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With negotiators facing a Dec. 15 deadline, the CBO report is a quick reference guide of options to achieve substantial savings — if lawmakers are willing to take some politically unpopular moves.
Some of the highlights:
Cap military raises
This option, already adopted by the Obama administration for 2014, would reduce the size of military raises to save money. The administration proposed capping the next basic pay raise that takes effect Jan. 1 at 1 percent, rather than the 1.8 percent required under a federal pay formula that is still technically in effect. That formula is designed to provide annual military raises that match average wage-growth in the private sector.
The CBO option would cap military raises starting in January 2015 at 0.5 percentage points less than average private-sector increases, and continue doing so through 2023. Over 10 years, that would yield $24.9 billion in savings.
The CBO admits that a lot of troops won’t like the idea, but suggests “the effect of such an option would be minor,” since troops would still receive pay raises.
Change retirement pay
Military retirement pay is calculated, in part, on the average basic pay over a service member’s three highest earning years in uniform, almost always the last three. As part of a larger reform in government retirement, the CBO said $2.1 billion could be saved over 10 years if retirement pay was calculated on average basic pay over a service member’s five highest earning years in uniform.
The CBO envisions applying the change to those who retire starting Jan. 1, 2015. The net effect would be an average 3 percent reduction in the lifetime value of military retired pay.
Halt concurrent receipt
Savings of about $108 billion over 10 years are possible if Congress ended a practice begun in 2003 that allows many disabled military retirees to receive full military retired pay and veterans disability pay, a move that has boosted the pay of about 420,000 people.
The big savings would result from terminating the dual payment in 2015, affecting those already eligible for both payments and preventing any new payments. But the savings would result exclusively from taking money away from military retirees, making it a particularly difficult political decision — especially since Congress overruled the Pentagon to create the dual benefit in the first place.
Limit disability pay
Troops who incur injuries while at home or on leave, or develop disabilities while in the military that have nothing specifically to do with military service, would not be considered to have service-connected medical conditions under this proposal.
This change, which would apply to both disability compensation and to dependency and indemnity compensation, would save $20.4 billion over 10 years by preventing payments to about 520,000 people.
About 80,000 veterans who receive additional disability compensation because they are considered unable to work would have that compensation reduced under an option that would save $15.3 billion over 10 years. This would apply to veterans whose disabilities are rated at between 60 percent and 90 percent who have their disability pay increased by an average of $1,500 a month because they are considered unable to work, known within VA as “individual unemployability.”
Under this proposal, unemployability could not be awarded until a veteran is past Social Security age for full retirement. The age for full Social Security eligibility ranges from 65 to 67, depending on birth year.
Set minimum TFL fees
Medicare-eligible retirees would be required to pay $550 each calendar year before Tricare for Life started covering any payments, and then would cover only 50 percent of the next $4,950 of expenses, under an option that would save $30.7 billion over 10 years. This plan would take effect in January 2015, with dollar limits indexed to the average cost growth in Medicare.
Raise other Tricare fees
Much like the Defense Department’s current plans for raising Tricare for Life fees for older retirees, CBO proposes saving $21 billion over 10 years with higher enrollment fees, deductibles and copayments for retirees under age 65 and saving $75.4 billion over 10 years by also making them ineligible for Tricare Prime, the military version of a health maintenance organization.
Access to Tricare Prime for working-age retirees already is being restricted by the Defense Department in some areas and fee increases are pending before Congress.
The CBO report does not focus only on pay and benefits. It also lists options for achieving significant savings over 10 years by altering some of the Pentagon’s big-ticket weapons programs:
■ Replace the Joint Strike Fighter with F-16s for the Air Force and F/A-18s for the Navy and Marine Corps. Savings: $48.5 billion.
■ Defer development of a new Air Force long-range bomber until after 2023. Savings: $32.1 billion.
■ Cancel the Army’s ground combat vehicle program. Savings: $15.1 billion.
■ Halt construction of the Ford-class nuclear-powered aircraft carrier after completion of the carrier John F. Kennedy. Savings: $17.8 billion.
■ Reduce the planned purchase of 14 Ohio-class ballistic missile submarines to just eight by 2020. Savings: $15.7 billion.
■ Cancel the Navy’s Littoral Combat Ship program after building the 24 now built or under contract. Savings: $18.3 billion
The Congressional Budget Office has proposed 103 ways to reduce the federal deficit, including controversial ideas for cutting military and veterans benefits.
CBO produces such reports every two years, usually to minimal fanfare. Some past options have made it into law, but most of the recommendations are tough actions that would cause major outcry from affected constituencies — and a lot of political pain for lawmakers — if they were formally proposed.
The latest report could be sidelined just as easily, if not for the fact that it surfaced in mid-November, just as House and Senate negotiators are wrestling with ways to cut spending and raise revenues in hopes of avoiding a repeat of the recent government shutdown.
“The sooner the better, as far as I’m concerned, so the force is well-informed about what potentially could happen,” he said. “I don’t want anybody to be surprised that they’re eligible for something like this, and I want them to have plenty of lead time — six months or more — to think about what their options could be.”
But if voluntary force reduction measures aren’t enough, Welsh said, all involuntary measures could be on the table, including reduction-in-force boards, selective early retirement boards and date-of-separation rollbacks.
“Every tool that we can use, we may have to use, if we get full sequestration,” Welsh said.
Welsh said that if Congress comes to a deal that eliminates or replaces the sequester cuts, the Air Force will pull back on those force reduction measures.
“Hopefully, there’s some kind of budget deal that’s reached, and all of this will become” overtaken by events, Welsh said. “And then if we end up not having to do anything, we’ll tell everybody as soon as we know that’s the case.”
The sequester forced the Air Force to stand down 31 squadrons, including 13 combat-coded squadrons, in 2013. Seven more squadrons were only able to fly enough to maintain proficiency in basic tasks, such as takeoff and landing, Welsh said.
Welsh and the other chiefs of staff urged lawmakers to give the services enough flexibility to decide where to make budget cuts on their own. The Air Force could meet the savings required by sequestration, if it had enough flexibility to make prudent cuts over time, Welsh said.
“However, sequestration robs us of that flexibility,” he said. “We’re left with options that simply don’t make business sense.”
For example, Welsh said, the Air Force will be forced to cut flying hours to the point that within three or four months, many units would be unable to maintain full mission readiness if sequestration continues. Major exercises will be canceled or curtailed. And the Air Force will reduce its initial pilot production targets, he said, which it was able to avoid doing in fiscal 2013 because it was able to use about $1.5 billion in unobligated funds from the previous year to offset roughly 25 percent of the service’s sequestration share. But that is not an option this year, Welsh said, because there is no money left over.
The current continuing resolution that is funding the Air Force has roughly $500 million less in operations and maintenance funding than the service had programmed for the year, Welsh said.
“We are behind the power curve, and dropping further behind,” Welsh said.
And Welsh reiterated his warning, which he first made in September, that the Air Force could be forced to cut about 550 aircraft over the next five years. The Air Force would have to cut entire fleets of aircraft, because cutting a few aircraft from each fleet would not be enough, he said.
The flying reductions are starting to affect the Air Force’s morale in worrying ways, Welsh said. He said he recently spoke to a group of young pilots, who were eligible for an aviation career incentive bonus if they agreed to stay with the Air Force, but had not accepted it.
“That doesn’t mean they’re planning to leave the Air Force, but it certainly means they’re keeping their options open, at a minimum,” Welsh said.
The Air Force is offering up to $225,000 bonuses to pilots who commit to 10 more years in the Air Force. Another group of young airmen told Welsh that they were bored because their squadrons weren’t flying.
“They said at the end of their enlistment, they planned to find work that they thought was a little more exciting,” Welsh said. “I haven’t heard anybody in our military say they were bored in quite some time. So that got my attention.”
The Air Force also needs to get back to full-spectrum training — or teaching airmen how to fight in all scenarios — which has been put on the back burner in the last few years due to the war in Afghanistan, Welsh said. For example, Red Flag training exercises and some weapons instructor courses were canceled last year, he said.
“That’s where we train our Ph.D.-level warfighters to lead and train the rest of the force,” Welsh said. “We have got to get back to that. If we’re not ready for all possible scenarios, then we’re accepting the notion that it’s OK to get to the fight late. We’re accepting the notion that the joint team may take longer to win, and we’re accepting the notion that our warfighters will be placed at greater risk. We should never accept those notions.”
Welsh said they’re in the process of cutting two four-star general positions, 15 three-star positions, and reducing the number of staff supporting those generals.
The service will soon start announcing force reduction measures to help it meet sequester-driven cuts of roughly 25,000 total force airmen over the next five years, Air Force Chief of Staff Gen. Mark Welsh said.
The Air Force will first try to achieve the necessary cuts — nearly 5 percent of the force — with voluntary force reduction measures, Welsh said Nov. 7 after testifying about the effects of sequestration to the Senate Armed Services Committee.
Welsh said he wants eligible airmen to have at least six months to consider their options.
The two sides appear close but Democrats are anxious about the level of savings being sought by Republicans from civilian federal workers. Finding some money on the military side of the equation could lessen this burden and make the package more equitable too from a political standpoint.
Indeed, the Pentagon has the greatest stake in some agreement and faces a further $21 billion cut in its 2014 budget if nothing is done. There is a greater recognition too –in Congress and among the Joint Chiefs— that it must come to terms with personnel-related costs, which are eating up more and more of what money remains.
“Forty-four cents of every dollar we spend goes to military personnel,” said House Armed Services Committee Chairman Buck McKeon (R.-Calif.) “You look at Detroit, you look at General Motors, you look at what happens when you build up these costs, but we aren’t doing anything about it in our [defense] bill this year.”
On the retirement front, President Barack Obama’s 2014 budget opened the door for the GOP by proposing to increase what federal employees contribute to their pensions: adjusting the number upward in three increments from .8 percent of pay to 2 percent.
When this was last proposed, Congress instead decided to charge newly-hired workers even more. The administration proposal seeks to impose its earlier plan on those hired before 2013. The estimated savings are about $20 billion over the coming decade.
But $20 billion from federal workers –in what’s anticipated to a very modest budget package—can seem out of proportion. And at a time when many of the same employees have seen their pay frozen—and even cut through furloughs over the past year—there is strong resistance from well-connected Democrats, most especially the Maryland delegation.
The challenge for negotiators is to navigate these waters –and some believe that finding savings from the military side could help.
The Obama budget partially opened the door here as well. But the president tended to focus more on pharmacy fees and premiums charged for TRICARE just as the president did with more Medicare means-testing. But since Democrats have ruled out big Medicare changes—without some concessions by the GOP on taxes—there is a reluctance to go down the TRICARE road now.
That brings the focus back to a military pension system that already represents a huge unfunded liability for the government. And unlike the civilian side, it demands no direct pay deductions from active duty military personnel.
Instead Congress appropriates billions each year to a military personnel line-item knows as “retired pay accrual.” In 2014 this amounts to nearly $16.8 billion for the active duty military –roughly two thirds for enlisted personnel and one third, officers.
That translates into about $12,334 per individual assuming an end-strength of 1.36 million personnel. Put another way, it’s roughly 32 cents on top of every dollar of base pay.
Even so, this doesn’t come close to the $50 billion which the Congressional Budget Office estimates is paid out each year to military retirees and their survivors. And since benefits continue to be a function of pay, critics have long argued that some contribution is warranted given the higher salaries of the all-volunteer force.
A second issue is that the system only benefits those who serve 20 years or more, meaning a fraction of those who serve ever benefit. Historically it is far more likely that officers will collect a pension than enlisted personnel.
The situation is far too complex to be resolved in a short-term budget deal, but if officers alone were asked to contribute 2 percent of their base pay to the retirement system, for example, it could save at least several billion dollars over 10 years.
A second option included in a recent CBO report calls for lengthening the pay period used to calculate a retiree’s annuity. Right now, this is typically based on the three consecutive years of highest earnings for a civilian; 36 months for the military.
CBO estimates that if that were changed to five years on the civilian side and 60 months for the military it could trim the combined pension costs by about $5.5 billion over 10 years. The military would share in this: accounting for about $2.1 billion. And it would appear a greater share of the savings would come from officers and higher-ranked civil servants.
Can savings from military pensions be part of the solution to avoid deeper cuts from defense next month?
That’s an important question facing House-Senate negotiators as they try to close out a deal this week to avoid another round of sequestration in January and restore some certainty to the appropriations process for the remainder of this Congress.
Tasked by Defense Secretary Chuck Hagel to find ways to preserve force readiness amid sharply falling budgets, his comptroller and the Joint Staff have asked the Defense Commissary Agency (DeCA) for a plan to close all stateside base grocery stores, say military resale community sources.
Time will tell if this is just the loudest warning shot yet fired by a department desperate for budget relief, or if stateside commissaries, still enormously popular with military families and retirees, are viewed by current military leaders as a costly relic burdening a financially stressed force.
Under Secretary of Defense Robert Hale, the department’s top financial adviser, and Air Force Lt. Gen. Mark F. Ramsay, director of force structure, resources and assessment for the Joint Staff, reportedly requested the plan in a meeting with military personnel policy and commissary officials.
It was to be briefed soon to Deputy Defense Secretary Ashton Carter and Adm. James Winnefeld, vice chairman of the Joint Chiefs of Staff.
(Reuters) - An Afghan army special forces commander has defected to an insurgent group allied with the Taliban in a Humvee truck packed with his team's guns and high-tech equipment, officials in the eastern Kunar province said on Sunday.
Monsif Khan, who raided the supplies of his 20-man team in Kunar's capital Asadabad over the Eid al-Adha religious holiday, is the first special forces commander to switch sides, joining the Hezb-e-Islami organisation.
A top general in charge of the U.S. Air Force's arsenal of nuclear ballistic missiles has been relieved of his command due to loss of trust, defense officials told NBC News.
Air Force officials said Maj. Gen. Michael Carey was fired for “personal misbehavior” while on temporary duty at an unspecified location outside his usual command. The officials would not describe the behavior, other than to say that it did not involve any sexual improprieties, drug use, gambling, or criminal conduct.
Carey oversaw the 20th Air Force, with a total of 450 intercontinental ballistic missiles at three locations across the U.S.
The government shutdown has delayed the implementation of the new physical fitness standards for airmen who fail the tape test but get a composite score of 75 on the rest of the PT test, officials said.
Starting Tuesday, tough new Body Mass Index and body fat standards were supposed to go into effect for the tape test failures, but the Air Force instruction laying out those standards has not been published yet, Air Force spokeswoman Lt. Col. Laurel Tingley said.
Until it is published, the old instruction on PT standards is still in effect, Tingley said.
The U.S. Air Force and Boeing have sent their first unmanned F-16 jet plane into the air — a drone craft test that promises to change the shape of battlefield missions in years to come.
“Now we have a mission-capable, highly sustainable, full-scaled aerial target to take us into the future,” said Lt. Col. Ryan Inman, in Sky News.