Base grocers want store consolidation idea shelved
June 14, 2012
by Tom Philpott
As congressional inaction on the debt
crisis deepens the threat of indiscriminate axe wielding on defense
programs by next January, advocates for base grocery stores hope to
emboss a "hands off"sign on military
commissaries and their $1.3 billion annual appropriation.
In particular, they want Congress to
ignore a "dangerously flawed"cost-saving option
presented last year by the Congressional Budget Office, to merge the
commissary system and the three military exchange services into a single
base resale operation.
The CBO idea is to phase out all
taxpayer support of commissaries, allow grocery prices to rise by at
least seven percent and then soften the blow for active duty families by
paying an annual grocery allowance of $400.
Retirees and other store patrons would
get no such allowance. They would just see shopping discounts decline
under what CBO has labeled "Discretionary
Spending—Option 6"in its 2011
Reducing the Deficit report.
Like a can of beans on a
grocer’s shelf, the cost-saving option is among many already
priced and endorsed by CBO, which gives them credibility with deficit
hawks and with congressional leaders who might be pressured by
approaching deadlines to slash federal spending fast.
Patrick Nixon, president of the
American Logistics Association, which represents manufacturers, brokers,
distributors and service companies that do business with the military
resale system, aggressively attacked the CBO military store
consolidation option during a June 7 hearing of the House armed services
subcommittee on military personnel.
Later, in an interview, Nixon said he
had good reasons for doing so. First, though CBO has a reputation for
objectivity and solid research, in this case its assumptions on
cost-savings and the after-effect of consolidation on store operations
simply "unravel"on inspection, he said. Yet the consequences, if
the option were adopted, likely would include over time the demise of
discounted grocery sales on military bases, Nixon said.
"The reason we attacked it is that an uninformed reader is
going to say ‘This looks like it might work,’"Nixon said.
when you look at it, line item by line item, you want to put Congress
and anybody else on alert…. This is not
a panacea. This is a hodgepodge of recommendations. A lot of them are
catastrophic and some of them make no sense at all."
A second reason that the ALA, the Armed
Forces Marketing Council and other lobbyists for military stores want
flaws in the CBO option exposed is the debt crisis, a "perfect
storm…with extreme implications for every American,"and which
a bitterly divided Congress seems unable to address.
Suspicions and partisanship resulted
last year in a mindless "sequestration"tool being inserted
in the 2011 Budget Control Act. So if Congress fails to reach a fresh
compromise on spending cuts and tax increases by Jan. 1, 2013,
sequestration would be triggered automatically and begin to lop nearly
$600 billion off all defense programs over the next decade. Witnesses
agreed with Wilson that that would be "catastrophic."
The fresh cuts would be atop $487
billion in defense cuts over 10 years that Republicans and Democrats
agreed on as part of last year’s budget
deal. So far commissaries would be fully funded under both the Obama
administration plan to implement the first wave of cuts and both the
House and Senate versions of the fiscal 2013 defense authorization
If sequestration occurs, however, every
major program could be cut 8 to 12 percent, according to one estimate of
the complex sequestration formula. And whether sequestration occurs, or
some alternative deficit reduction package is adopted, lawmakers might
be tempted to pull CBO options off the shelf to protect more favored or
vital defense programs.
As Nixon reminded the House
subcommittee, one debt reduction panel already included the CBO option
on military store consolidation in its final report. And last year Sen.
Richard Burr (R-N.C.), ranking member on the veterans affairs committee,
persuaded colleagues to adopt that option so the commissary
system’s $1.3 billion annual subsidy could be used instead to
provide health care to veterans and families exposed years ago to
contaminated water at Camp Lejeune, N.C.
Strong reaction to that effort from
military families and retirees has stalled Burr’s bill, S.
277. His staff has assured ALA they are looking for alternative savings
to cover for health care for former Lejeune residents.
"So you can see what can happen if you don’t
challenge"the CBO cost-saving option, Nixon told me.
Rep. Joe Wilson (R-S.C.), chairman of
the military personnel subcommittee, got more than 60 House colleagues
to sign a letter opposing the Burr amendment. But he said risks to base
shopping are still growing.
"Unfortunately we cannot declare victory in this battle as
the continuing pressure to shift budgets within [DoD] will energize the
people who do not fully appreciate the value of these programs. This
pressure can only be expected to increase in the coming months as the
Congress debates the devastating reductions to defense accounts that are
associated with the sequestration process scheduled to begin next
Joseph H. Jeu, director of the Defense
Commissary Agency, testified that although commissaries are a highly
prized benefit for service families, and provide taxpayers a two-for-one
return on their investment, critics still raise the notion
they’ve become "antiquated."They have not, Jeu
"Last fiscal year the commissary provided direct savings
to customers of $2.8 billion for a taxpayer cost of $1.34
billion…With 260,000 patrons visiting a commissary every day,
buying $16 million in goods, there is no doubt that the commissary
remains relevant and an invaluable element of the non-pay compensation
Robert L. Gordon, deputy assistant
secretary of defense for military community and family policy, assured
Wilson that DoD "has no plan at this point to examine exchange
consolidation."He said seven past studies "have basically
shown that consolidation of our exchanges actually can do more harm than
good in terms of cost savings and innovation."
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