Skip to comments.Military Update: Gates tosses military pay, benefits into risk pool [militRY under attack]
Posted on 06/04/2011 4:23:12 PM PDT by SandRat
Defense Secretary Robert Gates last week delivered his last major policy speech and, in it, suggested that politicians show courage in the fiscal crisis by making the military compensation system more efficient.
Gates has the department preparing such a set of recommendations to be part of a $400 billion defense savings package over the next 12 years.
Specifically he criticized a one-size-fits-all approach to basic pay and retirement, suggesting tiered and targeted methods could cost less but pay more to service members in high demand and dangerous specialties.
He implied pay levels overall are set too high as evidenced by the services continuous ability to meet recruiting and retention targets, except for the Army and only during the worst years of Iraq.
Gates again asked that TRICARE fees be raised, particularly for working age retirees. And he eyes replacing the all-or-nothing 20-year retirement plan with a more flexible system that would allow earlier vesting in benefits but also encourage more members to serve longer careers.
Some of these ideas are decades old. Over the past 40 years other defense secretaries have made similar or even more unpopular proclamations to curb military benefits, from closing discount stores on base to ending tax-free allowances and shifting the military to fully taxable salaries.
Gates had softened some of the impact of his remarks to the conservative think-tank American Enterprise Institute May 24 by reassuring Marines at Camp Lejeune just weeks earlier that any change to retirement should not affect the current force. So dont get nervous, he said.
The reality is that sharp changes to pay or benefits typically dont occur as a result of policy speeches or even in-depth studies written over months by commissions created for that task. Dramatic changes usually occur during fiscal emergencies, real or perceived.
The House Armed Services Committee, for example, thought it necessary in 1984-85 to move military retirement to an accrual accounting system to ensure funding of benefits to future members stopped encroaching on money for other defense programs.
Lawmakers then set a target for the accrual account and told Defense officials to design a retirement plan to produce the required result. That turned out to be Redux, a plan that cut the value of 20-year retirement by roughly 25 percent for new members. As time passed and retention fell among the Redux generation, Congress repealed the plan. To preserve some cost savings, however, a $30,000 lump sum bonus was offered to any member who agreed to opt back into Redux during their 15th year of service.
Redux was fruit of a crisis tied to rising retirement obligations. The current debt crisis is far more threatening. Total national debt is nearing $15 trillion. Unless the debt ceiling is raised by Aug. 2, the U.S. Treasury says it will default on some obligations, likely triggering a worldwide financial crisis.
Republicans vow not to raise the ceiling unless an agreement is reached with the White House to cut federal spending deeply, to include Medicare and other prized entitlements. Vice President Joe Biden is hosting closed-door meetings with Republicans and Democrats. He promises to bring forth at least $1 trillion in spending cuts over the next 10 years.
Its during such closed-door deals that popular programs, even military benefits, can become tempting targets. Gates remarks encourage that military compensation be part of planned defense cuts, suggesting excess dollars going today into compensation can be diverted over time to help replace aging fleets of aircraft, ships, submarines and land warfare vehicles.
Benefit cuts that impact current members and families in wartime could be seen as unfair. But lawmakers negotiating with Biden have plenty of other options from among recommendations made late last year by separate debt reduction panels.
A task force co-chaired by former Sen. Pete Domenici and economist Alice Rivlin proposed a cheaper military retirement plan, which could be shaped to target future members only. It would provide some retired pay at age 60 for those with as few as 10 years service. But it would end the tradition of paying an immediate annuity after only 20 years.
The National Commission on Fiscal Responsibility and Reform, co-chaired by Alan Simpson and Erskine Bowles, recommended a study of structural changes to federal retirement plans. One idea floated is to defer cost-of-living adjustments until age 62, when a one-time catch-up raise would restore lost inflation protection.
Perhaps the ripest fruit for those arguing federal entitlements are unsustainable is adoption of a modified Consumer Price Index (CPI) that would shave annual cost-of-living adjustments. Both deficit reduction panels endorsed it.
The revised index is a chain-weighted CPI. The Bureau of Labor Statistic created it in 2002 to address criticism of substitution bias in other CPIs. The idea behind the revised CPI is that, as prices rise, people actually change behavior and buy cheaper items, apples instead of oranges, for example. Yet the CPI used to adjust federal entitlements assumes consumers buy the same items month after month regardless of price.
Reformers see this as exaggerating inflation and driving up entitlement costs. Defenders of current COLAs argue the index should measure price changes for the same goods and services over time, and not be adjusted continually based on changing behaviors from the sting of rising prices.
Shifting to the new CPI would curb entitlement spending, on average, by .25 percentage points a year. Yet by one estimate the savings could total $300 billion over the next decade, at least half from Social Security benefits.
For the Department of Defense, proponents might argue, this change alone is a no-brainer in desperate times, serving to dampen retirement costs without singling out the military alone for fiscal sacrifice.
To comment, e-mail email@example.com, write to Military Update, P.O. Box 231111, Centreville, VA, 20120-1111 or visit: www.militaryupdate.com
America only has so many dollars.
We send hundreds of billions of those to China.
Sorry US Service People, China has your money.
How’s that “free trade” thing working out?...
bastards. In time of crisis, the military is the only people who should be paid.
Cut Obeelzebub’s pay check, golf outings and money for his and his mooching wife’s vacations. Cut the congressional “fact finding” vacations and their $170,000 plus per year extorting from the tax payers, but don’t touch money going to our troops.
I’ll be happy when this maggot is gone. Gates has done a lot of damage to the military. Of course, that was why he was selected for the job. Meanwhile, Moochelle and Rimshot Biden’s wife are out there sucking up to the military at every turn while their spouses are actually stabbing the service members and their families in the back.
Thank you Mr. Gates for handing all the military/family/supporter votes to the candidate that tells you and Obama to go to hell.
If we lose this election with gifts like this, we deserve our fate.
Bail out the middle east/pay china to be nice or pay our servicemen and women...hmmmm tough choice...for a liberal. Not for an American.
I like GW, really, but he really should apologize to America for appointing this moron.
There are some here that know what that means.
I'll leave it at that.
But we nickel and dime people who put their lives on the line.
Col (Ret) USAF
Just another attempt by the Democrats to promote class warfare and divide.
sometimes just waiding across the Rio Grande.
Back in my day the military did have this "tiered and targeted" method to compensate members in high demand specialties.
It was called a Selective Reenlistment Bonus.
Had to read that more than once to be sure what it said.
A pretty cynical viewpoint for a SECDEF. He doesn't think Americans ever join because they want to serve their country, or because they are attracted all the things that make the military different from civilian. He doesn't think any of them want to "see the world" as many old recruiting slogans used to say?
I've heard Gates called the "consummate bureaucrat", meaning he'll say or do whatever the bosses say, whoever the bosses might be, makes no difference. Sounds like that was pretty accurate.
You have my vote!!!! My knees are shot after 17 years on M1 tanks. He makes it sound like I spent my time at Disneyworld!!
Gates is the typical “I am too good” to serve, but I know all about serving my country in rough and tough areas(Georgetown and Washington D.C.).
Wow... just wow...
What an asshole.
I retired with 25.5 years in. By law, as an O-5, I could only have stayed in another 2.5 years. I did a PCA after budget cuts, and ended up spending my last year in a do nothing paperwork job, trying to squeeze an hour of work into an 8 hour day.
I asked to be transferred anywhere in the world, and was told there was no money, so I retired.
The truth is I would have gladly stayed in for 35, if they would just have put me somewhere with something useful to do - but the law required me to leave at 28. That may have made sense in the 50s, but at 53 I’m riding horses, jogging, and on my last PT test in the USAF, only one guy beat me. And he admitted to me afterward that he was going to die before he’d let a 50 year old officer do more push-ups than him or run 1.5 miles faster than him. He beat me by 3 pushups and 15 seconds.
So revising the retirement system makes sense to me. HOWEVER, I am certain they will go about it the wrong way because almost no one in Congress has any idea what the military does or what motivates it.