Posted : Thursday Jul 21, 2011 10:06:53 EDT
A bipartisan Senate deficit-reduction plan would force smaller cost-of-living adjustments for military retirees as early as 2012 and give the House and Senate armed services committees no choice about making other cuts in military entitlements.
The so-called Gang of Six proposal, named for the three Democrats and three Republicans who drafted it, calls for cuts of $80 billion over 10 years in military entitlements, leaving details to be worked out by the armed services committees. If any committee fails to make the ordered cut, across-the-board reductions would be made in all entitlements under the committee’s jurisdiction.
This would be just the first round of cuts under a plan designed to save almost $4.3 trillion over time. Tax reform and cuts in discretionary spending would be required to achieve the bulk of those cuts, with the defense budget on the hook for a large part of the savings and with a special review planned of federal health care spending.
The plan, prepared by three Democrats and three Republicans, is gaining support in the Senate but appears, so far, to have little support among House Republicans. Some House Republicans would have to vote for the plan in order for it to pass.
Entitlements under jurisdiction of the armed services committees include regular and disability retired pay, survivor benefits and Montgomery GI Bill benefits for the National Guard and Reserve. Tricare for Life health care for Medicare-eligible retirees is the only part of the military health care system considered an entitlement under budget rules.
The $80 billion in savings would be in addition to any money saved in a revision of how cost-of-living adjustments are calculated for military retirees. The Gang of Six plan calls for a change, effective with the Dec. 1, 2012, adjustment, to a new formula that is estimated to reduce any adjustment by one-quarter to one-half of a percentage point each year. The same 2012 change would apply to COLA for federal civilian workers but would not apply to Social Security until 2017, under the proposal.
How veterans’ disability and survivor benefits would be affected is unclear because these payments do not automatically adjust. Instead, Congress reserves the right to approve any annual increase in veterans’ compensation, although the amount usually equals the increase provided to Social Security recipients.
An $80 billion reduction in retirement costs does not mean that pay for current retirees and current service members would change, other than the COLA revision that would apply across the government.
Retirement savings could be claimed by making a change in benefits for future service members, something that achieves immediate savings because the Defense Department is required to set aside money each year to pay for the future retirement benefits of service members.