ADJUSTMENTS IN FOREIGN SERVICE ANNUITIES-REPORT OF A COMMITTEE-MINORITY VIEWS (S. REPT. NO 813)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP66B00403R000300050004-1
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 23, 2016
• Document Release Date: February 21, 2014
• Sequence Number: 4
• Publication Date: December 19, 1963
• Content Type: OPEN SOURCE

Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300050004-1
1963 CONGRESSIONAL RECORD ? SENATE
REPORT ON HIGH COSTS PERTAINING TO SITES
FOR SELECTED LOW-RENT HOUSING PROJECTS
A letter from the Comptroller General of
the United States, transmitting, pursuant to
law, a report on high costs pertaining to sites
for selected low-rent housing projects in the
area administered by the San Francisco Re-
gional Office, Public Housing Administration,
Housing and Home Finance Agency, dated
December 1963 (with an accompanying re-
port); to the Committee on Government
Operations.
REPORT ON EXCESSIVE PRICE PAID FOR PROPUL-
SION REDUCTION GEARS PURCHASED FROM
WESTINGHOUSE ELECTRIC CORP.
A letter from the Comptroller General of
the United States, transmitting, pursuant to
law, a report on the excessive price paid? ftr
propulsion reduction gears purchased from
Westinghouse Electric Corp., Sunnyvale,
Calif., Department of the Navy, dated De-
cember 1963 (with an accompanying re-
port); to the Committee on Government
Operations.
REPORT ON UNNECESSARY COSTS BEING IN-
CURRED AS A RESULT OF THE NAVY'S REFUSAL
TO ACCEPT THE STANDARDIZED OFFICERS'
DRESS SHOES
A letter from the Comptroller General of
the United States,, transmitting, pursuant to
law, a report on the unnecessary costs being
incurred as a result of the Navy's refusal to
accept the standardized officers' dress shoes
agreed upon by the Army, Air Force, and
Marine Corps, Department of Defense, crated
December 1963 (with an accompanying re-
? port); to the Committee on Government
Operations.
ADJUSTMENT OF IMMIGRATION STATUS
? A letter from the Commissioner, Immigra-
tion and Naturalization Service, Department
of Justice, transmitting, pursuant to law,
copies of orders entered in behalf of Ho Liu,
Irene Liu, and Jefferson Liu, relating to ad-
justment of their immigration status (with
accompanying papers); to the Committee on
the Judiciary.
PETITIONS AND MEMORIALS
Petitions, etc., were laid before the
Senate, and referred as indicated:
By the ACTING PRESIDENT pro tern-
pore:
A resolution adopted by the Nashville Area
Chamber of Commerce, Nashville, Tenn., re-
lating to Federal expenditures, Federal in-
come tax reduction, and sound fiscal policy;
to the Committee on Finance.
A resolution adopted by the Windham
County Democratic Association, of north-
eastern Connecticut, favoring the enact-
ment of legislation to designate November 22
? as President Kennedy Memorial Day',
ordered to lie on the table.
ADJUSTMENTS IN FOREIGN ERV
ICE ANNUITIES?REPORT OF A
COMMITTEE?MINORITY VIEWS
(S. REPT. NO. 813)
Mr. SPARKMAN. Mr. President, from
the Committee on Foreign Relations, I
report favorably with amendments, the
bill (S. 745) to provide for adjustments
in annuities under the Foreign Service
retirement and disability system, and
I submit a report thereon. I ask unani-
mous consent that the report be printed,
together with the minority views of Sen-
ators LAITSCRE, WILLIAMS of Delaware,
and MUNDT.
The PRESIDING OFFICER (Mr. IN-
OUYE in the chair). The report will be
received and the bill will be placed on the
calendar; and, without objection, the
report will be printed as requested by the
Senator from Alabama.
Mr. LAUSCHE. Mr. President, I ask
unanimous consent to have printed in
the RECORD the minority views in con-
nection with Senate bill 745, which has
just been reported by the Senator from
Alabama [Mr. SPARKmAN].
The PRESIDING OFFICER. Without
objection, it is so ordered.
The minority views are as follows:
MINORITY VIEWS
It is our opinion that this bill should not
be acted upon favorably because, if adopted:
" 1. It will grant to certain individuals rights
to which they are not entitled and which
will make these particular individuals the
beneficiaries of grants not given equally to
other persons in the Foreign Service retire-
ment program.
2. Allow these special retirees now to desig-
nate their respective wives as beneficiaries, in
the event they are survived by their wives,
without requiring the retirees to pay back
into the Treasury excess amounts which the
fund paid them upon their retirement be-
cause they did not select to have their wives
designated as beneficiaries.
3. Treat unjustly those retirees who did
designate their wives as survivor benefici-
aries and thus suffered a reduction in the
retirement pay which they received.
4. Create further complications and the
need for further adjustments when those
retirees who did designate their wives as
survivor beneficiaries learn of the losses
which they suffered through the reduction
in retirement pay because they did designate
their wives as survivor beneficiaries.
5. Definitely create an inequality of treat-
ment of the persons covered by the fund.
6. Give encouragement to the administra-
tion of retirement funds completely incon-
sistent with prudence and actuarial rules.
7. Require the payment of the obligations
created by the bill not out of the Foreign.
Service retirement fund but out of the
general taxpayers' fund of the Federal Gov-
ernment.
Any beneficiary under this bill at the time-
of retirement from the Foreign Service had
the option of either designating or not desig-
nating a potential surviving spouse as a
beneficiary. The retiree had to decide
whether he would prefer getting an in-
creased retirement pay for himself without
designating his wife as a beneficiary; or a
decreased retirement pay by so designating
his spouse.
? Many retirees did designate their spouses
as beneficiaries and thus received less money
for themselves during their lifetime. There
were others who exercised the option of get-
ng more pay for themselves but excluding
their spouses as beneficiaries.
If this bill is adopted it will result in un-
equal treatment as between these two classes
of retirees. The retiree for whom this bill is
being passed will now be allowed to desig-
nate the spouse as a beneficiary but will also
be allowed to keep all of the excess pay that
he received from the fund since his retire-
ment.
However, the Foreign Service worker who,
at the time of retirement, elected to have
his spouse designated as a beneficiary, of
course, received less money. There is no
provision in the bill reimbursing those re-
tirees for their losses. We are of the opinion
that this latter class, when it learns of the
discriminatory treatment to which this bill
will subject them, will justifiably come be-
fore the Congress asking that they be given
equal consideration.
With regard to this Foreign Service retire-
ment plan, we have an exhibition of what
reckless and imprudent disregard for actuar-
ial rules does to the stability of a retirement
23957
plan that was originally set up on a sound
basis. The retirement plan of the Foreign
Service was adopted by Congress in 1924.
At that time, it provided for employee con-
tributions equal to 5 percent of salary Up to
$9,000; and Government appropriations
necessary to continue the plan in full force,
the aggregate- total of Government appro-
priations not to exceed the aggregate total of
officer contributions plus interest. However,
at various times forces began to operate for
liberalizations of rights and payments.
Some of the liberalizations that the Con-
gress adopted are as follows:
1. In 1939, officers who had served 30 years
could retire at age 60, on a reduced annuity.
? 2. In 1939, survivor annuities for wives
were first provided.
3. In 1941, the act was changed to permit
retirement with 30 years of service at age 50.
4. In 1946, voluntary retirement at age 50
with 20 years of service was permitted.
5. In 1946, disability retirement was lib-
eralized so that when a participant in the
system becomes disabled, if he has at least
5 years of service, his annuity is figured on
the basis of a minimum of 20 years of
service.
6. Also in 1946, the act was amended "to
provide that an annuity would be based on
the officer's 5-year average salary next pre-
ceding retirement, rather than the 10 years
next preceding retirement.
7. In 1955, it was changed to the best 5-
year average, rather than the 5 years next
preceding retirement.
8. In 1956, the limitation on years of serv-
ice on which an annuity could be based was
raised to 35 years, thus allowing 70 percent
of the highest 5-year average salary as an
annuity.
9. In 1960, the retirement system was
changed to provide that Foreign Service Staff
personnel, after they have served 10 years
in the Foreign Service, become participants
in the Foreign Service retirement system.
During the first 10 years of their service they
are subject to the Civil Service Retirement
Act.
10. In 1960, survivor annuities for children
were also granted.
11. And, in 1960, the act was amended to
provide for recomputation of annuities of
those who had retired prior to 1956 to allow
those with more than 30 years to be given
added credit for the difference up to 35 years.
A measure of the dollar impact of these
liberalizations on the unfunded liability of
the system is not available. But, partly as
a consequence of these liberalizations the
fund is now in an indefensible state of in-
stability.
The limitation of 5 percent of salary up to
$9,000 provided by the 1924 act was changed
to $10,000 on February 23, 1931; changed to
$13,500 on August 13, 1946; and removed al-
together on August 5, 1955. The limitation
on Government appropriations to the fund
which was a provision from the establish-
ment of the system in 1924, was removed on
April 24, 1939, Government payments were
to be in the form of annual appropriations
based upon an actuarial determination of the
contribution required. Frequently the Con-
gress did not appropriate all or any part of
the funds requested for this purpose. '
Subsequently on September 8, 1960, the law
was again changed with respect to contribu-
tions requiring that the employees and the
U.S. 'Government each pay 61/2 percent effec-
tive July 1, 1961.
Existing now with respect to this retire-
ment program is the indefensible and unbe-
lievable situation that because of liberaliza-
tions in rights and other causes it requires
a contribution of 29.7 percent to maintain
the fund. If the contributions were to be
made on an equal basis by employer and em-
ployee, each would have to contribute 14.81/2
percent _of the payroll. The Government
now owes $288 million to the fund; the re-
ceipts of the fund are now equal to 13 per-
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23958 CONGRESSIONAL RECORD ?SENATE December 19
cent of the payroll of the Foreign Service
which is approximately $250 million. It is
essential that this inadequacy of contribu-
tion be solved.
We have been told that a proposal will be
made to continue the payment of the em-
ployees at 61/2 percent of their salaries but
that the general taxpayers will then be re-
quired to contribute 23.2 percent of the pay-
roll.
Illustrative of the unbelievable situation
that prevails in the fund is the fact that into
It now on the basis of a 13-percent contribu-
tion (61/2 percent by the Government and
61/2 percent by the workers) in fiscal year
1962, the fund received $6 million while it
paid out for all purposes $5.5 million. An
actuarial projection of funds, known obliga-
tions, and anticipated receipts reveals that
unless measures are taken to improve the
financing of the fund it will be depleted by
1977 and unable to meet future obligations.
Obviously, this situation is bad. It is the
result of failure to recognize when the lib-
eralizations were made what the ultimate
consequences would be. Many times when
new rights were granted to one group, sub-
sequently new rights had to be granted to
another in order to equalize the considera-
tion given.
We believe that Congress should not act
favorably upon this bill because, if adopted
it will treat persons covered by the fund
Unequally. In addition, its adoption would
encourage the imprudent and actuarially
unsound administration of retirement funds;
and would further obligate the general tax-
payers' fund of the Federal Government,
rather than the Foreign Service retirement
fund. We believe that rather than further
adding to the unfunded liability of the For-
eign Service retirement plan Congress should
be considering viable proposals to solve the
deficiency in the fund aggravated by the
liberalizations adopted in the past.
FRANK J. LAUSCHE,
JOHN J. WILLIAMS,
KARL E. MUNDT.
Mr. LAUSCHE. Mr. President, this
bill contemplates the liberalization of the
retirement payments in the Foreign
Service, because of previous liberalization
running through the years. The situa-
tion now requires a 29.7 percent of wages
to be contributed to the fund in order to
make it actuarily sound. It has been
suggested that the workers in the For-
eign Service put up 61/2 percent and that
the taxpayers put up 23:2 percent of the
salaries in order to maintain it financi-
ally feasible.
It is one of the most indefensible, im-
prudent expansion's of' taxpayers' funds
that is probably on record in the history
of Congress.
BILLS AND JOINT RESOLUTION
INTRODUCED
Bills and a joint resolution were intro-
duced, read the first time, and by unani-
mous consent, the second -time, and re-
ferred as follows:
By Mr. WILLIAMS of New Jersey:
S. 2402. A bill to suspend for a temporary
period the import duty on polyethylene
imine; to. the Committee on Finance.
By Mr. TALMADGE:
S. 2403. A bill to amend section 7701 of
the Internal Revenue Code of 1954 to clarify
the tax status of certain professional asso-
ciations and corporations formed under State
law; to the Committee on Finance.
By Mr. HART:
S. 2404. A bill for the relief of Carleen
Coen; to the Committee on the Judiciary.
By Mr. KEATING (for himself and Mr.
DOUGLAS) :
S. 2405. A bill to amend the International
Claims Settlement Act of 1949, as amended,
to provide for submission of certain claims
agreements to the Senate for its advice and
consent; to the Committee on Foreign'
Relations.
(See the remarks of Mr. KEATING when he
introduced the above bill, which appear
under a separate heading.)
By Mr. HARTKE:
S. 2406. A bill for the relief of Ioannis
Ko.smakos; and
8.2407. A bill for the relief of Nikolaos
Vilos; to the Committee on the Judiciary.
By Mr. MOSS:
S. 2408. A bill to provide for granting em-
ployees in the postal field service time off
for one State holiday each year; to the Com-
mittee on Post Office and Civil Service:
By Mr. KEATING:
S.J. Res. 140. Joint resolution proposing
an amendment to the Constitution to create
the offices of Executive Vice President and
Legislative Vice President; to the Commit-
tee on the Judiciary.
(See the remarks of Mr. KEATING when he
introduced the above joint resolution, which
appear under a separate heading.)
CONCURRENT- RESOLUTION
TO PRINT AS A SENATE DOCU-
MENT, WITH ADDITIONAL COPIES,
MEMORIAL COPIES OF INAUGU-
? RAL ADDRESS OF THE LATE PRES-
IDENT KENNEDY ON JANUARY 20,
1961
Mr. HUMPHREY. Mr. President, I
submit a concurrent resolution which
reads as follo*s: .
Resolved by the Senate (the House of
Representatives concurring),
SECTION. 1. That there be printed as a Sen-
ate document, in such style, form, and man-
neras may be directed by the Joint Commit-
tee on Printing, memorial copies of the
inaugural address delivered by the late Presi-
dent, John F. Kennedy, upon the occasion
of his inauguration on January 20, 1961.
. SEC. 2. There shall be printed 60,000 ad-
ditional copies of such document, of which
20,000 shall be for the use of Members of
. the Senate and 40,000 shall be for the use
of Members of the House of Representatives.
Mr. President, I send the concurrent
resolution to the desk to have it appro-
priately referred. I have read the text
of the concurrent resolution because I
wish the RECORD to show that this pro-
cedure is now underway. I am very
hopeful that early in January 1964 the
committee-will be able to report the con-
current resolution favorably. There is
already a great demand for this partic-
,
ular document.
The PRESIDING' OFFICER. The
concurrent resolution will be received
and referred to the Committee on Rules
and Administration.
The concurrent resolution (S. Con.
Res. '70) was referred to the Committee
on Rules and Administration.
RESOLUTION
TO PRINT AS A SENATE DOCUMENT
A REPORT ENTITLED "PERSONNEL
ADMINISTRATION AND OPERA-
TIONS OF AGENCY FOR INTERNA-
TIONAL DEVELOPMENT"
Mr. McGEE submitted the following
resolution (S. Res. 237) ; which was re-
ferred to the Committee on Rules and
Administration:
Resolved, That there be printed as a Senate
document a report entitled "Personnel Ad-
ministration and Operations of Agency for
International Development," submitted by
Senator GALE W. MCGEE to the Committee
on Appropriations and that 10,000 additional
copies be printed for the use of that com-
mittee.
CLAIMS AGREEMENTS SHOULD BE
HANDLED AS TREATIES, KEATING
URGES
Mr. KEATING. Mr. President, on be-
half of the Senator from Illinois [Mr.
DOUGLAS], and myself, I introduce, for
appropriate reference, legislation to re-
quire Senate ratification of any claims
agreenient made with foreign nations for
claims adjudicated by the Foreign Claims
Settlement Commission.
The purpose of this legislation is clear.
In the International Claims Settlement
Act of 1949, as amended, the Congress
has established the procedure whereby
the Claims Commisison investigates and
adjudicates the claims of U.S. citizens
against foreign countries.
At present most of the claims under
consideration are for property Seized and
nationalized by Communist governments
in Eastern Europe. In the future these
claims may well include expropriation
claims against other nations throughout
the world.
What has happened so far in the set-
tlement of these claims is instructive.
The Foreign Claims Settlement Commis-
sion has set a total claims value for each
nation involved. Then, time and again
the State Department "has negotiated
with the countries seizing U.S. property
and settled for 40 percent, 30 percent, 24
percent, and the Czech case less than
10 percent of the full amount determined
by the Claims Commission." Explicitly
or implicitly, the agreements reached
have not been limited to claims settle-
ments, but have included other points at
Issue and frequently trade agreements
have been the quid pro quo to get agree-
ment by the Communist governments on
the claims owed.
The result of these actions by the De-
partment of State has been to deprive
U.S. citizens of property, in the form of
validated claims, without due process of
law and with no further appeal to any
agency of the Government.
In the Czech case, for instance, the
Department of State has in effect ad-
mitted that they would be prepared to
settle for about $11 million of a total of
- $113.6 million, including both principal
and interest. Furthermore, I should be
glad to make available the contradictory
correspondence which I have had on this
matter to any interested Members of the
Senate so that they can review it.
Mr. President, I introduced an amend-
ment along these lines, but referring only
to the Czech settlements, when the for-
eign aid bill was before the Senate.
Basically I regard an agreement to ac-
cept less than 10 percent on a dollar of
adjudicated claims as a form of foreign
aid at the expense of U.S. taxpayers.'
However, in a technical sense, this
issue can even more properly be con-
sidered as an amendment to the Interns,-
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