The Washington Post: Pension panic
Of all the reactions to the bipartisan budget pact that passed Congress this week, none is less justifiable than the outrage of certain supposed Republican budget hawks at the plan's minuscule trim to military retirement pay.
Essentially, the bill would reduce the annual cost-of-living adjustment by a single percentage point a year on pensions for working-age retirees, up to the age of 62. For a man who enlisted at age 18 and retired as an Army sergeant first class at 38, lifetime retirement pay would decline from $1.734 million to $1.626 million, according to House Budget Committee staff.
The cut would save $6 billion over 10 years, helping to pay for much-needed current missions. Yet GOP senators including Kelly Ayotte, N.H., Jeff Sessions, Ala., and Lindsey O. Graham, S.C., lined up to denounce the plan; Mr. Graham said it "screws" military retirees.
Men and women who choose serving in uniform as a career deserve to be compensated in keeping with the sacrifices they and their families make. But the cost of health care and pensions for those who retire after 20 years most of whom then go on to have lengthy civilian careers is consuming a growing share of defense budget dollars. The tab for military pensions was $51.7 billion in 2012; it's on course to hit $59 billion by 2022, even though the number of retirees will remain constant at roughly 2.3 million, according to official estimates.
Sensibly wishing to shift scarce resources from past obligations to current and future defense needs, Pentagon officials gave Rep. Paul Ryan, R-Wis., and Sen. Patty Murray, D-Wash., a green light to address legacy personnel costs and tweaking the cost-of-living adjustment was the most they could agree to do.
Actually, military retiree benefits need much greater reforms. Pensions are not even the biggest concern: That would be health care for retirees, both working-age and Medicare-eligible, and their families, which has been projected to account for nearly two-thirds of all Pentagon health spending by 2015. Retiree benefits account for much of the increase in Defense Department health-care spending; it grew from $19 billion in 2001 to $52.8 billion in 2012.
President Obama has proposed saving $12.8 billion over five years by gradually increasing the out-of-pocket contribution working-age retirees are expected to make, which would still leave them a far better deal than civilians with employer-paid insurance have. Congress shot the idea down like an enemy aircraft.
Even the Ryan-Murray plan's teensy-weensy cut doesn't take effect until December 2015, which gives opponents plenty of time to undo it, with the help of the military retiree lobby. And when retirees hit age 62, they'll resume full cost-of-living adjustments, and their base pay will be tweaked to account for the adjustments they'd forgone. Not only is this not "screwing" anyone, but it's a far cry from the real reforms and the real shift in budget priorities that the Defense Department badly needs.