The New Administration: The High Cost of Serving the Country

HIGH federal office often brings fame to a man and, once he returns to private life, fortune as well. The successful businessman or professional entering Government service, however, may draw an official salary that is far less than the sum he is accustomed to paying in taxes. That is particularly true for many of Richard Nixon's Cabinet appointees, an uncommonly successful lot.

All twelve department heads get the same pay: $35,000 a year* plus such perquisites as the use of a limousine. Yet to become Secretary of State, William Rogers is giving up an income in the $300,000 range, derived from his law practice and his limited partnership in the Dreyfus Fund. David Kennedy (Treasury) has been earning more than $230,000 a year, plus stock options, as chairman of the Continental Illinois National Bank and Trust Co. Maurice Stans (Commerce) has been grossing about $250,000 as president of the investment-banking firm of Glore Forgan, William R. Staats, Inc., and as a member of other corporate boards. Nixon Law Partner John Mitchell (Attorney General) has been earning more than $200,000. Winton Blount (Postmaster General) is the nonsalaried president of the U.S. Chamber of Commerce, but his Alabama-based construction company has had contracts this year involving more than $100 million. He says his personal income has been "several times" $35,000.

A Raise in Salary. Blount, of course, will unload his interest in the family company. So will another millionaire builder, Governor John Volpe of Massachusetts, who will head the Transportation Department. Volpe retained his chairmanship of the John A. Volpe Construction Co. while serving as Governor. He will sell his interest, which he estimates at about $1,000,000, and expects to lose a quarter of that in taxes.

The third contractor in the Cabinet, Walter Hickel (Interior), put his private holdings, worth an estimated $14 million, into trusteeship after being elected Governor of Alaska in 1966. Even if Cabinet salaries are not increased, Hickel stands to get a raise; the Governor of Alaska receives $27,500. But he must give up his free mansion in Juneau. Michigan pays its Governor $40,000, so George Romney (Housing and Urban Development) will be taking a $5,000 cut. Romney's personal holdings are estimated at $1,500,000, and have been in trust since he left American Motors to enter politics in 1962.

Even the two educators in the crowd face cuts in remuneration. George Shultz says that he will be making a "very substantial sacrifice" when he resigns as Dean of the University of Chicago Graduate School of Business to become Secretary of Labor. He will also have to give up income from directorships of Borg-Warner, the General American Transportation Co., and the Stein, Roe and Farnham funds. To become Secretary of Agriculture, Clifford Hardin will receive the same base pay of $35,000 that he has been drawing as Chancellor of the University of Nebraska, but he loses his free residence.

Two other appointees not known for large wealth--Melvin Laird (Defense) and Robert Finch (Health, Education and Welfare)--are nonetheless members in good standing of the affluent society. Laird, whose family owns the principal interest in a Wisconsin lumber company, has a portfolio of stocks held in trust and valued at something under $1,000,000. He will have to liquidate stocks in corporations related to defense industries. But, says Laird, "This is not as great a problem with me as it may have been with previous Secretaries of Defense." His congressional salary is $5,000 less than Cabinet pay. Finch makes $25,000 as California's Lieutenant Governor. He estimates his net worth at about $200,000, most of it in two California homes, other real estate and cash savings.

Blind Trust. Regardless of the size or nature of their holdings, all the Cabinet members--and other ranking appointees--will be subject to scrutiny by Senate committees when their confirmation hearings are held. To guide them on what to do with their holdings, the staff of John Ehrlichman, who will be Nixon's White House counsel, has prepared a Reference Booklet on Conflict of Interest. The 87-page pamphlet advises appointees to liquidate their investments and put the proceeds either into blind trusts--in which the beneficiary receives no information on the nature of the investment--or into diversified mutual funds. "We don't want any whiff of a question," says Ehrlichman. "No member of the Cabinet is going to know what he owns. They will get periodic reports of how their money is faring, that's all."

Nixon, whose net worth was estimated at $500,000 during the campaign, has set an austere example for his subordinates, many of whom are far more prosperous. The President-elect had been earning around $200,000 a year from his law firm until August. But as soon as he won the Republican nomination, he ceased drawing his pay.

* A congressional study group has recommended increasing this figure to $60,000, with comparable raises for the President (from $100,000 to $200,000), Vice President (from $43,000 to $67,500), members of Congress (from $30,000 to $50,000) and sub-Cabinet officials (from roughly $28,000 or $30,000 to the $40,000-to-$50,000 bracket).

This file is automatically generated by a robot program, so reader's discretion is required.