The CHAIRMAN. Thank you very much, Mr. Gavin. [Applause.] [Applause.]

Mr. GAVIN. And that goes, regardless of what the Navy over here has to say. [Laughter.]

The CHAIRMAN. All right.

Now, Captain Martineau, you explain the different grades and the percentage increase in dollars and cents, as displayed on your chart. Captain MARTINEAU. Mr. Chairman, we have prepared two charts for each of the officers, the warrant officers, and the enlisted men. This chart now on the screen is the first of the two charts for the officers.

Over on the left we have the officers' grades here, commencing from the second lieutenant on up through the top rank, the major general. And across here we have the years of service, because, of course, their basic pay depends upon their rank and length of service.

This chart now before you shows in black at the top line the pay, the basic pay, they are now receiving under existing law.

The blue line shows the pay that was proposed in the bill H. R. 2607 before it was considered by the subcommittee.

Now we have the third line here, Mr. Chairman, shown in the red, which indicates the changes that were made by the subcommittee to the basic pay scales.

The CHAIRMAN. Now one minute. Now, Mr. Kilday, you propose to put this chart either in the report-it is in the law. It goes in the law?

Mr. KILDAY. Well, the law will only have one figure.

The CHAIRMAN. That is right, the red figure.

Mr. KILDAY. That is right.

The CHAIRMAN. All right. Then

Mr. KILDAY. These charts are in the hearings and are to be carried in the report.

The CHAIRMAN. All right. Go ahead.

Captain MARTINEAU. This follows exactly the pattern of the pay tables that are now in existing law, Mr. Chairman.

I might add that these lines here, however, are not in the law. They have simply been put in to make it a little clearer, to show the career pattern. In other words, as the average officer progresses on up the line, he falls within this area here. There are very few officers out here with this little service and that rank. Therefore, they receive no in-grade increase. Only the officers in this group.

Likewise, the group out here are those officers who would be considered to have excessive service in the grade, so they would not receive any in-grade increase.

The CHAIRMAN. Now let me ask you this. Wait. Let that chart stay there.

Now the black line is the law today. The blue line is what the Department proposed. The red line is what the committee agreed on and are recommending to the full committee.

Now, what is the difference, the total difference between the blue line and the red line?

Mr. KILDAY. We are going to have that on the next chart.

Captain MARTINEAU. I think that will show up a little clearer on the next chart, sir.

Mr. VAN ZANDT. Mr. Chairman.

The CHAIRMAN. Yes.

Mr. VAN ZANDT. In inserting this table in the record, are we going to have an explanation of O-1 to 0-8 for the benefit of the membership?

The CHAIRMAN. What did you say?

Mr. VAN ZANDT. Are we going to give in the committee printed report an explanation of what O-1 and O-2, 3, 4, 5, 6, 7, and 8 means in the way of rank?

Mr. NORBLAD. I don't know what they are.

Mr. BLANDFORD. It will be in the report, Mr. Van Zandt, with regard to officers. It will be in there, in one portion of the report, showing the Army grade.

One of the difficulties that we encounter in attempting to do that with enlisted personnel

Mr. VAN ZANDT. No, I am not worried so much about enlisted personnel as I am the differential between the ranks in the Army and the Marines and the Air Force, as compared with the Navy.

Mr. BLANDFORD. Well, we have one chart which shows major general, brigadier general, and colonel and all the way down. Now, we can also add, if the committee desires, a chart showing the breakdown-in other words, if O-8 means such-and-such in the Army, suchand-such in the Navy, and such-and-such in the Marine Corps. That will be very simple to do.

Mr. VAN ZANDT. That is right.

Mr. KILDAY. Mr. Chairman, this chart does not reflect the fact, as proposed in H. R. 2607, there was a new column, over 35 years of service, where there would have been only a substantial increase for the O-8 or major general.

The subcommittee has eliminated that column.

Mr. COLE. Mr. Chairman, could I inquire?

Mr. KILDAY. Yes.

The CHAIRMAN. Mr. Cole.

Mr. COLE. Could I inquire if there were any instances where the subcommittee reduced the allowance below what the Department had recommended? As I scan the chart, I only see increases. Were there instances where the committee reduced them?

Mr. BLANDFORD. Very definitely; the over-35 block.

Mr. KILDAY. I don't remember. The 35, of course, came out.

Mr. COLE. Other than that one block.

Mr. KILDAY. I am never able to remember these tables.

Mr. COLE. I will ask Captain Martineau.

Captain MARTINEAU. They have not. There are no reductions reflected on this table, and the committee made no reductions in the proposed pay except the one that Mr. Kilday mentions.

Mr. BLANDFORD. Mr. Chairman, may I explain why the committee took the action that it did with regard to the increases that you see, for example, for major generals? The Department of Defense recommended $1,014 a month. We recommended $1,021.80 a month. That became necessary after we had agreed to a flat 6-percent increase in retired pay for those drawing retirement pay under the Career Compensation Act. In other words, we want to be able to say that all retired people will receive a 6-percent increase, or not less than a 6percent increase if they are drawing pay under the Career Compensa

tion Act.

We also want to be able to say that all retired personnel, including those retired with less than 3 years of service, will receive a 6-percent increase under the Career Compensation Act.

We also want to say that all retired personnel who do not qualify under the Career Compensation Act will also receive a 6-percent increase in pay.

Now, dollarwise, it made very small difference in the officers structure. In other words, the major general with over 8 or over 10 or over 12 or over 14 years of service and less than 16 or less than 18 is a very rare bird. So obviously dollarwise that made no difference.

But the way the chart came in originally, the increase at that point was only approximately 5 percent. We increased it to 6 percent, actually 6.07, to conform with the general theory of the subcommittee that no one should receive less than a 6-percent increase at that point.

The CHAIRMAN. Then, so the committee can understand it, all officers on the retired list who retired before and prior to 1949 get 6-percent increase across the board of his retired pay and not 6 percent of his base pay?

Mr. BLANDFORD. No-well, what it is: It is 6 percent-it is the same thing, actually.

The CHAIRMAN. Yes.

Mr. BLANDFORD. But the result is

Mr. RIVERS. What he is getting now.

Mr. BLANDFORD. Yes; that statement is correct with regard to those who did not qualify under the Career Compensation Act.

Mr. RIVERS. That is right.

Mr. BLANDFORD. Now those who do receive pay under the Career Compensation Act, and that applies, for practical purposes, to every person retired after October 1, 1949, will receive an increase of not less than 6 percent.

Now in some instances that increase will be larger because of the career pattern that we have established here, which will mean that they will be receiving anywheres from a 10, 11, 12, to 14 percent increase with regard to their retired pay.

Now that also is true of the officer who is retired with less than 3 years of service, to the extent of a 6-percent increase.

If you will note on your pay scales, under 2 and over 2 reflects the same pay throughout. In other words, there is absolutely no increase. The Department recommended no increase and we recommended no increase.

We recognize, however, that since October 1, 1949, there have been young officers retired for disability who would not receive any increase under the proposal as it was originally submitted. We wanted to guarantee those individuals the retired pay that they are now receiving, plus 6 percent.

Of course, those are the men, enlisted men and officers-less than 2 as to enlisted men and less than 3 as to officers who were injured in training or who were wounded in combat severely enough that they were retired.

Under the pattern we have here, unless something were done there, that would be the group of retired persons who would have been left out, which, of course, is not the intention.

I don't believe it is the intention of anyone.

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The CHAIRMAN. Mr. Short.

Mr. SHORT. I think the point the gentleman from New York, Mr. Cole, wanted to bring out is that our committee really was more generous than the Department of Defense itself in their recommendations. Because in every instance on this chart we voted a larger increase than that that was recommended by the Department of Defense itself.

Captain MARTINEAU. That is correct, sir.

Mr. COLE. Is it correct the Department of Defense did not make recommendation to increase the retired pay?

Mr. BLANDFORD. The Department of Defense recommended that those retired under laws other than the Career Compensation Act would be given another 2-year period of time in which to make a reelection. The subcommittee rejected that proposal. In 1949 those individuals who were required to qualify or who were advised as to what their pay would be under the old law or under the new law were given a 5-year period in which to make an election.

Now, I might explain that for a moment to the members of the full committee. In 1949 an entirely new theory of disability retirement was overwhelmingly adopted by this committee and by Congress. Disability retirement since October 1, 1949, has been placed upon a basis of years of service or degree of disability in conformity with standards established by the Veterans' Administration.

In other words, an officer with 5 years of service and a 70-percent disability is retired with 70 percent of his basic pay. An officer with 30-percent disability and 20 years of service can take his retired pay based upon his length of service, which would be 50 percent, and then that portion of his retired pay which bears a relationship to his degree of disability is nontaxable.

Under the old law, all retirement for disability was nontaxable. Seventy-five percent retired pay was automatic for people with as little as 10-percent disability, or for people with as much as 100-percent disability. It made neither rhyme nor reason. We changed that whole system.

You will recall in World War II we retired a considerable number of people. We have over 83,000 officers on the retired rolls today at a cost to the Government of in excess of $403 million. And something had to happen with regard to this whole system of disability retirement.

Now those people were allowed to elect. What happened was this. All of those cases were reevaluated. They were then advised they could take their retirement based upon their degree of disability; that is, the amount that was granted to them on a reevaluation or evaluation of their degree of disability, or upon their length of service.

Now, obviously anybody who didn't get a pay increase felt that he was harshly dealt with, because he said, "Well, you always guaranteed me 75 percent retired pay for the remainder of my life." Well, we maintained that. We gave him the choice of taking 75 percent of the old pay for the remainder of his life or he was allowed to elect, within a 5-year period, as to whether he wanted to come under the new pay scale.

Now that election was in that law for a purpose. Obviously these individuals had a 5-year period in which to make their election. That period expired last year.

Mr. GAVIN. All of them were duly notified?

Mr. BLANDFORD. Oh, yes, sir; they certainly were duly notified, and there are some 43,000 people who are drawing pay under laws other than the Career Compensation Act and thus drawing, you might say, saved pay.

Now in 1952 we granted those people an increase in retired pay across the board because of action of the other body, it being necessary for us to reduce that amount.

Mr. VAN ZANDT. What was it, Russ?

Mr. BLANDFORD. To a straight 4 percent.

Now all retired people received a 4-percent increase in retired pay in 1952. There would not have been any word raised had we granted a flat percentage increase in this proposed pay scale if it had been a flat percentage increase because it would have been applicable to those retired under laws other than the Career Compensation Act.

But instead, from a very practical viewpoint, the Congress and the American people are confronted with a very serious problem, a problem that is fantastically expensive with regard to reenlistment rates and with regard to failure of young officers to apply for regular commissions.

On that theory and for that reason, and that reason practically alone, although the cost of living has gone up, the bill that was submitted to this committee provides increases on a career pattern at critical points to induce enlisted men to stay on active duty, stay in the service, and to induce young officers to make a career of the service. That is the whole theory of the bill.

Now, those retired people were given a 6-percent increase which would then restore to them the amount of increase that this House originally passed in 1952, slightly over that, because the 6 percent also applies to the 4-percent increase they got in 1952.

The cost of living for practical purposes has not gone up since 1952 to any appreciable extent.

Therefore, it is not, in my opinion, sound to say that we are being unfair in any respect to these retired people.

Mr. KILDAY. At that point, Mr. Chairman, we are not being unfair to anyone here. We are being very just and adequate. The question we had before us was whether we were going to give them a new election.

I don't know of anyone who took the position in 1949 that because we provided an election at that time, that in every subsequent pay bill there would be a new election. As a matter of fact, it was the exact contrary. At that time, inasmuch as we were changing a longestablished retirement system to a new one on the basis of the percentage of disability, that we felt in justice at that time that they should all have the right to come under the new law or stay under the old, whichever was to their advantage.

Now, in this bill, as I said when I started, it will help a great deal to understand it if we remember what type of bill it is. It is a career incentive bill.

We had no complaints in 1952 of a 4 percent increase to the retired personnel.

It is true that some of the retired people one of the organizations is insistent upon an election, as the hearings will reflect. Of course,