DoD’s Balk on Compensation Reform Irks Commission
The Department of Defense disappointed members of the new Military Compensation and Retirement Modernization Commission by failing this month to propose a fresh set of ideas for reforming pay and benefits, as Congress had directed.
The anticipated Pentagon proposals were to serve as a kind of launch pad for the commission's work, which entered a new phase this week when the nine commissioners held their first public hearings.
"When the trumpet is silent who will follow," quipped Commissioner Steve Buyer, former Republican congressman from Indiana, when invited to comment on the department's cautious response on deadline.
Last year's defense authorization act directed that not later than nine months after it established the commission, which meant Nov. 1, the secretary of defense "shall transmit" recommendations for modernizing compensation and retirement.
Instead, Defense Secretary Chuck Hagel's deputy, Ashton B. Carter, sent a letter summarizing recent pay and benefit initiatives the department had tried to push through Congress with limited success. These included a modest cap on the next pay raise and a failed attempt to raise TRICARE fees for military retirees, particularly for retirees younger than 65. More proposals on pay and benefits will be included in the fiscal 2015 defense budget request due to Congress early next year, Carter promised.
That letter, Buyer said, left him "incredibly disappointed."
"When the Secretary of Defense statutorily is to give guidance, and doesn't, then the commission has to step forward and lead," said Buyer who served on the House Armed Services Committee for years and chaired its personnel subcommittee.
"But how bold can we be, realistically," Buyer asked, if the Obama administration opts to "stay silent."
Carter, in his letter to Commission Chairman Alphonso Maldon Jr., did note that department staff has "expertise on military retirement. Although we have not made any specific retirement proposals, we would be glad to discuss our thoughts on the military retirement system informally with the commission."
That caution rankled more commissioners than Buyer.
"Disappointing would be a fair description, absolutely," said Commissioner Mike Higgins, a retired Air Force officer who also retired recently from the professional staff of the House Armed Services Committee where he worked compensation issues. "This is clearly not up to anyone's expectations."
However, Higgins said his "confidence is pretty high" DoD will propose more substantial reforms, presumably in time for the commission to consider them before it must send its own recommendations to the president and Congress next May.
Buyer noted that the commission schedule doesn't leave time for Congress to adopt any recommendations before 2015, after the 2014 elections. He speculated that Hagel couldn't win consensus from the services on sweeping compensation changes, including a redesign of military retirement for future generations.
One commissioner, who asked not to be named in making this point, suggested the Obama administration chose to sidestep controversy.
"They come out of the box," he said, "and they're going to create a lot of furor in the force. So the environment might have been very difficult."
Maldon, a retired Army officer who served as assistant secretary of defense for force management and policy during the last years of the Clinton administration, said in an interview that the commission would stay focused on its task.
"Obviously we would have loved to have had [DoD's] perspective. But not having it certainly is not a showstopper for us. And, in fact, I'd like to believe that something may even still be forthcoming" from the department.
A defense official did note again that compensation costs, including for health care, now accounts for almost 50 percent of defense budgets. Without reform "that percentage could rise, impacting critical readiness and modernization efforts."
As the law required, President Obama in mid-September did provide a set of written principles for commissioners to follow. Maldon alluded to these in explaining the commission will have three priorities in proposing changes: protect the long-term viability of the all volunteer force; provide a high quality of life for members and families, and ensure "fiscal sustainability" of compensation and retirement programs.
"We want this to be the most comprehensive review that can possibly be done, hopefully for the next 20 years," Maldon said in our interview. The "foremost objective," he added, is to keep the force filled with quality personnel.
Current retirees are not to be impacted by any alternative retirement plan the commission might propose, according to its guiding principles. And members already in service when changes take effect could stay under the current retirement plan. But Maldon said they also could "volunteer" to accept an alternative plan.
Many past studies have proposed a more flexible force-shaping tool than the current retirement system, which provides generous benefits but only to members who serve at least 20 years. Proponents for change have argued it would be more fair and cost-effective to vest members with some portable retirement benefits earlier, perhaps after five or 10 years' service, and then use targeted incentives, like gate pays or career bonuses, to keep the right mix of skills for 20 years and beyond.
The commission heard these same kinds of ideas on the second day of public hearings. It also heard from military family advocates who helpfully proposed that oversight of certain support services, like childcare, could be streamlined across DoD. Other associations and veterans groups argued for protecting recent pay gains as well as a retirement system that has supported an all-volunteer force for 40 years.
Maldon said all options would be considered.
"But I want to make sure everybody understands that the primary purpose of this commission is not to come out and balance any kind of budgets on the back of veterans," he said.
Other commissioners are: former Democratic congressman Chris Carney, retired Army Gen. Peter W. Chiarelli, retired Adm. Edmund Giambastiani, Jr., former senators Bob Kerrey and Larry Pressler and former defense comptroller Dov Zakheim.
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