Senate Majority Leader, Harry Reid of Nevada
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Panel calls for 3-year freeze on military pay

By Chuck Vinch - Staff writer
Posted : Thursday Nov 11, 2010 12:48:54 EST
A three-year freeze on basic pay and military housing and food allowances is among 58 recommendations contained in the draft report of President Obama's National Commission on Fiscal Responsibility and Reform that was released Wednesday.

The Debt Commission, as it is informally known, said Regular Military Compensation - basic pay, basic allowance for housing, and basic allowance for subsistence, as well as the tax advantage of those two tax-free allowances - is expected to grow by $9.2 billion from 2011 to 2015.

"A three-year freeze at 2011 levels for these compensation categories would save the federal government $7.6 billion in compensation and tax expenditures," as well as another $1.6 billion in future retirement pay, for a total of $9.2 billion in savings in 2015.

Combined, the 58 recommendations would save $3.8 trillion through 2020, mainly by making cuts to Social Security and Medicare, reducing income-tax rates and eliminating tax breaks, including the mortgage-interest deduction.

But the commission's co-chairs, Erskine Bowles, former White House chief of staff under President Clinton, and Alan Simpson, a former Republican senator from Wyoming, had plenty of other recommendations for savings within the Defense Department budget.

The proposed three-year freeze on military compensation is the most eye-opening military-related recommendation in the report, and it could prove politically untenable. But other defense-related recommendations pick up on ideas that have been discussed before at length, some for years.

For example, one recommendation calls for adjusting Tricare enrollment fees, co-pays and deductibles, an idea that the Pentagon has proposed - unsuccessfully - for three years running as a way to address its soaring medical budget.

The most recent Pentagon proposal called for allowing those beneficiary costs, which have not changed since Tricare was launched in the mid-1990s, to rise with inflation. The new Debt Commission recommendation would raise premiums and co-pays by smaller, unspecified amounts and would squeeze most of its cost savings from a new requirement that private-sector employers reimburse the government for the employer share of health care costs for working-age retirees who use Tricare instead of their employer-provided health plan.

"This would eliminate a subsidy by the government for what is a normal business expense, and provide the government with about $3 billion," the commission report said.

A related recommendation would require all beneficiaries to pay a "modest" enrolment fee for each of the three Tricare plans, and designate whether they are using Tricare as their primary insurer or as a supplemental policy.

"To reduce higher-than-average usage of health care by families of service members, the option would also raise co-pays for office visits from their current low levels closer to national averages," the report said.

Another recommendation would increase out-of-pocket costs for veterans in Priority Group 5 who are enrolled in the Veterans Affairs Department health care system. That category is for veterans who do not have service-connected disabilities and whose income is below a VA-defined threshold.

Those patients now pay no fees for inpatient or outpatient medical care. The commission calls for establishing co-pays for medical care provided by VA to those veterans.

The commission also suggests major changes to the Defense Department's dependents education system, and morale, welfare and recreation activities.

The report calls for consolidating the Defense Department's commissary and exchange systems, an idea that has been floating around Washington for years. The commission says consolidating the stores into one network over five years eventually would result in savings of $1.7 billion a year - if the new facilities "raised prices 5 percent on average."

"It has been suggested that some of this savings could be returned to military families in the form of a $600 [monthly] grocery allowance, which would more than offset the 5 percent increase in prices. This would leave over $800 million in savings annually," the report said. "One argument against the grocery allowance is that the exchanges would still be able to offer below-market prices for goods."

The commission also recommends shutting down the military's stateside school system, which operates mostly in the South as a legacy of the Jim Crow era, when the military was desegregated but civilian communities were not. Noting that most service members now live off base and send their children to private-sector schools, the report said it is "no longer clear why the system is still necessary, or why the Defense Department plans to spend $1.2 billion ... to rebuild these schools" from 2011 through 2015.

The report suggests increasing federal funding to public school districts that would take in additional military children if the DoD schools closed.

Other military-related recommendations in the report:

• Reduce military personnel stationed at overseas bases in Europe and Asia by one-third.

• Cut spending on facilities maintenance.

• Apply the $100 billion in overhead savings that Defense Secretary Robert Gates wants to squeeze out of the defense budget to deficit reduction, rather than reinvesting it in force structure and weapons modernization, as Gates would like to do.

• Freeze federal salaries, bonuses, and other compensation for the DoD civilian workforce for three years.

• Double the number of defense contractor positions scheduled for elimination from 10 percent of current staff augmentees to 20 percent.

• Reduce procurement by 15 percent, or $20 billion.

• Eliminate the V-22 Osprey program, the Marine Corps' Expeditionary Fighting Vehicle program, the Navy's Future Maritime Prepositioning Force, new Joint Light Tactical Vehicle, the Ground Combat Vehicle, and the Joint Tactical Radio.

• Cut the planned number of F-35 Joint Strike Fighters in favor of more F-16s and F/A-18Es.

• Cancel the Marine Corps' F-35 program.

Under Obama's executive order last February that created the commission of 12 members of Congress and six private citizens, 14 of the 18 commissioners must agree in order to send any package to Congress for a vote in December.

The Senate majority leader, Harry Reid of Nevada, and Rep. Nancy Pelosi, D-Calif., who will remain the House speaker until January, have promised in writing that the Senate would vote first and, if it approves a plan, the House would vote as well.

If such a package falls short of the necessary 14 votes among commissioners, some of the recommendations could be developed piecemeal to reduce the federal deficit once the economy fully recovers.

Reacting to the report, a long time expert on military pay and benefits said the recommendations will be the start of a prolonged battle.

"I take this as a serious threat, although not necessarily an imminent threat," said Steve Strobridge of the Military Officers Association of America. "We face an era of national belt-tightening that is going to last a number of years. If they don't cut military retired pay this year, or next year, that doesn't mean they won't do it the year after. Nothing is safe."

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We, the undersigned, call on OUR government to STOP taking away from these military families and individuals who already give so much and get so little in return.

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