[Public Papers of the Presidents of the United States: William J. Clinton (1995, Book II)]
[August 31, 1995]
[Pages 1275-1276]
[From the U.S. Government Publishing Office www.gpo.gov]



Letter to Congressional Leaders on the Alternative Plan for Federal Pay 
Adjustment
August 31, 1995

Dear Mr. Speaker:  (Dear Mr. President:)
    The law requires that the President transmit to the Congress an 
alternative plan for Federal pay adjustments if he views the pay 
adjustments that would take effect under the law as inappropriate. 
Therefore, to ensure that substantially larger increases do not take 
effect automatically, I am transmitting an alternative plan for the 1996 
pay adjustments.
    Under section 5303(a) of title 5, United States Code, the rates of 
basic pay would rise by 2.4 percent, effective in January 1996. In 
addition, pursuant to section 5304 of title 5, General Schedule 
employees also would receive an increase in their locality-based 
comparability payments that would cost 2.7 percent of payroll. When 
combined with the 2.4 percent basic pay increase, the locality-based 
payments would produce a total payroll increase of about 5.1 percent 
that would cost $3.9 billion in 1996--$2 billion more than the 2.4 
percent pay increase I proposed in my 1996 Budget and which is included 
in my Balanced Budget Plan.
    Sections 5303(b) and 5304a of title 5, however, provide me the 
authority to implement an alternate pay adjustment plan if I view the 
pay adjustments that would otherwise take effect as inappropriate due to 
``national emergency or serious economic conditions affecting the 
general welfare.'' As you know, Presidents have used such authority many 
times over the past 15 years.
    In evaluating ``an economic condition affecting the general 
welfare,'' the statute directs me to consider such economic measures as 
the Index of Leading Economic Indicators, the Gross National Product, 
the unemployment rate, the budget deficit, the Consumer Price Index, the 
Producer Price Index, the Employment Cost Index, and the Implicit Price 
Deflator for Personal Consumption Expenditures. I have reviewed these 
and other pertinent measures of our economy.
    The budget discipline that my Administration has put in place has 
contributed to sustained economic growth and low inflation. To continue

[[Page 1276]]

this discipline and its favorable impact on economic conditions, I have 
determined that an alternative pay adjustment of 2.4 percent is 
appropriate for the 1996 pay raises under sections 5303 and 5304. This 
raise matches the 2.4 percent basic pay increase that I proposed for 
military members in my fiscal 1996 Budget and that the Congress likely 
will include in the 1996 Defense Authorization bill.
    Because many Federal civilian employees do not receive locality pay, 
I will put the bulk of the 2.4 percent adjustment into the general 
increase under section 5303, thus giving all employees a meaningful 
raise. I will apply the remainder to increasing the locality-based 
comparability payments under section 5304.
    Accordingly, I have determined that the following alternate pay plan 
is appropriate:
       (1)  Under the authority of section 5303(b) of title 5, United 
            States Code, the pay rates for each statutory pay system 
            shall be increased by 2 percent, effective on the first day 
            of the first applicable pay period beginning on or after 
            January 1, 1996.
       (2)  Under the authority of section 5304a of title 5, United 
            States Code, locality-based comparability payments in the 
            amounts set forth on the attached table shall be effective 
            on the first day of the first applicable pay period 
            beginning on or after January 1, 1996. When compared with 
            the payments currently in effect, these comparability 
            payments will increase the General Schedule payroll by about 
            0.4 percent.
    Finally, the law requires that I include in this report an 
assessment of the impact that my decisions will have on the Government's 
ability to recruit and retain well-qualified employees. While I regret 
that our fiscal situation does not permit granting Federal employees a 
pay increase greater than 2.4 percent, I do not believe this will have 
any material impact on the quality of our work force. In accordance with 
the Federal Workforce Restructuring Act of 1994, I am committed to 
reducing Government employment substantially; consequently, hiring and 
attrition are very low. In addition, the Government has at hand many pay 
tools, such as recruitment bonuses, retention allowances, and special 
salary rates, to maintain the high quality work force that serves our 
Nation so very well.
        Sincerely,

                                                      William J. Clinton

Note: Identical letters were sent to Newt Gingrich, Speaker of the House 
of Representatives, and Albert Gore, Jr., President of the Senate. The 
locality based comparability payment table was attached to the 
President's letter. This letter was released by the Office of the Press 
Secretary on September 1.