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Ryan-Murray deal affects younger retirees

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From page C4 | December 15, 2013 | 3 Comments

The yearly value of a 20-year military retirement would be cut for the current force steadily until age 62 under a cost-of-living adjusment cap provision in the “bipartisan” budget deal struck by Rep. Paul Ryan, R-Wis., and Sen. Patty Murray, D-Wash., the House and Senate budget committee chairmen.

The cumulative effect would be to cut the lifetime value of military retirement by roughly $83,000 for a typical enlisted member who retires at age 40 after 20 years’ service. The typical officer retiring at age 42 after 20 would lose about $124,000.

That’s according to retired Air Force Col. Michael F. Hayden, director of government relations for Military Officers Association of America. Hayden also serves are co-chair of The Military Coalition, an umbrella group of more than 30 military and veteran associations rushing to try to kill the deal.

Targeted in Ryan-Murray deal is full inflation protection for “working age” military retirees, those younger than 62. Retirees 62 and older would continue to get annual COLAs that match inflation as measured by the government’s Consumer Price Index.

Retirees younger than 62 and future retirees, including current members, would see yearly COLAs in retirement cut by 1 percentage point below inflation until age 62. At that point, they would receive a one-time catch up in their annuity to restore lost purchasing power going forward into old age.

The Ryan-Murray deal, said Hayden, reneges on assurances by Congress in setting up the Military Compensation and Retirement Modernization Commission last year, as well as promises from President Barack Obama and his defense secretaries that any substantive changes to retirement would be “grandfathered,” impacting only future generations of members. Current retirees or serving members were to be protected.

The budget deal, said Hayden, “basically shoots the grandfather.”

“I have to think anyone who signed on to this doesn’t understand the full effect it will have on purchasing power of promised retired pay,” Hayden said.

The message being sent to the current force and younger retirees is, he said, “they just changed the rules on the benefit you signed up for.”

To do so without the armed services committee holding a single hearing and without any analysis conducted on the impact on force readiness, said Hayden, is “absolutely insane.”

“You have a group of lawmakers not affiliated with the military that completely backdoor these changes,” Hayden said.

Murray serves on the Senate appropriations subcommittee on defense and the veterans affairs committee, which she chaired for a few years until becoming budget committee chairman last year.

Hayden said The Military Coalition was rushing to try to stop the budget deal from becoming law. He wasn’t optimistic.

“They basically are putting a lump of coal in the stocking and running out for the holidays,” Hayden said.

Hayden said this would have “a significant impact on members and their families looking to make the military a career.” The long-term financial impact is enough to change minds “on whether to stay in the military.”

Congress and the White House seemed unaware of the hornets’ nest they had kicked inside the military community.

At a press conference late Tuesday, Ryan and Murray congratulated themselves on reaching a deal that takes a first step toward reducing the deficit through bipartisan compromise, eases across-the-board sequestration cuts to federal programs, including defense, and protects their “core beliefs.”

For him, Ryan said, those are no tax increases and replacing arbitrary cuts of sequestration with “smart, targeted reforms.”

“We eliminate waste,” Ryan said. “We stop sending checks to criminals. We cut corporate welfare. We reform some mandatory programs and we start to make real reforms in these autopilot programs that are the drivers of our debt in the first place,” Ryan said.

One “autopilot” program, in his view, appears to be full COLAs for working-age military retirees.

“For younger military retirees, we trim their cost-of-living adjustment just a bit,” explains a fact sheet released by Ryan’s committee. “It’s a modest reform for working-age military retirees.”

The first capped COLAs would take effect in January 2016.

Obama called the deal “balanced” and “a good first step” to replace sequestration, which has “harmed students, seniors and middle-class families and served as a mindless drag on our economy over the last year.”

The deal, the president continued in a written statement, includes “targeted fee increases and spending cuts designed in a way that doesn’t hurt our economy or break the ironclad promises we’ve made to our seniors.”

Murray said the deal would cut $6 billion from military retirement across 10 years, and another $6 billion from federal civilian retirement by forcing new hires with fewer than five years’ federal service to contribute an additional 1.3 percent of salary toward their pensions.

“We think it’s only fair that hard-working taxpayers who paid for the benefits that our federal employees receive are treated fairly as well,” said Ryan. “We also believe it’s important that military families as well as nonmilitary families are treated equally and fair.”

The Federal Employees Retirement System, which took effect in 1987, only provides full inflation protection in years when the CPI increase is 2 percent or less. If inflation is between 2 to 3 percent, COLA is set at

2 percent. If the CPI is more than

3 percent, COLAs for FERS are set 1 percent below the CPI.

Advocates for military retirees argue that FERS wasn’t imposed on career employees. They could stay under a system still paying full COLAs.

To comment, write Military Update, P.O. Box 231111, Centreville, VA, email milupdate@aol.com or tweet Tom Philpott @Military_Update.

LEAVE A COMMENT

Discussion | 3 comments

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  • Rich GiddensDecember 13, 2013 - 11:44 am

    Military pensions were already cut back in 1986 with the redux pay formulas enacted by congress. The cpi index excludes food and energy too---gas and groceries are not luxuries.

    Reply | Report abusive comment
  • Danny BuntinDecember 15, 2013 - 6:45 pm

    By removing those two key items, it helps our politicians look like they are keeping inflation in check.

    Reply | Report abusive comment
  • Rich GiddensDecember 15, 2013 - 9:29 am

    Here's a little something I found---good luck getting the next generation to serve in the military. I hope that Peace Corp Congress mean of yours reads it Hoss. . In 24 years of active military service, I never lived any closer than 300 miles to my family. Sometimes it was eight time zones away. My wife and I moved five times in first ten years. All five children were born at different duty stations; the first one was born overseas. It was two months before the grandparents saw him. I’ve been deployed three times to hostile fire zones. I’ve been shot at, had grenades throw at me, had a pistol put to my head, seen a SCUD missile blow up overhead and it’s wreckage land a quarter-mile away, and been in two riots, one of which required getting helicopter gunships cover my escape while being responsible for the lives of eight war correspondents. In the other riot I appeared on live TV to urge calm. I ran countless miles to stay in shape. I took physical fitness tests and was weighed every six months and for every school I attended. I’ve taken urine tests to see if I was on illegal drugs. I’ve had my background investigated every five years, and I’m been polygraphed. I wore a helmet and body armor as my daily uniform over 1,000 times. Most days I wore boots, not shoes. I have served in the rain, the freezing rain, the sleet, the snow, the ice – and in the sun when it was 120 degrees in the shade and when exposed metal reaches 140 degrees. Once in Africa I went 45 days without a shower. I’ve served in hurricane winds too. And I worked in the Pentagon the day the plane hit and in the days afterward while the fire still burned. Overseas I picked up a parasitic disease that was previously unknown to American medical doctors, for which I was treated thirty days with an experimental chemical compound the main component of which was formerly used to clean barnacles off ship hulls and for which the Environmental Protection Agency outlawed as too toxin for the ecosystem, while living two months on an HIV+ ward…where I was cross-contaminated with Hepatitis B from an AIDS patient via my nurse. I now have no cartilage in my knees; I have a torn rotator cuff on my dominant arm; I have a herniated disc in my lower back and I have obstructive sleep apnea from over-developed neck muscles built up to support a four pound helmet, nine pound flak vest and a forty pound rucksack, while carrying an eight pound rifle. I have routinely pulled shifts of 24-48 hours, while charged with leading over one hundred other men doing the same dangerous duty as I. Due to demands of my profession I missed the stock market run-up of the 80’s and the housing market run up of the 90's. My compensation package, based on a salary of which at one point in my career was 23% below comparable civilian pay. My retiree health care plan, as declared by act of Congress, only minimally meets the standards of the new mandatory federal health care system, and is fully only available to me in an ever decreasing number of military communities in which I am the lowest of patient priorities. Based on Department of Defense retirement and mortality statistics I will die 11 years earlier than a normal American man of my age. It would take seventeen and one-half years of my combined retainer pay – yes, I can be called back to duty in case of full mobilization – AND my 80% Veterans Administration disability compensation pay to equal the eleven years of my current post-retirement civilian salary that my earlier death will cause my estate to miss out on. And none of this career was automatic. I served in an up-or-out Army, with progressively more restrictive promotion selection rates of 95%, 85%, 50% and 19%. If you missed a promotion gate you were out of the active service, with a severance pay but no 401(k) to carry over to your next job. And yes, veterans are discriminated against in the job market. In fact I was non-selected for active promotion at one point in my career, due to the downsizing of the military after end of the Cold War, the Gulf War and implementation our new ‘peace dividend.’ I did get a severance package. I then spent the last half of my uniformed career on active duty in the reserve components and am subsequently one of less than five thousand Soldiers down-sized after the first Gulf War to successfully string together a long enough stretch of active and reserve duty to earn a military retirement before the age of 60 – when reservists are eligible to receive their significantly less ‘rei tainer pay.’ In order to draw active retirement pay I had to pay back 100% of that prior severance package, even though 20% of the original amount was taken off the top in the form of federal withholding tax. Isn’t that double-taxation? No one’s inflated my retirement package. In fact, the only efforts to adjust my retirement have been to change the basis of calculating my retirement to lesser formula. Or better yet, a move to quadruple the premium I now pay for retirement health care –a benefit that was promised 24 years ago as ‘free for life.’ Did my recruiter lie to me? Or did Congress? My wife, who followed me around the world when she could and raised five kids by herself when she couldn’t, who gave up a career of her own to be my support system, will get a whopping twenty-seven thousand dollars a year survivor benefit pension should I die before she does, out of which she’ll still have to pay premiums for retiree health and dental care. And she’ll lose that pension if she finds love again and remarries. At least I am eligible to be buried a Veterans Administration cemetery, or if there’s still room by then, in Arlington National Cemetery. Of course it’s a six-week backlog to be buried at Arlington… even in death for the military, it’s ‘hurry-up-and-wait.’ Over compensated? I was part of the all volunteer American military that re-vitalized itself after the Vietnam War, that trained superbly hard for war with the Soviets, that absolutely crushed Iraq in the first Gulf War and that re-trained itself to simultaneously fight the longest counter-insurgency campaigns and world-wide war against terrorists in our history. Like a very old Legionnaire, I am now home from my empire’s wars and I am enjoying what my government chose to compensate me with. I am a grateful citizen. My government can change present and future military compensation with simple legislative and executive ease, and even the past promises of retiree compensation. If it does I will not grumble, but instead whisper ‘good luck’ in raising a loyal, well trained Roman Legion in the generation to come.

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