Pentagon opposes COLA cut, but warns of more ahead

Christine Fox (left), acting deputy secretary of defense and Carl Levin, D-Mich., chairman of the Senate Armed Services Committee. (Department of Defense and Chuck Kennedy/MCT)
Christine Fox (left), acting deputy secretary of defense and Carl Levin, D-Mich., chairman of the Senate Armed Services Committee. (Department of Defense and Chuck Kennedy/MCT)

Pentagon opposes COLA cut, but warns of more ahead

by: Leo Shane III | .
Stars and Stripes | .
published: January 29, 2014

WASHINGTON — Pentagon leaders support dramatic changes to military retirement. Just not right now. And not for existing retirees. And maybe not the plan Congress has already passed.

In testimony before the Senate Armed Services Committee on Tuesday, defense officials pushed for a repeal of the military retirement changes passed by Congress last month as part of a comprehensive budget deal.

They called the move unexpected and unfair, saying that any large changes in military compensation should not include current troops and retirees, who have been promised specific benefits and retirement payouts already.

But Christine Fox, acting deputy secretary of defense, also noted that changes to compensation such as troops’ pay, health care benefits, and retirement payouts will be needed soon, to keep personnel costs from overwhelming the rest of the military budget.

“We cannot afford to sustain the rate of growth in military compensation that we’ve experienced over the last decade,” she said. “We must find ways to slow it down … if the department is going to maintain the current force.”

Fox said officials want to wait until later this year when the military compensation and retirement modernization commission will issue its report before making any further pay and benefits changes. But she stopped short of demanding an immediate repeal of the retirement change — a 1 percent reduction in the annual cost-of-living calculation for working-age retirees.

That rankled the lawmakers before her and veterans groups sitting behind the witness table, both who are incensed over the retirement reduction vote. The cost-of-living change will save the government about $5.7 billion over the next decade, according to Congressional Budget Office estimates. Lawmakers on the budget committee argued in December the savings were needed to finalize the larger budget deal, and remove mandatory sequestration budget cuts which have haunted Pentagon planners for two years.

But since the retirement changes were adopted, dozens of lawmakers have railed against the decision. Democratic senators on the committee took turns attacking the measure while also defending their vote for the plan as a necessary evil that needs to be amended.

Congress has already passed one large correction, restoring those cost-of-living cuts for most medically retired veterans.

SASC Chairman Carl Levin, D-Mich., argued a repeal is needed “because (the change) targets a single group — military retirees — to help address the budget problems of the federal government as a whole.”

Veterans groups have offered similar complaints, and said the move breaks promises made to troops who have made many sacrifices on behalf of their country. Paul Rieckhoff, chief executive officer of Iraq and Afghanistan Veterans of America, called the move “a betrayal” which has hurt morale and compromised recruiting.

The Military Officers Association of America estimates the retirement change will cost a typical enlisted member who retires at 40 about $83,000 over 20 years, and cost a typical retired officer more than $124,000 over 20 years. That’s based on an estimated retirement package totaling about $1 million over that span.

The Senate is expected to take up a measure this week repealing the retirement change, as part of a veterans legislative package dealing with dozens of benefits and health care changes. But that measure faces an uncertain future in the House — Senate leaders haven’t specified how they’ll pay for the measure, and House leaders have demanded clear offsets for all new spending.

Meanwhile, more than a dozen repeal bills are pending in Congress, but none with broad bipartisan support. Veterans advocates have loudly complained that if a repeal doesn’t happen soon, focus on the retirement reduction might fade, making it even more difficult to remove.

In a press conference with veterans before the hearing, committee member Sen. Mark Begich, D-Alaska, said he is confident a fix can be found soon.

“We have just completed several appropriations bills that many in the media didn’t think we’d ever get done,” he said. “There’s a different tone now … and I think it’s clear a lot of people want to correct this.”
Twitter: @LeoShane