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The original documents are located in Box 6, folder "Peterson Commission Report on
Executive Salaries, December 2, 1976" of the White House Special Files Unit Files at the
Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 6 of the White House Special Files Unit Files at the Gerald R. Ford Presidential Library
Commission on
Executive, Legislative
and Judicial Salaries
1750 K Street, N.W.
Washington, D.C. 20006
December 2, 1976
The Honorable Gerald R. Ford
President
The White House
Washington, D. C. 20500
Dear Mr. President:
It is my privilege to present to you the attached report of the
Commission on Executive, Legislative and Judicial Salaries.
All recommendations in this report have the unanimous support of
the distinguished Americans who constitute the Commission. This
unanimity reflects the urgency of the Commission's concern with
a genuine crisis of public confidence in the quality and integrity of
our Government.
We fear that the twin trends of ebbing public trust and the increasing
difficulty of attracting and retaining high quality people may soon be
irreversible -- unless the kind of actions suggested in this report are
undertaken as soon and as vigorously as possible.
We further believe that the American public will understand that a
small investment now in terms of increased salaries and a large in-
vestment now of conviction, time and effort in reform in the form
of a new Code of Public Conduct -- will pay large public dividends in
the building of a competent, full time and trusted government.
Respectfully submitted
Pear
Peter G. Peterson
Chairman, Commission on
Executive, Legislative and Judicial
mr. President on Behalf formy Salaries fellow-commissiones.
we Thank you for this opportunity to contribute.
THE PRESIDENT HAS SEEN a name
The Report
of the
Commission on Executive, Legislative
and Judicial Salaries
December 1976
SUMMARY
Introduction
Names of Commission members and members
of the Task Force on Public Conduct.
How We Did Our Work
The concept of "total compensation,"
including benefits (pensions, insurance,
etc.) and "psychic income" in the form
of prestige and the sense of doing an
important job for the country. A list
of studies undertaken.
The Problem
Images and Reality - The executives in
this survey have had only one nominal 5%
increase in nearly eight years. The
result - in the top grades - has been
difficulty in recruiting good people,
high early retirement, and bad morale
caused in part by "compression" at the
high levels of civil service, where
20,000 people in four grades all receive
the same "frozen" salary. Why does
Congress deny these raises? Because it
knows the mood of Americans, who have
far less confidence in public officials
than before. Breaches of trust - even
by relatively few - have reduced the
willingness to increase compensation.
Only a commitment to serious reform will
convince Americans that trust and
confidence can be restored, and that
increases in salary are justified.
Recommendations -- Part I:
A Code of Public Conduct
Proposed general principals of a Code to
cover all public officials at Level V
and above - executive, legislative, and
judicial. Public disclosure of finan-
cial affairs. Rigorous restrictions on
outside earned income. Strict conflict
of interest provisions on investments.
Appropriate and accountable expense al-
lowances. Clear restrictions on post-
service employment. Equal applicability
across the three branches. Vigorous and
consistent auditing. A proposed com-
mitment to prompt action by all three
branches after careful consultation and
precise drafting.
Recommendations - Part II:
Compensation
O Principles of Compensation
The inappropriateness of "comparability"
at these high executive levels. The
need for executive salaries as low as
possible yet sufficient to attract and
retain high-quality people. Salaries
should contemplate full-time work, and
obviate the need for outside earned
income (legal fees, honoraria, etc.)
The need not to exclude people of high
ability who depend entirely upon current
income to support themselves and their
families. The basis for granting less
of an increase in the top levels, and
more at the lower levels, where
nonmonetary satisfications are less. A
national pay standard, and one tied to
the job, rather than artificially pre-
determined fixed relationships.
2
O Background Studies on Compensation
and the Proposed Scales
Selected material from the Weber/-
Yankelovich studies. Why executives
enter government? Why they leave? How
much of a consideration at either point
is salary? Some sacrifice is customary.
Relative salary advantages and sacri-
fices on entry into different branches.
Realization of substantial increases on
leaving government service. The dif-
ferent problem of the judiciary, a life-
time commitment to a substantially
lowered standard of living. Pension
costs as a "comparability" factor;
postponement of executive contributions
to the system as a way to improve cash
flow during short-term government
service. A proposal for relocation
costs. A proposal to ease the "two-
residence" requirement for Members of
Congress and the problems caused by it.
Annual automatic cost of living adjust-
ments unwise.
o Salary Recommendations
The case for greater increases in ju-
dicial pay. Outside earning capacity
abandoned for lifetime service.
Throughout the three branches substan-
tially greater rates of increase at the
lower levels than at the higher levels.
Smallest increase recommended for Cabi-
net officers. Large increases for as-
sistant secretaries and the lower
levels, where the problems are great and
non-monetary income lower. The rela-
tionship among the salary levels of the
Vice President, the Speaker, and the
Chief Justice maintained through equal
increases for each. Congress raised
slightly less than average but still a
substantial amount - remembering our
proposal to eliminate most outside
earned income, and recognizing the
strong desire of Congress to be
conservative on the matters of members'
pay. "Compression" greatly reduced to a
satisfactory level.
3
Recommendations - Part III:
Quadrennial Commission
A concept for a permanent guadrennial
:
commission, with a four-year term and a
full agenda. Organization and responsi-
bilities of the proposed commission.
Proposed studies of the varying pension
systems within the government, particu-
larly variations in benefit levels, cost
assumptions, (static projections seri-
ously underestimate funding needs),
early retirement program, and funding
and budgeting generally. Do the people
understand the funding shortfalls? Life
insurance benefits should be studied as
well. Some coverage seems inadequate,
some inconsistent. The problem of
proper job classification; some serious
anomalies.
Submittal to the President
Unanimous agreement on recommendations.
No dissenting positions.
11
INTRODUCTION
Under existing statute, a Commission on Executive, Legislative, and
Judicial Salaries is formed every four years to make recommendations to
the President on the appropriate level of compensation for the Vice
President and for positions in the Executive Branch from Cabinet officers
through Level V, for the Members of Congress, and for Supreme Court
Justices and other members of the Federal judiciary (the complete statute
is presented in an Appendix).
The nine Commissioners are appointed by representatives of each of the
three branches of the Federal Government. Three, including the
chairman, are appointed by the President, and two each by the Chief
Justice, the Speaker of the House of Representatives, and the President
of the Senate.
The Commission makes its recommendations to the President and he
submits his recommendations as part of his next Budget message.
The recommendations from the President go into effect within 30 days,
unless they are disapproved or modified by either the House or the
Senate.
Members of the 1976 Commission are:
Appointed by the President:
Lane Kirkland
Secretary-Treasurer
AFL-CIO
Norma Pace
Senior Vice President and Economist
American Paper Institute
Peter G. Peterson - Chairman of the Commission
Chairman of the Board
Lehman Brothers Incorporated
Former Secretary of Commerce
Appointed by the President of the Senate:
Joseph F. Meglen
Lawyer
Partner: Meglen & Bradley
Bernard G. Segal
Lawyer
Chairman, Schnader, Harrison, Segal & Lewis
Past President, American Bar Association
Appointed by the Speaker of the House of Representatives:
Edward H. Foley
Lawyer
Former Undersecretary of the Treasury
Sherman Hazeltine
Chairman of the Board
First National Bank of Arizona
Appointed by the Chief Justice of the United States:
Charles T. Duncan
Dean
Howard Law School
Chesterfield Smith
Lakeland, Florida
Lawyer
Partner: Holland & Knight
Past President, American Bar Association
Executive Director:
Wesley R. Liebtag
Director, Personnel Programs
International Business Machines Corporation
In the belief that public confidence is directly related to a set of
perceptions of the conduct of public officials, we asked a special task
force of distinguished Americans to propose a set of standards for public
officials in the difficult area of conflict of interest, outside income and
post-service employment. We are most grateful for their efforts, and we
believe the proposed Code of Public Conduct to be a significant element in
our proposals. The members of the task force are listed on the following
page.
2
Members of the Task Force on Public Conduct
Mortimer M. Caplin, Chairman of the Task Force
Partner: Caplin & Drysdale
Former Commissioner of Internal Revenue Service
Tom Bradley
Mayor, Los Angeles, California
Tom C. Clark
Associate Justice, U.S. Supreme Court, Retired
C. Douglas Dillon
Former Secretary of the Treasury
Ray Garrett, Jr.
Partner: Gardner, Carton, & Douglas
Former Chairman, Securities and Exchange
Commission
Martha W. Griffiths
Partner: Griffiths & Griffiths
Former Member, U.S. House of Representatives
Leon Jaworski
Partner: Fulbright & Jaworski
Former Director, Office of Watergate Special
Prosecution Force
William McChesney Martin, Jr.
Former Chairman of the Federal Reserve Board
George Romney
Chairman, National Center for Voluntary Action
Former Industrialist, Secretary of Housing and
Urban Development
William D. Ruckelshaus
Senior Vice President, Weyerhauser Company
Former Deputy Attorney General
George P. Shultz
President, Bechtel Corporation
Former Secretary of the Treasury
Stuart Symington
United States Senator
3
Cyrus R. Vance
Partner: Simpson, Thacher & Bartlett
Former Deputy Secretary of Defense
W. Willard Wirtz
Partner: Wirtz & Gentry
Former Secretary of Labor
4
HOW WE DID OUR WORK
Il might be useful, at the outset, to explain how the Commission went
about its duties. The staff was composed principally of personnel
executives from private industry, and personnel and manpower experts
from academia.
While government specialists made sqme important contributions, there was
a general feeling that the work of this task force should be directed by
and presented to the Commission by representatives of the private sector,
as well as by our able Executive Director, on the theory that the
objectivity and thus the credibility of the studies would be enhanced if
the government members were not, in effect, sitting in judgment on their
own compensation problems. Accordingly, leading personnel executives
with backgrounds in major private concerns such as IBM, Eastman Kodak,
RCA, Hay Associates, and Pfizer were brought in to take a major role in
the various research projects.
We turned to Dr. Arnold Weber, Provost, Carnegie-Mellon University, for
some original research on why people came, didn't come, stayed, and left
government service and what the role of compensation was.
Al the threshold of its deliberations, the Commission determined to study
the problem in terms of "total compensation", rather than merely limiting
ils inquiry and its recommendations to questions of salary alone. Man
does not live, the Scriptures tell us, by bread alone (whether the ancient
or modern meaning of the word), and there are many elements of
remuneration which go to make up a salary, a wage, compensation. Such
obvious benefits and perquisites as pensions, insurance, vacations,
severance pay, profit sharing, and the like have all become familiar parts
of the wage "package". To those available to the senior government
executive, judge, or legislator must be added the "psychic" income of a
fulfilled sense of patriotism, the knowledge that one is doing (and
perhaps doing well) an important job for one's country as well as, to be
sure, the sense of importance which attaches to many of these positions at
or near the lop. There is also the strong possibility of career
enhancement after government service is over. On the negative side
there is income and career advancement foregone in the private sector,
the difficulties of transferring family life to a new, expensive, and
probably unknown site, and - again in the case of the Judicial and
Executive Branches - the above average possibility of a substantial drop
in annual income.
Consistent with this desire to examine total compensation, the following
are examples of studies which were conducted:
11
Salary and Economic Indicators and Trends
-
Federal government salaries - all levels
-
State government salaries - selected jobs
-
Private sector salaries - blue collar, clerical,
professional, and executive
-
Salary spreads between organization levels
-
Geographic salary rate differentials
-
Cost of living
Fringe Benefits in Government and Private Sector
-
Pension - size, costs, funding
-
!
Medical and health plans
-
Life insurance plans
-
Perquisites
-
Moving allowances and housing reimbursements
Other
-
Conflict of interest
-
Disclosure
-
Post-government service employment
-
Auditing procedures
-
Tenure
-
Retirement
-
Recruiting
-
Attitudes of top government officals towards pay
and other factors that may influence decisions to
join, remain in, or leave government service
Finally, the Commission wished to assure the fullest possible exposure of
the data to public review and also wished to assure its own exposure to
comment from the many interested parties.
All studies were presented in public hearings.
Over 100 organizations and individuals were invited to testify and 24
appeared.
Written comments were received from over 100 sources.
:
2
Over 520 individuals from all three branches - incumbents, departees, as
well as those who decided not to come to government, were interviewed by
the Yankelovich, Skelly and White firm in the study for Dr. Arnold
Weber.
In addition, a number of key government officials were asked to provide
their views on specific issues - in particular, those officials in present
and previous administrations who had the recruiting responsibility.
The Commission also examined, to its great profit, the report prepared in
1975 under the direction of Vice President Nelson Rockefeller, the report
on the Federal pay system, which report contributed strongly to the
Commission's decision to consider "total compensation" in the course of its
deliberations instead of merely looking at salary levels. Vice President
Rockefeller also contributed a substantial and thoughtful statement for the
consideration of the Commission.
In carrying out the work outlined in this report, the Commission was well
aware that its legal responsibility is primarily recommending rates of pay
to the President, but we were also aware that we met in time of crisis,
that the rate of good people leaving the government in the upper grades
had become a flood, that partly because of the crisis of confidence in the
nation no significant pay raises at all - whatever the recommendations of
Quadrennial Commissions - would have been granted for eight years, and
we quickly saw that a recommendation for substantial salary increases,
unaccompanied by any reference either to the other elements of income or
the crisis of confidence, would meet the same fate as did the
recommendations in 1974. We did not believe we had been convened to
perform an idle act. Mr. President, in the spirit of that belief, and
mindful of our legal and moral obligations, the Commission respectfully
presents this report.
3
THE PROBLEM - IMAGES AND REALITY
On September 22, 1976, Congress acted to deny a small upward salary
adjustment to the top employees of all three branches of the Federal
Government, an adjustment which reflected a percentage increase based
upon a comparability study with the General Schedule and which would
have occurred automatically had Congress not voted affirmatively to deny
it.
The action was hardly justified by the facts. Since 1969, Federal judges,
all members of the House and Senate and top officials of the Executive
Branch had received only one increase in salary - and that had been 5%.
This "freeze" had occurred during a period of sometimes double-digit
inflation and regular pay increases for workers in all other parts of
society, including government at all levels - state, local and the Federal
Civil Service General Schedule.
During the time in question - 1969 to 1976 - in which the officials whose
pay is the subject of this report received a total 5% increase, average
hourly private non-farm earnings increased by 70.1%. The Consumer
Price Index for urban wage earners and clerical employees went up nearly
as rapidly, by 60.5%.
General Schedule Federal Civil Service pay increased on the average
during that period by 65.7%, and in the so-called "super grades" GS 16 -
18, by 48.9%.
The 1976 survey of executive pay ($30,000 to $65,000) in 318 private
companies showed a salary increase during those seven years of 52.5% in
all companies and of 58.6% in companies where no bonuses were paid.
In fifteen major state governments, in the years from 1969 to 1975, the
Governors' pay was increased by 37.7% and that of the top five
administrative officials by 41.5%. In general, all the indicators - including
those cited above - demonstrated an approximate 55% increase in
comparable salary rates since 1969 which, allowing for the 5% increase in
1975, would have required a 50% increase in Executive Level salaries by
1976, just in order to provide comparable treatment. The charts on the
following pages dramatically illustrate the disparity in treatment at the
time the Congress chose to deny a modest 5% increase to the judiciary and
Executive Levels and, to be sure, to its own members.
The problem which Congress addressed - or, more properly, failed to
address - ran deeper than merely a substantial lag in salary increments
over a nearly eight year period. Since, by statute, the employees of the
Civil Service General Schedule cannot be paid more than the salary of the
lowest level of executives - Level V - these employees at the GS-18 level
and below were "frozen" at existing pay levels soon after the 1969
adjustment. As increases have been granted in the General Schedule over
the years - more or less comparable to those granted elsewhere in and out
of government - this "compression" has added more and more upper level
OVERVIEW: CHANGES IN EXECUTIVE LEVEL
SCHEDULE VS. SIGNIFICANT PAY INCREASE INDICATORS
70
HRLY. EARNINGS
AVG. G.S.
60
C.P.I., INDUST. ToT. COMP.
INDUST. SALARIES
PATC (GS11-15)
50
AVG. SUPERGRADE
TOP 5 STATE OFFICIALS*
40
% INCREASE
GOVERNORS*
*15 LARGE STATES
30
20
10
I
EXECUTIVE LEVELS
0
1969
70
71
72
73
74
75
76
YEAR
SUMMARY OF INDICATORS 1969-1976
AVG.
HAY ASSOC.
HRLY.
CONS.
AVG.
INCR
EARN
PRICE
INCR.
SUPER
PATC
ALL
NON-BONUS
INDEX
INDEX
G.S.
GRADES
SURVEY
CO'S
CO'S
70
60
% INCREASE
50
0
CONCLUSION:
Indicators suggest an approximate 55% increase in
salary rates since 1969.
civil servants to the "frozen pay" category. This has now reached down
lo the middle steps of GS-15, with the result that more than 20,000 men
and women in grades 15 to 18 as well as comparable grades in the foreign
service and other government salary groups have for years faced, and
face now, the prospect of no pay increase when they are promoted. They
have, in the words of the song, "gone about as far as they can go". This
means that in most government agencies executives at four and sometimes
live levels of management are paid at the same "frozen" salary rate.
Thus, in one study, over 40% declined a government job offer which
involved an increase in responsibility but could not involve an increase in
pay.
This situation led, for example, to a circumstance where a NASA official
told us that 47 people who work for him make as much or more than he
does.
This also has a noticeable effect on retirement rates. The retirement law
provides for semi-annual increases in annuities commensurate with
increases in the cost of living, and only this year has an added 1%
"kicker" been eliminated. Since the cost-of-living upward adjustment had
gone only to retirees, and not to those who remained on the job at a
"frozen" salary, the latter group forfeited the annuity raises awarded
during the period of the seven years. This was more than an incentive to
early relirement; some thought it was a virtual command to retire when
first eligible.
And so it proved to be. Only 19.9% of all eligible employees retired
during the year beginning November 1973 but 29.9% of "frozen rate"
executives did so in the same period. (Members of Congress who chose to
retire are not included). For the following year, the general rate
remained relatively constant at 19.5%, but early retirement by executives
whose salaries were "frozen" jumped to 46.6%.
According lo the Chairman of the Civil Service Commission:
Generally, the objective evidence of problems seems greatest among
certain highly paid professions, where there is easy movement
between the Government and the private sector:
-
Many agencies, and particularly the regulatory
agencies, report tremendous difficulty in retaining attorneys,
since the skills they have acquired in regulatory work enable
them to make much more in private practice. For example, at
ICC the General Counsel and the Deputy General Counsel both
resigned this year. In a single agency, the National Labor
Relations Board, fifteen administrative law judges left last
year.
The Social Security Administration was unable to fill its Chief
Actuary position for over a year, during which time more than
30 candidates refused the job because of the pay.
2
Key scientists and researchers have been retiring and
resigning at an unprecedented rate. From 1969 to 1976, the Air
Force lost 46 percent of its top scientists. Forty candidates
refused the post of director of a major new Defense Department
research program, with the majority saying they would have to
take a pay cut to accept.
-
In the last three years, four of the eleven Institute
Directorships at NIH have become vacant and remained vacant
nearly a year, with 85 out of 87 outside candidates refusing the
jobs because of pay. EPA finds that the senior physicians it
needs to conduct its clinical research programs are earning up
to $80,000 in private practice or medical schools.
While the evidence of the impact of the executive pay situation may
be most' dramatic among the professionals, the problem certainly
exists among all types of managerial jobs:
-
The Social Security Administration lost nine of its nineteen
supergrades to retirement at one time last year.
-
The average retirement age among Air Force supergrades has
dropped from 62.5 in 1969 to 56.5 in 1975.
-
More than half of the Civil Service Commission's supergrades
have retired in the last three years.
Another aspect of the executive pay problem that is proving very
difficult for agencies to deal with is the refusal of employees to
accept geographical reassignments (particularly to Washington, D.C.
or New York City) or promotions to more difficult jobs because no
pay raise would be involved:
-
Five of the Defense Contract Audit Agency's six GS-16 Regional
Managers declined to be considered for promotion to the GS-17
post of Deputy Director.
-
Several GS-15 meteorologists refused to be considered for the
GS-16 post of New York Regional Director of the National
Weather Service.
-
Fifteen managers at GS-15 and higher in the Veterans
Administration have refused reassignments in the last year.
-
Many IRS executives have refused to be considered for
promotions; IRS has had 51 payless promotions in the last two
years.
The same stories are told in the Judicial Branch. Deputy Attorney
General Harold Tyler, whose job includes a major responsibility in
connection with the selection and nomination of candidates for the Federal
bench, gave it as his "firm opinion in the last 19 months there has been
strong circumstancial evidence, if not direct evidence, that current pay
3
scales in vogue for the last several years are discouraging qualified men
and women, particularly in the age group from 40 to 55 years, from
considering taking a judicial appointment."
Why then, in the fact of this available evidence, did Congress choose to
deny, yet again, a relatively small increase in salary to executive and
judicial officials, including Members of Congress?
The people's representatives who voted this way surely were not obtuse;
they knew the alarming facts. They had no desire to deny themselves,
judges and executives a pay raise out'of some real or imagined grievance.
On the contrary, they knew the scope of the problem and the need for a
solution - in the form of a substantial increase. But they also knew,
better than anyone else in government, the mood of America, and they
knew that the consequences in November for any Congressman who voted
himself a pay raise in September - however justified - would be paid at
the ballot box.
Congressmen and Senators are unique in many ways, but in none more so
than that they are virtually the only employed Americans who have the
power to set their own salaries.
They do not covet that power; they would gladly assign it to someone
else, almost any else. But it is a constitutional burden they must bear,
and in 1976 that meant bearing, as well, an even heavier burden. The
American people had lost confidence in Government - despite a vastly
improved climate of trust in the Presidency itself - noticeable since the
end of the "national nightmare" in August, 1974. They did not trust
their leaders. They did not believe them to be people of honor, integrity
and probity. And they believed these defects to be most clear when the
subject was money.
The great social historian of our country, Alexis de Tocqueville, noted as
early as the first half of the last century an abiding difference between
our democracy and the aristocracy of other lands, including France, his
own. A democracy, he noted, pays its secondary officials well but is
"parsimonious only towards its principal agents". The scale of
remuneration, observed de Tocqueville, is determined by a comparison
with the people's wants. Americans lived, he found, in great comfort and
sought to have their servants share in that comfort. But lacking any
"distinct idea" of the needs of a high official, and envious when they did
have such a distinct idea, they made salaries "diminish as the power of
the recipients increases".
De Tocqueville was speaking only relatively, he deemed it proof of this
theory that the Secretary of State earned only three times the salary of
the "Chief Clerk" at the Treasury and the President only four times the
salary of the Secretary of State. We have become even more egalitarian
since. What would de Tocqueville have made of the phenomenon known as
"compression", by result of which the top several grades of "clerk" all
earn the same amount so that the Chief Clerk makes no more than, let us
say, many of his own assistants, and theirs as well? How would he have
accounted for a system of executive pay in which cabinet heads -
4
Secretary of State and the others - earn not 300% of the salary of the
Chief Clerk, but only 150% of it? And in which 100 United States Senators
and 435 Representatives earn only 12% more than some 20,000 "clerks"?
11 is more than a healthy egalitarianism which has brought us to this
pass. Our people are younger (63% of our Congressmen are 38 years old
or under and in January more than half will have only four years of
seniorily or less), better educated, and to be sure, more informed.
Although great differences in income and what the academics like to call
socio-economic status still exist, we have nonetheless progressed in the
150 years since "Democracy in America" first appeared - even closer to
that egalitarian ideal foreseen by de Tocqueville. So that healthy
scepticism toward authority, expressed in an anti-aristocratic denial of
huge salaries to those who govern us, is as strong, if not stronger, as
ever.
But in the past decade, other and less healthy forces have been at work
which have greatly aggravated the unease about public officials and the
reluctance to reward them with adequate compensation. This sentiment -
whether called "anti-Washington feeling" by political observers (and
successful politicians) or "alienation" by public opinion analysts and social
commentators - has been easy to detect and, for the people's
representatives, easy to act upon.
For more than a decade, the number of Americans who agree with the
statement, "people in government don't care about people like me" has
steadily risen. The percentage of Americans with a reasonable degree of
trust and confidence in their public officials - not that they be right,
only that they tell the truth - has declined precipitously.
-
Dr. Gallup tells us that the general level of trust in government
has fallen from 76% in 1964 to 33% in this year.
-
A survey by Yankelovich, Skelly & White this year yielded the
alarming statistics that 61% of the people believe "there is
something morally wrong with the country."
-
The same survey showed that 83% of the respondents say that
they do not trust those in positions of leadership as much as
they used to.
I
Surveys in the mid 60's showed that 1/3 of all Americans felt
isolated and distant from the political process. By the mid
70's, a 2/3 majority reported an attitude of "what I feel doesn't
really count."
-
An assessment of spending priorities among Americans ("spend
more," "spend less"), of a dozen categories compiled earlier
this year, revealed that the only category faring less well than
government salaries was foreign aid, both as to the large
number saying "spend less" and the small number saying
"spend more." Even "welfare," not traditionally an area in
which many Americans want increased spending, fared better in
the survey than government salaries.
5
These serious developments - this steady slide of public confidence in
government - did not just happen. This was. no ordinary historic or
cyclical pattern. On the contrary, it came as the inevitable result of a
series. of government crises - scandals, in the common usage of de
Tocqueville's time: - which successively shook American's faith in the
probily of public officials.
By, the mid-nineteen seventies, 70% of all Americans say they get most of
their news from TV and: 50% identify television as the source of all their
news. Over the past decade here: are some of the messages which have
flickered into our Ilving rooms.
The Viet Nam War, in which we came to doubt the truth of what
we were told about our allies and about the war itself - from
successive administrations of both parties.
o
Walergate and all that was subsumed under that heading. A
President who resigned in the face of impeachment charges, and
several of his aides convicted of an obstruction of justice
involving the payment of large sums of "hush money".
o
Unreported campaign contributions paid illegally by American
corporations.
o
Campaign money, some of it paid illegally and all of it secretly
from special interest groups such as the milk producers.
O
A Vice President resigned after a plea of nolo contendere
following charges that he had. taken bribes in the very
executive office of government.
A powerful committee chairman of the House resigned after
charges that public funds had been used. to. pay an employee
whose "work" consisted only sexual favors for the boss.
a
Corruption of foreign leaders by some of the same corporations,
resulting in the public disgrace of the leaders of some of our
allies and the indictment and trial of others.
a
Allegations of the improper use of union pension funds,
including links to organized crime, in a union whose ex-
president had been pardomed, some felt for political reasons.
OJ
Current reports of payment by foreign citizens to Congressmen
and other public figures. perhaps more than 100 in all.
After all of this, to which must be added revelations of illegal and
perhaps criminal activity by the very agencies charged with keeping the
peace al home and abroad, is it any wonder that public confidence in
government has never been lower? Is there any wonder that public
officials have come under the same general civic indictment, that they are
believed (however wrongly as to the great majority) to be taking
advanlage of high salary and retirement scales, that expense accounts
6
and reimbursable payments, staff and travel allowances, outside income
(in some cases in excess of salary) and honoraria from trade associations
and trade unions or "legal fees" from corporations - all are believed to be
ways in which the top officials take financial advantage of their positions
in ways the ordinary citizen cannot. Is it a surprise that the major
explicit and implicit public issue in the elections of 1976 - local, state and
national - was the relation between the citizen and the government - in
which the government and its conspicious representatives suffered by
comparison?
This Commission, Mr. President, could have interpreted its mandate
narrowly, looked at the impressive data which was developed and which
make it clear that the failure to accord substantial increases in salary to
the top levels of all three branches of government has led to a crisis - a
crisis whose impact on the public is substantial. We could have concluded
that without that substantial increase the problems would only worsen -
"compression" will, in a few years "freeze" all employees of GS 15 and
begin to creep lower; early retirement will increase as will the number of
vacancies in key jobs because of the unwillingness of competent people to
fill them. We could have noted all that, proposed new pay schedules
recommended herein, and counted our task as finished.
But our task would not have been finished, because we firmly believe that
without serious attention to the nature of the larger crisis we have
described - the crisis of confidence and of trust - our labors would have
been useless. The members of both houses of Congress are close to the
people and they can gauge the extent of this greater crisis better than
others. They would have anticipated the response of the American people
confronted with a substantial salary increase and too few checks on what
they perceive to be continuing breaches of public trust. The result
would be the same as it has been for the past eight years.
We have therefore assumed as part of our task the proposal of a new Code
of Public Conduct - reforms applicable to all three branches of
government, which we believe must be the indispensible prelude to a
popular acceptance of a general increase in executive, legislative and
judicial salaries.
We have proceeded on a basis, from the beginning of our deliberations, of
"total compensation", and we believe these proposed reforms to be the
way to pursue that end. Americans are not blind to the problems
discussed here, nor do they wish to punish all bureaucrats, legislators,
and judges for the sins of the few. But they do believe that a public
office is indeed a public trust. They will pay a fair day's wage for a full
day's work but they want to know that the salary they pay is the salary
the public servant receives. They will pay enough to avoid the necessity
of hidden "moonlighting", but they want to know and be able to verify -
that there is none of this "moonlighting" going on anyway. They want
open, fair and responsive government from fair and honorable people who
work full time for what they receive - and they will pay adequate salaries
il they believe that what they pay for is what they get.
7
What is the alternative? It is a nice question, but which we do not have
much time lo answer: whether and for how long a free society can endure
if the majority of its members believe that many high officials are serving
a private interest and not the public?
Do we continue, then, down this path of increasing public cynicism? Do
we lose more and more of our best officials who want to stay in public
service - whether elected or appointed - but who nevertheless resign
under the spur of higher and higher living expenses, particularly the
education of their children? Do we force fine men and women into early
retirement, not only because they can no longer ask their families to make
the financial sacrifice, but as well because they choose no longer to abide
the increasing public abuse which accompanies the government post? It is
one thing to stay in the kitchen and take the heat that comes with the
political territory; it is quite another to bear the suspicion and doubt
properly earned by others.
We have not only reviewed the statistics of the past, impressive as they
are. We have talked privately with some of our most senior and respected
career officials, who speak sadly of the likelihood that they will have to
leave government service. This is true not only of those high in the
bureaucracy; we speak here of some highly respected elected officials as
well.
If we continue down the path of the past eight years, in which the politics
of survival have required no pay raises at all, we must accept the
implications of a government of only the rich, or only the young and
untried or, more likely, a government of those who are willing to
compromise themselves with political money. The costs of such a
government reach beyond the costs of a salary increase; they are
incalculable, and to a free people unacceptable.
But this cynicism, this lack of confidence, is not our natural state, as the
data shows. We are an optimistic people and we have always believed that
times will be better - and so they have always turned out to be. We can
achieve a rebirth of that confidence that has always sustained us, but to
do so we must begin the slow process of restoring trust in our public
institutions and the people who guide them.
We believe a commitment to the principles of reform which follow could be
the first step in this process.
8
RECOMMENDATIONS - PART I:
A CODE OF PUBLIC CONDUCT
Mr. President, we believe il an exercise in political futility (a judgement
Congress has confirmed more than once) to propose any significant
increase in executive, legislative, and judicial salaries unless you are
salisfied that the leaders of the other branches of government will join
you in a commitment to major reform. (Speaking for ourselves, we would
not have proposed significant salary increases except in the context of
such reform). Such a reform must be sufficiently tangible to persuade a
substantial majority of Americans that the Post-Watergate era has truly
begun. Such a majority is by no means persuaded now.
We believe that this program - this Code of Public Conduct -should
encompass the following general principles, to be applied by developing
regulations to govern the activities of all members of the judiciary, the
Congress, and officials of the Executive Branch above a certain level.
While we understand that we cannot completely eliminate conflicts of
interest simply by devising rules, we believe major improvements and
clarifications are possible and necessary.
We recognize that the Administration is presently in a period described as
transition and that any legislation which might be formulated as a result
of this report would have to be enacted during the term of office of your
successor. Therefore, we would certainly support such continuing
consultation with the President-elect as you deemed appropriate.
PUBLIC DISCLOSURE
All such individuals should be required to make disclosure of their
financial affairs by periodically filing with an appropriate authority, as
suggesled below, financial statements showing all income, by source and
amount, reimbursements for travel and other expenses, gifts, debts, and
personal holdings. Such information shall be made public unless the
appropriate authority specifically permits the confidentiality of certain
information, for example, in order to avoid impairing the privacy of
others, or in certain special situations, the privacy of the individual. In
any case, however, the information should be available in an official
proceeding whether legislative, judicial, or administrative.
Discussion - Currently, disclosure requirements in the Executive and
Legislalive Branches are incomplete, inconsistent, inconstant, and in
general inadequate. For example, in one of the houses of Congress, the
source of honoraria (for speaking engagements) above $300 is publicly
available, but not the amount. It is no great service to discover that one
or another pressure or interest group has been regularly paying a
member without being able to find out how much. Indeed, the whole
question of honoraria needs to be examined. It is conceivable that in
some cases, the person has not been engaged for the occasion merely
because of substantive or oratorical skills or his added prestige to an
otherwise ordinary meeting: sometimes the member's legislative standing
has weighed in the equation.
here will be cases where close questions will arise between the demands
of individual privacy and the public's need to know. It is certainly not
our objective lo make the disclosure rules so onerous an invasion of
privacy that we discourage first-rate people from entering public service.
It is for these reasons that we believe that an appropriate authority
should review these disclosures and make these sensitive judgements. If,
in an extreme case, the appropriate authority wishes to make information
public in a confirmation hearing that the individuals believe is an
unnecessary invasion of privacy, then the prospective appointee should
be given the opportunity of withdrawing his or her name from
consideration.
As to "other" income for services rendered, in the House of
Representalives the source but not the amounts over $5,000 of income
from a "single source" are reported. But not, alas, publicly - this
information, inadequate as it is, is sealed and available only for an
"Official Investigation". In the Senate, income other than from honoraria
and contributions, is filed under seal but not reported to the public.
Thus, the public is denied the relevant information on "other" income
earned, which might reveal a real or apparent conflict between the private
interest of the employee and his official government duties. (If, as
Justice Brandeis said, "sunlight is the best disinfectant", then the
average citizen remains in the dark as to this private compensation
beyond a public salary).
RIGOROUS RESTRICTIONS ON OUTSIDE EARNED INCOME
The government should provide fair and reasonable compensation to its
public servants sufficient to permit them to meet all normal personal and
family obligations without the need for outside income. All executives,
judges, Senators, and Representatives may then be reasonably expected
to devole their full time and energies to their public employment, and the
earning of outside income should be restricted. Under these
circumstances, they should be prohibited from receiving honoraria, legal
fees, gifts, or the proceeds of testimonial dinners, etc. for personal use,
and any other compensation for services rendered which might have, or
appear to have an influence on the conduct of the public's business.
Al the same time, we want to fix the salary levels so that high executive
posts are not reserved solely for wealthy individuals with sufficient
savings, estales, or investments - i.e., unearned outside income - to
whom these regulations are unimportant.
We are not unmindful, Mr. President, that we have raised here the whole
question of "money in politics", most of the ramifications of which, such
as the influence of personal wealth and campaign contributions on
elections, are outside the scope of this report. But clearly, a new public
image of government must include further reforms in this area as well.
Discussion - Many public officials have told members of the Commission
that they are uneasy about some of the outside income they accept, and
only do so because of the pressure of rapidly rising costs and static
salaries. Thus, we believe most public officials and private citizens would
2
welcome a salary level which would permit the minimization (for example,
perhaps nominal amounts to be earned from academic lectures or writing,
provided such activities did not impinge upon the work of the
government) or elimination of outside earned income entirely.
STRICT CONFLICT OF INTEREST PROVISIONS UPON INVESTMENT
Tight but sensible provisions should be developed in order to eliminate -
or at the very least minimize - those conflicts that necessarily arise when
the economic investment interest of the individual falls within the scope of
his public responsibility. The involvement of government in our economic
affairs has become such that as a people we have probably lost the
capacity to eliminate entirely all conflicts of interest, particularly those
which are minimal, occasional, and transitory. In some cases - indeed, in
most cases - public disclosure may be adequate protection. In others,
where there is a direct conflict (as in certain executive departments,
legislative committees, or certain cases before a court), it would be
desirable to review the potential conflict with an appropriate and perhaps
new authority. A specific procedure could then be recommended to fit the
particular case - whether it might be divestiture, a blind trust (which
might be devised so as to be deaf as well) or, in some cases, abstention
from the particular decision - so as to minimize a real or apparent
conflict.
APPROPRIATE AND ACCOUNTABLE EXPENSE ALLOWANCES
There is a need for much more consistency in the availability of legitimate
expense allowances in all three branches of government, including
domeslic and - when appropriate - foreign travel, entertainment granted
and received, and gifts. Equally as important, there is a need to
reassure the public that, once these allowances have been granted the
expenditures reported are indeed made for the permitted and specified
purposes, and not as a mask for substitute income.
Discussion - The Commission notes wide differences among the various
branches and, for that matter, various positions within the branches, as
to the scope and nature of expense allowances. (The Speaker's expense
allowance is $10,000. The Chief Justice's is $5,000. Yet it is reported
that the Chief Justice is also often expected to represent the judiciary in
outside contacts with both domestic and foreign groups. We would simply
argue that the system of government allowances should have coherence).
A permissible expense in one place is not permitted elsewhere. A ceiling
imposed in one branch may be exceeded in another and, as recent
revelations have made clear, the auditing of expense accounts has been,
from time to time and from place to place, loose enough to permit (or
perhaps to encourage) the flow of expense funds as a substitute for
denied salary increases, or at levels higher than the public would support
were they made public. Various GAO studies have been regularly critical
of the opportunities presented for abuse in this area. Most of the
criticism is directed at loose definitions and lax administration of
expenses, so-called "administrative funds," and travel and gift allowance
regulations. In this connection, we commend the efforts in Congress
such as those of the Obey Commission in the House of Representatives to
3
rescind the authority of the Committee on Administration to expand,
change the character, or create new categories of allowances without a
vole of the members of the full House, as well as efforts to consolidate
accounts, abolish extra postal allowances, eliminate so-called "cash outs,"
and to require documented vouchers. It is a useful first step.
POST-SERVICE EMPLOYMENT
Restrictions should be imposed - throughout the government - so as to
insure that top executives, judges, or legislators do not compromise
either their objectivity or that total devotion to the job to which the
public is entilled, by any arrangements they may make while in public
employment with respect to subsequent employment or other relationships.
Different departments or branches have different rules which limit post-
service employment. More consistent and explicit rules are needed. In
this way, all government employees and even more important the public
could and would know the limits of permissible conduct. The present
ambiguilies permit alleged "revolving door" arrangements through which
company executives, government regulators, and contract negotiators
pass freely, changing hats or uniforms as they go, doing damage to
public respect for government.
EQUAL APPLICABILITY ACROSS THE THREE BRANCHES OF
GOVERNMENT
We recognize there are Constitutional and operational issues as between
the various branches of government. However, if we assume that our
senior officials are to be paid enough to meet all normal personal and
family obligations without the need for outside income, then these
regulations should be broadly applicable across all three branches of
government. Differences in form and function among agencies,
departments and positions, elected or appointed, have in the past dictated
differences in treatment in this area, but surely the over-riding interest
of the government and the people in open and respected administration of
the people's business should generally prevail over differences that may
exist.
VIGOROUS AND CONSISTENT AUDITING
An appropriate body or bodies should be established - or if an existing
one is to be so charged, it should be strengthened - to insure that these
requirements are fully enforced and that all information disclosed under
this Code of Public Conduct is regularly and adequately audited and
publicly reported.
Discussion The acceptable standards in the conduct of the public's
business should be even higher than those of the marketplace. Yet
today, most would agree that the auditing procedures of our larger public
corporations - which standards are themselves coming under increasing
question - meet a higher standard than those imposed in many areas of
the government.
4
ONE APPROACH TO A CREDIBLE, TANGIBLE COMMITMENT TO IMPLEMENT
THIS CODE OF PUBLIC CONDUCT
In order to translate the principles of reform - which really constitute the
essential preconditions for acceptance of upward salary movement by
Congress and the public - we suggest a Presidential meeting with the
Chief Justice and the leadership of the Senate and the House. Such a
meeting would be counted historic if its result were a joint commitment to
action on a Code of Public Conduct. (We know you will, of course, at all
times want to be especially sensitive to the Constitutional perogatives of
the other branches with regard to the qualifications of their members).
Such a commitment could consist of three major actions:
1.
A Commitment to the Principles of the Code
This is a largely symbolic act, and would require no more than
agreement to proceed, but we live in large part by symbols,
and the crisis in confidence and trust in many ways reflects
that fact. A formal signing of a declaration to proceed, and a
commitment to the principles of the Code set forth above, would
be persuasive to the public that action had begun.
2.
A Commitment to Prompt Action
We do not underestimate the complexity of the problem, nor the
need lo proceed with great care and caution in devising specific
regulations and new mechanisms, but neither do we
underestimate the public impatience with unnecessary delay.
We believe it would be reasonable for you, Mr. President, to
call for the Code's being in place and functioning throughout
the three branches within nine months.
3.
A Commitment to a New Mechanism to Meet the Schedule
We believe there is merit in the idea of creating an
intergovernmental commission, composed of equal representation
of private citizens appointed by each branch, to develop after
the most careful consultation with the branches involved a
specific Code of Public Conduct and set up mechanisms to
oversee and administer the Code. The chairman should be
named by the President after consultation with the Chief Justice
and the leadership of each house. The staff of the Commission
should come primarily from the private sector; professional
guidance might appropriately be sought from such groups as
bar associations or organizations of auditors. Such
origanizations could provide short-term experienced talent for
this purpose.
Legislation authorizing such a commission should properly be submitted at
the same time as the Budget message which reflects the salary increases
proposed - should you choose to accept them. The Commission would be
authorized to examine in confidence whatever information would be
5
relevant with respect, for example, to expense allowances, auditing
procedures, outside income, investments, and conflict-of-interest
reporting.
The commission would be under mandate to submit regulations, or
legislative proposals where required, within 180 days, which would set
forth precise rules to put the principles of the Code into effect,
mechanisms to resolve conflict-of-interest questions, procedures to audit
the results of these programs, methods to guarantee the availability of
public scrutiny and to assure that all public officials would read,
understand, and accept the new Code of Public Conduct before embarking
on their duties.
6
RECOMMENDATIONS: PART II
COMPENSATION
PRINCIPLES OF COMPENSATION
Some of the principles which guided our deliberations are set forth here.
I.
Direct pay comparisons with the private sector - the so-called
principle of "comparability" - are inappropriate for almost all
the positions covered by this report. Positions in the Civil
Service General Schedule, and even for many of the GS 16 to
GS 18 super grades, the principle is usually applicable and
useful in helping set scales for pay and other elements of
compensation.
But at the Executive Levels, and in the judiciary and the
Congress, comparability is of little value. With what job in the
private sector, for example, does one "compare" the top
positions at the Department of Defense? Or a Judge of the
Court of Appeals?
And, for that matter, what if "comparable" jobs could be found?
If some top positions at HEW, for example, had a rough
comparability, let us say, to the presidency of a large
insurance company, or the chief of the U.S. Information
Agency to the chairman of a large radio and television network,
what then? Would the Congress wish to pay, and would the
people support, a comparable salary? Do we want Cabinet
officers to be earning three times as much as the President's
$200,000? To ask the question is to answer it.
The taxpayer's interest is in the opposite direction, toward
salaries as low as possible, but yet adequate to attract and
hold - for a reasonable period of time - the best qualified
executives, legislators and judges for these positions.
2. On the assumption that the important posts to be filled on the
Executive Level are full time jobs, pay levels should be set so
that there would be no need for office holders to rely on those
forms of outside income (honoraria, legal fees, etc.) which not
only distract the officials but also corrode public trust. A
proper compensation system must make it possible for people of
outstanding ability to devote all of their time to the job.
3. Top grade salaries should be adequate to attract and motivate
people of outstanding ability but whose standard of living
depends upon current income, rather than savings,
investments, or other unearned income. Americans do not want
someone seeking high government posts because of the good
salary, nor do they want able people to turn down the job
because the salary is too low. A top official's position in the
Federal Government ought not to involve so substantial a drop
in living standards - at least with respect to certain
fundamentals such as the education of one's children - as to
discourage people from taking jobs in the first place.
Nevertheless, much of the data developed during our deliber-
ations tells us that most executives and judges are prepared to
accept some diminution in income to come into the government.
4. Setting pay scales within the five Executive Levels involves a
curious phenomenon: the difference in pay should be less as
one moves up the scale, but at present the spread is greater.
In the General Schedule there seems to be justification for
greater comparative rewards at the top of the ladder, but in
the Executive Levels the reverse seems to us to be true. In
terms of total compensation, a Cabinet Secretary receives much
more of the non-monetary income - the emotional, psychic
return - than an Assistant Secretary. The same is also
probably true of the chairman of a regulatory commission
against a member of the same commission.
2
This principle - the need for greater increases at the lower and
secondary levels - is reinforced when one considers the Weber-
Yankelovich data. There, it appears that officials do not
consider salary as a major factor when they enter government
service, but that it plays a major role in their ultimate decision
to leave. It is precisely at these entry levels for government
executives and judges that we must look most closely. The
salaries should be high enough - and that means today that the
increase should be large enough - not only to attract them but
to retain these people for a reasonable time once they ve made
the change. The evidence suggests that a Presidential
appointee sees the new job as a temporary one of from two to
eight years (the latter figure is a maximum, the average is
closer to the former). Whether or not as a conscious part of
the motivation at the time of entry or not - a chief motivating
factor seems to be the opportunity for the new challenge of
public service - there will almost certainly be better prospects
at the time of reentry into the private sector.
Thus the common problem during government service, at least
insofar as the salary is concerned, is to avoid a further
substantial erosion of the ability to maintain an already reduced
but acceptable living standard assumed from entry. Thus, for
the unaffluent, the problem is almost entirely one of cash flow
without regard to building up an estate or to replenish savings
or investments or enhancing life style. (As we point out later,
those in Executive Levels are not likely to be concerned in any
way with their government pension rates or accumulated leave.
Given these facts, it seems clearly wrong to compel these
executives to immediately reduce their cash flow by
contributing to a pension fund from which they will almost
certainly draw no benefit.)
3
Furthermore, since we have set entry salaries at which we
believe to be the lowest dollar levels consistent with the
government's objectives, it is important that some mechanism
(such as the permanent quadrennial commission discussed later)
be developed to assure that the salary - the cash flow - does
not substantially deteriorate as against the cost of living. The
experience of the past eight years has demonstrated - with its
extraordinarily high exit rates - that while psychic income and
the desire for public service can compensate for an initial drop
in income, it is not enough to sustain a continued erosion.
Even a highly motivated government executive, Member of
Congress or a Fèderal judge, cannot warm his hands
indefinitely before a picture of a fire.
5. The scale for government officials at these levels should be set
nationally rather than, for example, after a determination of
varying geographic rates of salary and cost of living. While
there appeared superficially to be some economies available
through such a geographic approach, as well as the possibility
of some recruiting advantages, a further consideration of the
complexities of the problem, as well as of the other issues which
would then be raised and considered with respect to all other
components of compensation, led inescapably to the conclusion
that the disadvantages of "regionalization" far outweighed the
slight gain.
6. The principle of fixed or automatic "linkage" - a recent
historical development - seems inappropriate as a continuing
way to fix salaries at these levels. Indeed, as the
accompanying chart shows, the most commonly referred to
linkage only began in 1969 (linkage between Congress, Level II
(undersecretaries), and the Judges of the Court of Appeals.)
There is also the "linkage" between Cabinet positions and
Associate Justices in the Supreme Court.
4
As the chart on the following page indicates, there is no
historic linkage among these positions, and we cannot find a
persuasive rationale for its rigid application. The basis since
1969 has apparently been largely political, based on the
assumption that the Circuit Judges and the Level II executives
might serve as a "lifeline" to the Members of Congress,
understandably unwilling to raise their own pay unilaterally.
But as the public mood has intensified, the lifeline has
disappeared, and it is Congress which has served as an anchor
over the past eight years, dragging down the "links" and
preventing any increase, anywhere.
There are, in fact, sound reasons for unlinking Congress,
Level II (or any other level), and any of the Federal judges.
Nol only are these, of course, entirely different jobs with
entirely different responsibilities, but the career anticipation
patterns vary sharply. The Weber-Yankelovich data tells us
that in almost every case, a Cabinet officer and a Circuit Judge
will take a reduction in salary when entering government
service; the difference is that the executive official will resume
a high level of earnings (perhaps even higher than if the choice
had not been made to interrupt a private career in the first
place) upon leaving the government. The judge, on the other
hand, has not made a decision to enter government for only a
few years, and therefore, to accept a slightly lower salary for
that period of service; but has on the contrary elected a per-
manent change, not only in earnings but in life style as well.
If, as is customary, the judge is selected from those successful
at the bar, the certain assumption is that the trade-off for the
judicial life, with the non-monetary satisfactions it affords, is a
heavy reduction in dollar earnings - for all of the remaining
productive years. That factor alone suggests unlinking the
two.
5
SELECTED LINKAGES AND RELATIONSHIPS AMONG
EXECUTIVE, LEGISLATIVE, AND JUDICIAL BRANCHES
(1975 - 1874)
MEMBERS
EXECUTIVE LEVEL II
YEAR OF
OF
CIRCUIT
(DEPUTY SECRETARY
EXECUTIVE LEVEL I
ADJUSTMENT
CONGRESS
JUDGES
ET AL)
(CABINET HEAD)
1975
44,600
44,600
44,600
63,000
1969
42,500
42,500
42,500
60,000
1965
30,000
---
---
1964
---
33,000
30,000
35,000
1956
---
---
22,500 AND 22,000
25,000
1955
22,500
25,500
---
---
1949
---
---
---
22,500
1947
12,500
---
---
---
1946
---
17,500
---
---
1945-1932
UP & DOWN
---
---
UP & DOWN
1926
---
12,500
---
---
1925
10,000
---
---
15,000
1919
---
8,500
---
1907
7,500
---
---
12,000
1903
---
7,000
---
---
1891
---
6,000
---
---
1874
5,000
---
---
8,000
5A
As for the Members of Congress, neither of the foregoing
assumptions prevail. Histocially, most members, after all, have
left not because the pay is too low or the job ultimately
unsatisfying, but because they were defeated for election or for
poor health, and these are risks that go with the territory.
(More recently, however, there has been increasing evidence
that pay has become a factor.) The psychic income is vastly
different - indeed, of a different kind - than it is in the
Executive Branch or in the judiciary, and the risks and
burdens include not only the loss of a job but of undeserved
public obloquy. And the decisions required, of course, do not
affect just one government department or policy, nor even one
group of litigants or others similary situated, but the greater
issues that affect all of our people. There is simply no
justification for the continued automatic linkage of salary among
these groups. Each should stand on its own, and with proper
public understanding, the political consequences can be
minimized.
6
BACKGROUND STUDIES ON COMPENSATION
The realization came early to the members of the Commission that we had
embarked not upon a clearly-defined, objective study of the relative pay
scales for different branches of the government, but instead upon a path
strewn with politics, precedents (constitutional and otherwise) and
prejudice.
We also concluded at an early stage in our deliberations that we possessed
no special expertise in the politics of Federal pay. Even if we did, there
are others with the power we lack to do something about their views, and
we are only an advisory group. We therefore decided that our advice
would be more credible and therefore more helpful if we fought off the
templation to compete with the political experts. For example, we have
registered our opinion - backed, we believe, by logic - that "linkage"
which has existed since 1969, tying the salaries of Members of Congress
to those of Level II executives and to those of Appellate Judges, should
be eliminated. Whether or not this is, nevertheless, a "political"
necessity, we shall leave to others to decide.
Al the outsel, we decided to commission some original factual research on
questions which seemed to be thus far unanswered. We wanted to know
the evaluation in the private executive marketplace of the worth of
various branches and levels of government - questions to be asked of
present and former executives as to their opinions both before and after
government service. How important, for example, is the actual dollar
compensation - or how important should it be - at the various levels and
branches, given the great differences in tenure, future career paths, and
the so-called "psychic income" of the different posts.
We authorized such a study to be done, under the direction of Dr. Arnold
Weber, Provost of Carnegie-Mellon University. Dr. Weber has a rich
background in labor economics and prior government service as Assistant
Secretary of Labor, Associate Director of OMB and as the first director of
the Cost of Living Council.
We believe that this work yields important insights as well as a good deal
of factual basis for our recommendations. We present here some excerpts
from Dr. Weber's findings so as to make clear some of the bases and
assumptions which undergird our pay recommendations. Considering a
number of factors - such as desire for public service and long term
career development - Dr. Weber concluded,
Compensation was a significant factor in each of the key decisions;
to enter, depart, and remain in high level government positions.
When approached with an offer of a Federal position, the individual
decision to accept or reject is influenced by the "adjusted" salary (in
constant 1967 dollars) of the job presently held and the job offered.
The higher the salary in the prospect's current job, the more likely
that he or she will refuse the Federal executive position offered. On
the other hand, the higher the salary related to the job offered, the
more likely that the potential appointee will accept. Similarly, the
greater a Federal executive's salary before acceptance, the more
likely that his tenure in government will be shortened, although his
length of service may be influenced by any salary increases while in
government.
We shall amplify some of his conclusions with some actual tabulations of
answers lo particular questions. Some of these percentage tabulations are
raw unrefined data. But if the reader is careful, we believe there will be
found here facts and explanations which will make our conclusions clear
and easier to understand.
What did the 528 questioned incumbents and departees from senior
positions in the three branches tell us about the role of compensation in
accepting or rejecting offers to come into government? We need not rely
only on their verbal opinions, we should first look at what happened in
fact to their salaries when they came to work for the government.
In fact, the Weber survey indicated that upon joining government, the
average respondent accepted a decrease in salary of $8,100 or 21.1% of his
salary immediately prior to joining the government.
2
Their responses to a number of questions support the contention that
individuals accept Federal employment with the understanding that salary
levels will be below those they could receive from employment in positions
of comparable reponsibility outside government.
In response lo the question, "Tell us in your own words, why you
decided to accept Federal employment?", the most frequent responses
were:
The opportunity for public service - 17% of respondents.
0
To accept a new challenge - 12% of respondents.
o
Less than 1% of the respondents mentioned an increase in salary
as a reason for accepting the position.
In response to the specific question, "What was the role of compensation
in your decision to accept Federal employment?", 86% of the respondents
indicated compensation had either a negative or no influence on their
decision.
O
Negative influence - 28% of respondents.
No influence - 58% of respondents.
Positive influence - 14% of respondents. (Note: super grades
have been eliminated).
Respondents were asked to rate the importance of each of a number of
possible motivations which might have influenced their decision to accept
Federal employment.
Respondents Indicating
Either "Very Important"
Molivations
or "Somewhat Important"
Public Service
95%
Challenging Interesting
Work
95%
Recognition
68%
Opportunity to do
Something Different
68%
Long Term Career
Development
60%
Compensation
43%
3
Compensation was by a considerable margin the least frequently reported
factor to be of any significance in influencing the decision to accept
Federal employment.
Dr. Weber has tried to put this congeries of non-salary factors into
context in the following way:
Within this complex of factors, compensation is likely to exert a
significant influence. This does not mean that compensation is
dominant or operates to the exclusion of other factors. It is
reasonable to assume, however, that compensation will strongly con-
dition decisions concerning Federal employment. Although the jobs
involved are usually prestigious and public service may be its own
reward, the individuals involved nonetheless have economic needs
and alternatives which will limit the extent of their 'sacrifices'.
The acceptees eloquently stated their desire for public service. But
the translation of this desire into a positive decision was also
consistent with economic circumstances which permitted such
subjective goals to be realized.
Although the 'call' to public service may excite noble motives, this
study indicates that these motives were most likely to be translated
into positive decisions when the anticipated or actual costs were not
onerous and did not worsen over time.
We would expect and are reassured that people, in Dr. Weber's phrase,
express "noble motives" in explaining the decision to go into government
service. We find these data consistent with this motivation, particularly
when we remember this study does show that on the average, these
officials took a substantial cut when they came to government.
On the question of the role of compensation in departures from
government service, we believe this study has some important things to
say. Unfortunately, our sample of departing Federal judges is smaller
than we would like to see. But even on this subject, there are some facts
worth keeping in mind on the growing importance of compensation (or
rather the lack of increased compensation in a highly inflationary period)
in accelerating departures from something even as prestigious and
salisfying as the Federal bench. To quote from the Weber study, "during
the last four years (since January 1972), total resignations averaged 3.25
per year; however, during the prior 31-year period they averaged just
under one per year."
4
The raw dala supply some interesting conclusions, not only on the
importance of compensation in departures but how this factor varies by
branch of government. Here is Dr. Weber's summary statement:
The decision to depart Federal service was associated with a process
of economic erosion. Thus, the higher the proportion that an
individual's salary was of his or her total income, the more likely
that the individual had left government service. There is some
evidence that the compensation factor was especially important in the
decision to depart of those in Executive Levels IV and V.
Regardless of an individual's experience in government, the decision
lo depart is influenced by personal and economic elements. In this
respect, the analysis indicates that where salary constitutes a
preponderant component of his total income, then he is more likely to
be a departee - other factors equal - than if he gains a substantial
proportion of his income from other sources. In this manner, the
variable "percentage of total income from salary" is positively related
to departure. For the sample of incumbents and departees used in
this analysis, more than 75% of total annual income was derived from
salary on average. As this proportion approached 100%, it more
likely indicated a departee.
The loss of income means that an individual will have to reduce his
standard of living, his rate of savings, or dip into other resources.
The greater proportion that his Federal salary is of his total income
from all sources, the more likely that the individual will have to
deplete his savings or capital or suffer a deterioration in his
standard of living.
The verbal responses to the survey illustrate this process of
depletion. One departed executive noted that, "I spent my savings
lo keep the family going. It would take twice as much money in
salary to (remain in government) comfortably." Another official
asserled, "I would like to earn more money to make up for 3-1/3 lean
years. I need to rebuild savings."
5
Dr. Weber continues:
The economics of the accept/reject decision also were related to the
prospect of supporting a son or daughter's college education. If the
potential appointee anticipated the enrollment of a child in college
within the next five years, this projection exerted a negative
influence on the decision to accept. Of those who rejected offers,
67% anticipated a child in college in the next five years. The figure
for those who accepted was 36%.
Likewise, in the decision to depart government:
The influence of college expenses was highlighted by several
departees. One explained his leaving by stating, "I needed more
income, especially for college costs. II Another pointed out,
"Suddenly, I became aware of college money requirements. I needed
more money, I can't see the government ever paying enough."
Referring now back to the raw data, we think they add to our
understanding of the role of compensation in departures - particularly in
explaining the substantial differences among branches and levels -
another piece of evidence in the argument against "linkage".
Question: "On balance, to what extent was your annual income a factor
in the decision to leave the Federal Government?"
Responses:
Executive
Judicial
Legislative
"To a large extent"
32%
73%
9%
"To some extent"
43
18
17
"To no extent"
25
9
74
Question: "In your own words, what would you say are the reasons you
left your Federal employment?"
Responses: First Mentioned Executive Judicial Legislative
Inadequate compensation
or had a better offer
38%
73%
8%
Never intended to stay
14
--
--
Had Enough
13
9
13
Poor Health
5
5
28
Lost Election
--
--
30
6
of particular interest to the Commission was the considerable disparity in
the change in adjusted salary that respondents in each of the branches
had reported on entering government service. These amounts are
presented in the table below:
All Respondents Who Had
Joined Government Service
Executive
I - V
Judicial Legislative
Average Adjusted* Salary
$39,800
$44,500
$28,300
hold just prior to Government
employment
Average Adjusled* Salary at
30,800
30,000
29,000
Entry to Government
Average Change
-9,000 -14,500
+700
in salary at entrance
Average Change as a Percent
-23%
-33%
+2%
of Original Salary
*All dollars presented in the Weber survey are deflated to 1967
rales. For example, the cost of living - as measured by the
Consumer Price Index, determined by the Bureau of Labor
Statistics - rose 33% from 1967 to 1973. To calculate "adjusted"
salaries earned in 1973, the salary would be multiplied by a deflation
factor of 0.75 (100% divided by 133%). Thus, if in 1973, an
individual earning $50,000 in the private sector accepted a
government position at $38,000, the "adjusted" salaries would be
calculated as follows:
Multiplied
Adjusted
1973
By Deflation
1967
Dollars
Factor
Dollars
Prior Salary
$50,000
.075
$37,500
Entry Salary
$38,000
.075
$28,500
7
This data suggests that there is sizeable personal economic sacrifice made
by individuals joining two of the three branchs of government. The
survey further indicates that the magnitude of the economic sacrifice has
increased in real terms over the past several years due to the effect
inflation has had in reducing the purchasing power of fixed salaries.
Another measure of the relative financial burden or the "opportunity cost"
of not working outside the government is indicated by the salaries which
individuals received immediately upon departure. The table below sets
forth a comparision by branch of the average annual salary that respon-
dents who departed government employment received just prior and
immediately following the transition:
AVERAGE ADJUSTED SALARIES OF DEPARTEES
LAST SALARY
PRIOR TO
FIRST JOB
DEPARTURE FROM
AFTER
PERCENT
GOVERNMENT
GOVERNMENT
CHANGE
Executive I-V
$26,200
$48,900
87%
Judicial
$24,700
$45,500
84%
Legislative
$30,800
$41,400
34%
These data tend to support the conclusion that the relative financial
burden falls most heavily on the members of the Judicial and Executive
Branches while the opportunity cost of serving in the Legislature appears
to be significantly less.
8
A summary comparison of the percentage changes in adjusted salary
experienced by respondents in each of the three branches at the time of
entry and deparlure is sel forth below.
PERCENT CHANGES IN ADJUSTED INCOME
PERCENT OF GAIN
PERCENT CHANGE
IN ADJUSTED
IN ADJUSTED
SALARY AT
SALARY AT ENTRY*
DEPARTURE*
Executive Level I-V
-23%
+87%
Judicial
-33%
+84%
Legislative
+ 2%
+34%
For incumbents and departees (all acceptees) (salary just
before government compared to first government salary).
For departees only - last government salary compared to
first salary after government.
Selling aside the political and psychological aspects, whose consequences
we have said we are pleased to delegate to others, we believe all these
data have a good deal to say about the notion of fixed linkages among the
branches. Dr Weber shares our view:
The automatic linkage of salary increases for federal executives,
members of the judiciary, and legislators should be closely reviewed.
The analysis indicates that the three categories are distinguishable
in lerms of career and earnings patterns. Effective compensation
policies should take account of these differences. For example, the
sample data reveal that, on average, Federal executives and judges
incur a significant reduction in income when they assume positions
with government, but that legislators experience a slight increase.
Uniform treatment of the three categories may accommodate the needs
of attraction and retention for one group, but not the other two.
Before moving lo the actual question of salary increases, we believe,
Mr. President, there are a few specific matters which must be raised.
9
PENSION COSTS
This is an enormously important subject and a troubling one to this
Commission. We are troubled by the enormous unfunded costs and what
we believe is not adequate understanding of this melancholy fact by too
many legislative and executive officials and most certainly by the public.
We are troubled that true future pension costs are not built into our
budget calculations and projections. We are troubled that the outside
studies of these pensions are not adequate. These are some of the
reasons we assign pensions a very high priority on the agenda of an
expanded quadrennial commission.
We must lake cognizance as well of the substantial differences among the
Branches in pension benefits and employee contributions.
This is particularly true for the Federal judiciary. Judges get 100% of
final pay but make no contribution. Were it not for this difference, we
would have been inclined to propose larger salary increases for the
judiciary - because theirs is a long-term career position, not an
interlude; and the evidence is overwhelming that Federal judges can earn
more in the private sector, and the evidence, as well as the public,
generally is substantially more supportive of higher salaries for the
judiciary. The Commission notes that although Federal judges receive full
pay throughout retirement, the great majority nevertheless continue to
perform judicial duties during that time.
There is also some specific short-term salary relevance to a pension
recommendation we make in the next section: namely, that members of
Executive Levels I-V, given the temporary nature of their service, be
permitted to defer contributions to the pension plan until the fifth
anniversary following appointment. This is a recommendation that costs
the taxpayer nothing; indeed it saves the taxpayer money in that it would
be a form of salary relief.
We asked Dr. Weber if and how this recommendation would square with his
studies and the comment in his report speaks for itself.
Some salary relief can be provided by raising the effective adjusted
salary of Federal employment by permitting incumbents the option of
choosing to substitute cash for fringe benefits. This may help the
"cash flow" problem associated with extended tenure in Federal
employment and lessen the depletion of resources associated with
long periods of government service.
10
There are also two areas of expenses not now adequately provided for
which we believe operate as a deterrent to attracting top quality people
who do not have independent means to government service. These are (I)
relocation costs, and (2) two-residence requirements for Members of
Congress.
RELOCATION COSTS
Problem
Newly appointed members of the Executive Branch and newly elected
Congressmen are required to pay their own relocation costs. The
Commission believes that this burden is unfair and may inhibit the
government's ability to recruit those with a limited net worth.
Employees in the private sector are normally eligible for relocation
assistance. The same is true only of "critical skill" government
employees. General government employees receive no relocation
assistance. The chart below illustrates this disparity.
NEW HIRE MOVING AND LIVING REIMBURSEMENT
PRACTICES IN THE PRIVATE SECTOR AND GOVERNMENT
PRIVATE
PRACTICE
SECTOR*
FEDERAL GOVERNMENT
General
Critical Skills
Employees
Employees
Househunting Trip(s)
77 %
No
No
Shipment of Household
100 %
No
Yes
Travel Expense to
99 %
No
Yes
New Location
Temporary Living
90 ₒ %
No
Yes
at New Location
Survey of 320 companies.
Critical Skills," i.e., manpower shortages in
specialized fields designated by the U.S. Civil
Service Commission.
Consistent with the Commission's view that government salaries for top
officials should be lower than those in private industry but also consistent
with its view that government employment must be made attractive to
those without significant resources, these allowances are needed and we
believe can be easliy justified to the public.
11
Recommendation
Each newly elected Member of Congress and each newly appointed
executive should be reimbursed toward relocation costs providing that his
or her present residence is outside of the Washington, D.C. metropolitan
area or the city to which the official is assigned. The allowances should
be as follows:
Transportation and temporary storage of household goods with
a maximum weight of 11,000 pounds.
-
Subsistence and travel to the location of the new post for the
appointee and eligible family members and dependents as
defined in the Federal Transportation Regulations.
Subsistence while occupying temporary quarters awaiting
permanent housing.
TWO RESIDENCE REQUIREMENTS FOR MEMBERS OF CONGRESS
Problem
Public law requires that each member of the Senate and House of
Representatives maintain a "residence" in his District. Beyond this,
many legislators have told us their constituents much prefer that they be
taxpaying property owners so they can better understand local tax
burdens. Their duties require their presence in Washington with the
resulting need for two residences. While we know that some Congressmen
maintain only a mailing address in their home District, it is nonetheless
true that these requirements impose general burdens that are unique to
Congressmen, particularly those with limited outside means. The burden
has been increased in recent years by the virtually continuous time
Congress has remained in session.
It is estimated that approximately 80% of the members bring their families
to Washington. Most of the remaining 20% live in single-room/efficiency
type accommodations.
The Commission believes that these circumstances not only impose an
unfair financial burden on the members but also work to the detriment of
the interests of their constituents. The emotional pressures created by
either the financial drain or the separation from family or the less
frequent exposure to their constituents are surely counterproductive.
12
Recommendation
Each Member of Congress should be eligible to receive up to $5,000
payable annually as an allowance toward the extra costs imposed as a
result of the requirements that a residence be maintained in both
Washington and the home District, provided that such payments shall be
supported by evidence of the actual maintenance of two residences.
Alternatively, the concept of the current tax deduction for traveling
expenses could be expanded to include the expense of two residences,
provided the expenses are actually incurred. On this basis, the present
tax deduction of $3,000 should be increased to $8000. The $3,000 amount
was set in 1952 and has become inadequate.
(It is the Commission's understanding that the Bureau of Labor Statistics
has undertaken a study that will identify housing costs at salary rates
consistent with Congressional earnings.) We are confident from our
experience with rental properties that reasonable accommodations could
cost at least $5,000 annually.
COST OF LIVING - WHY ISN'T $44,000 A YEAR PLENTY?
It is not only Members of Congress - although they feel it most keenly -
who are aware of the substantial feeling throughout the country that
there is something wrong with people who cannot live adequately, indeed
graciously, on $44,000 per year. Members of this Commission, some of
whom either live or have lived in places like Billings, Montana or
Kearney, Nebraska or Prescott, Arizona hear this persistent question
often.
The argument must be met, and while the answers may not arouse much
sympathy or even understanding, fairness requires that certain obvious
ideas be set forth clearly.
1. The quality of person we all seek to attract to Washington - in
any branch - will almost certainly have achieved or expect to
achieve a higher degree of success than the average person in
his or her field, and will have established an equivalently
higher standard of living. No member of the Commission
quarrels with the principle that some financial sacrifices are
appropriately required from the government executive, but the
human condition being what is is, we appreciate that the
financial disadvantage an executive, legislator or judge is
willing to assume will be at best a relative thing.
13
Thus, unless we are ready to say that we want our top officials
lo earn no more than the average salary of all Americans, we
must set higher levels - and the only question is how high must
we go to obtain and keep them? Put another way, what is the
least we can pay to achieve this purpose? We must point out
that assuming a Federal budget of more than $400 billion, the
impact of the total salaries we are proposing (including the
major portion of the effect on the unfreezing of salary rates
warranted to those in GS 16 through 18 several years ago, but
never paid) comes to about $130 million, or three one-
hundredths of one percent (.03%). If the result is even a
slight margin of improvement in the quality and retention of
able officials, the return to the nation should far exceed that
cost.
2.
We believe that no fair assessment of Federal compensation can
be undertaken without some understanding of the relationship
of the cost of living in Washington, D.C. to other cities in the
nation. A survey of comparative costs comparing Chicago,
Omaha, Des Moines, and Atlanta, while the data are far from
complete, suggests a higher cost in Washington of some 20-30%.
(This does not of course include the cost of private higher
education - or secondary education either.)
In this same connection, the following figures in the area of
housing are instructive. These are average prices of the
houses sold by a national real estate firm in various cities
across the country.
RANKED BY AVERAGE HOME PURCHASE PRICE
(FIRST NINE MONTHS - 1976)
AVERAGE HOME
AREA
PURCHASE PRICE
INDEX
Washington, D.C.
$68,400
(1.00)
San Francisco
59,600
(0.87)
Chicago
57,600
(0.84)
Atlanta
55,700
(0.81)
Minneapolis
55,400
(0.81)
Lincoln
54,900
(0.80)
Omaha
44,800
(0.65)
Des Moines
34,100
(0.50)
14
NOTE: It is clear that even this limited sample suggests that
those moving to Washington experience significantly higher
housing costs. The difference may be even greater than that
shown since those who come for a limited stay may be expected
to be forced to make rapid decisions - given the time pressures
of the new assignments.
But beyond this static picture at a given moment, we have the even more
difficult problem of what to do about future levels of inflation.
ANNUAL COST OF LIVING ADJUSTMENTS
The Commission has been offered probably nearly every point of view
available with regard to how to handle periodic cost of living adjustments.
We are impressed with the argument that the current crises in which we
find ourselves has come about largely because of the absence of such
adjustments.
We are also mindful of the potential negative impact on incumbents,
potential government officials, and those "frozen" at the top of the
General Schedule if the prognosis for future adjustments is as dim as the
record of the past eight years.
Thus, we have no problem accepting Dr. Weber's conclusion, at least as a
rational objective, "systematic, periodic adjustments in the salary levels
of Federal executives (and judges) probably will have a positive influence
on the decision to accept and remain in Federal service."
Our difficulty, of course, is with the means, but not the end, by which
such adjustments could be made. Among the public's frustrations we
know of, none that ranks higher than inflation. And we know of no
problem which the public is more likely to blame on government spending
and therefore the Congress and Executive Branch. The idea that
Congress would be willing to support the notion that the rest of the
country suffers the ravages of inflation, but that its members have a kind
of inflation insurance, protected from the very disease that it is believed
lo have created is not one whose time has come.
15
It is virtually inconceivable to us that Congress would not insist on
explicit voting on this issue whenever the question of the cost of living
adjustment would arise. Quite apart from the self-serving aspects (or
perhaps we should say self-destructive aspects) of this kind of automatic
cost of living adjustment, it would be perceived as a bad example to the
resl of the country, particularly when we remember that the Council on
Wage and Price Stability reports that only about 10% of all workers are
covered by such clauses in a contract, and, in any event, these
escalation clauses over the period 1968 to 1974 provided only about half of
the rise in the cost of living during the period.
One could imagine a scheme whereby such a cost of living adjustment
applied to the branch of government that might be said to have had the
least impact in causing inflation, the judiciary. Again, given our system
of equal but separate branches, and the example it would set at very high
levels of government to the public at large, we think this would also be
inappropriate.
Thus, we conclude that the most practical approach to cost of living
adjustments would be a permanent commission making recommendations as
appropriate to the President, but at the very least, of course, once every
four years.
SALARY RECOMMENDATIONS
If our logic has been valid and our factual base sound, our
recommendations should not require major exposition. (Our
recommendations for specific salary adjustments are set forth in tables at
the end of this section.)
Thus, we will only in a summary way review the high points and let the
numbers speak for themselves.
1. As a group, we have recommended the highest level of
increases for the judiciary. We shall not over-elaborate the
reasons: the judges have made, or at least want to make, a long
term career decision, there is no opportunity to "recoup" later
on and this group foregoes more outside earning opportunity
than any other in Federal service. The strains of the past
seven years are beginning to show, not only in the upper ranks
of the Federal judiciary but even more in the Federal
Bankruptcy Courts where 18 resignations in the past two years
appear to be related to money problems. Finally, all of our
studies and other research tell us the American public is most
supportive of the highest possible quality in the judiciary, and
is quite prepared, we believe, to pay for it.
16
2. Throughout the three branches, we have proposed substantially
higher rates of increase at the lower levels than at the higher
levels. First, it is at these levels that the most serious problem
becomes the maintenance of a minimum acceptable standard,
taking into account that the employee will accept a reduction
from his previous income but not one that seems unreasonable,
considering the likelihood that the salary will not be increased
significantly during the term of employment and that increases
which might otherwise be expected "on the outside" must be
foregone. Equity and the needs of the government require that
these lower-level executives get the larger increases. Beyond
this, the psychic rewards at the higher (i.e., Cabinet) levels
are of such a magnitude that we cannot persuade ourselves that
equivalent increases are necessary to attract and retain persons
of the highest quality.
The American people, under the best of circumstances, will
have trouble assimilating this large overall increase at one time.
The educational task will be easier if it can be understood that
the most senior officials of all three branches were willing to
sacrifice in relation to their equally hard working but less
honored colleagues. With the thought that it might cushion the
shock, we explored the option of phasing these recommenda-
tions in over a period of years. We have rejected this course
on two grounds: one of equity (this increase has already been
postponed too long), and one of pragmatism (some have
expressed fears that attempts would be made in future years to
rescind the subsequent phases), perhaps under the threat of
popular retaliation at a time of increased "anti-government"
feeling. The case for these increases can be made, clearly and
convincingly, but it need and should only be made once.
17
3.
One cannot fail to notice that we recommend that the Cabinet
level posts receive a smaller increase than any others. In some
ways, this reflects years of what one might consider relative
over-compensation in relation to Levels II-V in the Executive
Branch. The current differential between Executive Levels I
and Il cannot be justified on any ground we have heard. The
Cabinet Secretary takes the job for what he knows is a limited
period. The psychic rewards are high. The later alternatives
in the private sector are nearly always enlarged and enhanced,
and indeed are probably better than they would otherwise have
been. Finally, we have little doubt that at $67,500 a President
would be able to attract and retain very high quality
candidates. While this breaks the "linkage" with Supreme
Court Justices, we have spelled out why we believe the job and
career circumstances are fundamentally different.
4.
As to the relationship among the salary levels of the Vice
President, the Speaker, and the Chief Justice, the increases we
propose maintain the relationship whereby all are paid at the
same salary level. We saw nothing to be gained by changing
these historical relationships and took note of the differences in
the living and expense allowances in the case of the Vice
President.
5.
With respect to Congress, the increase in salary allowance is
slightly less than average but still a substantial 28.9%. We
offer these thoughts - first of all, we should remember that we
are proposing that the Congress eliminate most outside earned
income, honoraria, and legal fees that many now earn. Thus,
even assuming, Mr. President, you accept our recommendation
to provide a housing allowance, the actual increase is less than
for other groups. We have had extensive consultations with
Congressional leaders on this matter and they have widely
indicated to us a strong desire to be conservative on matters of
members' pay. Given the statutory requirement that the
Comptroller General be at so-called Level II ($60,000), any
anomaly created by the fact that this employee of the Congress
is making more than its members should take into account the
recommended Congressional housing allowance.
18
6.
It should be noted that our Level V recommendation of $49,000
still will result in some compression (through much reduced - to
2, 485 employees from the current number of 20,365 - and all
confined to GS 18 and the upper steps of GS 17).
Our reasoning is as follows: we are not at all offended by some
cost discipline and pressure of Level V rates on the super
grades. It is here that the cost exposures are greatest (over
70% of the total cost of our proposed increases). It is also here
that the Commission has the least faith in the system's ability to
measure need and worth. Too many experts have also
cautioned us to be sure that these comparability studies give
full weight to the costs of generous fringe benefits, such as the
early retirement feature of the pension plan. This question
about the super grades is a worthy one for the quadrennial
commission whose creation we are recommending.
In the meantime, our interviews with those at high levels of the
bureaucracy suggest that neither this income nor the slight
compression remaining will present a serious problem.
The tables on the following pages, Mr. President, represent the results of
our deliberations on salary recommendations.
Table 1 - Illustrates the salary relationships we recommend among the
different levels in each of the branches.
Table 2 - Sels forth our specific recommendations for salary adjustment
for each position.
Table 3 - Presents estimates of the cost of implementing these salary
recommendations - including the cost of both the specific salary increases
and also the related effect of raising the ceiling on the "compressed"
salaries in the General Schedule and the associated groups of Federal
employees.
Table 4 - Provides a comparison of the population of Federal employees
presently affected by compression with the reduced population which
would still be compressed at the recommended levels.
19
TABLE 1
COMMISSION ON EXECUTIVE, LEGISLATIVE AND JUDICIAL SALARIES
RECOMMENDED PAY RELATIONSHIPS OF TOP FEDERAL OFFICIALS 1
(Selected Positions - See Table 1 for all Positions)
EXECUTIVE
LEGISLATIVE
JUDICIAL
SALARY
($000)
80
Vice President-$80,000
Speaker of the House - $80,000
Chief Justice - $80,000
[3.2%]
78
Associate Justice-$77,500
76
74
[18.5%]²
72
[23.1%]
[19.2%]
70
68
Level I - - $67,500
66
Pres. Pro-Tem, Maj & Min
Circuit Judge - $65,000
Leaders - $65,000
64
[12.5%]
[4.8%]
62
[8.3%]
District Judge - $62,000
60
Level II - - $60,000
Comptroller General - $60,000
[4.3%]
[8.8%]
58
[5.3%]
Congress - $57,500
[0.9%]
Level III - $57,000
Asst. Compt. Genl. - $57,000
Director, Admin, Ofc of
56
Courts - $57,000
[7.5%]
[7.5%]
[7.5%]
54
Level IV - $53,000
Librarian - $53,000
Bankruptcy Judge - $53,000
52
[8.2%]
[8.2%]
50
Level V - - $49,000
Deputy Librarian - $49,000
48
46
FOOTNOTES:
1
Recommended salaries and inter-level pay differentials.
2
Percentages in brackets are the inter-level pay differentials.
TABLE 2
COMMISSION ON EXECUTIVE, LEGISLATIVE AND JUDICIAL SALARIES
RECOMMENDED SALARY LEVELS
PRESENT
RECOMMENDED
PERCENT INCREASE
Vice President
$65,600
$80,000
22.0%
Chief Justice
65,600
80,000
22.0%
Speaker of the House
65,600
80,000
22.0%
75
Associate Justice
63,000
77,500
23.0%
Executive Level I
63,000
67,500
7.1%
President Pro-Tem, Majority and Minority Leaders
52,000
65,000
25.0%
Judges - Circuit Courts of Appeals
44,600
65,000
45.7%
Judges - Court of Claims
44,600
65,000
45.7%
Judges - Court of Military Appeals
44,600
65,000
45.7%
Judges - Court of Customs and Patent Appeals
44,600
65,000
45.7%
Judges - U.S. District Courts
42,000
62,000
47.6%
Judges - Customs Court
42,000
62,000
47,6%
Judges - Tax Court
42,000
62,000
47,6%
Executive Level II
44,600
60,000
34.5%
Comptroller General
44,600
60,000
34.5%
Senatore, Representatives, Resident Commissioner of Puerto Rico
44,600
57,500
26,9%
Executive Level III
42,000
57,000
35.7%
Assistant Comptroller General
42,000
57,000
35,7%
Director - Administrative Office - U.S. Courts
42,000
57,000
35.7%
Executive Level IV
39,900
53,000
32.8%
General Counsel - GAO
39,900
53,000
32,8%
Librarian of Congress
39,900
53,000
32.8%
Public Printer
39,900
53,000
32.8%
Architect of the Capitol
39,900
53,000
32.8%
Commissioners - Court of Claims
37,800
53,000
40.2%
Deputy Director - Administrative Office - U.S. Courts
37,800
53,000
40.2%
Bankruptcy Judges (full time)
37,800
53,000
40,2%
Executive Level V
37,800
49,000
29.6%
Deputy Librarian of Congress
37,800
49,000
29.6%
Deputy Public Printer
37,800
49,000
29.6%
Assistant Architect of the Capitol
37,800
49,000
29.6%
Bankruptcy Judges (part time)
18,900
26,500
40.2%
Board of Governors, U.S. Postal Service
10,000
10,000
0%
TABLE 3
COMMISSION ON EXECUTIVE, LEGISLATIVE AND JUDICIAL SALARIES
ESTIMATED COST OF SALARY RECOMMENDATIONS
I. OFFICIALS WHOSE SALARIES ARE DETERMINED PURSUANT TO THE COMMISSION'S RECOMMENDATIONS
CURRENT
COST OF
NEW
EMPLOYEE
SALARY
SALARY
SALARY
PERCENT
GROUP
POPULATION
COSTS
INCREASES
COSTS
INCREASE
EXECUTIVE
865
$ 34,663,300
$ 10,977,200
$ 45,640,500
31.7%
LEGISLATIVE
550
24,538,900
7,099,600
31,638,500
28.9%
JUDICIAL
1,081
43,841,900
19,472,100
63,314,000
44.4%
TOTAL
2,496
$103,044,100
$ 37,548,900
$140,593,000
36.4%
II. FEDERAL EMPLOYEES -- WITH SALARIES LIMITED BY EXECUTIVE LEVEL V --
CURRENT
COST OF
NEW
EMPLOYEE
SALARY
SALARY
SALARY
PERCENT
GROUP
POPULATION
COSTS
INCREASES
COSTS
INCREASE
GENERAL
SCHEDULE &
20,365
$806,479,000²
$ 80,942,222³
$887,421,222
10.0%
EQUIVALENTS
NOTE:
1 2,485 employees in this group will still be affected by salary
compression, up to a maximum of approximately $5,400. See
Table 4 for further detail.
2 Rounded data.
3
The annual cost of additional Federal pension liabilities will be
approximately $11,032,000.
The tables below present a comparison of the population of
Federal employees affected by salary compression (I) at the
present salary levels (Level V at $39,600) and (II) at the
recommended salary levels (Level V at $49,000).
TABLE 4
COMMISSION ON EXECUTIVE, LEGISLATIVE AND JUDICIAL SALARIES
FEDERAL EMPLOYEE POPULATION AFFECTED
BY COMPRESSION
I. At Current Level -- Executive Level V and at $39,600 --
GS GRADE
GENERAL
FOREIGN
VETERANS
MILI-
PL 313
GENERAL
ALL
OR EQUIV
SCHEDULE
SERVICE
ADMIN.
TARY
TYPES
GRADES
OTHERS
TOTAL
15
8,537
1
2,783
124
0
350
398
12,193
16
3,309
881
22
31
881
398
154
5,676
17
990
0
26
0
264
158
46
1,484
18
348
455
6
5
93
89
16
1,012
TOTAL
13,184
1,337
2,837
160
1,238
995
614
20,365
III. At Recommended Level -- Executive Level V at $49,000 --
GS GRADE
GENERAL
FOREIGN
VETERANS
MILI-
PL 313
GENERAL
ALL
OR EQUIV
SCHEDULE
SERVICE
ADMIN.
TARY
TYPES
GRADES
OTHERS
TOTAL
15
0
0
0
0
0
0
0
0
16
202
0
10
31
54
31
9
337
/
17
752
0
26
0
201
122
35
1,136
18
348
455
6
5
93
89
16
1,012
TOTAL
1,302
455
42
36
348
242
60
2;485
RECOMMENDATIONS - PART III
A New Concept of a Quadrennial Commission -
A Four Year Term and A Full Agenda: Recommendations in
Other Areas - Pensions - Life Insurance - Job Classifications
This Commission - particularly during the short term of its existence - is
almost overwhelmed by the number of compensation issues which are not
receiving objective or coherent review. This is hardly surprising, since
we are dealing with the world's most complex manpower structure.
The threshold question - one which concerns the Members of Congress
not quadrennially, but bi-annually - is this, and it is asked insistently,
one imagines, wherever Americans gather to discuss public matters: "Who
else do you know - or what other group is there - whose members vote
their own salary?" The question, of course, has larger implications than
those relating lo congressional pay and benefits. It could be as easily
phrased: "Is il appropriate to rely on government personnel to review
their own compensation structures?" We think the answer is properly in
the negative.
Thus, we believe the concept of a permanent quadrennial commission, of
private citizens, has a much broader applicability than the present
syslem, which calls only for review once every four years of only one
relatively narrow portion of the compensation package - salaries.
In addition, the Commission believes that a predominantly private sector
staff could add substantially to both the objectivity and therefore the
credibility of the periodic analysis of the total, "whole" Federal
compensation process.
There is a variety of issues which a permanent commission could seek to
resolve. There is, for example, a lack of coherence in the compensation
program across the spectrum of all three branches - a lack of coherence
which would be unacceptable within any moderately well-run private
business enterprise. Later in this section of the report, we will attempt
to illuminate and amplify some of the specific problem areas which could
with great profit lo the nation form part of the agenda of a four year
commission.
RECOMMENDATION
A new quadrennial commission should be appointed to a four-year term.
Il should be supported by an Office of Personnel Management. The
support office should have the following characteristics:
I. Mission
To advise the quadrennial commission on defined personnel
matters relating to the executive, legislative, and judicial
structure, and on the relationship to General Schedule grades
16, 17, and 18.
11. Organization
A. Report to the chairman of the commission.
B. Draw executive director from the private sector (four year
term).
C. Have limited permanent government staff.
D. Have advisory committee composed of private sector
compensation and evaluation executives (two year term).
E. Have advisory group composed of representatives of the
Chief Justice, the Executive, and Legislative Branches
and the Civil Service Commission.
111. Responsibilities
A. Provide staff support to the commission.
B. Advise the commission on an annual basis on the
desirability of applying the annual comparability (cost of
living) increase to the various levels and/or groups within
its area of responsibility.
C. Submit an annual report of the "State of the System" to
the commission.
D. Conduct appropriate salary surveys (to be done by
industry advisory committee).
2
E. Establish and maintain a data base for tracking
compensation information in all sectors of the economy.
F. Within one year from date of appointment, recommend a
pay system which provides some recognition for
individual performance. (The Commission was distressed
to see how automatic the promotion and pay increase
systems were - which is to say how often they seem to be
based on seniority rather than performance. For example,
when we tried to find out whether we were losing a higher
proportion of the outstanding people, we found there was
no way to identify who the outstanding people were.)
G. Monitor and recommend approval of the relevant job
classifications in the Executive Levels and consult with the
Civil Service Commission on the classifications and
organization patterns in grades 16, 17, and 18.
H. Within one year from date of appointment, make
recommendations on an improved classification system. In
making this study, the Commission recommends the Office
of Personnel Management give serious consideration to the
so-called "broad band" approach previously examined by
the Civil Service Commission. Under this concept, grades
16, 17, and 18 are merged into one group. The average
per capita salary for an agency would be budgeted at a
specified level, and then within certain limits, individual
salaries could be set at the discretion of the agency head.
3
IMMEDIATE TASKS FOR A NEW PERMANENT COMMISSION
1.
PENSION BENEFITS (see Appendix for Commission studies)
There are now 5I separate employees' retirement systems in the
Federal Government. Benefits vary (e.g., for 35 years of service at
age 65, 64% of final salary for Executive Branch employees, to 77% of
final pay for Members of Congress, to 100% of final salary after ten
years of service at age 70 for the Federal judiciary). Employee
contributions vary (e.g., from 8% of gross salary in Congress to 7%
in the Executive Branch to no contribution at all in the judiciary,
except for 4.5% to an annuity system for survivor benefits).
Legislative committee jurisdiction varies. And because these pension
programs - all within the Federal Government employee system - are
operated independently rather than on an integrated basis,
individuals are able to draw pensions from one plan (or more) while
drawing a full salary from another source within the same
government. This "double-dipping", as it is called by critics of the
system, is a fruitful source of discontent for those citizens who
observe from outside the government - but not outside the tax
paying public.
Under all these circumstances, we should not be surprised at the
lack of coherence - or even the lack of a rationale. But there are
far larger issues at stake here than mere symmetry. There is the
crucial question of costs, for example. Who, when it comes to
funding, is watching the store?
On the funding issue, the Commission asked a panel of private sector
experts to work with the Civil Service Commission to determine the
degree of funding which would be required to fund Federal pension
obligations at the same rate as leading American companies fund their
systems.
4
While it is true that different experts may make different
assumptions about future funding arrangements, we were stuck by
the narrow range of estimates within which our private sector expert
analysis fell. For example: current funding as a percentage of
payroll should be between 33% and 40% (two to three times the rate in
private industry); that present unfunded Federal pension liabilities
total approximately $107 billion and that the generous 20-year early
retirement program has led to the anomalous combination of high
costs and high exit rates.
We have, in the course of our work on this issue, asked a few key
members of both Houses if they were aware of these huge future
pension costs, and the surprised responses have left us far from
reassured. It is safe to assume that if this knowledge is not
widespread in Congress, neither is the country aware of the size of
these future obligations. The New York City analogy should not
escape us.
We should ask as well whether the pension costs are fully considered
when "comparability" is regularly assessed. From what the
Commission has been able to determine in the short time available, it
seems unlikely.
All this suggests that high on the agenda of the new full-time
quadrennial commission should be a full review of all Federal pension
programs, and whether the idea of such a permanent commission is
adopted or not, the President should now ask for a review of several
critical pension issues:
A. Variation in benefit levels and employee contributions - in all
three branches and within the branches.
B. Cost assumptions - The current method of assuming stable cost
projections in a time of steadily rising prices seriously under-
estimates, in our view, the future costs.
C. The early retirement program - its benefit levels, its cost and
its overall effect.
D. How these pension costs should be reflected in both budgeting
and funding procedures and how t' ey should be communicated
to the Legislative Branch - and, to be sure, to the people.
5
Contribution to Pension Costs of Executive Levels I-V
We feel we know enough already, however, to make one
recommendation for modifying pension funding for those at Executive
Levels, which would have an immediate favorable impact on "whole
compensation" levels at no cost to the public. The Weber-
Yankelovich study makes it clear that many people in these posts
complain of a cash flow deficit while in government service, and a
postponement of entry into the system would relieve some of this
pressure and would, in any event, be only fair.
Current administrative provisions require that Executive Branch
officials immediately, upon appointment, begin making a contribution
of 7% of their salaries, after tax, to a pension fund. Judges do not
make contributions at all, and Members of Congress may, with
certain limitations, delay making payments until they wish to enter
the plan, at which time they may make a lump sum payment,
including interest. This provision for Congress, which the
Commission believes to be wise, recognizes the inherent unfairness
in requiring those whose tenure in government is likely to be brief
to make immediate contributions, with the consequent negative effect
on the individual's cash flow.
Study shows that the current average tenure for Members of
Congress is approximately ten years. Tenure for those in the
Executive Branch is less than three years. It appears obvious that
the deferral option should be made available to the Executive
Branch.
Recommendation
Each such executive should be permitted to defer contributions to
the pension fund until the fifth anniversary date following the initial
appointment. The contribution should include appropriate interest
payments.
A note of caution is required. "Late funding" must be limited to
certain Executive Level positions which have historically involved
demonstrably brief tenure. If it is extended to all employees, it will
further damage the already weak pension plan funding base.
6
2.
LIFE INSURANCE BENEFITS
Some Illustrative Problems:
-
The current level of life insurance provided to government
employees by industry standards is inadequate. Most major
companies provide two to three times earnings as insurance,
often at no cost to the employee, versus about one time
coverage in the government. Not only do government
employees contribute to the insurance, but the cost per
thousand is extremely high.
-
The failure to require employees who retire early to continue to
contribute to the cost of full insurance coverage until at least
age 65 imposes an unfair cost burden on active individuals.
-
Congress typically votes to give the surviving spouse of a
Congressman an additional year's pay. This is not the case
with members of other branches. The judiciary continues to
feel that its joint survivor benefits are not adequate in spite
of the recent legislation on this matter.
As in other aspects of the Federal compensation program, the
coherence of the insurance program throughout the Federal system
would benefit from a system-wide review by the staff of the
permanent quadrennial commission.
The Commission believes that even its cursory examination supports
the following recommendations:
A. Increase normal coverage from one to two times earnings.
B. Establish a maximum insurance level.
C. Continue premium payments by all participants until age 65 or
until the coverage drops to the post-retirement level.
7
3.
CLASSIFICATION OF POSITIONS IN EXECUTIVE LEVELS
Virtually every government executive to whom the Commission spoke,
including those in all three branches of government, expressed the
view that the present process of assigning jobs to levels is
inadequate. The reasons offered for this inadequacy were as
follows:
A.
The lack of a strong central control. This lack affects not only
new jobs, but makes it almost impossible to re-evaluate
previously established jobs where the work's content has
eroded.
B. Job classifications have been created without adequate
overview. It appears clear that some of the newer and more
visible agencies and organizations, such as HEW and EPA, have
received more favorable treatment than some of the more mature
agencies, such as Defense.
Based on the testimony which the Commission received, it carried out
two studies. By necessity, these studies were not comprehensive.
One focused on Levels 1, II, III, and IV. The other dealt with
positions in Level V and General Schedule grades 16-18. Both were
conducted by private sector specialists. A summary appears below:
Total Judged
Number of
To Be
Jobs
Number
Number
Improperly
Level
Examined
Too Low
Too High
Classified
II
7
2
4
6
III
3
-
3
3
IV
6
-
4
4
V
13
-
2
2
GS-18
15
1
7
8
GS-17
7
1
1
2
GS-16
11
-
2
3
Total
62
4
23
27
When we remember that there are 5,144 jobs and we have sampled
only 62 of these, it should not be concluded from the data shown
above that the Commission believes that they are representative of
all of the jobs. Neither should it be concluded that the Commission
supports all of the individual task force recommendations on
classifications. Rather, one should conclude that brief examinations
of a small number of selected jobs were sufficient to verify the
existence of a problem of significant magnitude. The problem should
be addressed promptly if we are to avoid further deterioration of the
classifications with the resultant unnecessary increase in cost.
8
The Problem of Proper Job Classification - Some Illustrations of Anomalies
The Commission's conclusion is that a significant number of Federal
Government jobs, both in the super grades and Executive Levels, are
evaluated erroneously.
But this is too serious and sophisticated a matter to be evaluated by the
current Quadrennial Commission, preoccupied as it has been by coming to
grips with the urgent realities of the salary situation in only a few weeks'
period. What follows, then, is designed to illustrate the problem, not a
proposal to resolve it.
Perhaps the example of the Chairman of the Federal Reserve Board will
serve to punctuate the anomalous nature of the classification problems.
By any standard, the Chairman of the Federal Reserve Board has
responsibilities that one could argue are roughly equivalent to the
Secretary of the Treasury. His position has many aspects of a career
job - given the fourteen year tenure. Thus, it does not offer the
prospect of a short government career. The internal relationships within
the "government" banking institutions are more than anomalous. They
are incomprehensible. The President of the New York Federal Reserve
Bank is paid $97,500 versus the $44,600 Level II salary of the Chairman of
the Federal Reserve Board.
An equally irrational classification result is the enormously important job
of Director of the Office of Management and Budget, who constantly
negotiates with Cabinet members on critical budget matters on behalf of
the President, yet is still classified as Level 11; i.e., at the level of an
Undersecretary.
It can thus be seen that a permanent quadrennial commission would have a
full plate from which to dine. Pensions, insurance, cost of living,
reclassification of job levels - all are illustrative of ongoing problems
which directly affect salary levels, form a serious portion of "whole
compensation" and cannot be ignored for four years only to be swept
under the rug once again as a commission such as ours seeks to do its job
in the allotted time. The expenditure of a few hundred thousand dollars
is a low price to pay to bring order and coherence to a civilian pay system
which costs the tax payers some $45 billion per year, and which could
after a few years return substantial money savings as well.
9
Mr. President,
We are pleased to report that we are in unanimous agreement on our
recommendations, and that there are no dissents on the content of the report.
Respectfully submitted on behalf of the Commission,
Peter 4 Person
Peter G. Peterson
Chairman,
Commission on Executive, Legislative
and Judicial Salaries
Commissioners:
Charles T. Duncan
Edward H. Foley
Sherman Hazeltine
Lane Kirkland
Joseph F. Meglen
Norma Pace
Bernard G. Segal
Chesterfield Smith
APPENDIX A
ORGANIC STATUTE
FOR THE COMMISSION ON EXECUTIVE, LEGISLATIVE,
AND JUDICIAL SALARIES
Section 225 of Public Law 90-206 (81 Stat. 613, 642), as
amended by section 6(a) of Public Law 91-375 (84 Stat. 719, 775),
and section 206(a) of Public Law 94-82 (89 Stat. 419, 423) (2 U.S.C. 351-361)
Sec. 225. (a) ESTABLISHMENT OF COMMISSION. There is hereby established
a commission to be known as the Commission on Executive, Legislative,
and Judicial Salaries (hereinafter referred to as the "Commission").
(b) MEMBERSHIP --
(1) The Commission shall be composed of nine members who shall be
appointed from private life, as follows:
(A) three appointed by the President of the United States, one
of whom shall be designated as Chairman by the President;
(B) two appointed by the President of the Senate;
(C) two appointed by the Speaker of the House of Representatives;
and
(D) two appointed by the Chief Justice of the United States.
(2) The terms of office of persons first appointed as members of the
Commission shall be for the period of the 1969 fiscal year of the Federal
Government, except that, if any appointment to membership on the Commission
is made after the beginning and before the close of such fiscal year,
the term of office based on such appointment shall be for the remainder
of such fiscal year.
(3) After the close of the 1969 fiscal year of the Federal Government,
persons shall be appointed as members of the Commission with respect to
every fourth fiscal year following the 1969 fiscal year. The terms of
office of persons so appointed shall be for the period of the fiscal
year with respect to which the appointment is made, except that, if any
appointment is made after the beginning and before the close of any such
fiscal year, the term of office based on such appointment shall be for
the remainder of such fiscal year.
(4) A vacancy in the membership of the Commission shall be filled in
the manner in which the original appointment was made.
(5) Each member of the Commission shall be paid at the rate of $100
for each day such member is engaged upon the work of the Commission and
shall be allowed travel expenses, including a per diem allowance, in
accordance with section 5703(b) of title 5, United States Code, when
engaged in the performance of services for the Commission.
(c) PERSONNEL OF COMMISSION --
(1) Without regard to the provisions of title 5, United States Code,
governing appointments in the competitive service, and the provisions of
chapter 51 and subchapter III of chapter 53 of such title, relating to
classification and General Schedule pay rates, and on a temporary basis
for periods covering all or part of any fiscal year referred to in
subsection (b) (2) and (3) of this section--
(A) the Commission is authorized to appoint an Executive
Director and fix his basic pay at the rate provided for level V
of the Executive Schedule by section 5316 of title 5, United
States Code; and
(B) with the approval of the Commission, the Executive Director
is authorized to appoint and fix the basic pay (at respective
rates not in excess of the maximum rate of the General Schedule
in section 5332 of title 5, United States Code) of such additional
personnel as may be necessary to carry out the function of the
Commission.
(2) Upon the request of the Commission, the head of any department, agency,
or establishment of any branch of the Federal Government is authorized
to detail, on a reimbursable basis, for periods covering all or part of
any fiscal year referred to in subsection (b) (2) and (3) of this section
any of the personnel of such department, agency, or establishment to
assist the Commission in carrying out its function.
(d) USE OF UNITED STATES MAILS BY COMMISSION--The Commission may use the
United States mails in the same manner and upon the same conditions as
other departments and agencies of the United States.
(e) ADMINISTRATIVE SUPPORT SERVICES-The Administrator of General Services
shall provide administrative support services for the Commission on a
reimbursable basis.
(f) FUNCTION--The Commission shall conduct, in each of the respective
fiscal years referred to in subsection (b) (2) and (3) of this section,
a review of the rates of pay of--
(A) the Vice President of the United States, Senators, Members of
the House of Representatives, the Resident Commissioner from
Puerto Rico, the Speaker of the House of Representatives, the
the President pro tempore of the Senate, and the majority and minority
leaders of the Senate and the House of Representatives;
(B) offices and positions in the legislative branch referred to
in subsections (a), (b), (c), and (d) of section 203 of the Federal
Legislative Salary Act of 1964 (78 Stat. 415; Public Law 88-426);
(c) justices, judges, and other personnel in the judicial branch
referred to in sections 402(d) and 403 of the Federal Judicial
Salary Act of 1964 (78 Stat. 434; Public Law 88-426); and
(D) the Governors of the Board of Governors of the United States
Postal Service appointed under section 202 of Title 39.
Such review by the Commission shall be made for the purpose of determining
and providing--
(i) the appropriate pay levels and relationships between and among
the respective offices and positions covered by such review, and
(ii) the appropriate pay relationships between such offices and
positions and the offices and positions subject to the provisions
of chapter 51 and subchapter III of chapter 53 of title 5, United
Stated Code, relating to classification and General Schedule pay
rates.
(g) REPORT BY THE COMMISSION TO THE PRESIDENT--The Commission shall
submit to the President a report of the results of each review conducted
by the Commission of the offices and positions within the purview of
subparagraphs (A), (B), (C), and (D) of subsection (f) of this section,
together with its recommendations. Each such report shall be submitted
on such date as the President may designate but not later than January 1
next following the close of the fiscal year in which the review is con-
ducted by the Commission.
(h) RECOMMENDATIONS OF THE PRESIDENT WITH RESPECT TO PAY-The President
shall include, in the budget next transmitted by him to the Congress after
the date of the submission of the report and recommendations of the
Commission under subsection (g) of this section, his recommendations with
respect to the exact rates of pay which he deems advisable, for those
offices and positions within the purview of subparagraphs (A), (B), (C),
and (D) of subsection (f) of this section. As used in this subsection,
the term "budget" means the budget referred to in section 201 of the
Budget and Accounting Act, 1921, as amended (31 U.S.C. 11).
(1) EFFECTIVE DATE OF RECOMMENDATIONS OF THE PRESIDENT--
(1) Except as provided in paragraph (2) of this subsection, all or
part (as the case may be) of the recommendations of the President trans-
mitted to the Congress in the budget under subsection (h) of this section
shall become effective at the beginning of the first pay period which
begins after the thirtieth day following the transmittal of such recom-
mendations in the budget; but only to the extent that, between the date
of transmittal of such recommendations in the budget and the beginning
of such first pay period--
(A) there has not been enacted into law a statute which establishes
rates of pay other than those proposed by all or part of such
recommendations,
(B) neither House of the Congress has enacted legislation which
specifically disapproves all or part of such recommendations, or,
(C) both.
(2) Any part of the recommendations of the President may, in accordance
with express provisions of such recommendations, be made operative on
a date later than the date on which such recommendation otherwise are
to take effect.
(j) EFFECT OF RECOMMENDATIONS OF THE PRESIDENT ON EXISTING LAW. AND PRIOR
PRESIDENTIAL RECOMMENDATIONS--The recommendations of the President trans-
mitted to the Congress immediately following a review conducted by the
Commission in one of the fiscal years referred to in subsection (b) (2)
and (3) of this section shall be held and considered to modify, supersede,
or render inapplicable, as the case may be, to the extent inconsistent
therewith--
(A) all provisions of law enacted prior to the effective date or
dates of all or part (as the case may be) of such recommendations
(other than any provision of law enacted in the period specified in
paragraph (1) of subsection (i) of this section with respect to
such recommendations), and
(B) any prior recommendations of the President which take effect
under this section.
(k) PUBLICATION OF RECOMMENDATIONS OF THE PRESIDENT--The recommendations
of the President which take effect shall be printed in the Statutes at
Large in the same volume as public laws and shall be printed in the Federal
Register and included in the Code of Federal Regulations.