September 19, 1974
Page 31883
Mr. MUSKIE. Mr. President, in the midst of historic and grave inflation, the President has presented to Congress the question of whether or not Federal employees should receive a 5.52 percent increase in pay to offset cost-of-living increases – increases which have raised prices paid by consumers by almost 12 percent in the past year. The Federal Civil Service Commission, and the Office of Management and Budget, under the provisions of existing law, have recommended this increase as reflecting comparable changes in non-Government salaries throughout the Nation. The increase would automatically take effect October 1, but for the President's request it be delayed 3 months. By approving Senate Resolution 394 the President's deferral of this increase would be disapproved, and the pay adjustment would take effect on October 1 when originally scheduled.
Mr. President, inflation has eroded the earning capacity of Federal employees just as it has for most Americans. The recommended pay increase would partially compensate Federal employees for the loss in earnings because of price increases over the past year. Consumer prices in the last year have risen more than twice as much as the recommended 5.52 percent raise – at a rate of 11.7 percent in the last 12 months. The procedures for determining the recommended Federal pay raise have set the level at only 5.52 percent because they are based on data collected 5 months ago, and so do not include a further private-sector salary increase of about 1.7 percent in the months since then. So the recommended pay raise would provide only partial compensation for the erosion of earning power caused by inflation.
The figures on Federal employees in my own State of Maine bear out the national trend. In Maine, there are about 15,000 white-collar Federal employees and military personnel – over 6,000 military personnel, 600 National Guard technicians, and over 8,000 white-collar Federal employees. For all employees in Maine – Federal and non-Federal – the latest figures show an annual rate of increase in weekly earnings of 8.7 percent for comparable work – enough to make up for only part of the inflation in consumer prices. But the Federal employees in our State have received no increase, yet are hit just as hard by inflation as other citizens. They deserve a modest 5.52 percent pay raise now.
Sound policy to deal with current inflation should, I believe, include restraint on Federal spending, and on inflationary wage and price increases. But wage and price restrictions should be applied on the entire economy, not just the 4 percent of the Nation's workforce affected by these Federal pay levels. In fact, if wage increases in the private sector were no higher than the 5.52 percent level, they would contribute significantly to the moderation of the cost-and-wage spiral which is a primary cause of present inflation. There is no indication that the recommended wage increase for Federal employees would be inflationary; it could certainly not cause unnecessary consumer spending during our current recession, at a time when demand for consumer products is slack.
Finally, Mr. President, a reduction in the overall level of Federal budget outlays this year does not depend upon the 700 million savings which would be achieved by deferring the Federal pay raise 3 months. So far this year, action completed by the Congress, and measures pending before the Senate, would reduce budget outlays by about $2 billion from the latest administration estimate – and we will give careful examination to further proposals to make deeper cuts.
Spending reductions can be – and are being – made without denying to Federal employees a modest pay raise which only partially compensates them for losses in earning power caused by inflation.
Mr. President, restraining inflationary wage increases, and reducing wasteful or less important Federal spending, are important goals in the fight against inflation. But deferring the modest Federal pay raise would serve neither goal well. The deferral should be disapproved.