Observing Memorial Day Gunnery Sergeant Laweryson, It goes without saying that this is a special weekend for all members of the uniformed services and veteran's community. Memorial Day carries a particular significance for MOAA members and families when our Nation is at war. Please keep all servicemembers, veterans, survivors, and their families in your thoughts. If you're traveling this weekend, please do so safely. Your family, your compatriots in uniform, and your country still need you.

In This Issue

Gates Targets Retirement, Health Care

In a speech at the American Enterprise Institute this week, Defense Secretary Gates reiterated his belief that military compensation, retirement, and health care benefits should be targets in the budget-cutting process.

House Passes Defense Bill

After plowing through more than 150 amendments, including many on personnel and benefits issues, the House of Representatives voted to approve the FY2012 Defense Authorization Act.

Report Charts Reserves' Future

A new Pentagon Report recommends a continuing active-duty role for the National Guard and Reserves in military missions after the Afghanistan and Iraq conflicts.

How Would TRICARE Fee COLA Adjustments Work?

Some think the proposed formula would eat up retired pay COLAs. Not so. Check out an example.

Gates Targets Retirement, Health Care

In a speech at the American Enterprise Institute this week Defense Secretary Robert Gates reiterated his assertion that DoD needs to fundamentally change the way it does business.

He said procurement overhaul already has produced significant savings, and identified force size and structure, military compensation, retirement, and health care as additional targets for budget cuts to achieve a planned $400 billion in DoD budget savings over the next 10 years.

Gates launched a comprehensive review of DoD’s future needs last week to identify specific recommendations. Among the specifics he cited were:

• Lowering military compensation in light of strong recruiting and retention numbers

• Eliminating the "one size fits all" military retirement system in favor of a tiered and targeted retirement system that weights compensation towards the most in-demand specialties

• Increasing health care cost-sharing for working-age retirees

Considering the staggering debt facing the nation, the reality is that anything the government spends money on is going to come under great pressure for cutbacks in coming years.

But it's troubling to hear Pentagon leadership citing the same old arguments that led to short-sighted changes of the 1970s, '80s, and '90s that ultimately caused significant retention and readiness problems.

Sustaining pay comparability – through good budget times and bad – is a fundamental underpinning of the all-volunteer force. We've spent the last decade recovering from the follies of the past. Cutting back on military pay every year we experience satisfactory recruiting and retention is a proven method to create future retention problems. It's the equivalent of driving a car by looking only in the rear-view mirror. Sooner or later, you're going to crash.

On the retirement front, the country should thank its lucky stars it has the current 20-year retirement system, because it's the primary reason we've been able to sustain the force through the last decade of war. The last retirement reform – the REDUX system of 1986 that cut lifetime retirement value by 22% for subsequent entrants – had to be repealed after it caused retention problems.

Now DoD budgeteers envision saving money by cutting retirement even more than REDUX did – by making military people fund more of their own retirement, delaying eligibility for retired pay until age 57 or later, and changing the retirement contribution every year based on the shortage skills of the time. They propose making it "fairer" by vesting military retirement benefits after 10 years of service.

But this system would blatantly take money from people who serve a career to pay people who leave early, creating a retention and readiness time bomb.

If you had 10 years of service, were facing a fourth tour to Afghanistan, and were given the choice of separating with a pro-rata retirement or being required to keep serving until age 57 to earn a regular retirement (knowing the military will still want to push most people off active duty well before that age), what would you do?

Budget-cutters always focus on short-term fiscal needs, recognizing that any negative consequences will be their successors' problem to solve.

Their fatal flaw, from a national readiness standpoint, is that they plan for the best-case scenario, when a volatile real-world never follows that scenario (see the "Quote of the Week" sidebar in this legislative update).

While all military compensation programs are going to come under very close budget scrutiny, MOAA will focus on reminding Congress of the lessons (hopefully) learned from past ill-considered cutbacks.

House Passes Defense Bill

On Wednesday, MOAA sent out a special alert urging members to support a FY2012 Defense Authorization Bill (H.R. 1540) amendment offered by Rep. Robert Andrews (D-NJ) that would provide compensation improvements for certain disabled retirees, military widows, and called-up Guard/Reserve personnel.

Despite thousands of messages of support from MOAA members, the Andrews amendment was ruled out of order and ended up not being considered.

But the House plowed through more than 150 other amendments before voting to approve the defense bill Thursday afternoon by a vote of 322 to 96. Among the amendments adopted were provisions to:

• Designate the Chief of the National Guard Bureau as a member of the Joint Chiefs of Staff

• Establish a registry of incidents in which servicemembers were exposed to occupational and chemical hazards during deployments

• Require an assessment of health risks for personnel exposed to open-air burn pits

• Allow members of the Individual Ready Reserve who have been called to active duty for at least one year since 9/11/01 to purchase premium-based TRICARE coverage on the same basis as members of the retired reserve

• Direct a review of the need for additional behavioral health professionals and ways to incentivize such professionals to join the active and reserve forces

• Direct the Pentagon to develop a plan to be able to call up a limited number of Guard and Reserve forces for missions short of war

• Require a variety of initiatives to enhance suicide prevention efforts and improve assessment and treatment of post-traumatic stress and traumatic brain injury; and

• Prohibit use of names and images of living or deceased servicemembers on merchandise and retail products without express permission from the members or their surviving families

Now it will be the Senate's turn to act on the defense bill. The Senate Armed Services Committee is expected to begin crafting its version of the bill in mid-June.

After the full Senate passes it, House and Senate leaders will have to convene a conference committee to work out the differences between the two bills. Typically, that process extends well into the fall – or later. So it will be a while before we know the final outcome.

Report Charts Reserves' Future

Outgoing Assistant Secretary of Defense for Reserve Affairs Dennis McCarthy briefed MOAA and other Military Coalition partners last week on the "Comprehensive Review of the Future Role of the Reserve Component." McCarthy co-chaired this study with Joint Chiefs Vice Chairman Gen James Cartwright, USMC.

The gist of the report is that the Guard and Reserve should remain a "force of choice" for military missions instead of a "force of necessity." McCarthy noted that current law only allows calling Reserves to active duty in response to emergency situations like the Iraq and Afghanistan wars.

Among other recommendations, the report proposes:

• New authority to call up and deploy Guard and Reserve forces on a recurring non-emergency basis New authority to call up and deploy Guard and Reserve forces on a recurring non-emergency basis – e.g., for regular deployments to Korea to help reduce the number of active troops there

• A common DoD total-force costing methodology to better compare regular vs. reserve component personnel, operating, individual and unit costs

• Options for "rebalancing" active duty, Guard and Reserve elements to allocate diminishing resources between the active and reserve components without accepting undue risk to the nation's security

• Consolidating the 28 types of military orders a Reservist can serve under to about six to simplify the purpose and funding for active vs. inactive (drill) duty (MOAA agrees)

• A "continuum of service" concept to let service members move easily between active duty (regular) status and reserve status. McCarthy noted that there has not been a lot of progress on the idea. MOAA believes this idea sounds good philosophically, but history indicates short-term service needs would trump commitments to servicemembers who might expect to pursue it

• Sustaining the Reserve Affairs office as the overseer of Reserve forces policy in DoD -- in contrast to the recommendation of the 2008 Commission on the National Guard and Reserves to eliminate the office

How Would TRICARE Fee COLA Adjustments Work?

Many of our members have asked how the COLA index proposed by the House Armed Services Committee would work for adjusting future TRICARE fees.

Some have the impression it could completely offset future COLA adjustments to retired pay. Not so.

The key issue is that the index would be a percentage change, not a dollar amount change. Since TRICARE fees represent a small fraction of retired pay, an equal percentage adjustment in each means any TRICARE fee COLA amount would still be a small fraction of the retired pay COLA amount.

For 2012, the proposed TRICARE Prime enrollment fee for a family is $520 per year. By comparison, the average military retired pay for all ranks is about $30,000 a year.

If the 2013 COLA is 3%, the TRICARE Prime enrollment fee increase would be 3% of $520 = $15.60 for the year.

In contrast, a 3% COLA would increase average retired pay by $900 a year.

So if you speculated that indexing TRICARE fees by the COLA percentage might somehow eat up retired pay COLAs, you can rest easy on that score.