[Weekly Compilation of Presidential Documents Volume 33, Number 35 (Monday, September 1, 1997)]
[Pages 1269-1270]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
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 out

[[Page 1270]]

come 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 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.