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Ryan Defends Reduction to Cost-of-Living Adjustments for Early Military Retirees

12:00 AM, Dec 15, 2013 • By JOHN MCCORMACK
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The two-year budget deal crafted by Republican congressman Paul Ryan and Democratic senator Patty Murray sailed through the House of Representatives on a 332-94 vote last Thursday, just two days after it was introduced.

EDIT.v16-22.Feb21.Continetti.AP Photo.Ryan J Foley

AP / Ryan J. Foley

If cutting a bipartisan deal is so easy, why couldn't Republicans and Democrats have reached an agreement before October 1 and skipped the government shutdown altogether?

"I think the pressure of divided government has come full force, and I think the specter of one or two more government shutdowns concentrated our minds to make this divided government work," Paul Ryan said on Saturday afternoon, speaking with THE WEEKLY STANDARD by phone from his hometown of Janesville. "It's very clear that without this deal two things would happen: The military would have borne the full force of these cuts starting in January. And we would have at least one more government shutdown drama.”

“We think that's bad,” Ryan said during a break between games at his son's basketball tournament. “We think that's not in our interest. We want 2014 to be a year where we don't keep cutting the military, and we focus on Obamacare, we focus on the conservative reforms we want to roll out, and we win the next election so we can start saving this country."

But the Ryan-Murray deal is not without its critics. In the Senate, a growing number of Republicans have objected to bill's provision to reduce the annual cost-of-living adjustment (COLA) by one percentage point for military retirees under the age of 62. Senators Kelly Ayotte of New Hampshire, Lindsey Graham of South Carolina, Roger Wicker of Mississippi, and Jim Inhofe of Oklahoma have all cited the issue as a dealbreaker for them.

Ryan defended the provision on Saturday as a modest reform that's part of a broader plan to save the military from devastating cuts.

"We give them a slightly smaller adjustment for inflation because they're still in their working years and in most cases earning another paycheck,” Ryan said. "Our goal here is to make sure that no other country comes close to matching the U.S. military, and the stress on the budget in the future brings that whole entire notion into question. We still have a Pentagon budget that is not where it needs to be."

Under the 2011 Budget Control Act, about $1 trillion was cut from the defense budget over 10 years--roughly $500 billion by the law's spending caps and another $500 billion through automatic sequestration cuts, which exempted personnel. The Ryan-Murray deal relieves $31.5 billion in sequestration cuts to defense over the next two years. "From my conversation with just Chuck Hagel and General Dempsey recently, the biggest relief this gets is military readiness," Ryan said. "The statistics are very, very concerning about our readiness."

The COLA reduction for military retirees, which doesn't take effect until January of 2016, would save an additional $6 billion over 10 years in the defense budget. "The defense community asked us to look at compensation and their entitlement spending within the Pentagon. We knew we couldn't put back into the Pentagon's budget as much as we'd like to, and these reforms help them with their budget," said Ryan. "The savings stays with the Department of Defense and that comes on top of the money we're giving back through the sequester."

The savings "can go to anything," said Ryan. "It can go to readiness, it can go to troops, it can go to brigades, buying equipment."

But why not grandfather benefits for current servicemembers, like Ryan does for Americans over the age of 55 in his plan to reform Medicare? 

Ryan replied that grandfathering wouldn't achieve the savings the military needs, and he emphasized the pension reform only affects servicemembers who have served the 20 years necessary to qualify for a pension (just 20 percent of all veterans) and retired before the age of 62. 

The bill has a "catchup provision" so that at age 62 the retiree's pension goes up to where it would have been without the COLA reduction. "I don't think people know there's a catchup provision," said Ryan. "Once they hit the age of 62, this provision recalculates their benefits so they get the full adjustment for inflation and their pension pay goes up as if nothing had happened. And from then on they have full inflation protection." 

According to House Budget Committee staff, a man who enlisted at age 18 and retired at 38 as a Sergeant First Class in the Army would see approximately a 6 percent overall reduction in lifetime retirement pay because of the COLA reduction--that is, he would receive about $1.626 million in lifetime retirement pay instead of $1.734 million.

Earning $108,000 less in retirement pay over a lifetime certainly isn't chump change, but Ryan points out that the budget deal achieves the same amount of savings over ten years from federal civilian employees' pensions ($6 billion) by requiring new employees to make higher contributions. "This is still far more generous than civilian retirees who receive absolutely no COLA before the age of 62," Ryan said. "We still kept the military retiree in a far better position than the civilian because we think that's the way it ought to be."

Ryan also noted that the deal gives Congress time to come up with a better way to achieve the same savings. "We delayed this provision so that it doesn't take effect until the year 2016, which gives Congress and the military community time to address the broader compensation issue, including this provision, if people believe there's a better way to solve this problem," he said. 

The problem is that there's no way to painlessly cut $1 trillion (or close to it) from the military's budget. Defense secretary Chuck Hagel said in a November speech that because of budget cuts only 2 of the Army's 43 brigade active-duty combat teams are ready for combat, and Marine Corps units that are not going to Afghanistan are getting 30 percent less funding. At one point this summer, only 8 warplanes were ready to respond to an emergency away from front-lines operations.

Simply structuring cuts more intelligently doesn't make it much better. Republican senator Tom Coburn of Oklahoma introduced a proposal in 2009 to cut $1 trillion from defense as part of a plan to cut $9 trillion from the federal budget. Among other defense cuts, Coburn's plan called for closing down elementary schools on military bases, making veterans pay more for their health care, canceling the F-35 Joint Strike Fighter, eliminating 1 of the nation's 11 aircraft carriers, and shrinking the Army by 65,000 soldiers. Anyone who thinks it's possible to save $1 trillion from defense by simply cutting "waste, fraud, and abuse" is mistaken.

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