OMB Director Jacob "Jack" Lew, in a memo to agency heads, recommends that the 0.38 percent spending cut agreed to by the White House and Congress should be made in programs that received funding above President Clinton's budget request.

And avoid layoffs, he suggests.

Under last month's spending deal, federal agencies are being asked to cut their spending by 0.38 percent--about $2.1 billion out of the government's $1.8 trillion budget. The cut, as first proposed by congressional Republicans, would have been applied across the board at agencies. But the agreement signed by Clinton Nov. 29 gives agencies the flexibility to protect their priority programs and slice elsewhere.

In particular, the agreement, part of the fiscal 2000 consolidated appropriations bill, requires that no program, project or activity of an agency can be reduced by more than 15 percent, a limitation that will stop agencies from eliminating programs or targeting one to bear the brunt of the cutback.

The measure also protects the armed forces from troop reductions.

The first across-the-board cut that congressional Republicans proposed, 0.97 percent, was sent to Clinton as part of an appropriations bill that he vetoed. That provision would have reduced the pay of members of Congress, a prospect that was dropped in the final negotiations.

An Office of Management and Budget official said White House and OMB negotiators fought hard with Republicans to bring the number down. "It was important to us that the reduction be implemented in a way that allows discretion for the agency and protected the president's highest priorities," the official said.

Lew's memo, perhaps appropriately for fiscal 2000, is labeled "Bulletin No. 00-01."

COMPARING PAY STUBS: Corporate executives are paid as much as 10 times more than government executives, according to a new report from the Congressional Budget Office. The differences hold true for pay alone, pay and bonuses together, and compensation that takes benefits into account.

The CBO report comes at a time when some members of Congress and administration officials are searching for ways to make the government more competitive in recruiting and retaining executive talent.

Top federal salaries, for the most part, are held back by the political constraints on congressional pay ($136,700 this year). Congress has been reluctant in recent years to grant pay raises to government executives, such as Cabinet secretaries ($151,800), and to career civil service executives (from $110,351 to $125,900 in Washington).

But some agencies have won exemptions to pay higher salaries to scientists and researchers. Two years ago, in hopes that the Internal Revenue Service could hire private-sector experts and managers, Congress gave the IRS the authority to pay dozens of executives as much as what the vice president receives, $175,400.

Using data gathered by consultants, the CBO found that the average chief executive officer earned a basic annual salary of slightly more than $1 million at the largest corporations, compared with $123,000 for the average high-level federal executive.

The average CEO in a medium-sized company made $302,000 annually, and the head of a large nonprofit organization earned, on average, $160,000--both more than the average high-level federal executive.

As might be expected, the average salary of chief executives at the large firms was more than three times that of those in the medium-sized companies. Using 1998 data, the CBO counted 15,636 federal executives, 1,463 legislative executives (including members of Congress) and 1,636 judicial branch executives (including Supreme Court justices.)

In making its comparisons, the CBO found that number two officials at corporations, chief financial officers, chief administrative officers and top corporate lawyers all made substantially more than the average high-level federal executive.

The author of the CBO report, R. Mark Musell, noted that the largest companies in the comparison, such as AT&T Corp., Federal Express Corp. and Dow Chemical Co., have large, diverse operations and nationwide work forces--just like many Cabinet departments. Many of the "medium-large" and medium-sized companies used in the study also have complex operations that are similar to those of many federal agencies, Musell said.

Musell points out that pay comparisons are difficult to make. For example, duties and responsibilities may vary among sectors despite similar job titles.