(b) pay under the Career Compensation Act computed on percentage of disability or years of service, whichever is greater. Senator CANNON. Thank you very much, Mr. Paston, for your very fine presentation.

On page 1 you make the statement that:

When an individual entered the Armed Forces, he knew the amount of pay he would receive and he knew that, upon retirement, Uncle Sam would pay him 75 percent of his active duty base and longevity pay.

I emphasize the word "his" because you have written in here the same thing that one of the other organizations presented yesterday, that the representation is made that he will get the percentage of his pay, and there is some question raised as to whether or not the representation is ever made that he would get 75 percent of somebody else's pay, in other words, of a pay grade in which he never served.

I am sure that you are aware of the fact that this is a very controversial subject and that the way it stands in the bill now this will end, if the bill is passed in this form it would end, recomputation once and for all, that recomputation would be permitted under the 1958 act with a cost-of-living increase of 5 percent beyond that point, and that from thence forward any increase in retired pay would be based on a formula using the cost of living as a base.

Mr. PASTON. May I answer that in this respect.

Reference made to his pay, 75 percent of his pay means 75 percent of his grade. In other words, if he is a first lieutenant, he would get 75 percent of the first lieutenant's pay. If he is a major he will get 75 percent of his major's pay. That is all that means, whatever it would be.

Senator CANNON. That is your interpretation of it.

That is not agreed to by a lot of people, just as I mentioned now in connection with private industry. The representation is made that if a man spends so many years in the service of private industry, he will retire under certain conditions on a percentage of his pay, not on a percentage of some pay in the future, and Senator Young brought out the day before yesterday I believe, in the hearings, the fact that this recomputation provision, even under the 1958 act, would result in some people drawing more in retirement than they ever drew on active duty.

As a matter of philosophy, does that sound like a sound philosophy, that a man should be able to draw more retired than he ever drew on active duty?

Mr. PASTON. If that eventuality should ever occur, it might be very fair.

For example, and I will go to an extreme to bring out the point, supposing a man was paid $50 a month while on active duty. The value of the dollar went down so much that later, if he is paid even $100 a month in retirement pay, that $100 a month might be less than the $50 he got while he was on active duty.

Senator CANNON. So you are relating your statement to the cost of living and that is exactly what is proposed in the bill.

Mr. PASTON. I am relating it to the active duty pay at the time he is being paid his retirement pay.

Senator CANNON. I know that, but you are in effect saying that the purchasing power of the dollar has gone down so it might well be that

he would receive that amount. That is exactly the principle recognized in the bill as it now stands, the principle of tying the retirement into the increases in cost-of-living rates rather than tying it to the principle of retirement pay based on the pay of a grade which is a pay rate that man never did receive.

Mr. PASTON. I am afraid that if we continue on at merely cost of living, we will continue to have this vexing problem. In other words, basically, if we say that if the people in the armed services are not getting enough pay because of the cost of living and we increase it accordingly, we do not need new legislation if we just merely say, as Congress has said in previous laws, that the retirement pay shall be 75 percent of the active duty pay the man would be receiving if he were still on active duty. That would with one fell swoop write out any necessity for further legislation on increasing retirement pay.

The bill here, which talks about cost of living, the Secretary of Defense from year to year will consult the Consumer Price Index, and he comes to a determination I believe in February or April of a year and then it becomes effective several months thereafter, so that if there should be an increase in the cost of living under the Consumer Price Index, under the computation principle, its increase is not given in full for that previous calendar year. There are several months lost there as we go along.

But there is a trouble we run into when we have statistics, computations and so on. If we would stick to principles, and I think I enunciated the one we urge; to wit, go back to the old simple formula, 75 percent of the active duty pay the man would be receiving if he were still on active duty, we would not need any legislation. We would not have any vexing problems.

We do not need consumer's price indexes, and we would not need any further legislation.

Senator CANNON. Thank you very much.

Mr. PASTON. As long as I took so much of your time and you were so patient with me, may I add one more thing here, to point out to this committee that, while what Brazil does may not have any immediate relation to what we do in our country, the Brazilian Government just voted a 70-percent pay raise to their military personnel and to their civilian employees, and their President just signed that bill giving them that increase because of the devaluation of their currency.

And may I also point out that the House recently, on July 9, passed a bill giving life tenure to the judges of the Court of Military Appeals, U.S. Court of Military Appeals, and in that bill they provided that those judges may be retired after 10 years of service at full pay. Senator CANNON. That is not unusual.

The Federal court system, I believe, entitles a man now, in the Federal court system, to retire at full pay after a period of time, I think 10 years, and upon reaching a certain age. But it does not provide that if the Federal Government should raise the pay of the Federal court judges over and above the pay they receive, that he would then be recomputed and get a pay under which he never did

serve.

Again with reference to that particular bill on the Military_Court of Appeals, I want to point out to you it may have passed the House, it has not passed the Senate. It has not been considered over here. Mr. PASTON. I am not against the bill. I testified in favor of it before the Senate committee. But I merely pointed out that where we do give judges full pay after 10 years' service then when we talk about giving three-quarters pay to retired personnel of the military, we are not giving them too much, because that three-quarters pay, if we omit the allowances that they do not get any part of at allSenator CANNON. What is the age in that bill, do you know? Is it 65? The bill you said passed the House.

Mr. PASTON. I have it here somewhere. I do not know if I can put my hands on it.

Senator CANNON. Well, that is really beside the point.
One other provision I think should be made clear.

You state in your statement that:

The Kennedy administration gave its endorsement to recomputation.

It did, not to recomputation as a continuing principle, but specifically to recomputation under the 1958 act, and that was exactly what Mr. McNamara said where you quoted him here. The statements in connection with Mr. McNamara are correct absolutely.

There should be an immediate adjustment in military pay scales and in certain allowances to bring them into better balance with Government civilian pay scales and those in private industry.

No question about that.

And to reflect rise in the cost of living since the last pay adjustment, to increase the attractiveness of military service as a career and to correct certain inequities in the present structure.

Mr. McNamara does not any place there say that he favors recomputation as a matter of continuing principle. He says:

The pay of retirees should be related to the cost of living so that retired personnel or their dependents are not penalized by changes in price level.

And that is exactly what the amendment attempts to do, as I read it. This was not a Senate amendment. This is the way the bill came over from the House, as you know.

Mr. PASTON. I agree with what the Secretary says, but this bill does not do it, because it will be up to the Secretary to consult the Consumer's Price Index and come to his determination as to what the increase was and then there must be at least a 3-percent increase before he puts into effect the pay increase.

Senator CANNON. That is correct.

Mr. PASTON. Now I take it that the Congress will take care of the armed services, and if there is an increase in the cost of living they will increase their pay. So I say that the thing works by itself. Just make the retirement pay based upon the active duty pay as it is increased or changed because of the cost of living.

Senator CANNON. I just want to simply point out that Secretary McNamara's statement, which you quoted, does not support your position for continuing recomputation ad infinitum. It specifically says that "it should be related to the cost of living" and not based on recomputation, based on a rate of pay in which a man did not serve.

act.

There is a principle that bothers a lot of people, and the whole theory under which this administration and the last, although the last recommended against recomputation at all at first, as you know, the whole theory was that it did unfairly discriminate against a certain group of people that came in at a particular time, in view of the 1958 But neither administration so far as I know have recommended recomputation as a continuing principle, and certainly this administration has specifically recommended against it, that after this onetime recomputation, it be related to the cost of living, as indicated by the fact that they propose here the 5-percent increase based on the cost of living since the date of the 1958 Pay Act, and then thereafter the 3-percent increase formula.

Thank you very much for appearing here. We appreciate your appearing and presenting your views.

Mr. PASTON. Thank you very much, sir, for your courtesy.

The next witness will be Mr. Penrose Albright, secretary of the Judge Advocates Association.

Mr. Albright, we are very happy to have you appear here and present the views of your association.

STATEMENT OF PENROSE L. ALBRIGHT, SECRETARY, JUDGE ADVOCATES ASSOCIATION

Mr. ALBRIGHT. Thank you, your Honor.

I am the national secretary of the Judge Advocates Association, and, as you have stated, I am appearing here on behalf of the Judge Advocates Association.

Mr. Chairman, the military pay bill as originally introduced, H.R. 3006, contained a provision to give lawyers and other members of the Armed Forces who require postgraduate degrees for the performance of their duties, constructive service creditable in the computation of basic pay for those years that they attended law school or other graduate school. Of course, such constructive service was only to be given provided the members were not otherwise accumulating such service credit at the same time by other means, such as membership in the National Guard, a federally recognized Reserve, et cetera.

The bill, of course, goes on to state in effect that you cannot get time twice, that is, you cannot be in the Reserve force when you are going to law school and count the time as double time.

The primary purpose of the military pay bill, including this provision, is the retention of officers and enlisted men beyond their obligated period of service. It is clear that this matter of retention, particularly officers in specialized fields, is posing a very serious problem for the armed services.

The report from the Committee on Armed Services of the House of Representatives, No. 208, to accompany H.R. 5555, indicated that for the services to put into the career force annually the number of officers which are required, they have to accept from 95 to 98 percent of the officers who apply for indefinite career status. This clearly indicates that the armed services are able to exercise only the barest quality control.

Moreover, although there does exist this small but positive, though very minimal, number of applications for career service by officers

as a whole above the requirements, such situation does not exist insofar as lawyers in the Armed Forces are concerned. It is our understanding, and I think it is an accurate understanding, that the services, particularly the Army and Navy, are simply unable to retain lawyers in the numbers needed for career service.

A serious aggravating factor which militates against the retention of lawyers or others who require postgraduate degrees for the performance of their duties is that such individuals are actually penalized under the present basic pay statutes because of the very fact that they had to make an investment in time, not to mention money, to acquire the necessary postgraduate degree. This penalty, according to the statement of Mr. John R. Blandford, counsel to the Committee on Armed Services (p. 1432, "Hearings before Subcommittee No. 1, Committee on Armed Services, House of Representatives, 88th Cong.," on H.R. 3006) would amount to approximately $14,950 over a period of 20 years' service.

At the present time, lawyers brought on to active duty as judge advocates in the Army and Air Force or law specialists in the Navy are statutorily accorded constructive credit for promotion purposes essentially equivalent to the period spent by them in law school, not to exceed 3 years. The same is true for the postgraduate education for doctors, dentists, chaplains and various other officers holding higher degrees in sciences allied to medicine. However, it is important to note that these years of service are not considered service creditable in the computation of basic pay, except in the cases of doctors and dentists.

To see how this works out in practice, let us suppose that two friends, or twins for that matter, Charley and Abel, graduated from the same college in June of 1959. Charley immediately went through the Navy's OCS program and was commissioned an ensign. Abel, on the other hand, entered law school. While Charley was earning pay, albeit not a great deal, as an ensign and later as a lieutenant, junior grade, in the Navy, Abel was spending his for his maintenance, tuition, books, et cetera.

In June 1962, Abel, like most young lawyers, is probably broke and probably in debt, graduated from law school, took and passed the bar of his State, and was duly admitted to practice law. He then, however, entered the Navy and was eventually commissioned as a lieutenant, junior grade, to serve as a law specialist.

Today, if we compare the relative pay of Abel and Charley, we will find that Charley is paid somewhat more than $110 per month over what Abel is paid. Assuming both are serving in the grade of full lieutenant 3 years hence when Charley will have over 6 years' service creditable in the computation of basic pay and Abel will have over 3 years, the differential of Charley's pay over Abel's pay under the proposed scales of H.R. 5555 will be $95 per month. Although the differential will vary from time to time, assuming normal promotions for both Charley and Abel, Charley will, throughout most of his naval career, receive more pay than Abel.

This pay differential must of necessity be a stubstantial negative factor in the mind of any Lieutenant Abel cognizant of the matter who is weighing the advantages and disadvantages of a Regular Navy career. For over his career, he will, in relation to officers of his same