FEDERAL EMPLOYEES SALARY ACT OF 1963 Part 2 TUESDAY, OCTOBER 15, 1963 HOUSE OF REPRESENTATIVES, COMMITTEE ON POST OFFICE AND CIVIL SERVICE, Washington, D.C. The committee met, pursuant to recess, at 10 a.m., in room 215, Cannon House Office Building, Hon. Tom Murray (chairman of the committee) presiding. The CHAIRMAN. We will come to order. This morning's hearing will resume on pending pay legislation. The first witness is Hon. Kermit Gordon, Director of the Bureau of the Budget. Mr. GROSS. Mr. Chairman? The CHAIRMAN. Mr. Gross. Mr. GROSS. Before you start, might I inquire: How many additional witnesses do you propose to have on the subject of this new addition, this fat increase for various officials, pooh-bahs of the Federal Government? The CHAIRMAN. What do you call them? Mr. GROSS. Pooh-bahs. Brass hats. The CHAIRMAN. We are always welcome to hear any officials of our Government here. It is a pleasure to always greet you. Mr. GROSS. Is it anticipated we will only have the witnesses who are here this morning? The CHAIRMAN. So far as the executive branch is concerned, I think that is true. Mr. GROSS. What about the judicial branch of the Government? The CHAIRMAN. It isn't customary to have Justice testify. Mr. UDALL. Will the gentleman yield? The CHAIRMAN. We never have. Mr. GROSS. Why not? Mr. OLSEN. We had witnesses on that subject. Mr. UDALL. I would like to make a short statement in answer to the gentleman's inquiry. I think the members of judicial, Chief Justices, and others do not testify on legislation of this sort, and I understand the chairman and the staff have requested the Chief Justice and the Administrator of the Federal Court System to submit statements, which I believe are before us this morning. The CHAIRMAN. We have reports on the desk from a number. Mr. GROSS. If you are going to resort to statements and justification for this kind of spending, why then don't we simply get state ments from Mr. Gordon, Mr. Staats, and Mr. Macy, and why did you have a hearing this morning if statements are substitute for personal justification, personal testimony and justification? Mr. UDALL. Let me comment further. We have testimony from the president of the American Bar Association, which organizaion, I think, speaks for lawyers and judges generally. We had Mr. Segal, who represents an important committee of that association. Mr. GROSS. I think the gentleman will admit the bill was filed only last week and there have been no witnesses since the bill was filed. I don't know anyone who had a bill of particulars with respect to this particular pay increase provision going into a good many billions of dollars. Mr. UDALL. My comment would be that we have been discussing the proposed executive pay raises in this committee for months and months. I have circulated a memorandum to the Members of the House, members of this committee. We had a draft of my proposal or a summary of it out 6 weeks ago, at least. I can show the gentleman page after page of the hearing record where we have discussed executive and judicial pay. Mr. GROSS. Without any bill of particulars before you. Is that the normal way of holding hearings on a bill? Mr. UDALL. It is certainly not the preferable way, but I think the subject has been discussed repeatedly in this committee and I don't think the gentleman from Iowa is surprised that my bill was introduced or is surprised that a proposal of this kind is being made. Mr. GROSS. I will say to the chairman and gentleman from Arizona, I am not surprised to see the fire put in the boiler for another steamroller operation to get a bill out. I am not at all surprised to see that and, as usual, I will probably be under the roller when the roller starts moving. Mr. UDALL. I had hoped the gentleman would support Mr. GROSS. If that is the way the committee wants it, God bless you, go ahead and run away with it. Mr. JOHANSEN. Mr. Chairman? The CHAIRMAN. Mr. Johansen. Mr. JOHANSEN. I wonder if I may make just one comment. There are a great many people representing the executive and legislative branch, or the judicial branch. The gentleman from Arizona says it is not customary for the Justices to testify. Of course not. But Mr. Olney, the Administrator of the Courts, if I understand it correctly, appears repeatedly before appropriations subcommittees. There is no reason in the world why Mr. Olney couldn't appear. Now I just want to make this observation that if it is proposed to close these hearings today, and to start what the gentleman from Iowa calls the steam roller rolling, I just want to make the observation The CHAIRMAN. Who proposed that hearings be closed today? Mr. JOHANSEN. It was my understanding that this was the last of the witnesses. The CHAIRMAN. That is news to me. I didn't know anything about it. Mr. JOHANSEN. Do we have the assurance of the chairman- Mr. JOHANSEN. That is quite a different matter. I would like to make just this comment, that you are now adding a member to the unholy trinity. You have the normal pressures from the union members and union leadership of Federal employees coming up from the bottom, you have added last year the lateral pressures from this comparability principle, and now you are releasing any restraint on pressures from above by jacking this ceiling up, and I just oppose the procedure and I oppose the program. The CHAIRMAN. The gentleman is entitled to his views. Is there anything further? If not, we will be glad to hear from you, Mr. Macy. Mr. MACY. I will defer to Mr. Gordon, Mr. Chairman. Mr. GORDON. I have a brief statement, Mr. Chairman, which I would like to read, if I may. The CHAIRMAN. Very well, sir. STATEMENT OF HON. KERMIT GORDON, DIRECTOR, BUREAU OF THE BUDGET; ACCOMPANIED BY ELMER B. STAATS, DEPUTY DIRECTOR; SPENCER PLATT, CHIEF, PERSONNEL MANAGEMENT BRANCH; AND WILLIAM LEHMAN, MEMBER OF STAFF, PERSONNEL MANAGEMENT BRANCH Mr. GORDON. I am glad to have this opportunity to record the administration's support for adjustments in executive salaries as set forth in identical bills, H.R. 8716 and H.R. 8717. The bills also provide adjustments in career, legislative, and judicial salaries. In recent weeks this committee and its staff have made a thorough analysis of the President's recommendations for pay adjustments in the statutory salary systems for career employees. I can add little to the record of the hearings on the bills which would make those adjustments, but Mr. Staats and I would be glad to answer any further questions which the committee may have. In the report of the Senate committee on the 1962 Salary Reform Act, the President was asked to recommend for consideration at the next session of Congress appropriate increases in Federal executive salaries at all levels. Responding to this request, the President asked his Advisory Panel on Federal Salary Systems, augmented by the addition of Mr. Justice Stanley F. Reed and former Congressman Robert Ramspeck, to prepare recommendations on appropriate levels for executive salaries; on the relationship between executive salaries and those payable to career employees; and on the relationship between executive salaries and those paid to the Congress and the judiciary. The report of the President's Panel, commonly referred to as the Randall report, was reprinted by this committee on August 16. The Advisory Panel has rendered service of exceptionally high order to the Government and the American public. Made up of leaders from industry, labor, education, and the public service, the Panel recommended the reform of the Federal stautory salary systems and, after a review of military compensation, pointed the direction of further studies of that subject which are now being pursued in the Department of Defense. Its report on executive, legislative, and judicial pay was its final service. The President asked the Bureau of the Budget and the Civil Service Commission to review and make recommendations on the Randall Panel's report. Our agencies have made this review, and, except for the specific salary rates proposed, we concur in the Panel's findings. H.R. 8716 and H.R. 8717 apply the Randall Panel findings in essentially the same fashion as would we, and provide salary rates which, although lower than those recommended by the Panel, we believe to be appropriate. The Panel, in its report, stated: Giving up a high income to accept a lesser income in a Federal office has been a common experience in the history of our country. We believe, however, that such action should not require the individual to draw down his personal resources in large amounts in order to support himself and his family while in office. The sacrifice must be of an order which many, not just a few, are prepared to make, and it should be no greater in a Federal position than in any other form of public service. Furthermore, there are many able young men who have accumulated no reserves to help them maintain themselves in public office. It is particularly important that inadequate pay scales neither deny our country their services nor create the kind of economic pressure of family responsibility which cuts their service short when they do accept public office. We find the Panel's reasoning persuasive. This administration has found, as did past administrations, that the current Government salaries for executives are deterrents to many able men and women who would otherwise be ready to serve in public office, but simply cannot afford it at the salary rates which we pay. Furthermore, these low executive salaries depress unreasonably the rates which we can pay in the higher grade career posts. I am sure that the committee will agree that the need for outstanding talent and commitment to a government career for posts at these levels is at least as great as any time in our Nation's history. It is a truism that no organization, public or private, is better than its leadership. The Government, with its myriad responsibilities, requires leadership of the highest order. Those of us in the executive and legislative branches who are constantly involved with governmental decisionmaking might draw back for a moment to see our jobs in broader perspective and realize the dimensions of the decisions which Federal officials must make. Leaving aside the great issues of war and peace and others which are peculiar to the public service, we might do well to remind ourselves of the magnitude of those Federal operations which are in some degree comparable with those in private companies. Public officials manage annual Federal receipts and expenditures far greater in magnitude than anything confronting the executives and board of directors of a private company. They decide to build or not to build facilities far beyond anything which a private company can undertake. They let contracts for procurement of goods and services totaling billions annually. In the business of government-as in any other business-skilled management is the key to efficiency and economy. Gains in productivity are preponderantly the result of managerial innovations; if, by retaining and recruiting topnotch managerial talent, we are able to speed up the increase in productivity by as little as 1 percent-in terms of output per unit of manpower input-the consequent saving to the American taxpayer would be in excess of $150 million. A salary structure for Federal management personnel which will enable the Government to hold its best people and to recruit others of comparable talent will, I believe, contribute to the imporvement of productivity in the Federal Government. The Randall Panel sought criteria for determining at what level Federal executive salaries should be set. They rejected the comparability principle for these high offices, and we agree with that'rejection. While the comparability principle is a valid standard for setting Federal career salary rates, it does not in our opinion have equal applicability to salaries for Federal executives. Aside from the difficulty of finding private enterprise responsibilities which compare, for example, with the Secretary of Defense or the Secretary of State, we believe that the considerations which govern the setting of private enterprise executive rates are not, in important respects, applicable to salaries for public office. Salaries as high as those paid in private enterprise are not required in order that we solve our pay problems for the top Government salary structure. On the other hand, we cannot continue to get along with salaries which are lower than those paid in many State and local governments and in colleges and city school systems and other nonprofit activities. Those salaries have advanced rapidly in the last 5 to 8 years. Federal top salary rates have remained unchanged since 1955-56. We cannot continue to offer salaries which often require incumbents to dig deep into their personal financial resources if, indeed, they are willing to serve at all. We would, accordingly, derive Federal executive salaries on the structural principle outlined in the Randall report. In other words, we would adopt the six-level executive structure recommended by the Panel, and would build the salary structure for the six levels as an upward projection from the career salary levels which result from career-private enterprise comparability. H.R. 8716 and H.R. 8717 provide the six-level structure recommended, and the salary rates in the bill are logical extensions of career comparability rates, with the salaries for levels V, IV, III, and I built up in successive 10-percent increments upon the comparability payline rate for GS-18. Mr. JOHANSEN. Excuse me. Would you refresh my memory: what is the top GS-18 under this proposed bill? Mr. GORDON. Under proposed legislation, Mr. Johansen, $25,500. Mr. JOHANSEN. Thank you. Mr. GORDON. In this structural concept, level II is a kind of halfgrade inserted between levels I and III; and level V, as explained by the Chairman of the Civil Service Commission in his statement, is the lowest executive level with a defined structural relationship to Classification Act grades. The salary rates thus developed bear a reasonable relationship to career rates. Being thus related to career rates they will also be reasonably related to changes in the American economy, since any pressure for further change in subsequent years would arise from cumulative career comparability adjustments in keeping with private enterprise adjustments. 23-242-63-pt. 2- -2 |