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Military Update: Debt panel eyes TRICARE hikes, federal pay freeze
Military personnel and federal civilian workers would see pay levels frozen for three years and their out-of-pocket medical costs rise under a proposed plan to cut federal budget deficits by $200 billion a year by 2015.
The 58-part “illustrative” plan was unveiled Nov. 10 by former Republican Sen. Alan Simpson (Wyo.) and Erskine Bowles, chief of staff to President Clinton, who serve as co-chairmen of the National Commission on Fiscal Responsibility and Reform.
That 18-member blue-ribbon panel is to deliver a final report to the president by December on ways to tackle a U.S. debt crisis that grows continually, with annual federal deficits nearing 10 percent of the gross domestic product, a rate higher than any year since World War II.
Yet the political minefield ahead for the co-chairmen’s proposal, at least in trying to squeeze savings out of the military community, became apparent in a phone interview Monday with Rep. Joe Wilson (R-S.C.).
Wilson is expected to become chairman of the House Armed Services Subcommittee on Military Personnel in the new Congress. He deems himself a member of the Tea Party. Many of them were elected this month on promises to reduce budget deficits.
But Wilson, whose districts includes Fort Jackson, Parris Island and several other bases, told me he is committed to protecting TRICARE beneficiaries from fee increases.
In fact, his priorities as panel chairman included expanding entitlements: ending a Survivor Benefit Plan offset for widows, lowering the age 60 start of reserve retirement and providing some military retired pay atop disability compensation for members forced to retire before reaching 20 years due to disability or injury.
The debt commission has a far different course in mind, to persuade the Obama administration and a more conservative Congress that a new era of fiscal restraint is needed to protect America.
The co-chairmen propose dramatic cuts across government including to Social Security, Medicare and federal retirement, presumably for future service members and civil servants.
They also call for a variety of higher taxes including on gasoline. Income taxes would be lowered and simplified, but popular deductions, including for home mortgages, would be cut.
“America cannot be great if we go broke,” Simpson and Bowles said. “We must stabilize then reduce the national debt,” which stands at nearly $14 trillion, “or we could spend $1 trillion a year on interest alone by 2020.”
Here are highlights that, if adopted, would impact the military:
“MODERNIZE” TRICARE – TRICARE premiums and fees would climb for working-age military retirees, except more modestly than proposed earlier by the Bush and Obama administrations. Employers, however, would have to reimburse the government their normal share of health costs if a military retiree on the payroll opts to use TRICARE rather than employer health insurance. The aim is to end a $3 billion a year government “subsidy” of what should be “a normal business expense” for civilian employers.
All TRICARE beneficiaries including active duty family members would face a co-payment for office visits, to reduce their “higher than average usage of health care.” Also, a “modest enrollment fee” would be set for all three TRICARE options, including fee-for-service coverage under TRICARE Standard and the preferred provider network using TRICARE Extra.
Finally, TRICARE would be subject to PAYGO or “pay-as-you-go” budget deficit rules so that any future increases in military health benefits are paid for through higher premiums, co-pays and deductibles.
FEDERAL PAY FREEZE – Military and federal civilian employees would see pay charts frozen for three years “to reflect the current economic and fiscal crisis” that has hit most private sector employees. Only combat pay would be exempt. The freeze would affect basic pay and housing allowances saving $7.6 billion in compensation and tax breaks in 2015. Holding down basic pay also would dampen accrual retirement costs by $1.6 billion a year.
PERSONNEL OVERSEAS – The number of military members assigned to bases in Europe and Asia would fall by a third, from 150,000 down to 100,000, to save $8.5 billion.
STATESIDE SCHOOLS – The Department of Defense would close 58 primary and secondary schools that it still operates for more than 19,000 dependent children in Alabama, Georgia, New York, North Carolina, South Carolina and Virginia. Begun on base when schools in the South were racially segregated, “it is no longer clear why the system is still necessary” at a cost per student of $51,000 in fiscal 2011, rising to $81,000 by 2015.
COLA “REFORM” – A new, more efficient formula would be used to set cost-of-living adjustments [COLAs] for Social Security and veterans benefits, military and federal annuities and survivor benefits. The co-chairmen said the current COLA formula fails to take into account new consumer choices made for their market basket when other products become too pricey.
FUTURE MILITARY RETIREMENT – The current 20-year system would be replaced, presumably for new entrants with a plan that vests some benefits after only 10 years and delays immediate, full annuities until age 60.
To critics who complain often that the first budget items cut should be U.S. foreign aid and support for the UN, well, those are targeted here too. The full proposal can be read at: www.fiscalcommission.gov .
Steve Strobridge with Military Officers Association of America, who testified at the commission’s June public forum, said most of these cost-cutting ideas for the military have been seen before.
But an era is at hand of “increasingly severe budget constraints,” he said. “It is different when the deficit is as large as it is.”
These ideas will make many lawmakers nervous, he predicted, and early on they only will be “dabbling at the edges.” But many newly elected Republicans did campaign on cutting budgets, Strobridge noted. “So I think there’s going to be some serious efforts to do some of these things.”
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