Full effects of automatic cuts unclear
Some veterans groups welcomed the impasse, which congressional observers expected to include higher out- of- pocket health care costs for military retirees and their families, and a hike in beneficiary co-payments on drug prescriptions filled through the TRICARE network of retail pharmacies.
Also, all federal retirees, Social Security recipients and disabled veterans stood to see annual cost-of-living adjustments dampened a little each year through adoption of a new “chain” COLA formula.
Whatever impact higher beneficiary co- payments might have had on military morale, Defense Secretary Leon Panetta warned the negatives will pale in comparison to the damage done to national security as a result of automatic cuts set to take effect in 2013 as a result of the super committee’s failure.
Leaders of every service, and the chairmen and ranking members of the armed services committees, echoed Panetta’s concern. They are worried because the same Budget Control Act that gave unprecedented power to a special panel of six Republicans and six Democrats also comes with what Panetta calls a “ doomsday mechanism” triggered by the super committee’s inability to achieve a majority.
The mechanism — sequestration — forces future defense budgets and some popular entitlement programs to take across- theboard cuts. For defense, the deepest cut would occur in 2013, followed by automatic cuts of up to $55 billion a year for eight more years.
This would be on top of $465 billion in defense cuts the president and Congress already have agreed to and which Defense officials are studying how to implement over the next decade.
Newt Gingrich, former speaker of the House and a candidate for president in 2012, called the sequestration gambit “suicidally stupid” for putting “the security of the United States at risk because of an arbitrary budget number.”
The various debt- cutting proposals aimed at TRICARE and brought to the super committee by independent commissions, the White House and leaders of the Senate Armed Services Committee have been described here in earlier columns. Sen. John McCain, R- Ariz., ranking Republican on armed services, even suggested that working- age retirees be bumped from TRICARE Prime, the managed care network, and pay higher costs under TRICARE Standard, the fee- for- service health insurance option or rely instead on civilian employerprovided insurance.
Last week, Panetta gave McCain more political cover for backing these entitlement cuts when he laid out for the senator in new detail what will befall defense programs if “maximum” sequestration is triggered so defense cuts total almost $1 trillion over the decade.
“The impacts … would be devastating,” Panetta wrote.
In fiscal 2013, assuming the president exercises his authority to exempt military personnel accounts from automatic cuts, a 23 percent cut “would have to be applied equally to each major investment and construction program” of the Department of Defense, leaving “most of our ship and construction projects unexecutable — you cannot buy three quarters of a ship or a building,” Panetta wrote.
Many civilian workers would have to be furloughed, Panetta said, breaking faith with valued personnel and “seriously damaging readiness.”
“The situation does not get better” beyond 2013, he added, with cuts of up to $100 billion a year possible compared to the 2012 defense budget.
“Rough estimates suggest after 10 years of these cuts, we would have the smallest ground force since 1940, the smallest number of ships since 1915, and the smallest Air Force in its history,” Panetta wrote.
Wartime funding for Afghanistan would not be directly impacted by sequestration, the secretary explained, but the war effort would suffer.
“ Contracting personnel would be cut, resulting in delays in the contracts and the contract oversight that support the war. Payroll personnel would be cut, resulting in late payments to wartime vendors, and legal and policy support would be disrupted,” Panetta advised.
Some Republicans are so worried they want to modify the Budget Control Act in 2012 to block the effect of sequestration on defense spending. Budget experts have warned that such an escape hatch could shatter confidence among Americans and world markets that Congress will never have the will to solve the nation’s debt crisis.
Arnold Punaro is a member of the Defense Business Board, an advisory group of executives to the secretary of defense, which has recommended major changes to TRICARE and future retirement plans to bring personnel costs under control. Punaro, a retired Marine Corps Reserve major general, said most military retirees are ready to accept reasonable fee increases if told the facts about the department’s soaring health care costs.
“Retirees get it,” he said. “ They say, ‘ Look, if everybody is sacrificing, we’re willing to pay our fair share. They don’t want to see a weak military 20 years from now. They don’t want to see the volunteer force get hollow.”
Most Republicans in Congress have signed a pledge not to raise taxes, even on the wealthiest Americans, and want the debt crisis addressed only through spending cuts. That’s become the pivot point of debt negotiations.
Retired Air Force Col. Steve Strobridge, director of government relations for Military Officers Association of America, said military folks understand the general aversion to raising taxes.
“But the very same people who have taken that stand, when they do offer revenue increases, put at the top military people and their TRICARE payments,” Strobridge said. “ We have a problem when they say ‘We don’t want to tax billionaires’ or ‘ We don’t want to tax corporations that ship jobs overseas.’ But the first thing they propose for revenue increases is a substantial health care tax on military people.”
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