In 1981, civil service reform faces critical challenges, all agencies must have fully functioning performance appraisal systems for all employees, and merit pay systems for compensating the government’s 130,000 GS-13-15 managers.  Performance bonuses for members of the Senior Executive Service will surely receive scrutiny.  If this attention is balanced and constructive, it can only enhance the chances for ultimate success of our bipartisan commitment to the revolutionary and crucial “pay for performance” concept.

REGULATORY REFORM

During the past four years we have made tremendous progress in regulatory reform.  We have discarded old economic regulations that prevented competition and raised consumer costs, and we have imposed strong management principles on the regulatory programs the country needs, cutting paperwork and other wasteful burdens.  The challenge for the future is to continue the progress in both areas without crippling vital health and safety programs.

Our economic deregulation program has achieved major successes in five areas: 

Airlines:  The Airline Deregulation Act is generating healthy competition, saving billions in fares, and making the airlines more efficient.  The Act provides that in 1985 the cab itself will go out of existence.

Trucking:  The trucking deregulation bill opens the industry to competition and allows truckers wide latitude on the routes they drive and the goods they haul.  The bill also phases out most of the old law’s immunity for setting rates.  The Congressional Budget Office estimates these reforms will save as much as $8 billion per year and cut as much as half a percentage point from the inflation rate.

Railroads:  Overregulation has stifled railroad management initiative, service, and competitive pricing.  The new legislation gives the railroads the freedom they need to rebuild a strong, efficient railroad industry.

Financial Institutions:  With the help of the Congress, over the past four years we have achieved two major pieces of financial reform legislation, legislation which has provided the basis for the most far-reaching changes in the financial services industry since the 1930’s.  The International Banking Act of 1978 was designed to reduce the advantages that foreign banks operating in the United States possessed in comparison to domestic banks.  The Depository Institutions Deregulation and Monetary Control Act, adopted last March, provides for the phased elimination of a variety of anti-competitive barriers to financial institutions and freedom to offer services to and attract the savings of consumers, especially small savers.

Recently, I submitted to the Congress my Administration’s recommendations for the phased liberalization of restrictions on geographic expansion by commercial banks.  Last year the Administration and financial regulatory agencies proposed legislation to permit the interstate acquisition of failing depository institutions.  In view of the difficult outlook for some depository institutions I strongly urge the Congress to take prompt favorable action on the failing bank legislation.