Mr. BENNETT. Because the cost-of-living thing was an alternative. It was something we provided for as an alternative which we thought at the time would be acceptable, and now if it is not acceptable by our retirees, I don't think Congress is obligated to give both.

Mr. PIRNIE. What does the witness think about the possibility of being charged with inequity in regard to other retirees under governmental programs?

Mr. BENNETT. Well, there may be a difference, but the moral obligation here arises from having served under a retirement system, although they were not promised it, it was not in a sense any legal, binding thing, but people did have a reasonable assumption that this type of program would continue and they would be paid on that basis. The same thing doesn't obtain with regard to comparison of civil service and this. I don't think there is any obligation to bring civil service up to this standard.

Mr. PIRNIE. Well, the witness doesn't think that there is any complete obligation not to change legislative rules governing this area if there is no substantial inequity, is that correct?

Mr. BENNETT. Well, I have come to the conclusion that there is a moral obligation, and of course it is not a legal obligation. It is not one that I would hope to make anybody be mad at their country for if it wasn't done, because there is nothing that says anybody who retains their job in the military is justified in thinking the statutes are going to stay the same. They knew that when they went into the service.

Mr. PIRNIE. My question was, we are bound to change some factors that might be built into ultimate retirement benefits in various relationships with people employed by the Government.

Mr. BENNETT. I think this is so. After all, I voted for the 1958 law and thought it was a good law. At the time I had no reason to feel I was doing anything but things that were good.

Mr. PIRNIE. Your point would be simply related to trying to continue the election of recomputation rights for those who served prior to 1958 ?

Mr. BENNETT. That is correct, and if somebody opted not to do that, I think they could take the cost-of-living thing, but I think there should be some cutoff date on that. If they should be allowed to do it, they shouldn't be allowed to flip back and forth, they should take one or the other. I should think some would take a cost of living rather than recomputation.

Mr. PIRNIE. I appreciate the viewpoint you expressed.

Mr. BENNETT. Thank you.

Mr. STRATTON. Could I ask on that point Mr. Pirnie raised, what do you base this moral obligation on specifically? Can we pin this down at all, because this has come up in discussions. Just the fact it was in existence at the time these people went on active duty?

Mr. BENNETT. Well, I think if a person serves under a particular system of pay, and retires, he has a reasonable moral rightness in assuming that this is going to be continued and not cut down. It isn't a contractual matter in the sense that it can't be changed. It isn't a

But I just feel when somebody serves under a particular retirement system, he has sort of a moral right in this position, and it should be continued.

Mr. STRATTON. I know in my case when I came into the Navy I wasn't aware there was such a thing as recomputation. It had no bearing on my decision to enter the Navy.

Do you think there was still this moral obligation in the case of individuals that came in under those circumstances?

Mr. BENNETT. Well, I wouldn't know how you would have a system where you would find out which people didn't know and which did. My point is the people that did know, and went into the service, and continued to be in the service on the basis of their reasonable belief that it would be continued do have a moral obligation owed them.

If you have a way to eliminate those that it made no difference to, that might be something to do, but I don't see as a practical matter how you could find out.

Mr. STRATTON. Let me ask one other question. I said in my opening statement we were going to ask everybody where the money was coming from. We are all, I am sure, aware of the problems that we have got in this Congress; and you have pointed out clearly revenue sharing is the sharing of revenue that we don't have.

But let me ask this question: We are all aware of the fact that the squeeze is on the military budget, and factors beyond the control of this committee may well lessen the amount of money available. We have already seen it in this calendar year.

If we had a limited amount of money, would you think it would be more important for us to spend that money on the active forces, rather than on the retired forces? In other words, what ought to be the driving factor in our pay scales, the active forces that we can attract and retain, or meeting this moral obligation to our retired people?

Mr. BENNETT. Well, you started off asking me where we are going to get the money and you wound up asking me whether I should put it in active duty. That is sort of a bifocal question. Suppose we address the first part of it first.

Mr. STRATTON. I refrain from asking the question.

Mr. BENNETT. I would like to answer it even if you refrained. You could pay for this program several times over with revenue sharing, assuming revenue sharing never grows. Revenue sharing would pay for this, and many times over. That is one.

Foreign aid would pay for it very comfortably, and have a tremendous input into the black if you abolished foreign aid, which I also favor doing. I don't favor revenue sharing as now constituted. I don't favor foreign aid in the way it is now being run, and don't favor any large-scale follow-on from it.

There are many subsidies in our country. Farm subsidies ought to be looked at very hard. I don't know whether they can be abolished or not, but you know a lot of fairly good farm organizations oppose the farm subsidy as a matter of fact, and I think that is something we ought to look at, although I have not concluded they can be ended.

But you could pay probably 10 times over the cost of this by abolishing certain programs which I think should be ended.

Now, getting to the second question which you did want to ask and that was whether we should put the emphasis upon the current military strength of our country, or upon retirees. If, in fact, we have a moral obligation, of course that really can't be equated with our present responsibility of another nature.

Obviously, we can do both. There is no problem of not doing both. We can do both, if we will rearrange our priorities and get rid of foreign aid and revenue sharing and get rid of some of these very subsidies which need a new look. But of course we have to have a strong national defense. Our country is being deeply cut in national defense. But we are increasing in areas of welfare, which are going to cost this country so many more billion dollars more than this it is possible to even think of.

We are thinking of guaranteed incomes and all this sort of thing. It is right down the pike real close. We ought to forego some of these things, some of these expensive welfare programs, and instead take care of those for whom we really have a moral obligation. Mr. STRATTON. Thank you very much.

Mr. Lennon, any questions?

Mr. LENNON. Mr. Bennett, your bill, H.R. 522, would then apply only to those individuals who were in active service in 1958?

Mr. BENNETT. That was my intention. Perhaps it doesn't say that, but if it doesn't say that, I would want to amend it to say that. This is a moral obligation I am trying to pay off. It doesn't state the system to be a good system for those who came in afterward.

Mr. LENNON. I do not recall the specific figures counsel responded to you when he stated what the lifetime cost would be if those individuals in the service in 1958 had their retirement pay recomputed. Would you state that, Mr. Counsel?

Mr. FORD. $1.1 billion the first year and $137 billion through the year 2000.

Mr. LENNON. Through the years of the life expectancy of those who were in the service in 1958 and retired since that time: is that the way you understand it?

Mr. FORD. Yes: it is for anybody who is retired or will ultimately achieve retirement, who was in the service before June 1, 1958. It is not the complete lifetime cost. It is the cost to the year 2000. Mr. LENNON. To the year 2000.

Mr. FORD. Over the next 28 years.

Mr. LENNON. Congressman, I was not a member of this committee in 1978 when this committee. I assume, after deliberation and hearings and testimony, made the decision to change the law.

You. I assume, were a member of this committee at that time?

Mr. BENNETT. Yes.

Mr. LENNON, You indicated you voted to cut off the recomputation. Was the moral issue then raised by some of the witnesses before the committee at that point in time?

Mr. BENNETT. Well, my memory really, frankly, is not very good on

But I know it wasn't brought out very graphically. It was not done in a way that really affected the committee very much in its deliberations. I am a very sensitive individual; and if it had been, I probably would not have voted for it.

I do have a faint recollection, which the record can speak for, because it is undoubtedly a record vote. I have a faint recollection I did in fact vote against the bill in the committee but supported it on the floor of the House.

Mr. LENNON. Have you had an opportunity

Mr. BENNETT. My memory is I voted against it when this issue was raised in the committee, but voted for the bill when it passed the House. That is my memory.

Mr. LENNON. I intend to go back and read the hearings of the committee at that time that made the decision in 1958. I have not had the time. Have you had the time?

Mr. BENNETT. No, sir; I have not.

Mr. LENNON. Mr. Chairman, these questions of the moral impact on the man in service who intended to make a career of it, at the time this committee acted and took the bill to the floor, I was not a member of the committee and therefore not familiar. I think we all ought to be briefed on that, Mr. Counsel and Mr. Chairman.

Now, another question: It has been suggested that we may have come to the point in time that the military retirement should be taken out of DOD as part of its budget and put in the regular retirement system.

Now, of course, historically the retirees looked to the Defense budget for their retirement on the philosophy we can better take care of our own in a system that we have been with than we can in some other system. Now, I read in some of the journals related to the services that that is being now seriously studied. What do you think about that? Have we reached that point in time that we have got to take the DOD retirement budget and put it in the civilian retirement budget?

Have we got to consider the question of requiring a man in the service to contribute something to his own retirement? These are all factors on which I think this subcommittee is going to finally have to at least come up with a recommendation to the full committee in its report.

Mr. BENNETT. Since you will be the most knowledgeable committee in this field and the most knowledgeable group in the country or the world. I would hope you would make recommendations on the basis of this kind of study and it would seem to be quite probable for the future, for those entering in the future, that some sort of arrangement might be made for contribution to the program, to the financial program.

Mr. LENNON. I believe the retirement cost to the Federal Government for military retirees in fiscal year 1973 is $4.9 billion. Reading what I have been able to obtain or projecting the substantial retirements, that is going to escalate pretty high, is it not?

I get this from magazines that are published by the services. Mr. BENNETT. As a lawyer, Mr. Lennon, you know that something very definite happens when you require somebody to contribute to a

program. As a matter of general law a person then has a right to sue if he doesn't get what he was going to get under the original system.

In other words if he pays in a penny under a system and you change the system it becomes a contractual relationship and the law has held many times you have the right to insist that the thing is not derogated in any way.

Mr. LENNON. I participated in a committee hearing last week where it was made crystal clear that the commissioned officers in the Public Health Service were going to also insist this committee look at its problems related to recomputation. They likewise pay nothing in retirement. They are assigned active duty any time during their careersome of them are, as you know-they said if this committee took the action, it necessarily in equity and justice would have to do the same thing for those commissioned officers in the Public Health Service if they had ever been assigned to active duty for as much as 6 months. That is what they served notice on on another subcommittee which I am on, Subcommittee No. 2, in our hearings.

Do you think we are going to have to do that too?

Mr. BENNETT. I have this observation to make about that. At the base of the benefits which are given to people who served in the military, there are two factors we must not overlook. The main one is the fact that these people can be called upon to give their lives for our country in combat.

There is another one, and that is that quite often they are drafted. With these two very strong moral obligations, very generous benefits have been built up in this country on the basis of those two factors.

Then you start applying it, as to who it applies to. Obviously these things don't apply to everybody. The combat thing applies only to a small fraction of the military force today, only a very small fraction, yet it is the base for many of these very generous benefits that occur. The drafting does apply to a larger group of people than the combat does, but it still doesn't apply to many, many people who serve in the military.

When you go on and stretch it still further and go to the Public Health Service, which generally speaking is not composed of drafted people, I don't believe-although there may be some drafted people in the Public Health Service-and which generally speaking it is not in combat, you see you are getting further and further away from the base upon which we laid these benefits.

Therefore, we ought to see whether or not we are not giving a great many benefits to the U.S. Public Health Service which should not in any way be borne by Defense funds but instead should be borne by Public Health or somewhere else. Then the question would be whether or not they should have these special benefits. I am not sure what the ultimate end should be on that.

Mr. LENNON. Congressman, should there be a differentiation between a person that goes in the service, say at age 20, and gets out at 40? The reason I raised that question, I had a retired general call me within the last 48 hours, and he raised this question, that some