    [Public Papers of the Presidents of the United States: William J. Clinton (1997, Book II)]
    [August 29, 1997]
    [Pages 1117-1118]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Letter to Congressional Leaders Transmitting an Alternative Plan for
    Federal Civilian Employee Pay Adjustments
    August 29, 1997

    Dear Mr. Speaker:  (Dear Mr. President:)
        I am transmitting an alternative plan for Federal civilian employee
    pay adjustments, to take effect in January 1998.
        Under title 5, United States Code, Federal civilian employees would
    receive a two-part pay raise in January 1998: (1) a 2.8 percent base
    salary raise linked to the part of the Employment Cost Index (ECI) that
    deals with changes in the wages and salaries of private industry
    workers; and (2) a locality pay raise, based on the Bureau of Labor
    Statistics' salary surveys of nonfederal employers in local pay areas,
    costing about 7.2 percent of payroll. Thus, on a cost-of-payroll basis,
    the total Federal employee pay increase would be about 10 percent in
    1998.
        But, for each part of the two-part pay increase, title 5 gives me
    the authority to implement an alternative pay adjustment plan if I view
    the adjustment that would otherwise take effect as inappropriate due to
    ``national emergency or serious economic conditions affecting the
    general welfare.'' Over the past 20 years, Presidents have used this or
    similar authority for most annual Federal pay raises.
        In evaluating ``an economic condition affecting the general
    welfare,'' the law 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.
        In assessing Federal civilian pay increases for 1998, I reviewed the
    indicators cited above as well as other pertinent economic and budgetary
    factors--including the compatibility of pay increases with the limits on
    Federal discretionary spending under the Bipartisan Balanced Budget
    Agreement.
        The Budget Agreement continues the spending discipline that my
    Administration initiated in 1993 and that has contributed to sustained
    economic growth, low inflation and unemployment, and a sharp cut in the
    budget deficit. Full statutory civilian pay increases of 10 percent in
    1998 are inconsistent with the task of reaching balance by 2002. They
    would cost about $7.9 billion in 1998 alone--$5.7 billion more than the
    2.8 percent increase I proposed in my fiscal 1998 Budget--and would
    build in later years. Such cost increases either would threaten our
    achieving balance by 2002, or force deep cuts in discretionary spending
    or Federal employment to stay within spending targets. Neither outcome
    is acceptable for maintaining the economic prosperity of the American
    people.
        Therefore, I have determined that my proposal for a total civilian
    raise of 2.8 percent

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    remains appropriate. This raise matches the 2.8 percent basic pay
    increase that I proposed for military members in my fiscal 1998 Budget,
    and that the Congress will likely include in the 1998 defense
    authorization bill.
        Because many Federal civilian employees do not receive locality pay,
    I will put the bulk of the 2.8 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:
           (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 2.3 percent, effective on the first
                day of the first applicable pay period beginning on or after
                January 1, 1998.
           (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, 1998. When compared with
                the payments now in effect, these comparability payments
                will increase the General Schedule payroll by about 0.5
                percent.
        Finally, the law requires that I include in this report an
    assessment of the impact of my decisions 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 larger pay
    increase, I do not believe that it will materially affect our ability to
    continue to attract and retain a quality Federal work force.
        Due to our continuing efforts to reinvent Government, creating a
    Government that works better and costs less, the number of Federal
    employees continues to fall; consequently, hiring and attrition are low.
    In addition, should the need arise, the Government has many 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.