Debt Deal Risks Military Pay, Veterans Programs
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By Bob Brewin,
Next-Gov
August 3, 2011

Military pay raises, funding for veterans health care and the Post-9/11 GI Bill could be sacrificed to new fiscal realities as the result of the deal signed by President Obama on Tuesday to raise the federal debt ceiling, according to the Military Officers Association and veterans groups. The law requires the federal budget be cut $2.1 trillion over 10 years.

The White House said it plans to cut $350 billion from the Defense Department budget (excluding war funding) over the next decade. Retired Air Force Col. Michael Hayden, the association's deputy director for government relations, said this means "everything is on the table," including military pay.

While Congress historically has been reluctant to freeze military pay, the 2011 Budget Control Act signed by Obama on Tuesday makes it clear upfront that military pay is no longer off-limits in budget discussions. If the administration and Congress fail to make the required reductions, then across-the-board cuts in discretionary funding will be triggered through a procedure known as sequestration. The law gives the president "authority to exempt any [military] personnel account from sequestration," but only if "savings are achieved through across-the-board reductions in the remainder of the Department of Defense budget," states a House Rules Committee analysis of the bill.

Hayden said, "This leaves pay raises up for grabs," as Defense crafts a new budget to meet cuts planned by the White House. He also expressed concern that cost-of-living increases for military retirees could end up sacrificed in the Pentagon budget-cutting process, although by law they are protected from sequestration.

Troops May Face Pay Freeze
Retired Air Force Col. Philip Odom, another deputy director for government relations at the Military Officers Association, said troops could face a pay freeze coming on the heels of a small 1.6 percent pay raise in the 2012 budget, the "second lowest increase since 1962."

Keith Weller, a spokesman for the Reserve Officers Association, expressed concern that the "super committee" Congress must establish to determine the budget cuts will use the new strict budget caps to increase fees for the TRICARE health insurance program for active-duty and retired military personnel.

"We don't want them to view TRICARE as a cash cow," Weller said. In January, then-Secretary of Defense Robert Gates called for a "modest" increase in TRICARE premiums, which have been frozen at $460 a year for the past 15 years, compared to $5,000 a year other federal workers pay for health insurance.

Gates said Defense heath care costs have spiraled to $50 billion a year from $19 billion a year over the past decade, with the 10 million TRICARE beneficiaries accounting for much of that increase.

The budget control law lumps the discretionary budgets for the Defense, Homeland Security and Veterans Affairs departments, along with the National Nuclear Security Administration, the intelligence community management account and portions of the State Department budget, in a new "security" category capped at $684 billion in fiscal 2012. This marks a 6 percent, or $44 billion, cut for those entities, according to an analysis by the Heritage Foundation.

If these departments and agencies do not adhere to the budget caps then they would lose funds through the sequestration process spread evenly across their budgets, but with no clear delineation in how and where cuts would be made, the analysis concluded. Carl Blake, legislative director of Paralyzed Veterans of America, said he has real concerns about the effect the law will have on veterans' health care.

Veterans Affairs Department pension and disability programs are fenced off from cuts or sequestration, Blake said, but not the massive 247,000 employee Veterans Health Administration, which is expected to care for 6.2 million patients in 2012. Blake said VHA operates under discretionary funding, which makes it a target for cuts.

Government Executive learned that John Carson, director of the White House office of public engagement, met with veterans groups, including the America Legion, Disabled American Veterans, Iraq and Afghanistan Veterans of America and the Wounded Warrior Project, to assure them that veterans compensation programs will be safe from sequestration.