Statement About Deferment of Federal Pay Raises

NEXT WEEK the Congress faces the acid test of its determination to cooperate in the national campaign to control rising prices. The House will either sanction, or veto, deferral of Federal pay raises from January I to July 1, 1971. That deferral has been made necessary in order to do equity and to help balance the Federal revenue loss resulting from the tax cuts I have proposed as part of the new program to create jobs and stop inflation.

The sacrifice being asked of Federal workers is not so heavy as to be inequitable, at a time when all Americans are being asked to sacrifice. The average Federal white-collar worker earns almost $13,000 in pay and benefits; his pay has risen 21 percent since mid-1969. With this deferral, the principle of comparability is maintained. The comparability increase will become effective July 1, 1972.

In the Federal Pay Comparability Act, when the Congress declared that alternative pay plans could be submitted "because of national emergency or economic conditions affecting the general welfare," it anticipated the present situation. Such conditions now exist.

If we are to ask the private sector to make unpopular decisions on wages, then we in the Federal Government--the largest employer in the United States--must demonstrate the courage to make a similar decision. Political pressures, however, are building on the Congress to reject deferral of Federal pay increases. If the House or the Senate should cave under that pressure, the inflationary consequences for the American housewife and American workingman would be rapid, extensive, and severe.

If the Congress should veto the deferral, an unmistakable signal will be sent to business, to labor, and to skeptical friends abroad that the legislative branch has unilaterally withdrawn from the national alliance of private and public institutions determined to halt inflation in the United States. There must be no political profiteering in the war against inflation.

Like all Americans, Federal employees will benefit from the new prosperity--a peacetime prosperity without inflation and without war. But if Congress rejects this pay raise deferral, then other Americans will have to bear the cost either in diminished benefits, deferred programs, or through other stern budgetary measures.

Let the Congress and the executive branch avoid the inevitable recriminations that will come if the new economic policy--and the prosperity it is designed to bring--is torpedoed. Rather, let us work cooperatively together so that all Americans can share the benefits of the new prosperity.