Why Lawrence Korb's "no big deal" is a big deal to retirees
The Senate yesterday moved one step further in passing the 2013 Bipartisan Budget Act which contains the provision to cut the COLA amounts by 1 percent annually. At this point some fighting about it remains, but it appears almost certain to take effect. As I wrote yesterday, I believe it is unjust for the simple reason that it violates general contact principles, and I believe it betrays a trust.
One person viewing it differently is Lawrence J. Korb of the left-wing Center for American Progress. Now, before anyone goes making this a partisan issue, it doesn’t break down as nicely as you would want to make such a point. The left-wing position of CAP is really no different than that of the right-wing Weekly Standard. The authors of this deal are 2012 Republican vice presidential candidate Paul Ryan and progressive Washington Sen. Patty Murray. It passed the House by large margins with both parties supporting it.
Nonetheless, Dr. Korb has a piece out titled “Here’s Why the Proposed Military Retiree Benefit Cuts Are No Big Deal.” It’s certainly no big deal to Dr. Korb who receives a salary of $215,599 (from the CAP Form 990) and is not retired military. But it’s significantly more of a problem to those who will be affected by it, who don’t have salaries north of the six-figure line. Dr. Korb lays out a series of reasons it is “no big deal” each of which I would like to address.
First, the provision does not break faith with the vast majority of men and women in uniform, since most of them will not retire. According to DOD’s Office of the Actuary, responsible for overseeing retiree pensions, only 15 to 17 percent of the enlisted soldiers, sailors, Marines and airmen who served in the conflicts in Iraq and Afghanistan will serve long enough to retire. The current retirement system provides no retirement benefits at all to servicemembers who serve less than 20 years.
This is a complete strawman argument that is meant to further the CAP position that retirements should be set up more like 401Ks than our current structure. But even leaving that aside, how is the odiousness of something diminished by the fact that it impacts a smaller number of people more than a larger number of people? The DoD has said this will save $6 billion over the next 10 years. Having it affect fewer people just means it impacts them more. It’s like saying that 25 people were killed in Helsinki last night, but they were all redheads and most people in that city do not have red hair. That’s slight reassurance to everyone who does have the red locks.
Second, the reduction applies only to working-age retirees – that is, military retirees who have not yet reached the age of 62. Since the vast majority of people who retire from the military in their 40s and 50s take other jobs, often using skills they have gained or developed in the military, their military retirement pay is not their sole source of income.
This is another statement made with really no basis in evidence. I’ve seen no evidence that suggests that 45-year-old veterans just entering the workforce do so at a level of parity with those who have worked since they left their parents homes. In other words, while someone who works for GE for the past 25 years might be middle to upper level management, that doesn’t mean that a former Infantry First Sergeant going to work at GE is going to be making the same level of pay. And consider that a civilian who works at a private business usually does so in one locale, or might relocate if there is the potential to advance. This would be a decision by that employee and his/her spouse. But military personnel are given no such option. While Dr. Korb has been able to live in DC for the past 25 years, and his wife presumably has been able to do the same, if I had stayed in to retirement (which would have been this year) my wife would have been unable to stay employed in the same place. When a servicemember is moved, which happens roughly every three years, the spouse has to largely begin anew at each place as well, absent some other circumstance that might happen irregularly. So, when the servicemember DOES retire, it is unlikely that his spouse will have the same earning potential as the spouse of a civilian employee.
Further, a sedentary position that doesn’t necessitate numerous moves is obviously easier financially. Someone gainfully employed in the civilian sector for 20 years has probably made great strides toward purchasing a house, and building equity. For servicemembers the vagaries of being sent around the country make it significantly more difficult. Ditto such things as children having a stable learning environment, relationship with a place of worship, and building a coterie of friends.
Third, the reduction does not affect those who suffered physical and mental wounds during their service. Disability compensation is paid through the Veterans’ Administration and will not be affected by this provision.
This is actually two arguments masquerading as one. And neither is particularly accurate. First off, one would have expected Dr. Korb to know that there hasn’t been a “Veterans’ Administration” since 1989 when Ronald Reagan made it the Cabinet level “Department of Veterans Affairs.” There is a Veterans Benefits Administration and a Veterans Health Administration, but neither of those really has bearing here anyway. Further, the opening statement isn’t completely accurate anyway, as made clear by this Marine Corps Times article today:
Military personnel who are medically retired — those with combat or service-related injuries so severe they were offered full military retirement pay and benefits — would see their retired pay cut as a result of the 2013 Bipartisan Budget Act, Sen. Kelly Ayotte, R-N.H., said Tuesday.
[…] A provision in the act limits annual cost-of-living adjustments for military retirees under age 62 to 1 percentage point less than annual inflation in consumer prices. But while the act discusses those with over 20 years of service with “non-disability retirement” as being affected, Ayotte said it includes the most seriously injured or ill who obtained full retirement benefits.
Ayotte said she received confirmation from the Pentagon that this group is included in the cuts. “It was a challenge to get confirmation from the Defense Department, but they admitted it,” she said after the news conference. “It’s horrendous.”
Lastly, Dr. Korb brings in disability compensation for no discernible reason except to apparently point out another awesome benefit we get. But disability compensation has never been a part of this discussion, and in fact such compensation comes from mandatory funds, not discretionary ones. Further, such compensation is to attempt to “make whole” those who suffered injuries. It has nothing do with military retirement.
Fourth, the alleged 20 percent lifetime reduction to working-age retiree pay applies only to those who separate at exactly the 20-year mark. Many men and women serve past the 20 year mark, putting them correspondingly closer to age 62, when their retirement pay is adjusted back up to the full amount. Consequently, the impact on them will be much less than the 20 percent number touted by MOAA.
The reality is that those folks who do retire will bear the complete, 100 percent burden for the $6 billion anticipated savings. You can look at those numbers any way you like, but it suffers the same infirmity that I noted above, you are disproportionately hitting ONLY those folks who gave their country the better part of their adult lives, forswearing other more lucrative opportunities, and doing so after they have already fulfilled, or substantially fulfilled, their obligations. Would it somehow make it better if it was only 17 percent? That full $6 billion figure is coming from the people who should LEAST be expected to pay it. We’ve been repeatedly promised by everyone in the government from the Pentagon to the halls of Congress to the White House that “we will not balance the budget on the backs of military retirees.” And 100 percent of the people being asked to make up the $6 billion shortfall are those who were promised it wouldn’t be their burden.
Fifth, and most importantly, MOAA ignores all of the other benefits that have been given to military retirees over the past decade that have enhanced the value of their retirements. These generous benefits more than make up for this potential cut to working-age retiree pay.
Again, this is completely irrelevant. That’s like giving a Christmas bonus to an employee for five years, and then cutting his pay with the explanation that “well, in the past you got those Christmas bonuses, so you should be fine with receiving less money.” Among the litany of “generous benefits” that Dr. Korb lists is “low-cost access to health insurance via TRICARE” which he states “far cheaper than comparable private insurance plans.” This might be relevant if it was an apples to apples comparison. But anyone who has served, or been to the VA, or been around veterans knows that the host of maladies we suffer from are different from those of society at large. One can’t plausibly argue that the risk of losing a limb is the same for an Infantryman as a pastry chef. Likewise, the wear and tear on a body that hauls an 80 pound ruck over the Hindu Kush is notably dissimilar to that which generally plagues a high school guidance counselor.
Further, the benefits of TRICARE for all military retirees have been greatly exaggerated, as Dr. Korb should well know. TRICARE Prime is only practicable if you happen to live close to a military base, and because reimbursement rates for TRICARE are tied to Medicare rates, more and more doctors are dropping TRICARE.
Everyone agrees that the current DOD budget is unsustainable in the long term. And those fears have been raised for at least the last 10 years, because I was working on Capitol Hill before going to Afghanistan, and I heard them then. And it might be very well true that something dramatic has to be done in order to preserve our readiness and force structure. But despite what Dr. Korb thinks about this being not a “big deal,” asking the servicemembers who have already performed their service to bear the brunt of this lack of prior planning is prima facia evidence of breaking the faith with these men and women who gave their country their all for 20 years and more.