IN HIS MESSAGE to Congress on the proposed Ethics in Government Act, President Carter properly noted the difficulty in balancing the rights of government employees to privacy against the need of the public to know those employees are free from conflicts of interest. It is a difficult balance to strike because the values on both sides are important. But the President, it seems to us, has carried his passion for financial disclosure too far. The law he is requesting goes beyond what is needed to reach the goal he seeks.

The President's proposal would require top-level government employees, career as well as political, to reveal in great detail their personal finances and those of members of their immediate families. The reports required would deal not ony with income - unearned as well as earned - and gifts received, but also with net worth - investments, real estate holdings, debts, patents, copyrights, mineral leases, and so on. And they would include a similar, though not as comprehensive, statement about the financial situation of the employee's spouse and each minor child. While the net worth reports would not have to show the precise value of each investment, they would have to specify what general category of value each had - up to $5,000, $5,000 to $15,000, $15,000 to $50,000 and so on. These reports would be available for inspection by anyone who wanted to see them.

This kind of undressing in public seems to us to be a high price to exact from those who serve in the top ranks of government. They - and their families - lose their privacy in an aspect of life that has always been protected from public revelation. Despite the provisions of the proposed law that would limit the ways in which this data could be used, the mere publication of it would change their lives. Friends, close and distant relatives, neighbors, casual acquaintances, debt collectors, salesmen, and everyone else could get a quick estimate of their assets. We had qualms about such total financial disclosure when President Carter required it of his cabinet nominees and when Congress required it of its members and senior employees. But they, at least, do not have to reveal all solely because they have reached the top ranks of the career they have chosen to follow.

The gain the government gets from this invasion of privacy does not seem to be worth it. Conflicts of interest are not going to decrease dramatically and in greater proportion because of this far-reaching disclosure program. Employees who want to cheat and steal will still find ways to do it. The only reason for so drastic a program, as far as we can tell, is that it is believed such a program may convince the public that government really is honest. But the mere existence of a financial disclosure program, no matter how broad its sweep, is not going to restore the confidence of the public in government. What is needed is conflict of interest legislation that really works. We think that could properly include a much more limited disclosure program, which would focus on the most relevant information relating to conflicts of interest - income, gifts and the existence (not necessarily the size) of investments in particular companies, industries, or real estate. It would not ask employees to reveal all in a public relations gesture.