivan, was soft on abortion, attacked Fulton. Parents of children born at an Oklahoma hospital with spina bifida, a congenital and often fatal birth defect, had sued their doctors in 1985, alleging they had withheld care from the infants. Fulton headed the agency that oversaw the hospital at the time of the suit, but the alleged malpractice happened before he took over. No matter. He was criticized for not punishing the doctors, even though the lawsuit has yet to come to trial. The Bush Administration bowed to pressure from six conservative Senators, and Fulton withdrew his nomination on June 1.

More recently, Drew Altman, New Jersey's commissioner for human services, was forced to pull his name from consideration for head of the Medicare division at HHS, partly because he had endorsed a universal medical insurance plan proposed by Democratic presidential candidate Michael Dukakis. Also, Robert B. Fiske had to withdraw his nomination as deputy attorney general: He was head of the American Bar Association's judicial screening committee when it criticized some of Reagan's choices for the bench. LOW SALARIES are corroding the government at many levels. Says Chase Untermeyer, director of presidential personnel: ''The typical appointee tends to be either an older, well-established individual who's unconcerned about the pay level, or a younger person -- some as young as 30 -- for whom pay is not a consideration.'' Recruiting for specialized but less visible jobs has become particularly hard. The National Institutes of Health has been unable to hire a single senior biomedical research scientist (salary range: $68,700 to $78,600) from industry or academe in the past ten years. At the same time, starting salaries for entry-level civil servants are not competitive. Top pay for a beginning engineer at the National Aeronautics and Space Administration is $25,000 -- that includes a 30% premium for hard-to- fill jobs like those in engineering and medicine. Top graduates with a B.S. in engineering can command up to $40,000 in business. Some senior employees leave government early simply because they cannot afford to stay. H. Robert Heller, 49, quit in June as a Federal Reserve governor. An economist with a background in banking and international monetary policy, Heller considered his Fed position the ultimate job, and he took more than a 50% pay cut when he left BankAmerica in 1986 to accept it. But his $82,500 salary produced biweekly take-home pay of only $1,844. Being of a statistical turn of mind, Heller calculated that the $15,000 salary paid to a governor when the Fed was created in 1914, adjusted for inflation, would be $180,000 today -- or $750,000 if it had kept up with increases in the average manufacturing wage. He also checked to see what retirement benefits he could look forward to if he continued to serve at the Fed to age 65, and found he would qualify for a pension of $1,139 a month -- or only $633 for his wife if he died. Had the 51% pay raise passed, Heller would have stayed at the Fed. Instead he is taking a job at Visa International, where he reportedly will earn about $250,000 a year. If pay had gone up, Noel W. Hinners might still be associate deputy administrator at the National Aeronautics and Space Administration, the No. 3 job. Hinners, 53, came to Washington in 1963 as an AT&T employee on the Apollo project and joined NASA in 1972. He managed to get by on his salary, $80,500 last year, in part because he still lives in the suburban Maryland house he bought in 1965 for $32,500. But with a son nearing college age, Hinners began thinking about leaving government for a job in education or industry when the pay increase fell through. He says, ''You find out that a year in school costs $15,000, and you haven't saved that up.'' But the new postemployment legislation really made up his mind. Although not officially a procurement official, Hinners was involved in a large number of major NASA contracts, and attorneys warned him that a tough interpretation of the law would bar him from working for any aerospace company for two years after leaving government. Hinners quit on May 13, three days before the law was supposed to go into effect. He is now vice president for strategic planning at Martin Marietta. His salary doubled. Eighteen other senior technical people blamed the new rules for their departures from NASA. Has ethics enthusiasm gone too far? Robert F. Drinan, a Jesuit priest who as a Massachusetts Congressman during the 1970s voted for the Ethics in Government Act, says, ''Maybe the day has come for a little deregulation.'' Drinan, now a law professor at Georgetown, thinks the tough restrictions are steering his students away from government service. But other supporters of the 1978 law, most prominently the self-styled citizens' lobbying group Common Cause, are pushing for even more stringent ethics regulations. President Bush's reform bill will frame the debate in the months ahead. Many of its proposals are sound. One alone would go a long way toward making government service less burdensome to corporate executives: a deferral of capital gains taxes that result from stock, real estate, or business divestiture required by conflict of interest rules. The idea is to be able to move all the money into a blind trust or mutual fund and pay capital gains only when that investment is cashed out. Another sensible suggestion would make the ethics laws more uniform across the branches of government by extending them to include members of Congress and their staffs. Administration officials, for instance, have long been prohibited from accepting gifts or free travel. If Congress had been similarly circumscribed, the kind of unseemly conduct that led to the resignations of House Speaker Jim Wright and Democratic whip Tony Coelho would be clearly prohibited. Members of Congress may note that the recent scandals were uncovered under existing rules and that the examples of Wright and Coelho have already had a salubrious effect: More than half the members of the House are now on the record as favoring an outright ban on the $2,000 speaking fees that some members have used as a standard supplement to their income. But bringing Congress under the same rules as the rest of the government would make members more likely to think before enacting even more burdensome ethics laws. THE BUSH PLAN would also bring civil penalties such as fines for conflict of interest violations, reserving criminal sanctions for the most serious cases. This might relieve a potential public servant's worry about being branded a criminal for some technical infraction. It would also make the laws more enforceable. Justice Department prosecutors have been reluctant to unleash the full fury of a criminal indictment in marginal cases. Some of Bush's recommendations are just plain dumb. The bill would require, for instance, disclosure of the actual dollar value of an appointee's assets rather than the ranges required under present law. A better approach would be to simplify the forms by requiring disclosure of assets only over a given amount, say, $10,000. The Bush plan would require that appointees and civil servants disclose the amount of their home mortgage, which is now exempted. The idea is that public servants could be influenced by the mortgage lender, a risk that seems much too unlikely to justify the invasion of privacy.

The Administration is also planning to ask for pay increases of up to 25% for senior civil servants and higher raises in a small number of critically skilled positions, for instance NASA scientists or NIH researchers. A better proposition would be to permanently uncouple executive government compensation from the pay levels of Congress and to construct a more rational, market-based mechanism for adjusting federal salaries. Like morality, ethics is tough to legislate. Within the year the Administration and Congress will try anyway. The best outcome would be a revision of existing laws and pay standards that would encourage experienced managers to work in Washington -- not discourage them.