not approve of putting those two things together. I call that to the Senator's attention, because of course Hawaii is a lot Navy. Senator CANNON. The Department of Defense recommended that. That was the recommendation of the Department of Defense. The Army and the Air Force supported that provision, and the Navy did not support that. Senator FONG. We have a tremendous Navy contingent out on the Pacific, that is our forward line of defense. We have approximately 25,000 people in the Navy there, and I would like to see the provision included. Senator SALTONSTALL. And they like the climate, don't they? Senator CANNON. Do you think that any of them would prefer to serve in the United States if the foreign service elimination of Hawaii were kept in? Senator FONG. I am afraid that you are going to have much discontent. I am afraid that will be so even with the beautiful climateyou just can't eat climate, Mr. Chairman. The provisions were enacted because of economic reasons, and the economic reasons still prevail. In fact, they are getting worse, and we feel very strongly that the economic reasons should induce this subcommittee to keep Hawaii in the provisions for foreign and special duty pay. Senator CANNON. Of course economic reasons apply in many places in our own country. I think in my State in particular some areas are very high-cost areas, and I am sure that enlisted people serving in my State would prefer to be included as you have requested Alaska and Hawaii, that they be entitled to draw foreign service pay when they are serving in that State. Senator FONG. Mr. Chairman, remember that the bill is already law, and they are now collecting it. Senator CANNON. I understand. Senator FONG. And the reasons which caused its enactment are still with us, and there is no reason why, just because they feel that the climate is so delightful in Hawaii, that we should now eliminate it, be cause climate is also delightful in Puerto Rico and the Virgin Islands. To deny it to Hawaii and give it to Puerto Rico, the Virgin Islands, and Alaska, which are all noncontinental areas as is Hawaii is unjust and unfair. Insularity is another reason why it was given in the first instance. Senator CANNON. Of course I think many of those arguments were used in reverse at the time that statehood was under consideration. There were a lot of good arguments advanced for statehood that these countries were getting benefits that would be eliminated if they were to become States; isn't that correct? Senator FONG. Yes, but Alaska is being kept in and Alaska is a State, and Puerto Rico and the Virgin Islands are no different than Hawaii. We are just saying that the reasons stemming from insularity demand that enlisted men serving in Hawaii be given this additional pay. Senator CANNON. I would agree with you that it doesn't make sense to call it foreign service pay and take Hawaii out and leave Alaska in. I think Alaska should have some consideration because they certainly should have hardship pay or something for serving up there, but on the other hand I don't know but I would agree that Hawaii should be left in on a foreign service pay basis, myself, but that is a matter that the committee will certainly have to consider. Senator FONG. We have got to go back to the reasons for its enactment and I think the reasons are still with us. Senator CANNON. You recommended the approval of the officers' subsistence pay, I take it from the testimony, as recommended by the Department of Defense. Senator FONG. Yes. Senator CANNON. Now the House knocked that out and used the flat $3 figure, and you are recommending that they put it back in. Since that time, the Department of Defense has made a recommendation that the $3 subsistence feature be eliminated, and that we apply a flat $30 increase to first lieutenants, captains, majors, and lieutenant colonels right across the board, that we add $30 onto the increase they would otherwise get under the bill. Now this in effect would do the same thing that adding this subsistence back in would do. But in view of that, would you will still urge that the subsistence Senator FONG. I think the recommendation made by the Defense Department is well taken. Senator CANNON. And I think you recommended that the effective date be the next pay date after enactment. Senator FONG. Yes. The salary reform act that we passed last year for the civil employees was to be effective immediately. Senator CANNON. You also recommended that those with 2 years and under of service be granted an increase. Did you have in mind a specific amount or some formula for that recommendation? Senator FONG. No, I had no amount in mind, Mr. Chairman, but I think that they should be treated similarly to the other officers and enlisted men, because this is their first tour of duty, and I think that by not discriminating against them paywise in their first tour of duty. we will have a better chance of retaining them. Our retention problem is the biggest problem. It costs us a lot of money to train a man and then we find them going out. I think by keeping him happy we would retain him in the Armed Forces thereby giving us a more efficient and a more economical force. Senator CANNON. The Department of Defense and each of the services agreed with you in principle as to what you stated, but they did not agree with you that increasing the pay of these 2-year service people would add toward that, that it was more important to have the pay increases from those points on, and therefore they all supported the position of not increasing the pay of the 2-year enlisted man and the 2-year officer. Senator FONG. I could understand the guiding principle which caused the military service to take that position. They feel that the man owes something to his country. But I am looking at it from the standpoint of what is comparable. If industry is paying him that amount, I don't think we should take it from the individual just because we draft him into the service. Senator CANNON. On the recomputation feature, you stated that you favored that. The proposal in the House bill provides for recomputation of those who retired prior to the 1958 pay bill, and then adds onto that a 5-percent cost of living increase up to this point, and provides that from here on every time the consumers' cost index rises 3 percent, they would then be reviewed and given an added percentage cost of living raise. Do you agree with that philosophy? Senator FONG. Yes, I do. Senator CANNON. This would be a termination once and for all of the recomputation law. Senator FONG. No, I am not satisfied with that. I think that the history of retired pay has been that it follows the general increases we have given to the people who are on active service, and that whenever there is an increase for active duty personnel there should also be a proportionate increase for military retirees. Senator CANNON. Yes, I understand, but are you saying now that rather than the cost of living increase, here on out, you feel that the recomputation provision should be kept for the future? Senator FONG. Yes. Senator CANNON. You said you favored the bill, and the bill makes it clear that recomputation would be ended after the recomputation under the 1958 act. Senator FONG. I am sorry that I did not expand on that. I feel that we should continue to include in the active duty pay scale the retired military men through a recomputation provision. Senator CANNON. Of course, one of the arguments among many others against that is the fact that the person might at some time in the future and I think Senator Young brought out that even in recompuation under the 1958 act-some people would be drawing more pay retired than they would have drawn, than they were drawing on active duty before they retired. Senator FONG. Yes. There wouldn't be too many of them, would there, Mr. Chairman? Senator CANNON. I don't think there would be many, no, but at least that was a point that Senator Young, I think, made. Senator FONG. Maybe under those circumstances we could set a ceiling, but we have always followed the other principle of accepting the last Senator CANNON. Do you know of any other pay system or any other retirement system either in private industry, civil service or anything else, that uses this theory of recomputation on retirement? Senator FONG. No, I am not aware of any, except that the Government has followed this in all these years. Senator CANNON. With respect to the military. Senator FONG. Yes. Senator CANNON. Civil service does not. Senator FONG. No. Senator CANNON. Civil service uses the cost-of-living increases as is in this bill now. Senator FONG. Because I think that was based primarily on the fact that the military service has not enjoyed a comparable salary with that of industry. But if we adopt a principle of comparability, then I think consideration could be given to the fact that we may not need to recompute. Senator CANNON. Of course that is what is attempted in this bill, to get them more nearly comparable with civil service and with private industry. I am sure that most everyone will agree that certainly they are not equal to it. But it is interesting to note that under this recomputation provision which you say would-you would prefer, rather than the cost of living, of 112,484 people who would be eligible under this recomputation law, 67,000 of those would receive an increase greater than 5 percent under recomputation, and the 5 percent is the cost-ofliving increase from the 1958 law up to the present time; 44,780 of those people would not receive an increase as much as the 5 percent, and there are 35,539 people that would receive no increase at all under recomputation. So actually when you talk about fairness under the recomputation provision, your fairness applies to a decided minority of the people in numbers, and applies to people principally in the higher ranks. Senator FONG. This refers to the retired people? Senator CANNON. Yes, this is retired people. For example, in some of the lower enlisted ranks, under recomputation many of them would get less than 2 percent increase over this period of the date of the 1958 act up to the present time. Senator FONG. I was not aware of that, Mr. Chairman. Senator SALTONSTALL. Would the Senator yield? Senator SALTONSTALL. I most respectfully say to the Senator what I said this morning when he was not here. When we figured this 1958 act, and I was on the subcommittee, we put in that cost of living because it would give something to the lower grades, whereas they would get very little in the lower grades on any other basis. Now, of course, the higher grades, the law was changed from the previous laws by not putting them in in the new law, because that was done for incentive pay primarily for people who were then in the service. That mistake we can correct, or we can make a change in the law on that. But to strike out all costs of living and leave it entirely on the other would be in my opinion unfair to a great many at the lower paid ranks. Senator FONG. Now that I have been informed, I can understand why some of them would be objecting to this recomputation. All the letters I have received are all based on recomputation. I have not received a single letter on Senator SALTONSTALL. But those are on the higher grade officers. Senator FONG. As I said, I was not aware of that, Mr. Chairman and Senator. Senator CANNON. And I think most of those letters, if they are like mine, were all referring to recomputation under the 1958 act. Senator FONG. Yes. Senator CANNON. The Department of Defense and the services have all made it clear that their support for recomputation ends with the 1958 act, that the services have been put on notice and that they favor the cost-of-living provision after recomputation under the 1958 act, which most of these letters apply to at the present time. Senator FONG. Yes, sir. Senator CANNON. Senator Saltonstall? Senator SALTONSTALL. Mr. Chairman, I have no questions. I just have one observation off the record. (Discussion off the record.) Senator CANNON. On the record. Senator YOUNG. I have no questions. Senator CANNON. Thank you very much, Senator Fong. We appreciate the benefit of your views. If you will supply for the record the estimated cost of these recommended changes that you made, I am sure it will be very helpful. Senator FONG. Thank you very much. I will do that. (The following information was subsequently submitted by Senator Fong:) Retaining special and foreign duty pay for enlisted men serving in Hawaii: Present cost__. With S. 908 (estimate). Subsistence pay for officers: Department of Defense recommendation of $77 per month (annual figure)-- Recommendation of 21 percent of present $47.88 per month (similar rate voted by House for enlisted men)-annual figure____ $6, 000, 000 6, 575,000 $121, 951, 000 75, 609, 620 [S. 908, 88th Cong., 1st sess.] A BILL To amend section 305 (b) of title 37, United States Code, relating to foreign duty pay Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 305 (b) of title 37, United States Code, is amended by striking out wherever it appears therein, the following: "Alaska, Hawaii,”. Senator CANNON. The next witness will be Maj. Gen. William H. Harrison, Jr., President of the National Guard Association of the United States. I am proceeding out of order from the way we had the list made up originally, because Senator Saltonstall wants to be here, and he is going to have to leave shortly. General Harrison, we are very happy to welcome you before the committee. You may proceed if you wish. STATEMENT OF MAJ. GEN. WILLIAM H. HARRISON, JR., PRESIDENT, NATIONAL GUARD ASSOCIATION OF THE UNITED STATES; ACCOMPANIED BY BRIG. GEN. MARK H. GALUSHA, EXECUTIVE ASSISTANT TO THE PRESIDENT; AND BRIG. GEN. JOHN L. STRAUSS, GENERAL COUNSEL General HARRISON. Thank you, Mr. Chairman. Mr. Chairman and members of the committee, I appreciate this opportunity to appear before you, representing the National Guard Association of the United States during your consideration of H.R. 5555, a bill to amend title 37, United States Code, to increase the rates |