Sunday, November 04, 2012

Here We Go Again

On several occasions over the past couple of years, we've written about the "war" on military retirement benefits.  And unlike the so-called "war on women," this battle is very real.  Pentagon officials and various think tank wonks have decided that the pension and benefits package for military retirees (and their dependents) is too generous, and cuts must be made.

The latest group to wade into the fray is the George Soros-funded Center for American Progress.  Late last week, the center issued a new report, entitled "Re balancing Our National Security," which recommends wholesale changes to the military retirement plan.  As summarized in Air Force Times:

The [report] calls for capping pay raises, eliminating military health benefits for many retirees who are covered by an employer-provided plan, and reducing the value of military retired pay as well as making retirees wait until age 60 to start receiving it.


Similarly, the report endorses many of the Defense Department’s proposals for cutting health care costs by raising fees, mostly on retirees and their families. But the report goes a step further: “To truly restore the Tricare program to stable financial footing, the Defense Department should enact measures to reduce the over-utilization of medical services and limit double coverage of working-age military retirees,” the report says.
One idea would be to modify Tricare for Life benefits for Medicare-eligible retirees so that the program would not cover the first $500 of costs per year and would cover only 50 percent of the next $5,000.
Another idea would be to mandate that working-age retirees could only have Tricare benefits if they or their spouses do not have access to employer-provided health benefits. The report suggests this would be an income-based restriction but does not say what the cutoff should be.
The report also recommends modifying military retirement benefits. For anyone currently in the military with fewer than 10 years of service, benefits could be cut: Instead of receiving 50 percent of basic pay after 20 years of service, with immediate benefits, the report says the benefits would be 40 percent of base pay with payments not beginning until age 60. For people not yet in the military, there would be no fixed retired pay in the future, only a pre-tax retirement savings plan based on contributions from the service member.
The report's tone can be effectively summarized in that rather curious word, "over-utilization."  Apparently, the center believes that military retirees are running to the doctor for every little cough or scratch, knowing the taxpayers will foot the bill.  But did it ever occur to them that many retirees are utilizing their medical because they need it, due to service-related injuries and disabilities?   Once upon a time, the nation made a promise to these men and women; serve your country honorably for at least 20 years, and we'll provide health care coverage to you (and your spouse) for the rest of your life.  Having fulfilled their end of the bargain, military retirees now expect the government to honor the contract.  What ingrates.  
It's also worth noting that many of these retirees have difficult obtaining coverage from their employers, for a couple of reasons.  First, there are those service-connected, pre-existing conditions.   Then, there's the matter of Obamacare.  If that program survives, the number of private employers offering coverage will shrink dramatically, so many retirees with private coverage now won't have it in the future.  
To be sure, rising military health care costs are a concern.  Former Defense Secretary Robert Gates lamented that roughly 10% of the DoD budget goes to health programs.  But it's also worth noting that the Pentagon sabotaged its own, perfectly workable on-base program for retiree health care.  Once upon a time, retirees and dependents were treated in military hospitals, alongside their active-duty counterparts.  
But Bill Clinton had a better idea, creating the Tricare system that put retirees (and many active duty dependents) into an HMO-style arrangement, utilizing off-base providers.  That alone generated astronomical cost increases.  A former surgeon general of the Air Force observed that a military hospital could perform an appendectomy on a patient (active or retired) for about $300--roughly the cost of the surgical pack.  The same, Tricare funded procedure, at a civilian hospital, runs more than $7,000--at 20-fold increase.  Bringing retirees back on base could generate tremendous savings, even when you account for additional staffing expenses.  
Likewise, proposals to overhaul military retirement pay are equally short-sighted.  Historically, one of the armed forces' greatest recruiting tools has been the promise of a 50% pension after only 20 years of service.  But the Soros think tank (and some in the Pentagon) believe this is far too generous.   
Once again, their arguments ignore a few inconvenient truths.  As we've noted, time and time again, the "average" military retiree isn't a General with 30+ years of service, and an annual pension in the six-figure range.  In reality, the typical military member who retires after 20 years of service is an E-6 (Staff Sergeant in the Army or Marine Corps; Petty Officer First Class in the Navy, Technical Sergeant in the Air Force).  Their average monthly pension, after taxes: $1700 a month.  Over a 40-year retirement, they'll collect about $816,000.  That sounds like princely sum, but it's less than the operating costs for Air Force One on President Obama's final campaign swing around the country.  
And most of those mid-level NCOs earned their pensions the hard way, through multiple deployments to war zones, and time away from family and friends that is measured in years.  We wonder how many of Soros's number crunchers and policy analysts would be willing to sign on for such a "sweet deal."  Their proposals reflect the misguided notion that the military is just like any other career; give enlistees a 401K (with benefits payable after age 60) and some semblance of health care, and military recruiting won't suffer.  
Think again.  The cornerstone of the U.S. military is its professional NCO corps, largely constituted of young men and women who willingly sacrifice other opportunities for a career in uniform.  The promise of a modest pension (after 20 years of service) and the ability to launch a second career figure prominently in their decision.   
A continued erosion in retirement benefits will directly impact our ability to attract (and retain) the career NCOs and officers needed to lead the world's finest military force.  That, in turn, will lead to a further decline in the capabilities of our armed forces, and increased threats to our national security.  But then again, a strong U      



Old NFO said...

Part of the post is cut off, but you are correct... and the volunteers would dry up in a heartbeat!!! Hello DRAFT!

TrT said...

The problem, these promises are unfunded.

You say "The Nation promised", but thats not true.

The reality is the people who made the promise are dead, the people who elected them retired, and those paying the bills were legally barred from voting at the time.

If you want to off someone 50% pay for what can easily be 40 years, you better be putting the money in escrow as they earn it.

The UK is suffering from similar problems, local governments already spend 30% of their income (from both local taxes and central government grants) on pensions for the retired members of staff.

If retiring on 50% pay at age 40 is a valuable recruiting tool, fine, fund it, now.

Anything else is just words.

Vigilis said...

The Center for American Progress's website lists 3 military "experts".

Two have zero military experience.

Of them, the woman expert's bio claims: "Areas of expertise: Military manpower, terrorism, national security, Afghanistan, Pakistan."

Closer examination yields:
"Her overseas experience includes work with the International Rescue Committee in Sierra Leone and two years in Ecuador and Chile. She served as a U.S. election observer in Afghanistan’s parliamentary elections in September 2010 and in Pakistan’s parliamentary elections in February 2008."

Rather weak, wouldn't you say?