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Pentagon cuts are just a preview of what's to come

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Monday, October 4, 2010; 10:58 PM

The bipartisan uproar in Congress caused by Defense Secretary Robert M. Gates's attempt to reduce excess Pentagon spending by eliminating the no-longer-needed Joint Forces Command in Virginia is just a preview of the battle that will occur next year when the country awakens to the drastic measures needed to bring overall federal taxes and outlays in line.

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That argument was made last week at a House Budget Committee hearing called primarily to give the Virginia congressional delegation another chance to complain about Gates's plan to end the command set up nine years ago to promote jointness among the services. At that time, it had a staff of 2,000 military and civilian personnel and cost $200 million. Today, with jointness an established service reality, JFCOM has a $1 billion price tag because it has ballooned to 3,000 military and civilian personnel and 3,000 contractors.

"The defense budget is in many respects a microcosm of the rest of the federal budget, and the issues in the defense budget - such as the rising cost of pay, pensions, health care, contracting, infrastructure and education - are issues in other parts of the federal budget as well," Todd Harrison, a senior fellow at the Center for Strategic and Budgetary Assessments, told the House panel.

CSBA describes itself as an "independent, nonpartisan policy research institute established to promote innovative thinking and debate about national security strategy and investment options."

CSBA's board includes former congressman David McCurdy (D-Okla.), former senator Dan Coats (R-Ind.), former Army vice chief of staff Jack Keane and former CIA director R. James Woolsey Jr.

Harrison said the Defense Department initially publicized "targeted cuts to programs and activities it has deemed to be a lower priority."

Calling it "a sound approach" and "a step in the right direction," he added that he recognized that "in some cases, it will mean lost jobs. In other cases, it will require taking on vested interests, both within the Pentagon and outside the building."

But he cautioned about the first announced cuts, "They do not address some of the fundamental issues that plague the defense budget, such as the rising cost of military health care."

The details Harrison then presented are stunning.

The Defense Department spends about $246 billion on the uniformed military and DOD civilian personnel, a payroll of 2.3 million direct, full-time employees. That is 51 percent of the federal workforce, he said.

Military health-care costs are rising "due in part to more and more military retirees and their dependents electing to use their military health-care benefits," Harrison said. That is not surprising, because the fee charged retirees under the Tricare military health plan is $460 a year for a family. That fee was set in 1995 and has not increased, Harrison said.

Compare that to the $3,500-a-year average annual premium that workers in the private sector pay for coverage, and you will not be surprised that more and more of the 70 percent of military retirees with access to private health plans are staying with the military system.

And with 9.5 million Americans eligible for military health-care benefits, the cost to the Defense Department will only grow. That is because Congress in 2001 approved Tricare for life, meaning that military retirees who are older than 65 and are on Medicare can also use Tricare as their supplemental insurance program.

"Accrual payments to this trust fund now total $11 billion annually out of the DOD budget," Harrison said.

At a Senate Armed Services Committee hearing last week about Gates's planned reductions, Deputy Defense Secretary William Lynn acknowledged that Pentagon health-care costs are growing "in dramatic fashion." He assured members that "as part of the fiscal 2012 budget, I think we will be proposing to Congress some ideas about how to restrain health-care costs."

If you think the howls of the Virginia delegation about eliminating JFCOM have been loud, wait until the veterans organizations see the first steps toward limiting military retirees' health-care benefits.

And all this is just a Pentagon-based preview of what is to come when the inevitable steps are proposed to raise taxes for, and reduce payouts from, Social Security and Medicare and other broad federal programs.


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