The fact that he would be able to retire after 20 years is very important, because if he quits in 12 years, he gets nothing. There is no vesting in the military retirement system as there is in a great many others, civil service, for example.

So it's an important procurement incentive. Now, which side of these scales is more important or deserves more weight is a serious question.

Senator CANNON. Of course, that 20-year period is only permissive, permissive retirement at 20 years.

Mr. PAUL. Yes, sir; that is right.

Senator ENGLE. Of course, it's a little collateral to what we are talking about, but it seems to me we magnify our problems, and if we do this, we ought to have in mind that we must arrange some way to create incentives for these men who are at the top of their capabilities to stay in the military services and to give the country the benefit of their experience and their competence. Otherwise they will just simply walk off on us and hire out to these defense industries. You look over the roster of these defense contractors. They simply bristle with former generals, admirals, and colonels, and you know it as well as I do.

I think it ought to be stopped. I think in this particular case that we ought to go back to this 1958 act. But I sure have some grave misgivings about a retirement system which encourages the best officers we have, the most competent and the most experienced, to step out of the service at an early age in order to make themselves thousands a year, or whatever they make.

They get good money and they are worth it, but if you are going to make a military career, you should.

Now, I would like to turn to another matter. You say on page 28 of your statement:

These actions

referring to the preceding recommended actions—

according to our estimates would result in future annual savings of some $104 million, which would be ample to provide increases in the areas we have recommended.

What you have done is you have turned around and you have juggled your initial recommendations, didn't you?

Mr. PAUL. No.

Senator ENGLE. In order to get under the House figure, isn't that right?

Mr. PAUL. Only in the sense that we moved what we had proposed by way of an increase from subsistence to basic pay, but as far as we are concerned, it is still compensation.

Senator ENGLE. I know that.

Mr. PAUL. Otherwise we didn't juggle it.

Senator ENGLE. But in order to increase these junior grade officers, lieutenants to captains and majors and lieutenant colonels, that would cost about $84 million

Mr. PAUL. Right.

Senator ENGLE. And so you fished around to find some way to get under $84 million, so that this essential area could be taken care of, isn't that right?

Mr. PAUL. We not only wanted the $84 million we would need to restore the first lieutenants, captains, and majors, we also would like the $17 million additional we need to restore an increase for lieutenant colonels.

Senator ENGLE. I understand that, but what I am trying to say is this: I am trying to find out whether or not you did not reshuffle your figures after the House bill, so that we wouldn't face the need in this committee of increasing the House bill by $84 million for these junior grades, plus whatever you have mentioned for the lieutenant colonels. Now, is that correct?

Mr. PAUL. Senator Engle, we were suggesting a way in which we thought it could be done without increasing costs; yes, sir.

Senator ENGLE. That is exactly the point I am getting to. What I want to find out is whether or not your recommendations are based upon merit or upon what you consider legislative feasibility.

Mr. PAUL. I would say they are based entirely on merit, Senator. Senator ENGLE. If they are based on merit, why did you make a contrary recommendation in the first place to the House committee? Because these things that you recommend being changed you formerly recommended.

Mr. PAUL. Senator, as far as the increase in officer compensations were concerned, we did recommend those to the House.

Senator ENGLE. I understand you did, but the House-these other things that you recommend here, I am speaking now of pages 26 and 27 of your statement.

Taking the one on page 26, I am certainly for those, but I get over here to A, B, and C. Didn't you originally recommend those to the House?

Mr. PAUL. No, sir: we did not. We recommended a $30 increase in subsistence for officers and none for enlisted. The House put in $70 million of subsistence increases for enlisted personnel, which we had not recommended, and left only a small percentage of our recommended subsistence increase for officers.

We are recommending that all subsistence increases be taken out of the bill and that the savings that would be accomplished by that be put back in officers base pay.

Senator ENGLE. Am I correct, then, in my conclusion that what you have recommended on page 27 of your statement, A, B, and C, are items put into the House bill not recommended by the Department of Defense?

Mr. PAUL. Yes, sir; that is correct.

Senator ENGLE. I would suspect that would make the case a little more defensible, so far as the Defense Department is concerned. That is all I have, Mr. Chairman. Thank you.

Senator CANNON. Senator Beall.

Senator BEALL. Mr. Chairman, I just want to ask the Secretary, did you recommend on the two bills over there, the Armed Services Committee voted out one bill and the House amended it on the floor, another bill. Which bill are you recommending now?

Mr. PAUL. We are discussing the bill that passed the House.

Senator BEALL. That actually passed the House. That is the bill that was rewritten on the floor?

Mr. PAUL. Yes. They added two provisions, the combat pay and the recomputation of retired pay, on the floor.

Senator BEALL. Actually, according to this chart here, there are not too many retired lieutenant generals and generals in this bill, 128 lieutenant generals and vice admirals. That is all there are. And major generals, there are only 730 of those, and rear admirals, in the bill now. If these people retired prior to 1958, they would be covered under this new bill, the increase in their compensation retirement.

Mr. PAUL. Yes, sir.

Senator ENGLE. May I ask one further question, Mr. Chairman. Senator CANNON. Yes.

Senator ENGLE. Right on the point I was on before. My attention has been called to page 12 of the Committee Print. It indicatesdo you have it before you, by the way?

Mr. PAUL. No, sir; I do not.

Senator ENGLE. I would like to have you have it before you, because what it indicates to me

Mr. PAUL. I have it now, sir.

Senator ENGLE (continuing). That this subsistence allowance is taken away from the enlisted personnel and shoved up there to take care of these junior grade officers. Now, I can understand the House action a little better, having seen these figures, because I know that those gentlemen over there would be very sensitive to taking out the subsistence allowance for enlisted personnel and taking care of officers to the tune of some $73,116,000.

Senator BEALL. There are more of them, Senator.

Senator ENGLE. That is correct. We understand this matter with great clarity.

Mr. PAUL. Yes, sir; that is exactly what they did.

Senator ENGLE. You don't have to be elected, but we do. Don't you think we ought to just grit our teeth and put in that extra $73 million? Mr. PAUL. Senator, without telling you what to do, I would like to simply say that the House also kept in the bill sea and foreign duty pay, which affects almost 1 million enlisted personnel and no officers.

We had recommended that that be eliminated, which incidentally costs, excluding Hawaii, around $127 or $128 million a year. This special pay has been continued by the House.

Senator ENGLE. I see it as $134 million over here.

Mr. PAUL. It is 134 if you include Hawaii, Senator, but that was excluded by the House.

Senator ENGLE. We don't consider Hawaii a foreign land any more, so it was appropriately excluded.

Mr. PAUL. The family separation allowance which the House put in, also includes enlisted personnel as well as officers. Those are two things additional we recommended. We did not assume retention of sea and foreign duty pay in proposing the basic pay schedules we did for enlisted members.

We are not in any way underestimating the need for an increase for enlisted personnel, but we feel that the logic of some of the subsistence increase voted by the House is open to question. We would like to have flexibility, for example, as I indicated earlier. On the commuted rations we don't see any reason why that should be statutorily fixed at $1.25 when it is currently based on the cost of food, and

as you and I know, the cost of food varies from year to year. That is one aspect.

Senator ENGLE. Just reconsidering the House position, I can see how, between a rock and a hard place, when they had the choice of knocking out the subsistence allowance for enlisted personnel and taking care of even junior grade officers of lieutenant, captain, and major status; I understand now why that occurred.

I have been a little puzzled about it, but you have clarified it very well. Thank you.

Senator CANNON. Senator Young.

Senator YOUNG. Mr. Secretary, I think everyone here is in agreement that a pay raise for men and women of our Armed Forces is overdue; long overdue but you have stated also that we should, in legislating, consider it attractive and make it attractive to young men to stay in the military service.

Do you consider that if this bill, as passed in the House of Representatives, after this teller or nonrecord vote, putting in the recomputation allowance, do you consider it is encouraging young men to remain in the Armed Services, when I notice here and I am referring to the chart on page 10—that a private first class or a seaman under recomputation; he would have an increase of 1 and 1/10 percent, while an ex-Chief of Staff would have an increase of 38 and 210 percent, and you go down to generals and admirals, 25 and 10 percent and down the line. Do you consider that as making it attractive for young men to stay in the services?

Mr. PAUL. In picking out the private and seaman recruit, Senator, I don't know of any, or very few, members of the Armed Forces that would end up in a career status at that rank.

Senator YOUNG. Then take a sergeant first class, a staff sergeant, petty officer first class, he gets 1.6 percent, but a sergeant first class 5.8 percent. Mr. Secretary, that doesn't seem so tremendous when you start at the top and go down, start at 38.2 percent; does it?

Mr. PAUL. No, sir; it certainly doesn't. As a matter of fact, there are only between 30,000 and 40,000 retired individuals out of the number involved here who would receive any substantial increase from this bill. There is a total of 112,000 who would receive some increase from it.

Senator YOUNG. Yes; I have those numbers, but since you bring that up, I am referring to the letter from Chairman Carl Vinson of the Armed Services Committee of the House of Representatives. Years ago I served as a Congress on his committee. So he has been in business a long time, and he is well beloved as an authority on this subiect; is he not?

Mr. PAUL. Yes, sir; absolutely.

Senator YOUNG. Now, he calls attention in his letter-I will read some paragraphs on the fifth page of his letter:

I am advised that the estimated lifetime cost for 112,484 retired personnel who would benefit by recomputation, involves an ultimate expenditure of $504,298,845, without regard to the Coast Guard, Public Health Service, and Coast and Geodetic Survey—

who would undoubtedly be justified in coming in following this example.

Now he said of that total of more than $500 million cost, of those who would benefit by recomputation, nearly $292 million would be paid to only 23,479 officers serving in the grade of lieutenant colonel and above, but on the other hand, 89,500 retired personnel will only receive $212 million during their lifetime, as a result of recomputation. In other words, those are rather astonishing figures, are they not? Wouldn't it be hard to justify paying added retirement to approximately 23,500 officers, retired officers, amounting to $292 million, when you pay 89,000 retired personnel under the grade of lieutenant colonel only $212 million during their lifetime as a result of recomputation? Do you challenge the figures? First, I will ask you: Do you challenge the figures of Chairman Vinson's letter?

Mr. PAUL. I am sure they are correct, Senator.

Senator YOUNG. Doesn't that sound a little lopsided to you, sir? Mr. PAUL. It is certainly true that the major benefits of recomputation affect these smaller numbers that you referred to. But I think the committee should also bear in mind that the individuals we are talking about in these relatively small numbers are and were for many years the leaders of our Armed Forces before they retired. They had not had over a period of many, many years, including more than 30 on 1 occasion, any increase in pay.

Senator YOUNG. That would also be true of majors and captains, would it not?

Mr. PAUL. No, sir. I would like, if you would permit me, Senator, to insert in the record a short indication of when these pay increases occurred and what ranks they applied to.

Senator YOUNG. It isn't a question of permitting it. I think we would like very much to have you insert that in the record. So I will go on to another subject right now.

(The following tables were subsequently submitted:)