As Congress works to curb federal spending, military pay and benefits are in the budgetary crosshairs. Proposals to revamp the current military retirement system and charge retirees significantly more for healthcare coverage have many active duty and Reserve personnel concerned about the future of their retirement benefit, and rightly so.
The Administration’s FY 2013 budget request proposes to trim more than $480 billion from the Department of Defense (DoD) budget over the next 10 years, beginning in 2013. In an effort to reduce the “unsustainable” growth in the cost of DoD personnel programs, the White House seeks to establish a commission to review retirement benefits and recommend “cost-effective” changes. Other cost-cutting proposals on the table include significant increases to TRICARE fees for retirees under age 65 (over and above the 13-percent fee hike imposed for this year) and a new enrollment fee for TRICARE-for-Life beneficiaries (those who are Medicare-eligible), with rates for both being based on retired pay levels. Pharmacy copays are also slated to go up for retirees and TRICARE Standard and Extra beneficiaries would see a new annual enrollment fee in FY 2013, which will gradually increase through FY 2017. After that, these annual fees would be indexed to healthcare inflation, which has been running at six to seven percent per year. All of these proposals constitute a serious threat to the value of military retired pay for all current and future retirees. (Although these budget and benefit cuts are targeted at DoD, Coast Guard personnel will feel the effect, as well.)
In addition to these already-planned budget cuts, DoD may also be asked to find an additional $500 billion to $600 billion (about 20 percent of the overall Defense budget) in cost savings if automatic budget cuts (sequestration) take effect in January 2013, as outlined in the Budget Control Act (BCA) of 2011. Congress is considering legislative efforts (H.R. 3662 and S. 2065) to exclude DoD from sequestration, but if those efforts are unsuccessful, competition to fund weapons technology and people programs (bullets vs. benefits) will intensify and lawmakers may be forced to slash other benefits for military personnel, retirees, veterans and survivors. Replacing the current military retirement system with a 401(k)-type program, prohibiting career service members from receiving retirement benefits until age 60, denying TRICARE Prime coverage to retirees, and further increases in TRICARE co-pays and enrollment fees for retirees are just a few of the threats that may be considered.
During a recent hearing, Secretary of Defense Leon Panetta revealed that DoD has made no plans for implementing sequestration cuts, in hopes that Congress will alter, reduce or repeal the reductions or find other ways to shrink the federal deficit. Although DoD’s budget accounts for only 17 percent of the nation’s overall spending, Defense is being asked to shoulder 50 percent of the sequestration cuts – a move Panetta likened to using a “meat ax” to implement the cuts that were mandated after the so-called “Super Committee” failed to reach agreement last year on $1.2 trillion in budget cuts over 10 years.
And it’s not just retirement benefits that are under the gun. Deep cuts to military manpower may mean longer and/or more frequent deployments. Panetta also stated that active duty and Reserve annual pay increases for FY 2013 and FY 2014 will be equal to the Employment Cost Index (ECI), but for FY 2015 through FY 2021 annual pay hikes will be less than the ECI. And the Department of Veterans Affairs’ (VA) budget is also subject to sequestration, which could impact VA education, healthcare and other benefit programs.
FRA strongly opposes these drastic benefit reductions and believes they will substantially erode the value of military and veteran benefits. FRA believes that such deep budget cuts will impact member pay and benefits, negatively affect military recruiting and retention, and ultimately pose a threat to national security.
Congress responds to constituent groups that are organized. When shipmates communicate regularly with their elected officials, it strengthens FRA’s legislative advocacy efforts. The FRA Action Center is an easy and effective way to communicate with your elected officials. The Action Center provides pre-written messages either supporting or opposing legislation that shipmates can edit and send to their elected officials in Washington. Ask your spouse, neighbors and friends to weigh in, too.