Special Message to the Congress About Deferment of Federal Wage Increases.

To the Congress of the United States:

On August 15, 1971 I announced a number of new economic initiatives to create new jobs, to hold down the cost of living, and to stabilize the dollar. In this connection, Executive Order 11615 calls for the development of policies, mechanisms and procedures to maintain economic growth without inflationary increases after the end of the 90-day freeze period which the order imposes. It is equally essential that the tax reductions which I recommended to the Congress, to provide a powerful stimulus to the economy, not be inflationary in their impact. A significant reduction in Federal expenditures is needed to provide a balance.

Since continuing emphasis will be placed on the exercise of responsible industrial and labor leadership throughout the Nation in the months to come, I must apply such fiscal restraints as will clearly signify the good faith of the Federal Government as a major employer, and to continue to set an example for the American people in our striving to achieve prosperity in peacetime. I place full reliance on the willingness of Federal employees along with their fellow Americans, to make whatever temporary sacrifices in personal gain may be needed to attain the greater good for the country as a whole.

Therefore, in consideration of the economic conditions affecting the general welfare, I hereby transmit to the Congress the following alternative plan, as authorized and required by section 5305(c)(1) of title 5, United States Code: Such adjustments in the rates of pay of each Federal statutory pay system as may be required, based on the 1971 Bureau of Labor Statistics survey, shall become effective on the first day of the first applicable pay period that begins on or after July 1, 1971.

I recognize that delaying the scheduled January 1971 increase to July 1972 means that two increases will then become due within a period of approximately three months. Since I am unable to predict whether two increases in such a relatively short time span will have a damaging effect on the economy, I am not prepared to make a decision with respect to the October 1972 increase at this time. After reviewing the economic situation during the first half of 1972, I will give serious consideration to the need for an alternative plan to that scheduled increase. If I conclude that an alternative plan is necessary I will, in accordance with the aforementioned provision of law, submit such a plan to Congress before September x, 1972. It appears highly unlikely that any such plan would involve a postponement of the October 1972 adjustments beyond January 1973.

Our Nation's public servants are entitled to a fair wage in line with the established policy of comparability with private enterprise; I regret the necessity of postponing pay increases, but our fight against the rising cost of living must take precedence. of course, success in holding down inflation will benefit the Government worker as well as all Americans.

I urge your support of this postponement.

RICHARD NIXON

The White House

August 31, 1971