Ask the Scholar
Document scope · 1 page
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory.
For page-specific OCR and visual context, open one of the page chats.
Scholar Source Context
Document identity
localId
6283026
label
Peterson Commission Report on Executive Salaries, December 10-11, 1976
core
doc
dtoType
document
citationUrl
pageCount
1
Source metadata
id
6283026
sourceUrl
contentType
document
title
Peterson Commission Report on Executive Salaries, December 10-11, 1976
citationUrl
collections
White House Special Files Unit Files
Issue Decision Papers for the President
subjects
Government salaries
Independent regulatory commissions
thumbnailUrl
largeImageUrl
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
naId
6283026
coverageEndDate
day
17
logicalDate
1977-01-17
month
1
year
1977
coverageStartDate
logicalDate
1976-11-01
month
11
year
1976
levelOfDescription
fileUnit
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
mediaId
44badd9663f0dc78
ocrText
The original documents are located in Box 6, folder "Peterson Commission Report on
Executive Salaries, December 10-11, 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States of America his copyrights in all of his unpublished writings in National Archives collections.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
yes
THE WHITE HOUSE
WASHINGTON
December 10, 1976
MEETING WITH THE SENATE REPUBLICAN WEDNESDAY GROUP
Monday, December 13, 1976
3:00-4:00 p.m. (60 minutes)
The Cabinet Room
From: Max L. Friedersdorf m.G.
I. PURPOSE
To comply with Senator Javits' request for the
opportunity for the Senate Republican Wednesday
Group to discuss the future of the Republican
Party with the President.
II. BACKGROUND, PARTICIPANTS AND PRESS PLAN
A. Background:
1. Senator Javits is hosting a luncheon for the Senate
Republican Wednesday Group on Monday, and requested
the opportunity to meet with the President while they
are in town.
2. Besides the regular Senators who attend, several of the
Senators-Elect will also be in attendance. They are:
John Heinz (PA), John Danforth (MO), John Chafee (R.I.)
and possibly Sam Hayakawa (CALIF).
B. Participants: The President, Senators Mark Hatfield, Bob
Packwood, Ted Stevens, Bob Stafford, Lowell Weicker, Jacob
Javits, John Heinz, John Danforth, John Chafee, Cliff Case
and Sam Hayakawa. From the Staff: Jack Marsh, Dick Cheney
and Max Friedersdorf.
C. Press Plan: Announce to the Press - White House photographer
only.
III. TALKING POINTS
1. I'm delighted that you could come down this afternoon.
2. Jack (Javits), since we are meeting at your suggestion,
why don't you lead off the discussion.
Original to Mike Duval to go in the
2 P.M. Meeting Package 12/11/76
Coalition for
Adequate
1800 M STREET, N.W.
Judicial
Washington, D.C. 20036
(202) 331-2200
Compensation
Writer's Direct No.:
(402) 346-6000
December 10, 1976
Rt
CO-CHAIRMEN
Herbert Brownell
John T. Connor
The President
The White House
HONORARY CO-CHAIRMEN
Alan Bible
Washington, D.C. 20500
Emanuel Celler
Norris Cotton
William M. McCulloch
Dear Mr. President:
ASSOCIATE CO-CHAIRMEN
Martha W. Griffiths
The Coalition for Adequate Judicial Compensation
Thomas H. Kuchel
commends the report recently submitted to you by the
Henry P. Smith, III
William B. Spong
Commission on Executive, Legislative and Judicial Sal-
aries and respectfully requests your favorable consid-
EXECUTIVE COMMITTEE
Roger M. Blough
eration.
John W. Byrnes
Lloyd N. Cutler
Laurence Gold
As this letterhead and reverse side of this page
William T. Gossett
indicate, the Coalition is composed of more than 100
Patricia Roberts Harris
R. William Ide, III
community leaders, former members of the Congress and
Sol M. Linowitz
a broad cross section of prominent members of the Bar.
Clarence M. Mitchell
Graham Purcell
It was formed in June of 1975 under the sponsorship of
Irving S. Shapiro
the American Bar Association and is a natural outgrowth
NATIONAL ADMINISTRATOR
of the ABA's long record of support of fair judicial
Robert J. Kutak
compensation.
600 Woodmen Tower
Omaha, Nebraska 68102
(402) 346-6000
On behalf of the Coalition, I have written to
STAFF LIAISON
Peter G. Peterson, chairman of the Quadrennial Com-
Herbert E. Hoffman
American Bar Association
mission, to pledge the Coalition's support of the
1800 M Street, NW
Commission's recommendations as they affect judicial
Washington, DC 20036
(202) 331-2210
compensation.
The Coalition was formed because of a growing
concern that high standards of the federal judiciary
would deteriorate under the decreasing purchasing
power of present salaries. As the Quadrennial Com-
mission pointed out, federal judges embark on a life-
time career when they accept a presidential appointment.
They expect no opportunity to recoup from lower federal
compensation by returning later to private life.
Attorneys who are selected for the federal judiciary
normally have attained high income levels. For the
The President
December 10, 1976
Page two
most part, they do not upgrade their incomes, and do not expect
to. But it is our conviction that unless present income level
is increased, erosion of the high standards of the federal judi-
ciary is inevitable. The prestige of serving as a judge at an
inadequate salary will not compensate the kind of attorneys we
must have as judges. The Coalition also endorses the standards
of conduct recommended by the Quadrennial Commission. Judges
already are governed by similar standards of conduct. The Coali-
tion likewise agrees that public acceptance of higher judicial
compensation would be quick. The people of our country have a
high regard for federal jurists.
The Coalition also supports higher salaries for the execu-
tive and legislative branches, and agrees with the analysis of
them by the Quadrennial Commission. Since the Coalition was
formed for the single purpose of supporting adequate judicial
salaries, we have not commented further on the income levels of
members of the other two branches of the federal government.
In this regard, the Board of Governors of the American Bar
Association, on December 7, adopted a resolution in support of
the Quadrennial Commission's recommendations, noting that "a crisis
condition exists in the three branches (of government) because of
the distressingly deficient pay scales which have been brought
about by the demonstrated lag between those applicable to top
personnel and those applicable to other governmental and non-
governmental employees.
While endorsing the Quadrennial Commission's report, it is
not the Coalition's purpose to suggest a specific dollar amount
in increases of judicial salaries. Rather, our concern is that
the principle of equity be fairly recognized. We are confident
that your recommendations to the Congress will grant such recogni-
tion.
We are aware of your own leadership, Mr. President, regarding
the areas of discussion covered by the Quadrennial Commission
Report. We note particularly your remarks on July 13, 1975, before
the Sixth Circuit Judicial Conference, your statement to the America
Judicature Society in November, 1976, and your response, printed in
the American Bar Association Journal of October, 1976, to the ABA's
questionnaire in which you noted that you had "pressed for adequate
pay for federal judges throughout (your) administration and will
continue to do so."
The President
December 10, 1976
Page three
We also recall with sincere appreciation your administra-
tion's leadership in the field of reform as evidenced by your
letter of July 19, 1976, to the Speaker of the House and the
President of the Senate transmitting a substitute to S.495, the
Watergate Reorganization and Reform Act of 1975, the so-called
Special Prosecutor Bill. Title III of your bill dealt directly
with protection of the public's right to be assured that public
officials, regardless of which branch of government they serve
in, disclose financial matters which could give rise to a con-
flict of interest in the performance of their official duties.
The Coalition shares the concern expressed by the Quadrennial
Commission about public sensitivity to what will appear to many as
unjustifiably large increases for public officials. We believe we
can be of significant assistance in gaining public acceptance of
fair and equitable salary levels. Our own inquiries indicate that
there already exists broad support for increased pay for the federal
judiciary. Further, we believe we can help foster congressional
acceptance of your proposals by direct contacts with the Congress
from our membership.
In summary, Mr. President, the Coalition wishes to be of all
the assistance it can in support of your recommendations.
To that end, we respectfully suggest that it would be most
helpful if you and the appropriate officials of your staff met at
an early date with the congressional leadership, including repre-
sentation from the Post Office and Civil Service Committees, to
seek an accord on those salary levels which would have the maximum
support of the Congress. Such consultation before the submission
of your recommendations in your Budget Message would, we believe,
greatly enhance congressional approval of your recommendations.
Representatives of the Coalition have had the privilege of
preliminary discussions with members of the White House staff on
this subject. We want you to know of our willingness to do all
we can, both within the legal profession and among the public, to
engender support for equitable judicial compensation.
We are prepared to provide any assistance that you desire.
Respectfully,
Noral Rotak
Robert J. Kutak
National Administrator
RJK:baf
THE WHITE HOUSE
WASHINGTON
December 11, 1976
MEETING ON THE REPORT OF THE
COMMISSION ON EXECUTIVE, LEGISLATIVE
AND JUDICIAL SALARIES (PETERSON COMMISSION)
Saturday, December 11, 1976
2:00 p.m. (2 hours)
Cabinet Room
From: Mike Duval
Who
GERALD
I.
PURPOSE
To receive staff advice on the Peterson Commission
Report and develop a plan for additional meetings
(if required).
II.
BACKGROUND, PARTICIPANTS & PRESS PLAN
A. Background: The attached memorandum summarizes
the report and presents the issues raised.
B. Participants: Dick Cheney, Mike Duval, Max
Friedersdorf, Alan Greenspan, Jim Lynn, Jack
Marsh, Ron Nessen, Paul O'Neill, Art Quern
(for Jim Cannon who is out of town), Ed Schmults
and Brent Scowcroft.
C. Press Plan: Announced, no press photo
III.
AGENDA
You may wish to use the sections on Decisions and
Implementation (starting on page 13) in the attached
memorandum as an agenda for this meeting.
THE WHITE HOUSE
WASHINGTON
December 11, 1976
MEMORANDUM FOR:
THE PRESIDENT
FROM:
MIKE DUVAL
Mike
SUBJECT:
Report of the Commission on
Executive, Legislative and
Judicial Salaries.
PURPOSE OF MEMORANDUM
This memorandum summarizes the Commission's Report and presents
the issues which require your decisions.
First is a background section which describes the history of
the Commission and the substance of its report. This is
followed by an analysis of the major policy issues raised by
the report along with the implications of the alternatives
you face. The next two sections respectively deal with the
specific, substantive questions raised by the Code of Conduct
and compensation issues. The sixth section presents all the
issues along with staff recommendations in decision format.
The final section discusses the alternatives available to
implement your decision.
BACKGROUND
The Organic Statute for the Commission on Executive, Legislative
and Judicial Salaries, created a nine member Commission to
review the rates of pay of certain high-level government
officials from all three branches. (The text of the statute
can be found at Appendix A of the attached Commission report
which is at Tab A.) The statute requires the following action
by the Commission and the President:
"REPORT BY THE COMMISSION TO THE PRESIDENT -- The
Commission shall submit to the President a report of the
[appropriate pay levels and relationships between and
among the respective offices and positions covered by
the review] together with its recommendation.
Page 2
"RECOMMENDATIONS BY THE PRESIDENT WITH RESPECT TO PAY
The President shall include in the budget next transmitted
to him by Congress after the date of the submission of the
report and recommendations of the Commission
his
recommendations with respect to the exact rates of pay
which he deems advisable for those offices and positions
within the purview of [the Organic Statute].
It is clear from the statute that you are required to make
recommendations with respect to the exact rates of pay which you
deem advisable. This could be done with a simple one line
statement in your Budget or with as high visibility as a special
message to Congress in addition to a recommendation in the Budget.
The statute only refers to Commission work concerning rates of
pay. It is clear that the Commission's recommendations concerning
a code of conduct are outside the purview of the statute.
The Commission's report makes two key recommendations.
That there should be substantial pay increases for
high ranking governmental officials. (Executive
Branch 32%, Legislative Branch 29%, and Judicial
Branch 44%.
These salary increases should be coupled with the
imposition of a new code of conduct on all three
branches.
The Commission made the following specific recommendations concerning
a code of public conduct:
All individuals (from the three branches) should be
required to disclose their financial affairs to an
appropriate authority.
All employees should be prohibited from receiving
honoraria, legal fees, gifts, or the proceeds of
testimonial dinners, etc. for their personal use, and
any other compensation for services rendered which
might have, or appear to have an influence in the
conduct of the public's business.
Tight but reasonable 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 the public responsibility.
Page 3
There should be more consistency in the availability
of legitimate expense allowances in all three branches
of the government, including domestic and -- when
appropriate -- foreign travel, entertainment granted
and received, and gifts. Such allowances must not be
used as a substitute for income.
Restrictions should be imposed so as to ensure the
top executives, judges, or legislators do not compromise
either their objectivity or total devotion to the job
by any arrangements that they may make while in public
employment with respect to subsequent employment or
other relationships.
The code of conduct regulations should be broadly
applicable across all three branches of government.
An appropriate body or bodies should be established --
or if an existing one is to be so charged, it should be
strengthened -- to ensure that these requirements are
fully enforced and that all information disclosed under
the Code of Public Conduct is regularly and adequately
audited and publicly reported.
The report goes on to suggest a Presidential meeting with the
Chief Justice and the leadership of the Senate and House in
order to get the following commitments:
To the principles of the code.
To prompt action.
To a new mechanism to implement the recommendations.
The report recommends that we draft legislation to create an
intergovernmental commission which would develop a specific
Code of Public Conduct and mechanisms to oversee and administer
the code. They recommend that the legislation be submitted with
the budget message.
The Commission has relied on the following principles concerning
compensation:
Comparability with the private sector is not a suitable
basis for setting pay for the Government's top officials.
Instead, pay should be set at the lowest rate that will
allow the Government to attract and retain the best
qualified individuals.
Page 4
Pay must be high enough to allow people to serve
without other income sources.
Because of the "psychic income" of higher level
jobs (such as the Cabinet) the pay differentials
between the Executive Schedule levels should be less
as you go up the scale.
If the pay level is set at the lowest level to attract
competent people, it must be adjusted regularly to
ensure that it does not fall substantially behind
increases in the cost of living.
Linkages between the three branches should be disregarded
because we are dealing with entirely different jobs with
different responsibilities and the career anticipation
patterns very sharply.
The Commission's report makes the following recommendations
concerning compensation:
In order to alleviate the "cash flow" problem of non
career appointees, they should be allowed to defer
Civil Service Retirement contributions until after they
have served for five years.
Newly elected Members of Congress and executive appointees
should be reimbursed for moving expenses, travel expenses,
and subsistence while seeking permanent housing.
Members of Congress should receive either an allowance
or tax deduction of up to $5000 per year (in addition
to the current $3000 deduction) to reimburse them for
the expense of maintaining two residences.
The following are the recommendations concerning salaries:
The largest pay increases are recommended for
the Judiciary because judges tend to make
government service a permanent career.
Larger increases are recommended for the lower
executive levels than for the higher because
of "psychic rewards".
Page 5
The increases should be all at once, rather
than phased because the need is immediate and
it is best not to let the problem continue to
fester.
A smaller percentage increase is recommended for
Congress compared to the other branches, but this
is partially off-set by their proposed housing
allowance. On a dollar basis, Congress would
get $57,500, plus the $5000 housing allowance
compared to $60,000 for Level II. Some compression
will remain at the top of the GS levels. The
Commission believes this is beneficial because
it will impose some "cost discipline" on the super-
grades. They feel that this is where the cost
exposures are greatest and also where they have
the least faith in the system's ability to measure
need and worth. Also, they question the validity
of the supergrade comparability rates primarily
because they do not give proper weight to the
cost of generous fringe benefits such as the early
retirement feature of the pension plan.
The Commission recommends the creation of a permanent quadrennial
commission made up of private citizens with significant staff
support. Such a commission would address the following types
of problems: periodic analysis of total federal compensation,
cost of living increases, pension benefits, life insurance, and
classification of positions.
Finally, to provide further perspective by way of background
information, I have spoken to pollsters Daniel Yankelovich and
Bob Teeter. Both agree that this is a highly volatile issue
because of a very strong feeling in the country that government
officials are paid too much as it is and do not deserve further
increases. Both agree that, while your support for the Commission's
findings could result in a positive public reaction, there is a
likelihood that the opposite would occur.
Yankelovich, (whose polling firm did some work for the Commission)
believes that your endorsement of the Commission's findings
would greatly add to the symbolism of your final days as President
by either showing you as (1) assisting old buddies with a pay
increase as you leave or (2) as taking a courageous step which
will result in giving the American people a better government.
Page 6
He points out that the public can be made to understand and
accept the concept that good government and elimination of
the last vestiges of Watergate require an elimination of the
mixed motives that result with outside income sources for
government officials and the obvious need to attract the very
best people in government and give them a sensible code of
ethics to follow. Yankelovich says that public reaction will
be largely determined by how your decision is presented. If
you decide to accept the Commission's approach, this is an
inherently believeable conclusion if presented in a firm and
sensible way that the people can understand.
Bob Teeter thinks that the general public reaction will be very
negative (but you should nevertheless adopt the Commission's
recommendations because they are right.) He believes that your
best course of action is to announce your decision in a clear
and forceful way but time it for Christmas week. He recommends
against any middle ground such as a lesser increase without the
code of conduct because this will be perceived as a compromise
which serves the interest of no one.
THRESHHOLD ISSUES
The following are general questions which are raised by the
Commission's report:
1. What are the implications of the President taking
an active and visible role in connection with the
report?
It is obvious under the statute that you must
take some action. Probably the safest course
(from a public perception standpoint) is for you
to propose further study of the entire compensation
question (including non-executive lower level
positions) coupled with a very modest increase to
cover cost of living in the FY 77 budget and strong
endorsement of the principles established by the
Commission concerning the code of conduct. You could
then participate in several events (such as meeting
with Congressional and Judicial leaders) designed to
give high visibility to the need for a code of conduct.
On the other hand, you can of course decide to go
forward with the fundamental recommendations of the
Commission with the understanding that there will
be a risk of severe public criticism but the possibility
of a positive response depending on how your decisions
are communicated.
Page 7
The following are some arguments of why you should
adopt the Commission's approach (major pay increase)
which will mean a highly visible role for you:
There is a need for Presidential leadership to
solve this problem which has existed for many
years. Many of your advisers believe a large
pay increase can be justified.
Without your strong leadership, a large pay increase
is highly unlikely.
If the press believe the arguments of the Commission,
you may be criticised for not demonstrating leader-
ship.
The following are some reasons for rejecting the
Commission's recommendations and avoiding a highly
visible role concerning the report:
This may be a no-win proposition and therefore
why take the risk.
If you do not take a leadership role, the likelihood
is that there will not be any major pay increase.
This might have the benefit of keeping down the
rate of growth of government, and making it likely
that people who have achieved private-sector
success continue to serve in government.
2. Should the code of conduct be linked with the compensa-
tion issue?
As stated above, the Organic Statute does not give
the Quadrennial Commission any charter to recommend
a code of conduct or otherwise deal with any issue
other than the executive pay question. By linking
the two issues there is a possibility that the code
of conduct proposal will be "contaminated" and the
public will view the pay increases as an unfair "price"
for code of conduct reforms which should occur on their
own merit.
One argument for linking the two is the obvious political
reality that this may be the only way to get the
necessary pay increase. A substantive argument is the
obvious need to know whether outside income is permitted
before setting salary levels.
Page 8
To some extent, public support or opposition will
be shaped by how real they perceive the commitment
to the new code of conduct.
One way of assuring, at least in public perception,
the commitment of both the House and Senate to
follow through on the code of conduct, would be by
language in your transmittal of the pay package
making it clear that acceptance by the Congress --
by not vetoing the pay increase within the 30 days --
will be taken by you and the American people as a
commitment of both the House and Senate on the code.
There is another approach which would likely provide
very strong evidence of commitment to the new code
of conduct. You could make the pay increase contingent
upon Congress passing legislation within 30 days to
create the ad hoc commission to propose a new code.
A varriant of this approach could include a provision
which makes the pay increase contingent on the passage
of Resolutions in both Houses of commitment to the
code of conduct concept.
3. Would implementation of the report recommendation
result in any constitutional and/or serious policy
problem?
Phil Buchen's office points out that there is a
Constitutional problem with the basic Organic Statute
which provides for the pay increase in your budget
subject only to disapproval by either House of Congress
within 30 days. However, Counsel's office states that
this problem can be ameliorated by your requesting an
affirmative vote by the Congress on the pay increase
and -- in any event there will be subsequent
appropriation bills.
Also, there are potential Constitutional problems in
developing a code of conduct and implementing mechanisms
covering all three branches. These probably can be
avoided with careful drafting of the legislation
creating the ad hoc commission to develop the code.
From a standpoint of policy, there is obviously the great
danger in your making any recommendations to the other
branches concerning how they control the conduct of their
members/employees. I frankly think that the public would
be receptive to your taking a firm leadership role in
this area given the fact that you have served for a
quarter of a century in Congress and are now viewed as a
national leader with no personal stake in the decisions
you make in your remaining days as President.
Page 9
CODE OF CONDUCT ISSUES
The following issues are raised because of the Commission's
recommendation that a code of conduct be adopted government-
wide in connection with the implementation of their recommended
pay increases.
1. Should there be a single set of principles governing
a code of conduct for all three branches?
The Commission's report is not clear as to why they
believe there should be a common Code of Conduct for
all three branches. Although logic suggests that
common principles should apply to the conduct of
officials from all three branches, the Commission
specifically recommends that code of conduct
regulations should apply to the three branches.
This may be a problem of semantics because Pete
Peterson advised me by telephone that the Commission's
intent is that there should be a common set of
principles but that each branch would be responsible
for the details of its own code of conduct.
2. What mechanism should be used to develop a draft
code of conduct?
Notwithstanding Pete's interpretation of the
Commission's intent concerning applicability to
the three branches of such a code, their report
does recommend that you submit specific legislation
which would result in the creation of an inter-
governmental commission to develop (after consultation
with the branches) a specific Code of Public Conduct
and set up mechanisms to oversee and administer the
code.
This Commission would be under a legislative 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.
There is, of course, a great danger in such an approach.
As stated in the Peterson Commission Report, there
would have to be some continuing mechanism to review
compliance with the code of conduct. The creation of
such an entity carries with it an enormous risk for
abuse.
Page 10
An alternative approach would be to create an ad
hoc intergovernmental commission to study the code
of conduct issue and make specific recommendations
to each branch separately after developing a common
set of principles. Each branch could be charged
with the responsibility of creating its own enforce-
ment mechanism with the ad hoc commission recommending
certain guidelines such as strict public disclosure.
The Peterson Commission Report suggests that such a
commission be given 180 days to complete its work.
This may be unrealistic given our experience in
developing a legislative alternative to S-495 the
"Watergate Reorganization and Reform Act."
3. What subjects should be covered by the proposed code
of conduct envisioned in the legislation submitted
by the President?
The Peterson Commission recommends that the following
subjects be covered in such a code: disclosure,
restrictions on outside income, conflict of interest,
allowances, post service employment and auditing.
Some of your advisors believe that there may be
additional matters which should be covered.
4. To what extent should legislation submitted by you
guide the ad hoc commission on such issues as what
form should the code (s) of conduct take (e.g., by
statute) or what mechanism should be used to implement
or enforce the code (s) ?
This is a complex subject which needs more staff work.
COMPENSATION ISSUE
The Peterson Commission Report raises the following questions
concerning compensation:
1. Should you take action to deal with the problem of
executive level compensation only or should you insist
on total reform of the federal employment system including
lower grade levels?
Page 11
There are obvious problems in the current Executive
Branch Civil Service System, such as so called "grade
creep", and a strong argument can be made that it makes
no sense to improve the tip of the iceberg while leaving
the larger problem untouched.
If, however, you decide to take action in this area
you probably are going to have to accept a less than
perfect solution in order to have a reasonable chance
of making some progress. For example, linking the
code of conduct with the pay increase may not be a
perfect solution but it may be the only practical
alternative. Likewise, I doubt it's possible to come
up with a reform package for the entire federal em-
ployee system between now and submission of the budget.
Since the Peterson Commission was permitted only to
look at executive pay levels by statute, it makes some
sense to deal only with this problem but identify the
fact that there is still a great need for additional
reform.
2. Should there be linkage between the various jobs
within each branch?
As the Commission noted, there is no historical linkage
among the various positions and they could not find
a persuasive rationale for its rigid application.
Undoubtedly the central reason for its existence is
the political reality that Congress finds it easier to
raise their own salary if they receive pressure due to
the linkage factor from the other two branches. Indeed
the political argument appears to be the only case that
can be made for maintaining linkage.
3. Assuming you decide to propose some increase, at what
level should the salaries be set?
Although there has been criticism of the Peterson
Commission report, it is generally a visceral reaction
to any pay increases for governmental officials. Many
of your advisers accept the Commission's figures as as
good as any. Several people have suggested that the
pay increases could be phased in order to reduce the
adverse political impact of such a decision. The
problem with this, of course, is that any phasing-in
would take you closer to the 1978 elections and this
could aggravate rather than diminish the political impact.
Page 12
Other advisers strongly object to such large
increases.
See Tab B
for the specific salary recommendations.
4. Should there be a relocation cost allowance and $5000
annual allowance for the second residence for Members
of Congress?
The Commission recommends in favor of both allowances.
There seems to be a good case in terms of the realities
of private sector competition for the relocation allowance.
The principle argument against the $5000 annual allowance
or tax deduction for the second residences of Members
of Congress is that this should be included in their
salaries directly rather than treating it an an allowance
or tax deduction.
5. Should there be a permanent Quadrennial Commission to
periodically recommend increases in salary and for
other purposes?
The Peterson Commission Report recommends that such a
permanent commission be established. This may have
resulted from their inability to deal with the question
of annual cost of living adjustments. While recognizing
the need for some adjustment on a periodic basis, they
rejected recommending cost of living adjustments on
the grounds that it would be perceived as a bad example
to the rest of the country. Indeed none of your advisers
urge adoption of a cost of living adjustment for the
obvious policy and public reaction reasons.
The major opposition to the permanent Quadrennial Com-
mission idea comes from the Civil Service Commission.
Bob Hampton argues that it would be duplicative of the
responsibilities that are currently placed in OMB, the
Civil Service Commission and the Advisory Committee on
Federal Pay.
One obvious alternative is to charge the ad hoc
Commission with the responsibility of making a
recommendation to the President and Congress as to
whether or not a permanent Quadrennial Commission is
required.
Page 13
TENTATIVE POLICY DECISIONS
The following specific issues are listed in generally the same
order as presented in the preceding sections. For purposes of
presentation only, there is an implicit assumption that each
decision is affirmative thus triggering the need to address
successive issues.
Also, these are presented as tentative decisions because you
may wish to consult with others before reaching final decisions.
See Tab C for staff recommendations and comments. Your advisors
have not commented on all the issues identified below but are
expected to do so at today's meeting.
GENERAL ISSUES
1) Should you take a highly visible role in connection with the
Report?
Very risky in terms of public reaction, but if you
do act, do so boldly and with a very good press plan.
(Teeter, Yankelovich)
May compromise your reputation for fiscal conservatism.
(Marsh)
DECISION:
2) Should you adopt the Commission's basic approach, i.e., a
substantial pay increase tied to a new code of conduct?
Most of your advisers that have commented, do not
flatly support the Commission's recommendations.
Jim Cannon supports the Commission while Phil Buchen
and General Scowcroft concur in general but question
the timing of the salary increases. Secretary Kissinger
and Chairman Bob Hampton support the salary increases.
Jack Marsh, Max Friedersdorf and Bob Hampton question
linking the code of conduct and pay increases.
DECISION:
Page 14
3) By what mechanism should the pay increase be linked to the
code of conduct?
The Commission recommends direct linkage.
DECISION:
4) Would implementation of the report result in Constitutional
problems?
Bob Hartmann believes that there is a serious
constitutional problem in having any single agency
monitor the conduct of the three branches.
Phil Buchen's office says that the basic 30-day
Congressional veto procedure is unconstitutional.
DECISION:
CODE OF CONDUCT ISSUES
5) Should there be a single set of principles for all these
branches?
DECISION:
Page 15
6) How should the code of conduct be drafted?
The Peterson Commission recommends that a new
commission be created by statute and draft the
Code in 180 days.
Some of your advisers believe each branch should
develop its own code, perhaps adhering to a common
set of principles.
DECISION:
7) What subjects should be covered by the proposed code of
conduct?
The Peterson Commission recommends that the
following be covered: disclosure, restrictions on
outside income, conflict of interest, allowances,
post-service employment and auditing.
DECISION:
8) Should you propose that the code be statutory or rules
adopted by the respective branches and how should the code be
implemented?
There seems to be general agreement among your staff
that a detailed code should not be imposed on all
branches by a single commission and that implementing
power should be controlled by each branch separately.
Some intergovernmental entity may be appropriate for
limited purposes.
DECISION:
Page 16
COMPENSATION ISSUES
9) Should you take action to deal with executive pay only
or should you insist on total reform of all pay levels?
Jack Marsh argues that these matters should
be addressed together -- not executive pay
alone.
DECISION:
10) Should there be linkage between the various jobs within
each branch?
The Peterson Commission recommends against linkage.
Bob Hampton believes Congress may object to this,
thus defeating the pay increase.
DECISION:
11) Assuming an increase, at what level should the salaries
be set?
NOTE: Phil Buchen notes that the Chief Justice wants
an opportunity to speak to you if you are considering
a substantial reduction in the judicial salary levels
proposed by the Commission.
Jack Marsh, Alan Greenspan do not support the recom-
mended pay increase.
Buchen's office and Greenspan suggest that an increase
be phased in.
Page 17
An alternative favored by some on your staff is
to raise judicial salaries in accordance with the
Commission's recommendation and give the Legislative
and Executive Branches a modest cost of living increase.
DECISION:
12) Should there be a relocation cost allowance for government
officials?
The Commission proposes this and there have been
no specific objections raised.
DECISION:
13) Should Members of Congress receive an additional $5000
allowance for second residences? Should it be in the form of
a tax deduction?
The Commission recommends this but Greenspan opposes.
DECISION:
14) Should there be a permanent Quadrennial Commission to
periodically recommend salary increases and for other purposes?
DECISION:
Page 18
IMPLEMENTATION ISSUES AND DECISIONS
You probably will have to make a decision concerning the
Commission's recommendations for a pay increase prior to
departure to Vail in order that it will be reflected in the
Budget. If you decide to sever the code of conduct and
compensation issues, there is no need to deal with the former
until January. However, as a political reality you probably
cannot announce your decisions on the Budget in January with-
out making some public statement concerning the Peterson
Commission recommendations concerning a code of conduct.
On the other hand, you may wish to consult with Congressional
and Judicial leaders both on the question of whether or not the
two proposals should be linked as well as the specific merits
of each. In this case you will probably will want to have
such meetings next week which will allow your decisions to be
reflected in the Budget.
The following issues will need to be resolved concerning pre-
decision consultation (to occur next week) :
Do you want Jack Marsh, Max Friedersdorf and others
to take informal soundings on the Hill?
Should you consult with Congressional and Judiciary
leaders as a group?
If you decide to separate the Congress and the
Judiciary, should you meet separately with House
and Senate leaders?
Should you meet with any outside groups such as the
Peterson Commission?
Should you meet with additional Administration offi-
cials such as Bob Hampton?
Should you seek any commitment from Governor Carter
before announcing your decisions?
If you decide to go forward with a major pay increase linked
to some action on the code of conduct, we will have to develop
a very effective press plan in order to avoid the risk described
by Yankelovich and Teeter.
"Tab B"
TABLE 1
COMMISSION ON EXECUTIVE, LEGISLATIVE AND JUDICIAL SALARIES
RECOMMENDED PAY RELATIONSHIPS OF TOP FEDERAL OFFICIALS¹
(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%
GERALD
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.
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.:
Date:
December 6, 1976
Time:
FOR ACTION:
CC (for information):
Phil Buchen
Bob Hartmann
Jim Cannon -
Jim Lynn
Max riedersdorf
Jack Marsh
Bill Seidman
Alan Greenspan
Paul O'Neill
Brent Scowcroft
FROM THE STAFF SECRETARY
DUE: Date:
Wednesday, December 8
Time:
c.o.B.
SUBJECT:
The Report of the Commission on Executive, Legislative
and Judicial Salaries
December 1976
PORD
ACTION REQUESTED:
X
For Necessary Action
For Your Recommendations
19
Prepare Agenda and Brief
Draft Reply
X For Your Comments
Draft Remarks
REMARKS:
copy
The President has asked for senior staff comments on the attached report
focusing on the following:
To Mikel
(1) Overall structure of the report
(2) Salary Structures recommended
(3) Standards of Conduct
((4) How do we proceed?
XFreedersdarf - comments
Seedman -pee comments
Harlmann comments
Buchen - comments
XMarsh comments
Meenepan - comments
X Scowcreft comments
Hannon- comments
om B giving info direct to
sentral copeed to Phel Bushen
/ copy to mike Deeral who will be memo doing
1
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
Jim Connor
delay in submitting the required material, please
For the President
telephone the Staff Secretary immediately.
MEMORANDUM
THE WHITE HOUSE
WASHINGTON
December 9, 1976
MEMORANDUM FOR:
JAMES CONNOR
FROM:
BRENT SCOWCROFT
B
SUBJECT:
Report of the Commission on
Executive, Legislative and Judicial
Salaries
I have reviewed the Report of the Commission on Executive, Legislative
and Judicial Salaries. The Commission has done an excellent job and
the report is a thoughtful presentation of a very complex and important
issue.
While I agree with the principle of providing compensation to high-level
government officials which corresponds approximately with their
counterparts of similar responsibility in the private sector, I am
concerned that isolated weaknesses and the unfortunate coincidence
of an economic pause with the report's submission may lead to
rejection of the many worthwhile points made in the report.
Specifically, I believe that notwithstanding the gross disparities
between the salaries of the highest government officials and their
counterparts, it is unrealistic to expect public or Congressional
support for increases of the magnitude recommended in the report.
The probable result is rejection of any increase and the discrediting
of the very worthwhile analysis that has been done. Although the
Commission has tried to take this factor into account and has proposed
increases amounting to less than the corresponding rise in living costs,
it remains very doubtful that support could be gained for increases on
the order of 20 - 40%.
In addition, I believe that further analysis should be given to the
precise correleation of the five Executive Levels to positions in the
Judicial and Legislative Branches.
The little time available for review has prevented detailed analysis
essential to a more constructive comment. The matter of compensa-
tion is extremely important and will have a vital impact on the quality
of persons attracted to service in the Federal Government. I recommend,
- 2 -
however, that the report be referred for further review which will
take into account the realities of public and Congressional support
of Federal expenditures and the matter of inter-branch position
correlation mentioned above.
7623104
THE SECRETARY OF STATE
RF
WASHINGTON
ES TO:
November 15, 1976
MEMORANDUM FOR: THE PRESIDENT
From:
Henry A. Kissinger
HK
Subject:
Federal Wage Policy
I would urge you, in your upcoming review of
proposals by the Commission on Executive, Legisla-
tive and Judicial Salaries to consider particularly
the situation in the Department of State's executive
ranks, both in Washington and in the Foreign Service
abroad. We are continuing to lose some of our best
officers because of the large disparity between their
salaries and those in the private sector: When our
ablest Foreign Service officers reach the $39,600
salary ceiling, they have at present no prospect of
pay increases to match the assumption of senior policy
and management responsibilities in years to come.
The probable loss of many of our best senior
officers, while still in their most productive years,
leads me to recommend strongly that pay levels for
senior Foreign Service grades be allowed to rise
mignificantly. The likely alternative, further sub-
stantial losses from our senior ranks, must inevitably.
cause impairment of this country's capacity to deal
with its problems and challenges in, international
offairs.
The course of inflation has made the situation
worse than it was when I sent you my memorandum of
December 2, 1974 urging an executive pay raise; worse
than that described in the Comptroller General's
report of February 25, 1975, which showed that the
- 2 -
salary of a GS-18, or Foreign Service Officer of
Class 1, was about half that of salaries for po-
sitions of equivalent responsibility in the private
sector.
It would be a grave misfortune if our failure
to provide proper compensation for our officers
should turn back the clock and make the formation
and implementation of foreign policy a profession
reserved for the rich. Our program for equal employ-
ment opportunity might then appear a sham. Yet
either that, or a decline in the standards of the
Foreign Service, is the prospect we face if we
cannot improve executive compensation.
THE WHITE HOUSE
WASHINGTON
December 8, 1976
JIM CONNOR
MEMORANDUM FOR:
MIKE DUVAL
FROM:
ED SCHMULTS
KEN LAZARUS
Eas
SUBJECT:
Pay Commission Report
Counsel's Office has reviewed the report of the
Commission on Legislative, Judicial and Executive
Salaries and offers the following:
(1) Overview. As you may be aware, the Commission's
powers under its enabling authority are solely
advisory in nature. The responsibility of the
President under the statute, on the other hand,
requires that he include within the upcoming budget
his recommendations with respect to the exact rates
of pay which he deems advisable for those offices
and positions within the purview of the organic act.
Although this recommendation is the only legal require-
ment imposed upon the President, he is, of course,
free to go beyond this limited role and comment on
related features of the report, i.e., "uncoupling",
a code of conduct, etc.
(2) Constitutional Infirmity. The Commission's
enabling statute provides that the pay recommendations
of the President shall become law unless disapproved
by either House of Congress during a period of 30 days
following the transmittal of such recommendations.
Counsel's Office and the Department of Justice believe
that this legislative scheme is unconstitutional.
We might note in this regard, however, that our case
in opposition to this legislative scheme is weakened
to the extent that this legislation contemplates a
subsequent appropriations bill carrying forward the
increases in customary legislative fashion.
(3) Technical Point. We have been advised by the staff
of the Commission that a "final report" will be forth-
coming next week to improve upon the general format
of the draft which is currently before us and to'
correct certain minor technical errors.
-2-
(4) Proposed Response. It is our view that the President
should go beyond the bare legal requirements of the
organic act and issue a message to accompany his budget
on the subject of pay reform. In this regard, Counsel's
Office recommends that the President generally support
the need for certain pay raises in the Legislative,
Executive and Judicial Branches and endorse the general
architecture of the Pay Commission's report subject to
the following considerations:
(a) Although the recommended salary levels
proposed in Table II of the report represent
reasonable goals, it would be inconsistent
with the public sensibilities on this
subject to propose immediate increases of
this scale. Rather, we would see these
figures as goals to be pursued over a three-
year period. Therefore, we would suggest
that the President this year formally
recommend increases of one-third of the
levels of increase proposed by the Commission.
(b) Due to the constitutional restraints
the President should also request that these
increases be made in the form of affirmative
legislation.
(c) The President should generally endorse
the concept of coupling reform of our
conflict laws with the pay increases.
This position dovetails with our comments
on the constitutional defect presented here.
(d) By staging these increases over a
three-year period, the President can also
make clear that there is a necessity for
fundamental reform of the general pay
schedules of government to insure that
people do not receive unwarranted increases
as they are caught up in the current of
this plan. Stated another way, during
recent years, many government people have
received grade increases in order to
achieve a desirable salary and, in many
instances, substantial increases in that
level would warrant a reevaluation of
their GS rating. A three-year stage of
pay increases would allow time for a
reevaluation of this situation.
-3-
(5) Prospects. In the past, Congress has approved
pay raises only in instances where (1) the Congressional
leadership was personally lobbied by the President
and an agreement reached in advance; and (2) in
instances where the rate of increase proposed for
Congressmen was equal to the increase received by
others in the government. Assuming the President
does not meet with the Congressional leadership on
the question in advance of his budget message, there
would appear to be little or no chance for Congressional
silence on the proposed increase since (1) we can
anticipate that Senator Allen, Helms or some other
fiscal Conservative will bring the question to a vote,
and (2) given the fact that Congressional increases
would be substantially less than others proposed for
judges and Executive Branch personnel, a resolution
of disapproval would likely carry. In order to allow
for reasonable prospects for any success here, the
President would have to meet with the Congressional
leadership in order to preclude a vote on his recommendation.
(6) Note: We should also indicate here that Phil Buchen
has been approached by the Chief Justice who requests
the opportunity to speak to the President on this issue
should the decision be reached to substantially reduce
the judicial salary levels proposed by the Commission.
Moreover, we are being rather heavily lobbied by various
bar associations in support of the judicial salary increases
and would, therefore, appreciate being kept informed as
to any future developments in this regard.
cc: Jack Marsh
THE WHITE HOUSE
WASHINGTON
December 10, 1976
MEMORANDUM FOR:
JIM CONNOR
FROM:
JIM CANNON
Cha
SUBJECT:
The Report of the Commission on
Executive, Legislative and Judicial
Salaries - December 1976
Here are my comments to the questions posed:
1.
The overall structure of the report reflects the
excellent work performed by this Commission. They
raise good questions and correctly note that salary
cannot be viewed simply in terms of "comparability"
with industry. Public trust in public employees is
an-element, as is the psychic value senior officials
receive from the performance of their jobs. The
report also correctly questions whether it is logical
to link certain jobs in the 3 different branches to
identical pay levels.
2.
The salary structures and levels recommended are
justified given the level of the work to be performed
and the other factors used in the analysis. I concur
with the specific recommendation that the amount of
salary increase should decrease as a percentage as
you move up the ladder rather than the reverse situa-
tion which now exists.
I concur with the specific salaries recommended in
Tables 1 and 2.
3.
The proposal for more precise and relatively uniform
standards of conduct is excellent. Linking the
overdue salary increases to an equally overdue reform
of Government standards of conduct clearly makes
sense, and will be supported by serious students of
public affairs.
-2-
4.
I concur with the recommendation that before the
President takes any action he should convene a
meeting with leaders of the legislative and judicial
branches. He should also urge creation of the
proposed Commission to develop a specific code of
public conduct.
The report also recommends creation of a new permanent
quadrennial Commission rather than the temporary ones
(as this) appointed every four years. I agree.
THE CHAIRMAN OF THE
COUNCIL OF ECONOMIC ADVISERS
WASHINGTON
December 8, 1976
MEMORANDUM FOR JIM CONNOR
FROM:
ALAN GREENSPAN PAN P
SUBJECT: Report of Commission "on Executive, Legislative
and Judicial Salaries
The report does not offer convincing evidence that
the current pay schedule for high-level government officials,
civil service or appointed, is inefficient for satisfying the
government's requirements for executives. I have no
objections to the overall structure of the report. However,
the report does not adequately establish the case for the
proposed salary structure. It would be difficult to defend a
sudden increase of 20 to 47 percent for high-level govern-
ment officials given that they did not experience unemployment
in the last few years. Gradual increases would be viewed
as more reasonable. Since the proposed wage increases are
arbitrary, the Administration is best off endorsing the
principle of gradual increases, without endorsing the
particular magnitudes. The standards of conduct (item 8
below) should be sufficiently broad as to avoid particular
problems that specific standards might entail. The report
could be released in the interest of promoting full public
discussion of these issues, with a Presidential endorsement
of relaxation of salary caps and stronger conflict of interest
provisions, but without endorsing the specifics of the Com-
mission report. Some more detailed comments follow.
(1) The report indicates that nongovernmental executives
tend to view a government job as a form of investment in
training. The sacrifice of earnings to take the job
(23 percent on average) is more than compensated for by the
rise in earning opportunities after leaving government
(on average an 84 percent rise in salary over the govern-
ment level when return to private sector.) Apparently,
the government employment broadens their experiences and
makes. them more valuable in the private sector. The report
does not present evidence that these persons are less
REVOLUTION
AMERICAN
BICENTENNIAL
1776-1976
-2-
effective in the government job than others who prefer
not to undertake this form of investment.
(2) The report indicates that among career civil
servants in the super-grades the cap on salaries makes
government jobs less attractive than private sector jobs.
This ignores many attractive benefits of government employ-
ment including the relatively high pension with early
retirement provisions and the stability of employment.
In part, middle-level private sector executives receive
high salaries because of the uncertainty of employment
and problems of reemployment if they lose their job. The
attractive alternative for super-grades appears to be
retirement with the government pension, rather than leaving
government for another executive position prior to retire-
ment age. This raises the question as to whether the
pension is too generous for the super-grades. In addition,
the report ignores the problem of grade-inflation in the
last few years.
(3) The report does not address the issue of the
beneficial effects of turnover among executives through
retirements when civil service restrictions make replace-
ment difficult if not impossible. Raising salaries relative
to pensions would decrease retirements, but would require
more aggressive policies to replace high-level civil servants
who are no longer as productive as their salary and position
would require.
(4) There is a serious problem of salary compression,
where GS-15 (higher steps) to GS-18 earn the same salary,
which now exceeds that of Executive Level V. Studies of
the earnings of Federal Government and private sector workers
of the same measurable characteristics (e.g., age, schooling,
work experience, area, etc.) suggest that Federal civil
service earnings exceed those of the private sector. (The
popular view of low government salaries is supported by
studies of state and local government workers.) In addition,
the fringe benefits (health insurance, pensions, and stability
of employment) are generally superior in the Federal sector.
The compression appears to be the result of salaries that
are "too high" for the lower grades near the compression
(GS-14-16) rather than too low at the upper end (GS-17-18,
Executive Level v). Unfortunately, the report does not
consider this problem when mentioning the problem of salary
compression.
-3-
(5) The report correctly points out that there is
no necessary link between the salaries in the three branches
of government. Separate salary schedules would be more
appropriate.
(6) Since most persons in Executive Level I-V positions
are in government temporarily, and withdraw their contribu-
tions to the pension fund upon departure, the recommendation
that they be permitted to defer contributions to the pension
plan until the fifth year seems warranted. In the jargon
of the report, this would ease their cash flow problem.
(7) The recommendation of a $5,000 per year housing
allowance for members of Congress with two residences seems
unwarranted. We should move away from categorical, non-
taxable supplements to income to a system in which compensa-
tion is in the form of salaries subject to taxation. This
facilitates the public's awareness of the income of members
of Congress and promotes greater equity between members of
Congress with different levels of other income.
(8) With regard to conflict of interest, the Commission
recommends:
a. periodic disclosure of financial affairs ---
income, by source and amount, gifts, debts
and personal holdings.
b. Rigorous restrictions on outside incomes.
C. Strict conflict of interest provisions with
regard to investments (blind trusts).
d. More consistent and explicit rules on post-
service employment. Implicit call for ending
the "revolving door" between government and
industry, but no time frame indicated.
(9) The Commission report calls for a permanent
Quadrennial Commission, consisting of private citizens,
to review salary levels and pension provisions.
UNITED
STATE
UNITED STATES CIVIL SERVICE COMMISSION
CIVIL SERVICE
WASHINGTON, D.C. 20415
CHAIRMAN
DEC 9 1976
MEMORANDUM FOR THE PRESIDENT
SUBJECT: Executive Pay Increase
We have reviewed the recommendations of the Commission on Executive,
Legislative, and Judicial Salaries (the quadrennial commission), and we
have several comments to offer for your consideration.
(1) Pay Increase Recommendations. We fully endorse the recommended pay
rates for the Executive Schedule. By any reasonable measure, the pay
increases recommended for the executive branch's top officials would be
conservative, and would not even restore these pay rates to their 1969
purchasing power.
We note that the quadrennial commission has recommended some very
significant departures from the existing pay linkages between the three
branches of the Government, particularly between the salaries for
Federal judges and for Members of Congress. We do not feel that we are
in a position to judge the likely congressional reaction to these depart-
ures, but we are concerned that these changes, if unacceptable to Congress,
could result in the defeat of any pay increase at all. We urge that
this subject in particular be discussed with the congressional leadership,
as well as the acceptability of the recommended salary rates generally.
(2) Code of Public Conduct. While we would recommend that you publicly
and strongly endorse the quadrennial commission's call for a Code of
Public Conduct applicable to all three branches, we think it is imprac-
tical to seek to actually implement such a complex proposal in advance
of your transmittal to Congress of your pay recommendations, since a
Code of Public Conduct could only be implemented through the full
legislative process. Furthermore, there would seem to be questions as
to the appropriateness of an outgoing Administration seeking to imple-
ment such a Code in its last few weeks in office. Therefore, we think
your urging of rapid action on this subject by the Ninety-Fifth Congress
would be a sufficient response to this aspect of the quadrennial com-
mission's report.
2
(3) Recommendations on Benefits. The quadrennial commission included
in its report several recommended changes in benefits-optional coverage
of Executive Schedule appointees under Civil Service Retirement for the
first five years; relocation expenses for newly elected Members of
Congress and newly appointed executive branch officials; and an allow-
ance or tax deduction to reimburse Members of Congress for the expense
of maintaining two residences. All of these appear to us to be reason-
able, and we would particularly favor the proposal on relocation expenses.
Here again, though, legislation would be necessary, and a public endorse-
ment on your part (assuming congressional agreement with the recommendations
that touch upon Congress) would seem to be all that is called for.
(4) New Role for Quadrennial Commission. The quadrennial commission
also recommended that it be made into a continuing agency, with both
members and staff drawn from the private sector, to monitor pay and
benefits for the Government's top officals on a continuing basis. This
is the one major aspect of the commission's report with which we must
disagree. We do not see the need for an additional Federal agency that
would be essentially duplicative of responsibilities that are presently
placed in the Office of Management and Budget, the Civil Service Commission,
and the Advisory Committee on Federal Pay. In our view, last year's
Executive Salary Cost-of-Living Adjustment Act, tying pay for the Govern-
ment's top officials to the annual pay comparability adjustments, is a
much simpler and more practical process that would, if allowed to operate,
keep pay for top officials keyed adequately to the rest of the economy
between quadrennial reviews. As for the need for outside scrutiny of
Federal pay-setting, we might point out that this is essentially the func-
tion of the existing Advisory Committee on Federal Pay, whose role has
already been strengthened and broadened pursuant to the recommendations
last year by your Panel on Federal Compensation, chaired by Vice President
Rockefeller. Therefore, we suggest that you not accept the recommenda-
tions of the quadrennial commission on a new role for that commission.
I would be happy to meet with you to discuss any of these matters further,
or to participate in any meetings you may wish to have with the other
two branches.
Bot
Robert E. Hampton
Chairman
Summary of Report
of Commission on Executive,
Legislative, and Judicial Salaries
I.
Code of Public Conduct
-
Public distrust of Government makes it impossible for
Congress to raise top Federal pay at present, regardless
of how justified a substantial raise would be.
-
Must be a commitment to major reform on part of all three
branches, and quadrennial commission proposes significant
pay increases only in the context of such reform.
-
All top officials should make public disclosures of
financial affairs, although confidentiality might
be permissible in very unusual situations.
-
There should be rigorous restrictions on outside
earned income (honoraria, legal fees, gifts, etc.)
for all three branches of Government, if salaries
are raised enough to allow top officials to meet
all normal personal and family obligations without
the need for outside income.
-
There should be strict conflict-of-interest restric-
tions on investments.
-
Expense allowances should be consistent for all three
branches of Government, and should have to be accounted
for.
-
There should be consistent and explicit rules against
post-service employment which raises conflict-of-
interest problems.
-
There should be rigorous, consistent, and publicly reported
auditing of all aspects of compliance with the Code of
Public Conduct.
President should meet with Chief Justice and Senate and
House leadership and reach a mutual commitment to implement
promptly a Code of Public Conduct.
2
-
A special commission should be established to oversee
and administer the Code of Public Conduct. Both the
members of this commission and its staff should be drawn
from the private sector rather than the Government.
II.
Compensation Principles
-
Comparability with the private sector is not a suitable
basis for setting pay for the Government's top officials.
Instead, pay should be set at the lowest rates that will
allow the Government to attract and retain-for a reason-
able period of time-the best-qualified individuals for
its top posts.
-
Pay must be high enough to allow people of outstanding
quality to serve without needing other income and without
needing to suffer an unacceptable drop in living standards.
Because of the "psychic income" of higher level jobs, such
as cabinet members and agency heads, the pay differentials
between Executive Schedule levels should be less as you
go up the scale.
-
If pay is set at the lowest level that will be acceptable
to outstanding people initially, it must then be adjusted
regularly to ensure that it doesn't fall substantially
behind changes in the cost of living.
-
Pay for top jobs should continue to be set on a national
basis.
-
The linkages between the three branches should be discarded,
as they don't recognize differences between career antici-
pations in the different branches: a Federal judge accepts
his post expecting to remain in it for the rest of his pro-
ductive years; an Executive Schedule appointee enters the
Government fully expecting to return to the private sector
after only a few years of service.
III.
Weber Study
-
Arnold Weber, Provost of Carnegie-Mellon University (formerly
Assistant Secretary of Labor, Associate Director of OMB,
and Director of the Cost of Living Council) conducted a
survey of incumbents and former incumbents of top positions
in Government.
3
-
Pay a more important factor in decisions to leave the
Government than in initial decisions to enter.
-
Executive Schedule appointees suffered an average 23 percent
cut in salary to join the Government; judges lost an average
33 percent; Members of Congress gained an average 2 percent
when they entered Government.
-
When Executive Schedule appointees left the Government
for the private sector, their salaries increased by an
average of 87 percent; for judges, the increase was an
average of 84 percent; for Members of Congress, the
increase was an average of 34 percent.
-
In summary, Members of Congress appear to suffer less
of an earnings loss from being in the Government rather
than in the private sector than do Executive Schedule
appointees or judges.
Retirement
-
Executive Schedule appointees should be allowed to defer
Civil Service Retirement contributions until they have
served for five years; if they are still serving after five
years, they would have to make a lump-sum payment of the
deferred contribution, plus interest.
Relocation Expenses
-
Newly-elected Members of Congress and Executive Schedule
appointees should be reimbursed for moving expenses,
travel expenses, and subsistence while seeking permanent
housing.
Second Residence for Members of Congress
-
Members of Congress should receive either an allowance
on tax deduction of up to $5,000 to reimburse them for
the expense of maintaining residences both in their dis-
tricts and in the Washington, D.C., area. However, the
allowance or deduction would be available only to those
Members who actually do maintain two residences.
4
Salary Recommendations
-
The largest pay increases are recommended for the judici-
ary, as judges make a permanent career commitment and
forego the most outside earning capacity when they enter
Government service.
-
Larger increases are recommended for the lower executive
levels than for the higher, as the need is greatest there, due
to the "psychic rewards" of the cabinet and other top posts.
-
The increases should be all at once, rather than phased,
as the need is immediate and it would be best to avoid
keeping the issue alive over the phasing period.
-
A smaller increase is recommended for Members of Congress,
but the $5,000 housing allowance deduction should be kept
in mind.
-
While some compression will remain at the top of the General
Schedule, the quadrennial commission questions the validity
of the supergrade comparability rates, particularly because
Civil Service Retirement benefits are not considered in
the comparability process.
-
Exact rates recommended are shown on two attached tables.
New Role for Quadrennial Commission
-
Quadrennial commission believes it is inappropriate to
rely on Government personnel to review their own compen-
sation structure. Therefore, the commission believes a
permanent body, with both members and staff from the pri-
vate sector, should continually review the whole Federal
compensation process.
-
Special subjects for review:
-
pay based on individual performance
-
average salary control of supergrade pay, individual
rates to be set by agency heads
-
full review of all Federal employee pension plans
-
consideration of increasing regular life insurance cov-
erage to two or three times salary
-
classification of Executive Schedule positions, as
there are clear anomalies, both overgrading and
undergrading, and these misclassifications also
extend down into the supergrades.
TABLE 1
COMMISSION ON EXECUTIVE, LEGISLATIVE AND JUDICIAL SALARIES
RECOMMENDED PAY RELATIONSHIPS OF TOP FEDERAL OFFICIALS¹
(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-$77,51
76
74
[18.5%]Z
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 - $53,00
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%
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%
Senators, Representatives, Resident Commissioner of Puerto Rico
44,600
57,500
28.9%
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 Librarion 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 %
THE WHITE HOUSE
WASHINGTON
December 9, 1976
MEMORANDUM FOR:
THE PRESIDENT
FROM:
JACK MARSH
SUBJECT:
Judicial June Salaries
Report of Commission on
Executive Legislative and
My views on this question are relatively unchanged since
earlier conversations at Camp David and the Oval Office.
The reservations I have relate to the leadership role
assumed by the President in the years of his Administra-
tion concerning Federal spending, sound economic approaches
and the need to apply discipline in the management of our
national finances.
I am of the view that substantial Federal pay increases,
particularly for the Congress, will set a bad precedent
having a far-reaching, adverse impact nationally as well
as erode some of the hard-earned credibility of the Presi-
dent. I feel it is inconsistent with his major statements
on economic policy and his campaign posture. I consider
the risk great that substantial pay increases will be
viewed as one last hurrah for the Washington crowd of
which we are a part.
I am of the opinion that the $12,500 increase in 1969 of
Congressional salaries compromised the 91st Congress in
making the hard choices that needed to be made by saying
no to people in programs to whom no should have been said.
These pay increases made it difficult to resist demands
for proposed pay increases, increases in veterans pen-
sions, and limiting new social programs as well as
restraining spending on existing Federal programs when
restraint was critical. It is hard for a Congressman
whose income has increased $1,000 a month to tell a con-
stituent that he cannot vote an increase of $10 on his
veterans pension or increase his Social Security check.
-2-
However, these increases ran into billions of dollars.
Outside of Government, an example is set that affects
price increases for labor contracts nationwide as well
as pay structures of State and local governments. This
ripple effect must be carefully considered in what the
President does.
On the other hand, I am much aware of the critical need
the Report seeks to address. There are severe inequities
in the Federal pay structure. However, I do not believe
the deficiencies that relate to the pay structure, the
problems of civil service and many others are being
addressed. I am of the view the pressure for pay increases
should be used as a vehicle for an institutional correc-
tion rather than adopt a temporary expedient.
The Report really deals only with the tip of the iceberg.
Its broad impact will be reflected primarily in the
senior GS grade structure and secondly, indirectly in
the lower grade structure. The proposed action, although
relatively small in cost, will include more than 20,000
other senior Federal officials. To adequately compensate
for this will mean a pay increase for a substantial group
that will ultimately in the years ahead recreate the
problem the Report seeks to redress.
The compaction situation is the tortoise and the hare.
In 1969 there was a substantial leap in salaries for a
very select group in the executive grades. The tortoise
which is the rest of the senior grades has moved inexor-
ably to the lowest level of the five executive grades.
Unless the situation that produces this type of com-
paction is remedied it is inevitable that in the next
several years we will have to leap the executive grades
to even higher salaries and the process of grade creep
and compaction will be repeated.
For this reason I consider the Report too narrow in that
it focuses only on a narrow band of individuals and
thereby provides only temporary relief of the problem.
In reference to the salary structure, I am of the view
that the increases are too large. Modest increases
for the Congress, but not to exceed $3,500, would be
in order if such an increase would not be perceived as
doing violence to the President's position on fiscal
restraint.
I am of the view that one of the most critical areas
of Federal pay inadequacies occurs in the Judiciary and
particularly for District Judges. I would recommend
District Judges be paid at the same rate, or perhaps
$2,500 more, than Members of Congress, Circuit Court of
Appeals Judges be paid $2,500 more than District Judges,
and that Justices be paid the same rate as that established
for Cabinet officers. The Vice President, the Chief
Justice, the Speaker and others would follow proportionally
as outlined in the Report but less than recommended there.
In reference to standards of conduct, I concur in the
view that this needs to be addressed, particularly in
the Congress. Its inclusion in this report troubles me
because I do not know whether its gensis arises out of
the need for reform or whether it is intended to be a
ribbon on the pay proposal to make it a more attractive
package back home, and, thereby, incur less citizen resent-
ment. Furthermore, there is a sensitivity in this area
relating to the separation of powers. Historically, the
regulation and discipline of Members of Congress is a
power vested exclusively in the respective Houses. The
implied coupling of pay and reform runs counter to that
separation. I would prefer to see the President address separately
the reform issue and call on, the Congress. to set its
Houses in order apart from a proposal for salary increases.
It is essential in the reform issue that the Leaders of
the House and Senate, on a bipartisan basis, assume this
responsibility. I am of the opinion that the initiative
should come from them.
Although that portion of the Report that deals with this
question is well done and dedicated to a sincere effort
to remedy the present situation, nevertheless it appears
from the Charter of the Study Group that this effort is
gratuitous and goes beyond their mandate.
If the President takes a position that he should addres
reform -- particularly for the Congress -- then the pro-
posals for reform should be carefully developed and
staffed in the Ford White House system. There are
serious questions that need to be discussed as to the
scope and nature of the reform, particularly those that
may go to what some might consider to be the steriliza-
tion of a Members representation by requiring disassociation
from many real world contacts. Is the requirement to be
disclosure, restriction, or prohibition on outside income?
These are different approaches that might be pursued.
-4-
As to how to proceed, there are two steps:
1.
Development of the President's program, and
2.
Laying the groundwork with Congress for its
consideration.
In the latter case, the first step must be taken with
the Leadership, but how we are to proceed will have to
first be determined by what the President decides to do.
Finally, the President should seize this opportunity
where there is great pressure for pay increases to
insist on a remedy for basic defects in the Federal
pay structure that produces compaction and grade creep.
Reform of the pay and grade structure should be coupled
with his proposal. This will strengthen his call for
reform in Congressional and executive standards of con-
duct. However, I repeat that the demand for Congressional
reform must be carefully handled in such a way that the
President is not viewed as improperly meddling in the
affairs of the Congress. There is a definite possibility
that the Congress may take the pay raise and never fully
implement reform.
In all events, should you decide to proceed, at least
quiet acquiescence in what you propose is an essential
requirement from the gentleman from Georgia, and pre-
ferably an open, public endorsement for what you send
to the Hill.
THE WHITE HOUSE
WASHINGTON
December 9, 1976
MEMORANDUN FOR:
JIM CONNOR
FROM:
MAX FRIEDERSDORF
m.6.
SUBJECT:
The Report of the Commission on Executive,
Legislative and Judicial Salaries
December 1976
With regard to the Report of the Pay Commission I would
recommend the President endorse the findings of the report
and include the amounts required in his budget proposal.
I would recommend that the President urge that the Judicial
and Congressional salaries be unlinked and considered
separately.
I believe that if the President does endorse the Pay Com-
mission recommendation, the President should strongly urge
that Congress vote on the pay increase.
The concensus on the Hill is that a vote will be a virtual
certainty in the Senate and that most likely a discharge
petition will be circulated by Congressman Grassley of Iowa.
However, even though a vote in the Congress seems likely,
because of the strong Congressional desire for a pay raise,
a pay raise is most likely to pass.
Another sticking point with the Congress will be the Code
of Public Conduct section.
There is very strong resentment among the Congress at this
time regarding this section.
Congress believes that it should not be constrained in this
regard because of the alleged temporary status of a Member
of Congress and the high cost of maintaining separate
residences and all the other extra cost of living expenses
attached to serving in the House and Senate.
Members of the minority with whom I have discussed this
matter with, including Minority Leader Rhodes, suggest that
the President couple his recommendation for a Congressional
vote with a suggestion that the Code of Public Conduct be
left to the prerogative of the House and Senate.
THE WHIT
LOG NO :
Date:
Time:
December 6, 1976
FOR ACTION:
cc (for information):
Phil Buchen
Bob Hartmann
Jim Cannon
Jim Lynn
Max Friedersdorf
Jack Marsh
Bill Seidman
Alan Greenspan
Paul O'Neill
Brent Scowcroft
FROM THE STAFF SECRETARY
DUE: Date:
Wednesday, December 8
Time:
c.o.b.
SUBJECT:
The Report of the Commission on Executive, Legislative
and Judicial Salaries
December 1976
ACTION REQUESTED:
X
For Necessary Action
For Your Recommendations
-
Prepare Agenda and Brief
Draft Reply
X For Your Comments
Draft Remarks
REMARKS:
The Fresident has asked for senior staff comments on the attached report
focusing on the following:
(1) Overall structure of the report
(2) Salary Structures recommended
(3) Standards of Conduct
((4) How do we proceed?
I have discussed this with the President and he is aware of my
views.
Basically, I believe there is a serious constitutional problem in
having any single agency monitor the conduct of the three separate
branches of government. Control of such an agency would be a
beautiful place to spawn a dictator.
RTH
RALA
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
Jim Connor
telephone the Staff Secretary immediately.
For the President
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.:
Date:
December 6, 1976
Time:
FOR ACTION:
cc (for information):
Phil Buchen
Bob Hartmann
Jim Cannon
Jim Lynn
Max Friedersdorf
Jack Marsh
Bill Seidman
Alan Greenspan
Paul O'Neill
Brent Scowcroft
FROM THE STAFF SECRETARY
DUE: Date:
Wednesday, December 8
Time:
c.o.b.
SUBJECT:
The Report of the Commission on Executive, Legislative
and Judicial Salaries
December 1976
ACTION REQUESTED:
For Necessary Action
X For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X For Your Comments
Draft Remarks
REMARKS:
The President has asked for senior staff comments on the attached report
focusing on the following:
(1) Overall structure of the report
(2) Salary Structures recommended
(3) Standards of Conduct
((4) How do we proceed?
In general d
- but d dont if they
agree with recommendation
PLEASE ATTACH THIS COPY TO MATERIAL fly SUBMITTED. in the congress
delay If you in have submitting any questions the required or is you material, please M for Jime Connor mist It
telephone the Staff Secretary immediately.
adm in the 10 resident
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.:
Date:
December 6, 1976
Time:
FOR ACTION:
CC (for information):
Phil Buchen
Bob Hartmann
Jim Cannon
Jim Lynn
Max Friedersdorf
Jack Marsh
Bill Seidman
Alan Greenspan
Paul O'Neill
Brent Scowcroft
FROM THE STAFF SECRETARY
DUE: Date:
Wednesday, December 8
Time:
c.o.b.
SUBJECT:
The Report of the Commission on Executive, Legislative
and Judicial Salaries
December 1976
ACTION REQUESTED:
X
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X
For Your Comments
Draft Remarks
REMARKS:
The President has asked for senior staff comments on the attached report
focusing on the following:
(1) Overall structure of the report
(2) Salary Structures recommended
(3) Standards of Conduct
((4) How do we proceed?
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
Jim Connor
telephone the Staff Secretary immediately.
For the President
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
Pean Y Peerson
Peter G. Peterson
Chairman, Commission on
Executive, Legislative and Judicial
mr. President on Behalf Amy Salaries fellow commissioners.
we Thank you for this opportunity to contribute.
aah.
reversed
-3-
I am of the view that one of the most critical areas
of Federal pay inadequacies occurs in the Judiciary and
particularly for District Judges. I would recommend
District Judges be paid at the same rate, or perhaps
$2,500 more, than Members of Congress, Circuit Court of
Appeals Judges be paid $2,500 more than District Judges,
and that Justices be paid the same rate as that established
for Cabinet officers. The Vice President, the Chief
Justice, the Speaker and others would follow proportionally
as outlined in the Report but less than recommended there.
In reference to standards of conduct, I concur in the
view that this needs to be addressed, particularly in
the Congress. Its inclusion in this report troubles me
because I do not know whether its gensis arises out of
the need for reform or whether it is intended to be a
ribbon on the pay proposal to make it a more attractive
package back home, and, thereby, incur less citizen resent-
ment. Furthermore, there is a sensitivity in this area
relating to the separation of powers. Historically, the
regulation and discipline of Members of Congress is a
power vested exclusively in the respective Houses. The
implied coupling of pay and reform runs counter to that
separation. I would prefer to see the President address separately
the reform issue and call on the Congress to set its
Houses in order apart from a proposal for salary increases.
It is essential in the reform issue that the Leaders of
the House and Senate, on a bipartisan basis, assume this
responsibility. I am of the opinion that the initiative
should come from them.
Although that portion of the Report that deals with this
question is well done and dedicated to a sincere effort
to remedy the present situation, nevertheless it appears
from the Charter of the Study Group that this effort is
gratuitous and goes beyond their mandate.
If the President takes a position that he should addres
reform -- particularly for the Congress -- then the pro-
posals for reform should be carefully developed and
staffed in the Ford White House system. There are
serious questions that need to be discussed as to the
scope and nature of the reform, particularly those that
may go to what some might consider to be the steriliza-
tion of Members.
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.:
Date:
December 6, 1976
Time:
FOR ACTION:
CC (for information):
Phil Buchen
Bob Hartmann
Jim Cannon
Jim Lynn
Max Friedersdorf
Jack Marsh
Bill Seidman
Alan Greenspan
Paul O'Neill
Brent Scowcroft
FROM THE STAFF SECRETARY
DUE: Date:
Wednesday, December 8
Time:
c.o.b.
SUBJECT:
The Report of the Commission on Executive, Legislative
and Judicial Salaries
December 1976
ACTION REQUESTED:
X
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X
For Your Comments
Draft Remarks
REMARKS:
The President has asked for senior staff comments on the attached report
focusing on the following:
(1) Overall structure of the report
(2) Salary Structures recommended
(3) Standards of Conduct
((4) How do we proceed?
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
Jim Connor
telephone the Staff Secretary immediately.
For the President
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 Parsa
Peter G. Peterson
Chairman, Commission on
Executive, Legislative and Judicial
mr. Presidens--on on Behalf of my Salaries fellow commissioners.
we Thank you for this opportunity to contribute
THE
THE WHITE HOUSE
WASHINGTON
December 11, 1976
MEETING ON THE REPORT OF THE
COMMISSION ON EXECUTIVE, LEGISLATIVE
AND JUDICIAL SALARIES (PETERSON COMMISSION)
Saturday, December 11, 1976
2:00 p.m. (2 hours)
Cabinet Room
From: Mike Duval Whe
GERALD
I.
PURPOSE
To receive staff advice on the Peterson Commission
Report and develop a plan for additional meetings
(if required).
II.
BACKGROUND, PARTICIPANTS & PRESS PLAN
A. Background: The attached memorandum summarizes
the report and presents the issues raised.
B. Participants: Dick Cheney, Mike Duval, Max
Friedersdorf, Alan Greenspan, Jim Lynn, Jack
Marsh, Ron Nessen, Paul O'Neill, Art Quern
(for Jim Cannon who is out of town), Ed Schmults
and Brent Scowcroft.
C. Press Plan: Announced, no press photo
III.
AGENDA
You may wish to use the sections on Decisions and
Implementation (starting on page 13) in the attached
memorandum as an agenda for this meeting.
THE WHITE HOUSE
WASHINGTON
December 11, 1976
MEMORANDUM FOR:
THE PRESIDENT
FROM:
MIKE DUVAL
Mike
SUBJECT:
Report of the Commission on
Executive, Legislative and
Judicial Salaries.
PURPOSE OF MEMORANDUM
This memorandum summarizes the Commission's Report and presents
the issues which require your decisions.
First is a background section which describes the history of
the Commission and the substance of its report. This is
followed by an analysis of the major policy issues raised by
the report along with the implications of the alternatives
you face. The next two sections respectively deal with the
specific, substantive questions raised by the Code of Conduct
and compensation issues. The sixth section presents all the
issues along with staff recommendations in decision format.
The final section discusses the alternatives available to
implement your decision.
BACKGROUND
The Organic Statute for the Commission on Executive, Legislative
and Judicial Salaries, created a nine member Commission to
review the rates of pay of certain high-level government
officials from all three branches. (The text of the statute
can be found at Appendix A of the attached Commission report
which is at Tab A.) The statute requires the following action
by the Commission and the President:
"REPORT BY THE COMMISSION TO THE PRESIDENT -- The
Commission shall submit to the President a report of the
[appropriate pay levels and relationships between and
among the respective offices and positions covered by
the review] together with its recommendation.
Page 2
"RECOMMENDATIONS BY THE PRESIDENT WITH RESPECT TO PAY --
The President shall include in the budget next transmitted
to him by Congress after the date of the submission of the
report and recommendations of the Commission
his
recommendations with respect to the exact rates of pay
which he deems advisable for those offices and positions
within the purview of [the Organic Statute].
It is clear from the statute that you are required to make
recommendations with respect to the exact rates of pay which you
deem advisable. This could be done with a simple one line
statement in your Budget or with as high visibility as a special
message to Congress in addition to a recommendation in the Budget.
The statute only refers to Commission work concerning rates of
pay. It is clear that the Commission's recommendations concerning
a code of conduct are outside the purview of the statute.
The Commission's report makes two key recommendations.
That there should be substantial pay increases for
high ranking governmental officials. (Executive
Branch 32%, Legislative Branch 29%, and Judicial
Branch 44%.
These salary increases should be coupled with the
imposition of a new code of conduct on all three
branches.
The Commission made the following specific recommendations concerning
a code of public conduct:
All individuals (from the three branches) should be
required to disclose their financial affairs to an
appropriate authority.
All employees should be prohibited from receiving
honoraria, legal fees, gifts, or the proceeds of
testimonial dinners, etc. for their personal use, and
any other compensation for services rendered which
might have, or appear to have an influence in the
conduct of the public's business.
Tight but reasonable 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 the public responsibility.
Page 3
There should be more consistency in the availability
of legitimate expense allowances in all three branches
of the government, including domestic and -- when
appropriate -- foreign travel, entertainment granted
and received, and gifts. Such allowances must not be
used as a substitute for income.
Restrictions should be imposed so as to ensure the
top executives, judges, or legislators do not compromise
either their objectivity. or total devotion to the job
by any arrangements that they may make while in public
employment with respect to subsequent employment or
other relationships.
The code of conduct regulations should be broadly
applicable across all three branches of government.
An appropriate body or bodies should be established --
or if an existing one is to be so charged, it should be
strengthened -- to ensure that these requirements are
fully enforced and that all information disclosed under
the Code of Public Conduct is regularly and adequately
audited and publicly reported.
The report goes on to suggest a Presidential meeting with the
Chief Justice and the leadership of the Senate and House in
order to get the following commitments:
To the principles of the code.
To prompt action.
To a new mechanism to implement the recommendations.
The report recommends that we draft legislation to create an
intergovernmental commission which would develop a specific
Code of Public Conduct and mechanisms to oversee and administer
the code. They recommend that the legislation be submitted with
the budget message.
The Commission has relied on the following principles concerning
compensation:
Comparability with the private sector is not a suitable
basis for setting pay for the Government's top officials.
Instead, pay should be set at the lowest rate that will
allow the Government to attract and retain the best
qualified individuals.
Page 4
Pay must be high enough to allow people to serve
without other income sources.
Because of the "psychic income" of higher level
jobs (such as the Cabinet) the pay differentials
between the Executive Schedule levels should be less
as you go up the scale.
If the pay level is set at the lowest level to attract
competent people, it must be adjusted regularly to
ensure that it does not fall substantially behind
increases in the cost of living.
Linkages between the three branches should be disregarded
because we are dealing with entirely different jobs with
different responsibilities and the career anticipation
patterns very sharply.
The Commission's report makes the following recommendations
concerning compensation:
In order to alleviate the "cash flow" problem of non
career appointees, they should be allowed to defer
Civil Service Retirement contributions until after they
have served for five years.
Newly elected Members of Congress and executive appointees
should be reimbursed for moving expenses, travel expenses,
and subsistence while seeking permanent housing.
Members of Congress should receive either an allowance
or tax deduction of up to $5000 per year (in addition
to the current $3000 deduction) to reimburse them for
the expense of maintaining two residences.
The following are the recommendations concerning salaries:
The largest pay increases are recommended for
the Judiciary because judges tend to make
government service a permanent career.
Larger increases are recommended for the lower
executive levels than for the higher because
of "psychic rewards".
Page 5
The increases should be all at once, rather
than phased because the need is immediate and
it is best not to let the problem continue to
fester.
A smaller percentage increase is recommended for
Congress compared to the other branches, but this
is partially off-set by their proposed housing
allowance. On a dollar basis, Congress would
get $57,500, plus the $5000 housing allowance
compared to $60,000 for Level II. Some compression
will remain at the top of the GS levels. The
Commission believes this is beneficial because
it will impose some "cost discipline" on the super-
grades. They feel that this is where the cost
exposures are greatest and also where they have
the least faith in the system's ability to measure
need and worth. Also, they question the validity
of the supergrade comparability rates primarily
because they do not give proper weight to the
cost of generous fringe benefits such as the early
retirement feature of the pension plan.
The Commission recommends the creation of a permanent quadrennial
commission made up of private citizens with significant staff
support. Such a commission would address the following types
of problems: periodic analysis of total federal compensation,
cost of living increases, pension benefits, life insurance, and
classification of positions.
Finally, to provide further perspective by way of background
information, I have spoken to pollsters Daniel Yankelovich and
Bob Teeter. Both agree that this is a highly volatile issue
because of a very strong feeling in the country that government
officials are paid too much as it is and do not deserve further
increases. Both agree that, while your support for the Commission's
findings could result in a positive public reaction, there is a
likelihood that the opposite would occur.
Yankelovich, (whose polling firm did some work for the Commission)
believes that your endorsement of the Commission's findings
would greatly add to the symbolism of your final days as President
by either showing you as (1) assisting old buddies with a pay
increase as you leave or (2) as taking a courageous step which
will result in giving the American people a better government.
Page 6
He points out that the public can be made to understand and
accept the concept that good government and elimination of
the last vestiges of Watergate require an elimination of the
mixed motives that result with outside income sources for
government officials and the obvious need to attract the very
best people in government and give them a sensible code of
ethics to follow. Yankelovich says that public reaction will
be largely determined by how your decision is presented. If
you decide to accept the Commission's approach, this is an
inherently believeable conclusion if presented in a firm and
sensible way that the people can understand.
Bob Teeter thinks that the general public reaction will be very
negative (but you should nevertheless adopt the Commission's
recommendations because they are right.) He believes that your
best course of action is to announce your decision in a clear
and forceful way but time it for Christmas week. He recommends
against any middle ground such as a lesser increase without the
code of conduct because this will be perceived as a compromise
which serves the interest of no one.
THRESHHOLD ISSUES
The following are general questions which are raised by the
Commission's report:
1. What are the implications of the President taking
an active and visible role in connection with the
report?
It is obvious under the statute that you must
take some action. Probably the safest course
(from a public perception standpoint) is for you
to propose further study of the entire compensation
question (including non-executive lower level
positions) coupled with a very modest increase to
cover cost of living in the FY 77 budget and strong
endorsement of the principles established by the
Commission concerning the code of conduct. You could
then participate in several events (such as meeting
with Congressional and Judicial leaders) designed to
give high visibility to the need for a code of conduct.
On the other hand, you can of course decide to go
forward with the fundamental recommendations of the
Commission with the understanding that there will
be a risk of severe public criticism but the possibility
of a positive response depending on how your decisions
are communicated.
Page 7
The following are some arguments of why you should
adopt the Commission's approach (major pay increase)
which will mean a highly visible role for you:
There is a need for Presidential leadership to
solve this problem which has existed for many
years. Many of your advisers believe a large
pay increase can be justified.
Without your strong leadership, a large pay increase
is highly unlikely.
If the press believe the arguments of the Commission,
you may be criticised for not demonstrating leader-
ship.
The following are some reasons for rejecting the
Commission's recommendations and avoiding a highly
visible role concerning the report:
This may be a no-win proposition and therefore
why take the risk.
If you do not take a leadership role, the likelihood
is that there will not be any major pay increase.
This might have the benefit of keeping down the
rate of growth of government, and making it likely
that people who have achieved private-sector
success continue to serve in government.
2. Should the code of conduct be linked with the compensa-
tion issue?
As stated above, the Organic Statute does not give
the Quadrennial Commission any charter to recommend
a code of conduct or otherwise deal with any issue
other than the executive pay question. By linking
the two issues there is a possibility that the code
of conduct proposal will be "contaminated" and the
public will view the pay increases as an unfair "price"
for code of conduct reforms which should occur on their
own merit.
One argument for linking the two is the obvious political
reality that this may be the only way to get the
necessary pay increase. A substantive argument is the
obvious need to know whether outside income is permitted
before setting salary levels.
Page 8
To some extent, public support or opposition will
be shaped by how real they perceive the commitment
to the new code of conduct.
One way of assuring, at least in public perception,
the commitment of both the House and Senate to
follow through on the code of conduct, would be by
language in your transmittal of the pay package
making it clear that acceptance by the Congress --
by not vetoing the pay increase within the 30 days --
will be taken by you and the American people as a
commitment of both the House and Senate on the code.
There is another approach which would likely provide
very strong evidence of commitment to the new code
of conduct. You could make the pay increase contingent
upon Congress passing legislation within 30 days to
create the ad hoc commission to propose a new code.
A varriant of this approach could include a provision
which makes the pay increase contingent on the passage
of Resolutions in both Houses of commitment to the
code of conduct concept.
3. Would implementation of the report recommendation
result in any constitutional and/or serious policy
problem?
Phil Buchen's office points out that there is a
Constitutional problem with the basic Organic Statute
which provides for the pay increase in your budget
subject only to disapproval by either House of Congress
within 30 days. However, Counsel's office states that
this problem can be ameliorated by your requesting an
affirmative vote by the Congress on the pay increase
and -- in any event -- there will be subsequent
appropriation bills.
Also, there are potential Constitutional problems in
developing a code of conduct and implementing mechanisms
covering all three branches. These probably can be
avoided with careful drafting of the legislation
creating the ad hoc commission to develop the code.
From a standpoint of policy, there is obviously the great
danger in your making any recommendations to the other
branches concerning how they control the conduct of their
members/employees. I frankly think that the public would
be receptive to your taking a firm leadership role in
this area given the fact that you have served for a
quarter of a century in Congress and are now viewed as a
national leader with no personal stake in the decisions
you make in your remaining days as President.
Page 9
CODE OF CONDUCT ISSUES
The following issues are raised because of the Commission's
recommendation that a code of conduct be adopted government-
wide in connection with the implementation of their recommended
pay increases.
1. Should there be a single set of principles governing
a code of conduct for all three branches?
The Commission's report is not clear as to why they
believe there should be a common Code of Conduct for
all three branches. Although logic suggests that
common principles should apply to the conduct of
officials from all three branches, the Commission
specifically recommends that code of conduct
regulations should apply to the three branches.
This may be a problem of semantics because Pete
Peterson advised me by telephone that the Commission's
intent is that there should be a common set of
principles but that each branch would be responsible
for the details of its own code of conduct.
2. What mechanism should be used to develop a draft
code of conduct?
Notwithstanding Pete's interpretation of the
Commission's intent concerning applicability to
the three branches of such a code, their report
does recommend that you submit specific legislation
which would result in the creation of an inter-
governmental commission to develop (after consultation
with the branches) a specific Code of Public Conduct
and set up mechanisms to oversee and administer the
code.
This Commission would be under a legislative 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.
There is, of course, a great danger in such an approach.
As stated in the Peterson Commission Report, there
would have to be some continuing mechanism to review
compliance with the code of conduct. The creation of
such an entity carries with it an enormous risk for
abuse.
Page 10
An alternative approach would be to create an ad
hoc intergovernmental commission to study the code
of conduct issue and make specific recommendations
to each branch separately after developing a common
set of principles. Each branch could be charged
with the responsibility of creating its own enforce-
ment mechanism with the ad hoc commission recommending
certain guidelines such as strict public disclosure.
The Peterson Commission Report suggests that such a
commission be given 180 days to complete its work.
This may be unrealistic given our experience in
developing a legislative alternative to S-495 the
"Watergate Reorganization and Reform Act."
3. What subjects should be covered by the proposed code
of conduct envisioned in the legislation submitted
by the President?
The Peterson Commission recommends that the following
subjects be covered in such a code: disclosure,
restrictions on outside income, conflict of interest,
allowances, post service employment and auditing.
Some of your advisors believe that there may be
additional matters which should be covered.
4. To what extent should legislation submitted by you
guide the ad hoc commission on such issues as what
form should the code (s) of conduct take (e.g., by
statute) or what mechanism should be used to implement
or enforce the code (s) ?
This is a complex subject which needs more staff work.
COMPENSATION ISSUE
The Peterson Commission Report raises the following questions
concerning compensation:
1. Should you take action to deal with the problem of
executive level compensation only or should you insist
on total reform of the federal employment system including
lower grade levels?
Page 11
There are obvious problems in the current Executive
Branch Civil Service System, such as so called "grade
creep", and a strong argument can be made that it makes
no sense to improve the tip of the iceberg while leaving
the larger problem untouched.
If, however, you decide to take action in this area
you probably are going to have to accept a less than
perfect solution in order to have a reasonable chance
of making some progress. For example, linking the
code of conduct with the pay increase may not be a
perfect solution but it may be the only practical
alternative. Likewise, I doubt it's possible to come
up with a reform package for the entire federal em-
ployee system between now and submission of the budget.
Since the Peterson Commission was permitted only to
look at executive pay levels by statute, it makes some
sense to deal only with this problem but identify the
fact that there is still a great need for additional
reform.
2. Should there be linkage between the various jobs
within each branch?
As the Commission noted, there is no historical linkage
among the various positions and they could not find
a persuasive rationale for its rigid application.
Undoubtedly the central reason for its existence is
the political reality that Congress finds it easier to
raise their own salary if they receive pressure due to
the linkage factor from the other two branches. Indeed
the political argument appears to be the only case that
can be made for maintaining linkage.
3. Assuming you decide to propose some increase, at what
level should the salaries be set?
Although there has been criticism of the Peterson
Commission report, it is generally a visceral reaction
to any pay increases for governmental officials. Many
of your advisers accept the Commission's figures as as
good as any. Several people have suggested that the
pay increases could be phased in order to reduce the
adverse political impact of such a decision. The
problem with this, of course, is that any phasing-in
would take you closer to the 1978 elections and this
could aggravate rather than diminish the political impact.
Page 12
Other advisers strongly object to such large
increases.
See Tab B
for the specific salary recommendations.
4. Should there be a relocation cost allowance and $5000
annual allowance for the second residence for Members
of Congress?
The Commission recommends in favor of both allowances.
There seems to be a good case in terms of the realities
of private sector competition for the relocation allowance.
The principle argument against the $5000 annual allowance
or tax deduction for the second residences of Members
of Congress is that this should be included in their
salaries directly rather than treating it an an allowance
or tax deduction.
5. Should there be a permanent Quadrennial Commission to
periodically recommend increases in salary and for
other purposes?
The Peterson Commission Report recommends that such a
permanent commission be established. This may have
resulted from their inability to deal with the question
of annual cost of living adjustments. While recognizing
the need for some adjustment on a periodic basis, they
rejected recommending cost of living adjustments on
the grounds that it would be perceived as a bad example
to the rest of the country. Indeed none of your advisers
urge adoption of a cost of living adjustment for the
obvious policy and public reaction reasons.
The major opposition to the permanent Quadrennial Com-
mission idea comes from the Civil Service Commission.
Bob Hampton argues that it would be duplicative of the
responsibilities that are currently placed in OMB, the
Civil Service Commission and the Advisory Committee on
Federal Pay.
One obvious alternative is to charge the ad hoc
Commission with the responsibility of making a
recommendation to the President and Congress as to
whether or not a permanent Quadrennial Commission is
required.
Page 13
TENTATIVE POLICY DECISIONS
The following specific issues are listed in generally the same
order as presented in the preceding sections. For purposes of
presentation only, there is an implicit assumption that each
decision is affirmative thus triggering the need to address
successive issues.
Also, these are presented as tentative decisions because you
may wish to consult with others before reaching final decisions.
See Tab C for staff recommendations and comments. Your advisors
have not commented on all the issues identified below but are
expected to do so at today's meeting.
GENERAL ISSUES
1) Should you take a highly visible role in connection with the
Report?
Very risky in terms of public reaction, but if you
do act, do so boldly and with a very good press plan.
(Teeter, Yankelovich)
May compromise your reputation for fiscal conservatism.
(Marsh)
DECISION:
2) Should you adopt the Commission's basic approach, i.e., a
substantial pay increase tied to a new code of conduct?
Most of your advisers that have commented, do not
flatly support the Commission's recommendations.
Jim Cannon supports the Commission while Phil Buchen
and General Scowcroft concur in general but question
the timing of the salary increases. Secretary Kissinger
and Chairman Bob Hampton support the salary increases.
Jack Marsh, Max Friedersdorf and Bob Hampton question
linking the code of conduct and pay increases.
DECISION:
Page 14
3) By what mechanism should the pay increase be linked to the
code of conduct?
The Commission recommends direct linkage.
DECISION:
4) Would implementation of the report result in Constitutional
problems?
Bob Hartmann believes that there is a serious
constitutional problem in having any single agency
monitor the conduct of the three branches.
Phil Buchen's office says that the basic 30-day
Congressional veto procedure is unconstitutional.
DECISION:
CODE OF CONDUCT ISSUES
5) Should there be a single set of principles for all these
branches?
DECISION:
Page 15
6) How should the code of conduct be drafted?
The Peterson Commission recommends that a new
commission be created by statute and draft the
Code in 180 days.
Some of your advisers believe each branch should
develop its own code, perhaps adhering to a common
set of principles.
DECISION:
GERALD
7) What subjects should be covered by the proposed code of
conduct?
The Peterson Commission recommends that the
following be covered: disclosure, restrictions on
outside income, conflict of interest, allowances,
post-service employment and auditing.
DECISION:
8) Should you propose that the code be statutory or rules
adopted by the respective branches and how should the code be
implemented?
There seems to be general agreement among your staff
that a detailed code should not be imposed on all
branches by a single commission and that implementing
power should be controlled by each branch separately.
Some intergovernmental entity may be appropriate for
limited purposes.
DECISION:
Page 16
COMPENSATION ISSUES
9) Should you take action to deal with executive pay only
or should you insist on total reform of all pay levels?
Jack Marsh argues that these matters should
be addressed together -- not executive pay
alone.
DECISION:
10) Should there be linkage between the various jobs within
each branch?
The Peterson Commission recommends against linkage.
Bob Hampton believes Congress may object to this,
thus defeating the pay increase.
DECISION:
11) Assuming an increase, at what level should the salaries
be set?
NOTE: Phil Buchen notes that the Chief Justice wants
an opportunity to speak to you if you are considering
a substantial reduction in the judicial salary levels
proposed by the Commission.
Jack Marsh, Alan Greenspan do not support the recom-
mended pay increase.
Buchen's office and Greenspan suggest that an increase
be phased in.
Page 17
An alternative favored by some on your staff is
to raise judicial salaries in accordance with the
Commission's recommendation and give the Legislative
and Executive Branches a modest cost of living increase.
DECISION:
12) Should there be a relocation cost allowance for government
officials?
The Commission proposes this and there have been
no specific objections raised.
DECISION:
13) Should Members of Congress receive an additional $5000
allowance for second residences? Should it be in the form of
a tax deduction?
The Commission recommends this but Greenspan opposes.
DECISION:
14) Should there be a permanent Quadrennial Commission to
periodically recommend salary increases and for other purposes?
DECISION:
Page 18
IMPLEMENTATION ISSUES AND DECISIONS
You probably will have to make a decision concerning the
Commission's recommendations for a pay increase prior to
departure to Vail in order that it will be reflected in the
Budget. If you decide to sever the code of conduct and
compensation issues, there is no need to deal with the former
until January. However, as a political reality you probably
cannot announce your decisions on the Budget in January with-
out making some public statement concerning the Peterson
Commission recommendations concerning a code of conduct.
On the other hand, you may wish to consult with Congressional
and Judicial leaders both on the question of whether or not the
two proposals should be linked as well as the specific merits
of each. In this case you will probably will want to have
such meetings next week which will allow your decisions to be
reflected in the Budget.
The following issues will need to be resolved concerning pre-
decision consultation (to occur next week) :
Do you want Jack Marsh, Max Friedersdorf and others
to take informal soundings on the Hill?
Should you consult with Congressional and Judiciary
leaders as a group?
If you decide to separate the Congress and the
Judiciary, should you meet separately with House
and Senate leaders?
Should you meet with any outside groups such as the
Peterson Commission?
Should you meet with additional Administration offi-
cials such as Bob Hampton?
Should you seek any commitment from Governor Carter
before announcing your decisions?
If you decide to go forward with a major pay increase linked
to some action on the code of conduct, we will have to develop
a very effective press plan in order to avoid the risk described
by Yankelovich and Teeter.
TAB A
TAB B
TABLE 1
COMMISSION ON EXECUTIVE, LEGISLATIVE AND JUDICIAL SALARIES
RECOMMENDED PAY RELATIONSHIPS OF TOP FEDERAL OFFICIALS¹
(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%
Associate Justice
63,000
77,500
75,000
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%
Senators, Representatives, Resident Commissioner of Puerto Rico
44,600
57,500
28.9%
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%
Bankruptey 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%
TAB C
THE WHITE HOUSE
WASHINGTON
December 9, 1976
MEMORANDUM FOR:
THE PRESIDENT
FROM:
JACK MARSH
SUBJECT:
Report of the Commission on
Executive Legislative and
Judicial Salaries
My views on this question are relatively unchanged since
earlier conversations at Camp David and the Oval Office.
The reservations I have relate to the leadership role
assumed by the President in the years of his Administra-
tion concerning Federal spending, sound economic approaches
and the need to apply discipline in the management of our
national finances.
I am of the view that substantial Federal pay increases,
particularly for the Congress, will set a bad precedent
having a far-reaching, adverse impact nationally as well
as erode some of the hard-earned credibility of the Presi-
dent. I feel it is inconsistent with his major statements
on economic policy and his campaign posture. I consider
the risk great that substantial pay increases will be
viewed as one last hurrah for the Washington crowd of
which we are a part.
I am of the opinion that the $12,500 increase in 1969 of
Congressional salaries compromised the 91st Congress in
making the hard choices that needed to be made by saying
no to people in programs to whom no should have been said.
These pay increases made it difficult to resist demands
for proposed pay increases, increases in veterans pen-
sions, and limiting new social programs as well as
restraining spending on existing Federal programs when
restraint was critical. It is hard for a Congressman
whose income has increased $1,000 a month to tell a con-
stituent that he cannot vote an increase of $10 on his
veterans pension or increase his Social Security check.
-2-
However, these increases ran into billions of dollars.
Outside of Government, an example is set that affects
price increases for labor contracts nationwide as well
as pay structures of State and local governments. This
ripple effect must be carefully considered in what the
President does.
On the other hand, I am much aware of the critical need
the Report seeks to address. There are severe inequities
in the Federal pay structure. However, I do not believe
the deficiencies that relate to the pay structure, the
problems of civil service and many others are being
addressed. I am of the view the pressure for pay increases
should be used as a vehicle for an institutional correc-
tion rather than adopt a temporary expedient.
The Report really deals only with the tip of the iceberg.
Its broad impact will be reflected primarily in the
senior GS grade structure and secondly, indirectly in
the lower grade structure. The proposed action, although
relatively small in cost, will include more than 20,000
other senior Federal officials. To adequately compensate
for this will mean a pay increase for a substantial group
that will ultimately in the years ahead recreate the
problem the Report seeks to redress.
The compaction situation is the tortoise and the hare.
In 1969 there was a substantial leap in salaries for a
very select group in the executive grades. The tortoise
which is the rest of the senior grades has moved inexor-
ably to the lowest level of the five executive grades.
Unless the situation that produces this type of com-
paction is remedied it is inevitable that in the next
several years we will have to leap the executive grades
to even higher salaries and the process of grade creep
and compaction will be repeated.
For this reason I consider the Report too narrow in that
it focuses only on a narrow band of individuals and
thereby provides only temporary relief of the problem.
In reference to the salary structure, I am of the view
that the increases are too large. Modest increases
for the Congress, but not to exceed $3,500, would be
in order if such an increase would not be perceived as
doing violence to the President's position on fiscal
restraint.
I am of the view that one of the most critical areas
of Federal pay inadequacies occurs in the Judiciary and
particularly for District Judges. I would recommend
District Judges be paid at the same rate, or perhaps
$2,500 more, than Members of Congress, Circuit Court of
Appeals Judges be paid $2,500 more than District Judges,
and that Justices be paid the same rate as that established
for Cabinet officers. The Vice President, the Chief
Justice, the Speaker and others would follow proportionally
as outlined in the Report but less than recommended there.
In reference to standards of conduct, I concur in the
view that this needs to be addressed, particularly in
the Congress. Its inclusion in this report troubles me
because I do not know whether its gensis arises out of
the need for reform or whether it is intended to be a
ribbon on the pay proposal to make it a more attractive
package back home, and, thereby, incur less citizen resent-
ment. Furthermore, there is a sensitivity in this area
relating to the separation of powers. Historically, the
regulation and discipline of Members of Congress is a
power vested exclusively in the respective Houses. The
implied coupling of pay and reform runs counter to that
separation. I would prefer to see the President address separately
the reform issue and call on the Congress to set its
Houses in order apart from a proposal for salary increases.
It is essential in the reform issue that the Leaders of
the House and Senate, on a bipartisan basis, assume this
responsibility. I am of the opinion that the initiative
should come from them.
Although that portion of the Report that deals with this
question is well done and dedicated to a sincere effort
to remedy the present situation, nevertheless it appears
from the Charter of the Study Group that this effort is
gratuitous and goes beyond their mandate.
If the President takes a position that he should addres
reform -- particularly for the Congress -- then the pro-
posals for reform should be carefully developed and
staffed in the Ford White House system. There are
serious questions that need to be discussed as to the
scope and nature of the reform, particularly those that
may go to what some might consider to be the steriliza-
tion of a Members representation by requiring disassociation
from many real world contacts. Is the requirement to be
disclosure, restriction, or prohibition on outside income?
These are different approaches that might be pursued.
-4-
As to how to proceed, there are two steps:
1.
Development of the President's program, and
2.
Laying the groundwork with Congress for its
consideration.
In the latter case, the first, step must be taken with
the Leadership, but how we are to proceed will have to
first be determined by what the President decides to do.
Finally, the President should seize this opportunity
where there is great pressure for pay increases to
insist on a remedy for basic defects in the Federal
pay structure that produces compaction and grade creep.
Reform of the pay and grade structure should be coupled
with his proposal. This will strengthen his call for
reform in Congressional and executive standards of con-
duct. However, I repeat that the demand for Congressional
reform must be carefully handled in such a way that the
President is not viewed as improperly meddling in the
affairs of the Congress. There is a definite possibility
that the Congress may take the pay raise and never fully
implement reform.
In all events, should you decide to proceed, at least
quiet acquiescence in what you propose is an essential
requirement from the gentleman from Georgia, and pre-
ferably an open, public endorsement for what you send
to the Hill.
UNITED
SELVES
UNITED STATES CIVIL SERVICE COMMISSION
CIVIL
COMMISSIONER
WASHINGTON, D.C. 20415
SERVICE
CHAIRMAN
DEC 9 1976
MEMORANDUM FOR THE PRESIDENT
SUBJECT: Executive Pay Increase
We have reviewed the recommendations of the Commission on Executive,
Legislative, and Judicial Salaries (the quadrennial commission), and we
have several comments to offer for your consideration.
(1) Pay Increase Recommendations. We fully endorse the recommended pay
rates for the Executive Schedule. By any reasonable measure, the pay
increases recommended for the executive branch's top officials would be
conservative, and would not even restore these pay rates to their 1969
purchasing power.
We note that the quadrennial commission has recommended some very
significant departures from the existing pay linkages between the three
branches of the Government, particularly between the salaries for
Federal judges and for Members of Congress. We do not feel that we are
in a position to judge the likely congressional reaction to these depart-
ures, but we are concerned that these changes, if unacceptable to Congress,
could result in the defeat of any pay increase at all. We urge that
this subject in particular be discussed with the congressional leadership,
as well as the acceptability of the recommended salary rates generally.
(2) Code of Public Conduct. While we would recommend that you publicly
and strongly endorse the quadrennial commission's call for a Code of
Public Conduct applicable to all three branches, we think it is imprac-
tical to seek to actually implement such a complex proposal in advance
of your transmittal to Congress of your pay recommendations, since a
Code of Public Conduct could only be implemented through the full
legislative process. Furthermore, there would seem to be questions as
to the appropriateness of an outgoing Administration seeking to imple-
ment such a Code in its last few weeks in office. Therefore, we think
your urging of rapid action on this subject by the Ninety-Fifth Congress
would be a sufficient response to this aspect of the quadrennial com-
mission's report.
2
(3) Recommendations on Benefits. The quadrennial commission included
in its report several recommended changes in benefits--optional coverage
of Executive Schedule appointees under Civil Service Retirement for the
first five years; relocation expenses for newly elected Members of
Congress and newly appointed executive branch officials; and an allow-
ance or tax deduction to reimburse Members of Congress for the expense
of maintaining two residences. All of these appear to us to be reason-
able, and we would particularly favor the proposal on relocation expenses.
Here again, though, legislation would be necessary, and a public endorse-
ment on your part (assuming congressional agreement with the recommendations
that touch upon Congress) would seem to be all that is called for.
(4) New Role for Quadrennial Commission. The quadrennial commission
also recommended that it be made into a continuing agency, with both
members and staff drawn from the private sector, to monitor pay and
benefits for the Government's top officals on a continuing basis. This
is the one major aspect of the commission's report with which we must
disagree. We do not see the need for an additional Federal agency that
would be essentially duplicative of responsibilities that are presently
placed in the Office of Management and Budget, the Civil Service Commission,
and the Advisory Committee on Federal Pay. In our view, last year's
Executive Salary Cost-of-Living Adjustment Act, tying pay for the Govern-
ment's top officials to the annual pay comparability adjustments, is a
much simpler and more practical process that would, if allowed to operate,
keep pay for top officials keyed adequately to the rest of the economy
between quadrennial reviews. As for the need for outside scrutiny of
Federal pay-setting, we might point out that this is essentially the func-
tion of the existing Advisory Committee on Federal Pay, whose role has
already been strengthened and broadened pursuant to the recommendations
last year by your Panel on Federal Compensation, chaired by Vice President
Rockefeller. Therefore, we suggest that you not accept the recommenda-
tions of the quadrennial commission on a new role for that commission.
I would be happy to meet with you to discuss any of these matters further,
or to participate in any meetings you may wish to have with the other
two branches.
Bot
Robert E. Hampton
Chairman
THE CHAIRMAN OF THE
COUNCIL OF ECONOMIC ADVISERS
WASHINGTON
December 8, 1976
MEMORANDUM FOR JIM CONNOR
FROM:
ALAN GREENSPAN RAND
SUBJECT: Report of Commission on Executive, Legislative
and Judicial Salaries
The report does not offer convincing evidence that
the current pay schedule for high-level government officials,
civil service or appointed, is inefficient for satisfying the
government's requirements for executives. I have no
objections to the overall structure of the report. However,
the report does not adequately establish the case for the
proposed salary structure. It would be difficult to defend a
sudden increase of 20 to 47 percent for high-level govern-
ment officials given that they did not experience unemployment
in the last few years. Gradual increases would be viewed
as more reasonable. Since the proposed wage increases are
arbitrary, the Administration is best off endorsing the
principle of gradual increases, without endorsing the
particular magnitudes. The standards of conduct (item 8
below) should be sufficiently broad as to avoid particular
problems that specific standards might entail. The report
could be released in the interest of promoting full public
discussion of these issues, with a Presidential endorsement
of relaxation of salary caps and stronger conflict of interest
provisions, but without endorsing the specifics of the Com-
mission report. Some more detailed comments follow.
(1) The report indicates that nongovernmental executives
tend to view a government job as a form of investment in
training. The sacrifice of earnings to take the job
(23 percent on average) is more than compensated for by the
rise in earning opportunities after leaving government
(on average an 84 percent rise in salary over the govern-
ment level when return to private sector.) Apparently,
the government employment broadens their experiences and
makes them more valuable in the private sector. The report
does not present evidence that these persons are less
REVOLUTION
AMERICAN
BICENTENNIAL
1776-1976
-2-
effective in the government job than others who prefer
not to undertake this form of investment.
(2) The report indicates that among career civil
servants in the super-grades the cap on salaries makes
government jobs less attractive than private sector jobs.
This ignores many attractive benefits of government employ-
ment including the relatively high pension with early
retirement provisions and the stability of employment.
In part, middle-level private sector executives receive
high salaries because of the uncertainty of employment
and problems of reemployment if they lose their job. The
attractive alternative for super-grades appears to be
retirement with the government pension, rather than leaving
government for another executive position prior to retire-
ment age. This raises the question as to whether the
pension is too generous for the super-grades. In addition,
the report ignores the problem of grade-inflation in the
last few years.
(3) The report does not address the issue of the
beneficial effects of turnover among executives through
retirements when civil service restrictions make replace-
ment difficult if not impossible. Raising salaries relative
to pensions would decrease retirements, but would require
more aggressive policies to replace high-level civil servants
who are no longer as productive as their salary and position
would require.
(4) There is a serious problem of salary compression,
where GS-15 (higher steps) to GS-18 earn the same salary,
which now exceeds that of Executive Level V. Studies of
the earnings of Federal Government and private sector workers
of the same measurable characteristics (e.g., age, schooling,
work experience, area, etc.) suggest that Federal civil
service earnings exceed those of the private sector. (The
popular view of low government salaries is supported by
studies of state and local government workers.) In addition,
the fringe benefits (health insurance, pensions, and stability
of employment) are generally superior in the Federal sector.
The compression appears to be the result of salaries that
are "too high" for the lower grades near the compression
(GS-14-16) rather than too low at the upper end (GS-17-18,
Executive Level v). Unfortunately, the report does not
consider this problem when mentioning the problem of salary
compression.
-3-
(5) The report correctly points out that there is
no necessary link between the salaries in the three branches
of government. Separate salary schedules would be more
appropriate.
(6) Since most persons in Executive Level I-V positions
are in government temporarily, and withdraw their contribu-
tions to the pension fund upon departure, the recommendation
that they be permitted to defer contributions to the pension
plan until the fifth year seems warranted. In the jargon
of the report, this would ease their cash flow problem.
(7) The recommendation of a $5,000 per year housing
allowance for members of Congress with two residences seems
unwarranted. We should move away from categorical, non-
taxable supplements to income to a system in which compensa-
tion is in the form of salaries subject to taxation. This
facilitates the public's awareness of the income of members
of Congress and promotes greater equity between members of
Congress with different levels of other income.
(8) With regard to conflict of interest, the Commission
recommends:
a. periodic disclosure of financial affairs ---
income, by source and amount, gifts, debts
and personal holdings.
b. Rigorous restrictions on outside incomes.
C. Strict conflict of interest provisions with
regard to investments (blind trusts).
d. More consistent and explicit rules on post-
service employment. Implicit call for ending
the "revolving door" between government and
industry, but no time frame indicated.
(9) The Commission report calls for a permanent
Quadrennial Commission, consisting of private citizens,
to review salary levels and pension provisions.
THE WHITE HOUSE
WASHINGTON
December 10, 1976
MEMORANDUM FOR:
JIM CONNOR
FROM:
JIM CANNON
cha
SUBJECT:
The Report of the Commission on
Executive, Legislative and Judicial
Salaries - December 1976
Here are my comments to the questions posed:
1.
The overall structure of the report reflects the
excellent work performed by this Commission. They
raise good questions and correctly note that salary
cannot be viewed simply in terms of "comparability"
with industry. Public trust in public employees is
an element, as is the psychic value senior officials
receive from the performance of their jobs. The
report also correctly questions whether it is logical
to link certain jobs in the 3 different branches to
identical pay levels.
2.
The salary structures and levels recommended are
justified given the level of the work to be performed
and the other factors used in the analysis. I concur
with the specific recommendation that the amount of
salary increase should decrease as a percentage as
you move up the ladder rather than the reverse situa-
tion which now exists.
I concur with the specific salaries recommended in
Tables 1 and 2.
3.
The proposal for more precise and relatively uniform
standards of conduct is excellent. Linking the
overdue salary increases to an equally overdue reform
of Government standards of conduct clearly makes
sense, and will be supported by serious students of
public affairs.
-2-
4.
I concur with the recommendation that before the
President takes any action he should convene a
meeting with leaders of the legislative and judicial
branches. He should also urge creation of the
proposed Commission to develop a specific code of
public conduct.
The report also recommends creation of a new permanent
quadrennial Commission rather than the temporary ones
(as this) appointed every four years. I agree.
THE WHITE HOUSE
WASHINGTON
December 8, 1976
JIM CONNOR
MEMORANDUM FOR:
MIKE DUVAL
FROM:
ED SCHMULTS
KEN LAZARUS
800
SUBJECT:
Pay Commission Report
Counsel's Office has reviewed the report of the
Commission on Legislative, Judicial and Executive
Salaries and offers the following:
(1) Overview. As you may be aware, the Commission's
powers under its enabling authority are solely
advisory in nature. The responsibility of the
President under the statute, on the other hand,
requires that he include within the upcoming budget
his recommendations with respect to the exact rates
of pay which he deems advisable for those offices
and positions within the purview of the organic act.
Although this recommendation is the only legal require-
ment imposed upon the President, he is, of course,
free to go beyond this limited role and comment on
related features of the report, i.e., "uncoupling",
a code of conduct, etc.
(2) Constitutional Infirmity. The Commission's
enabling statute provides that the pay recommendations
of the President shall become law unless disapproved
by either House of Congress during a period of 30 days
following the transmittal of such recommendations.
Counsel's Office and the Department of Justice believe
that this legislative scheme is unconstitutional.
We might note in this regard, however, that our case
in opposition to this legislative scheme is weakened
to the extent that this legislation contemplates a
subsequent appropriations bill carrying forward the
increases in customary legislative fashion.
(3) Technical Point. We have been advised by the staff
of the Commission that a "final report" will be forth-
coming next week to improve upon the general format
of the draft which is currently before us and to
correct certain minor technical errors.
-2-
(4) Proposed Response. It is our view that the President
should go beyond the bare legal requirements of the
organic act and issue a message to accompany his budget
on the subject of pay reform. In this regard, Counsel's
Office recommends that the President generally support
the need for certain pay raises in the Legislative,
Executive and Judicial Branches and endorse the general
architecture of the Pay Commission's report subject to
the following considerations:
(a) Although the recommended salary levels
proposed in Table II of the report represent
reasonable goals, it would be inconsistent
with the public sensibilities on this
subject to propose immediate increases of
this scale. Rather, we would see these
figures as goals to be pursued over a three-
year period. Therefore, we would suggest
that the President this year formally
recommend increases of one-third of the
levels of increase proposed by the Commission.
(b) Due to the constitutional restraints
the President should also request that these
increases be made in the form of affirmative
legislation.
(c) The President should generally endorse
the concept of coupling reform of our
conflict laws with the pay increases.
This position dovetails with our comments
on the constitutional defect presented here.
(d) By staging these increases over a
three-year period, the President can also
make clear that there is a necessity for
fundamental reform of the general pay
schedules of government to insure that
people do not receive unwarranted increases
as they are caught up in the current of
this plan. Stated another way, during
recent years, many government people have
received grade increases in order to
achieve a desirable salary and, in many
instances, substantial increases in that
level would warrant a reevaluation of
their GS rating. A three-year stage of
pay increases would allow time for a
reevaluation of this situation.
-3-
(5) Prospects. In the past, Congress has approved
pay raises only in instances where (1) the Congressional
leadership was personally lobbied by the President
and an agreement reached in advance; and (2) in
instances where the rate of increase proposed for
Congressmen was equal to the increase received by
others in the government. Assuming the President
does not meet with the Congressional leadership on
the question in advance of his budget message, there
would appear to be little or no chance for Congressional
silence on the proposed increase since (1) we can
anticipate that Senator Allen, Helms or some other
fiscal Conservative will bring the question to a vote,
and (2) given the fact that Congressional increases
would be substantially less than others proposed for
judges and Executive Branch personnel, a resolution
of disapproval would likely carry. In order to allow
for reasonable prospects for any success here, the
President would have to meet with the Congressional
leadership in order to preclude a vote on his recommendation.
(6) Note: We should also indicate here that Phil Buchen
has been approached by the Chief Justice who requests
the opportunity to speak to the President on this issue
should the decision be reached to substantially reduce
the judicial salary levels proposed by the Commission.
Moreover, we are being rather heavily lobbied by various
bar associations in support of the judicial salary increases
and would, therefore, appreciate being kept informed as
to any future developments in this regard.
CC: Jack Marsh
MEMORANDUM
THE WHITE HOUSE
WASHINGTON
December 9, 1976
MEMORANDUM FOR:
JAMES CONNOR
FROM:
BRENT SCOWCROFT
B
SUBJECT:
Report of the Commission on
Executive, Legislative and Judicial
Salaries
I have reviewed the Report of the Commission on Executive, Legislative
and Judicial Salaries. The Commission has done an excellent job and
the report is a thoughtful presentation of a very complex and important
issue.
While I agree with the principle of providing compensation to high-level
government officials which corresponds approximately with their
counterparts of similar responsibility in the private sector, I am
concerned that isolated weaknesses and the unfortunate coincidence
of an economic pause with the report's submission may lead to
rejection of the many worthwhile points made in the report.
Specifically, I believe that notwithstanding the gross disparities
between the salaries of the highest government officials and their
counterparts, it is unrealistic to expect public or Congressional
support for increases of the magnitude recommended in the report.
The probable result is rejection of any increase and the discrediting
of the very worthwhile analysis that has been done. Although the
Commission has tried to take this factor into account and has proposed
increases amounting to less than the corresponding rise in living costs,
it remains very doubtful that support could be gained for increases on
the order of 20 - 40%.
In addition, I believe that further analysis should be given to the
precise correleation of the five Executive Levels to positions in the
Judicial and Legislative Branches.
The little time available for review has prevented detailed analysis
essential to a more constructive comment. The matter of compensa-
tion is extremely important and will have a vital impact on the quality
of persons attracted to service in the Federal Government. I recommend,
- 2 -
however, that the report be referred for further review which will
take into account the realities of public and Congressional support
of Federal expenditures and the matter of inter-branch position
correlation mentioned above.
7623184
THE SECRETARY OF STATE
RF
WASHINGTON
OPIES TO:
November 15, 1976
I/DG
I/MO
F-WS
MEMORANDUM FOR: THE PRESIDENT
From:
Henry A. Kissinger
HK
Subject:
Federal Wage Policy
I would urge you, in your upcoming review of
proposals by the Commission on Executive, Legisla-
tive and Judicial Salaries to consider particularly
the situation in the Department of State's executive
ranks, both in Washington and in the Foreign Service
abroad. We are continuing to lose some of our best
officers because of the large disparity between their
salaries and those in the private sector. When our
ablest Foreign Service officers reach the $39,600
salary ceiling, they have at present no prospect of
pay increases to match the assumption of senior policy
and management responsibilities in years to come.
The probable loss of many of our best senior
officers, while still in their most productive years,
leads me to recommend strongly that pay levels for
senior Foreign Service grades be allowed to rise
mignificantly. The likely alternative, further sub-
stantial losses from our senior ranks, must inevitably.
cause impairment of this country's capacity to deal
with its problems and challenges in, international
affairs.
The course of inflation has made the situation
worse than it was when I sent you my memorandum of
December 2, 1974 urging an executive pay raise; worse
than that described in the Comptroller General's
report of February 25, 1975, which showed that the
- 2 -
salary of a GS-18, or Foreign Service Officer of
Class 1, was about half that of salaries for po-
sitions of equivalent responsibility in the private
sector.
It would be a grave misfortune if our failure
to provide proper compensation for our officers
should turn back the clock and make the formation
and implementation of foreign policy a profession
reserved for the rich. Our program for equal employ-
ment opportunity might then appear a sham. Yet
either that, or a decline in the standards of the
Foreign Service, is the prospect we face if we
cannot improve executive compensation.
-2-
However, others in the minority including Congressman
Bob Michel, believe that the Code of Conduct provision
should be strongly endorsed as a balance to the pay raise.
Bob Michel supports the pay raise and indicates he will
probably vote for it if necessary.
However, Michel recommends that the Carter administration be
forced to endorse it before the President makes his recom-
mendation.
Otherwise Michel maintains the Democrats in the Congress
will use the political argument that the pay raise was a
result of the Ford administration's recommendation.
Michel is willing to work through Tip O'Neill to insist
that Carter endorse the pay raise before the President
makes the decision or sends his recommendation to the Hill.
cc: Jack Marsh
Dick Cheney
Jim Cannon
THE WHITE HOUSE
WASHINGTON
December 9, 1976
MEMORANDUN FOR:
JIM CONNOR
FROM:
MAX FRIEDERSDORF
m.6.
SUBJECT:
The Report of the Commission on Executive,
Legislative and Judicial Salaries
December 1976
With regard to the Report of the Pay Commission I would
recommend the President endorse the findings of the report
and include the amounts required in his budget proposal.
I would recommend that the President urge that the Judicial
and Congressional salaries be unlinked and considered
separately.
I believe that if the President does endorse the Pay Com-
mission recommendation, the President should strongly urge
that Congress vote on the pay increase.
The concensus on the Hill is that a vote will be a virtual
certainty in the Senate and that most likely a discharge
petition will be circulated by Congressman Grassley of Iowa.
However, even though a vote in the Congress seems likely,
because of the strong Congressional desire for a pay raise,
a pay raise is most likely to pass.
Another sticking point with the Congress will be the Code
of Public Conduct section.
There is very strong resentment among the Congress at this
time regarding this section.
Congress believes that it should not be constrained in this
regard because of the alleged temporary status of a Member
of Congress and the high cost of maintaining separate
residences and all the other extra cost of living expenses
attached to serving in the House and Senate.
Members of the minority with whom I have discussed this
matter with, including Minority Leader Rhodes, suggest that
the President couple his recommendation for a Congressional
vote with a suggestion that the Code of Public Conduct be
left to the prerogative of the House and Senate.
THE WHO
LOG NO:
Date:
Time:
December 6, 1976
FOR ACTION:
CC (for information):
Phil Buchen
Bob Hartmann
Jim Cannon
Jim Lynn
Max Friedersdorf
Jack Marsh
Bill Seidman
Alan Greenspan
Paul O'Neill
Brent Scowcroft
FROM THE STAFF SECRETARY
DUE: Date:
Wednesday, December 8
Time:
c.o.b.
SUBJECT:
The Report of the Commission on Executive, Legislative
and Judicial Salaries
December 1976
ACTION REQUESTED:
X
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X For Your Comments
Draft Remarks
REMARKS:
The Fresident has asked for senior staff comments on the attached report
focusing on the following:
(1) Overall structure of the report
(2) Salary Structures recommended
(3) Standards of Conduct
((4) How do we proceed?
I have discussed this with the President and he is aware of my
views.
Basically, I believe there is a serious constitutional problem in
having any single agency monitor the conduct of the three separate
branches of government. Control of such an agency would be a
beautiful place to spawn a dictator.
RTH
RAA
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
Jim Connor
telephone the Staff Secretary immediately.
For the President
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.:
Date:
December 6, 1976
Time:
FOR ACTION:
CC (for information):
Phil Buchen
Bob Hartmann
Jim Cannon
Jim Lynn
Max Friedersdorf
Jack Marsh
Bill Seidman
Alan Greenspan
Paul O'Neill
Brent Scowcroft
FROM THE STAFF SECRETARY
DUE: Date:
Wednesday, December 8
Time:
c.o.b.
SUBJECT:
The Report of the Commission on Executive, Legislative
and Judicial Salaries
December 1976
ACTION REQUESTED:
X
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X For Your Comments
Draft Remarks
REMARKS:
The President has asked for senior staff comments on the attached report
focusing on the following:
(1) Overall structure of the report
(2) Salary Structures recommended
(3) Standards of Conduct
((4) How do we proceed?
In general d
- but d don't if they
agree with recommendation
PLEASE ATTACH THIS COPY TO MATERIAL fly SUBMITTED. in the congress mit
If you have any questions or It you te
delay in submitting the required material, please
for Jim Connor
telephone the Staff Secretary immediately.
adm in Forthe resident
N
Coalition for
Adequate
1800 M STREET, N.W.
Judicial
Washington, D.C. 20036
(202) 331-2200
Compensation
Writer's Direct No.:
(402) 346-6000
December 10, 1976
RL
CO-CHAIRMEN
Herbert Brownell
The President
John T. Connor
The White House
HONORARY CO-CHAIRMEN
Alan Bible
Washington, D.C. 20500
Emanuel Celler
Norris Cotton
William M. McCulloch
Dear Mr. President:
ASSOCIATE CO-CHAIRMEN
Martha W. Griffiths
The Coalition for Adequate Judicial Compensation
Thomas H. Kuchel
commends the report recently submitted to you by the
Henry P. Smith, III
William B. Spong
Commission on Executive, Legislative and Judicial Sal-
aries and respectfully requests your favorable consid-
EXECUTIVE COMMITTEE
Roger M. Blough
eration.
John W. Byrnes
Lloyd N. Cutler
Laurence Gold
As this letterhead and reverse side of this page
William T. Gossett
indicate, the Coalition is composed of more than 100
Patricia Roberts Harris
R. William Ide, III
community leaders, former members of the Congress and
Sol M. Linowitz
a broad cross section of prominent members of the Bar.
Clarence M. Mitchell
Graham Purcell
It was formed in June of 1975 under the sponsorship of
Irving S. Shapiro
the American Bar Association and is a natural outgrowth
NATIONAL ADMINISTRATOR
of the ABA's long record of support of fair judicial
Robert J. Kutak
600 Woodmen Tower
compensation.
Omaha, Nebraska 68102
(402) 346-6000
On behalf of the Coalition, I have written to
STAFF LIAISON
Peter G. Peterson, chairman of the Quadrennial Com-
Herbert E. Hoffman
American Bar Association
mission, to pledge the Coalition's support of the
1800 M Street, NW
Commission's recommendations as they affect judicial
Washington, DC 20036
(202) 331-2210
compensation.
The Coalition was formed because of a growing
concern that high standards of the federal judiciary
would deteriorate under the decreasing purchasing
power of present salaries. As the Quadrennial Com-
mission pointed out, federal judges embark on a life-
time career when they accept a presidential appointment.
They expect no opportunity to recoup from lower federal
compensation by returning later to private life.
Attorneys who are selected for the federal judiciary
normally have attained high income levels. For the
The President
December 10, 1976
Page two
most part, they do not upgrade their incomes, and do not expect
to. But it is our conviction that unless present income level
is increased, erosion of the high standards of the federal judi-
ciary is inevitable. The prestige of serving as a judge at an
inadequate salary will not compensate the kind of attorneys we
must have as judges. The Coalition also endorses the standards
of conduct recommended by the Quadrennial Commission. Judges
already are governed by similar standards of conduct. The Coali-
tion likewise agrees that public acceptance of higher judicial
compensation would be quick. The people of our country have a
high regard for federal jurists.
The Coalition also supports higher salaries for the execu-
tive and legislative branches, and agrees with the analysis of
them by the Quadrennial Commission. Since the Coalition was
formed for the single purpose of supporting adequate judicial
salaries, we have not commented further on the income levels of
members of the other two branches of the federal government.
In this regard, the Board of Governors of the American Bar
Association, on December 7, adopted a resolution in support of
the Quadrennial Commission's recommendations, noting that "a crisis
condition exists in the three branches (of government) because of
the distressingly deficient pay scales which have been brought
about by the demonstrated lag between those applicable to top
personnel and those applicable to other governmental and non-
governmental employees.
While endorsing the Quadrennial Commission's report, it is
not the Coalition's purpose to suggest a specific dollar amount
in increases of judicial salaries. Rather, our concern is that
the principle of equity be fairly recognized. We are confident
that your recommendations to the Congress will grant such recogni-
tion.
We are aware of your own leadership, Mr. President, regarding
the areas of discussion covered by the Quadrennial Commission
Report. We note particularly your remarks on July 13, 1975, before
the Sixth Circuit Judicial Conference, your statement to the American
Judicature Society in November, 1976, and your response, printed in
the American Bar Association Journal of October, 1976, to the ABA's
questionnaire in which you noted that you had "pressed for adequate
pay for federal judges throughout (your) administration and will
continue to do so."
The President
December 10, 1976
Page three
We also recall with sincere appreciation your administra-
tion's leadership in the field of reform as evidenced by your
letter of July 19, 1976, to the Speaker of the House and the
President of the Senate transmitting a substitute to S.495, the
Watergate Reorganization and Reform Act of 1975, the so-called
Special Prosecutor Bill. Title III of your bill dealt directly
with protection of the public's right to be assured that public
officials, regardless of which branch of government they serve
in, disclose financial matters which could give rise to a con-
flict of interest in the performance of their official duties.
The Coalition shares the concern expressed by the Quadrennial
Commission about public sensitivity to what will appear to many as
unjustifiably large increases for public officials. We believe we
can be of significant assistance in gaining public acceptance of
fair and equitable salary levels. Our own inquiries indicate that
there already exists broad support for increased pay for the federal
judiciary. Further, we believe we can help foster congressional
acceptance of your proposals by direct contacts with the Congress
from our membership.
In summary, Mr. President, the Coalition wishes to be of all
the assistance it can in support of your recommendations.
To that end, we respectfully suggest that it would be most
helpful if you and the appropriate officials of your staff met at
an early date with the congressional leadership, including repre-
sentation from the Post Office and Civil Service Committees, to
seek an accord on those salary levels which would have the maximum
support of the Congress. Such consultation before the submission
of your recommendations in your Budget Message would, we believe,
greatly enhance congressional approval of your recommendations.
Representatives of the Coalition have had the privilege of
preliminary discussions with members of the White House staff on
this subject. We want you to know of our willingness to do all
we can, both within the legal profession and among the public, to
engender support for equitable judicial compensation.
We are prepared to provide any assistance that you desire.
Respectfully,
Robert Noral Rotak J. Kutak
National Administrator
RJK:baf