Veto of the Federal Employees Life Insurance Bill.
To the House of Representatives:
For the second time in less than eight weeks, I am forced to return a bill without my approval because it is inflationary.
The bill I am now returning--H.R. 6926--would increase life insurance coverage for Federal employees by over 30%--at an annual cost to the taxpayer of $90 million. If we were to extend equivalent increases in fringe benefits to all American workers, we would be fueling the fires of inflation by nearly $3 billion.
At a time when we are making every effort to reduce low priority Federal spending in other areas, this bill cannot be justified.
At a time when we are urging business and labor to exercise restraint, this bill would set a double standard for executive branch employees and members of the Congress.
At a time when the Congress--at the request of the employee unions--has already added almost $300 million more than I requested to this year's cost of civilian pay, this bill cannot be supported.
In the past ten years, the average Federal civilian salary rose by nearly 75%--from about $4,000 a year to about $7,000 a year. Since life insurance is geared to the annual salary, this means that insurance has also increased by 75%. Over the same period, the average pay of a factory worker increased 47%.
Since I have been President, there have been four successive civilian pay increases-and four insurance increases. The total cost of these increases has amounted to over $2 billion.
In addition, there have been very large increases in survivor benefits under the Federal employees' retirement system. This is equivalent to added insurance. In the case of a typical employee, the widow's survivorship annuity has risen by 94% since 1954.
These increased benefits must be protected. They must not be eroded by inflation.
I have already submitted to the Congress my recommendations on the Federal employee insurance program. My recommendations are fair and responsible. They would increase maximum coverage for employees in the upper grades from $20,000 to $30,000 and they would provide for an actuarially sound funding of the insurance program.
The House of Representatives initially approved my bill. The Senate Post Office and Civil Service Committee expanded the benefits of the bill beyond acceptable limits. Its action raised the annual cost of this program from the $12 million I had proposed to $90 million. It increased the maximum coverage-which would be applicable only to high level executive branch employees and Members of the Congress--from the $30,000 we had proposed to $42,000.
The Senate acted on this bill without the benefit of any debate. The House then accepted the Senate version with virtually no debate.
The bill goes far beyond my recommendations-and far beyond anything the American taxpayer should be asked to pay for at this time.
One point should be made clear. Government group life insurance was never intended to meet an employee's insurance needs entirely. It is--like other employee life insurance plans--meant only to supplement his private coverage.
Further, insurance for government employees cannot be considered in isolation from other Federally provided benefits. It must be regarded as a part of the total pay and fringe benefits an employee receives. Piecemeal increases in life insurance, without considering other benefits, will inevitably result in a compensation program that is unsound and inequitable.
We have worked long and hard to sustain 67 months--5 1/2 years--of economic growth and stability. And every American has benefitted. Yet this unparalleled prosperity has created new pressures on our economy. That is why, four days ago, I proposed a four point program of immediate action for the Congress, the Executive Branch, and the American people.
One crucial aspect of this program is a substantial reduction in Federal spending. Many members of Congress share my belief that our anti-inflationary efforts must include restraints on spending. The measure I veto today is totally inconsistent with our common goals.
I deeply regret that disapproval of this bill has the effect of deferring an increase in both agency and employee contributions. I would gladly approve a bill which enacted this provision, and provided for an increase in maximum insurance coverage up to Level II of the Federal Executive Salary Schedule-now $30,000. I also regret the delay in clarifying the application of Federal insurance law with respect to re-employed annuitants. I have directed the Attorney General to take every possible action to clarify this matter under existing law.
In returning this measure, I do so in the hope that Congress will adopt the insurance proposals I submitted earlier. Such a measure would be fiscally responsible. It would be consistent with the wage-price guideposts. I would be proud to sign it.
LYNDON B. JOHNSON
The White House
September 12, 1966
Note: For the President's veto of a previous bill as "inflationary" (Star Route postal contracts, H.R. 2035), see Item 336.
Lyndon B. Johnson, Veto of the Federal Employees Life Insurance Bill. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/238646