January 31, 2014
MOAA Chairman of the Board Gen. John Tilelli, USA (Ret) testified January 28 before the Senate Armed Services Committee (SASC) on an annual 1 percentage point COLA cut for working age military retirees established in the Bipartisan Budget Act (BBA).
General Tilelli laid out three priorities:
- Full and immediate repeal of the COLA cut
- Future changes to the military retirement system must grandfather military retirees and the current force
- Future changes to the military retirement system must be fully vetted through the Armed Services Committees to determine the impact on our world class, all-volunteer force.
The full impact of the COLA cut caught many legislators by surprise only after the BBA was signed into law on December 26. The BBA failed to grandfather currently serving members or retirees, and was not vetted by the House and Senate Armed Services Committees.
MOAA launched the largest campaign to overturn the cut, sending more than 270,000 messages to Congress. By the time of the hearing this week at least 17 repeal bills had been introduced in the House and Senate with nearly 50 percent of legislators signed on as cosponsors to one or more measures.
The hearing was an important step towards repeal. Members of the committee present and the DoD witnesses agreed that the current servicemembers and retirees should be grandfathered from the COLA cuts.
Vice Chairman of the Joint Chiefs of Staff Adm. James A. Winnefeld Jr., USN said the COLA cut has caused “considerable and understandable anxiety” among retirees and those planning for retirement. He emphasized that making piecemeal changes to the retirement system would be a “big mistake.”
Acting Deputy Secretary of Defense Christine Fox stated that “no DoD officials were consulted on the details” of the budget deal, and if Congress went ahead with it, DoD would strongly recommend that it be modified to include a grandfather clause.
Sen. Angus King (I-Maine) quipped that with no one taking credit for birthing this provision, it must be an “immaculate misconception.”
Committee members agreed that repealing the COLA cut should happen sooner than later.
“It is our intention and belief that [the COLA cut] should be immediately repealed,” said Committee Chairman Carl Levin (D-Mich.).
Sen. James Inhofe (R-Okla.), the committee’s ranking member, commented to the panel of association witnesses (including MOAA), “You guys have already won.”
Although most of the hearing centered on the COLA provision, Pentagon witnesses also discussed what has been characterized as unsustainable personnel cost growth. In that context Fox said, "The one-third of the defense budget consumed by military compensation cannot be exempt as an area of defense savings. We must find ways to slow the rate of growth."
Fox’s remark confirms exactly what MOAA has stated numerous times: military personnel costs have consumed roughly a third of the DoD budget over the past 30 years.
The future cost trajectory of personnel programs came under scrutiny during the hearing. When Senator Lindsey Graham (R-S.C.) questioned Adm. Winnefeld about military personnel costs over the next 15 to 20 years, he responded with “frankly it’s probably going to stay stable.”
Gen. Tilelli testified that DoD projections of personnel cost growth are off the mark. “Have costs grown since 2000? Yes, certainly, but using the ‘2000’ baseline without a historical context is grossly misleading.”
Using 2000 as a baseline fails to recognize that the Pentagon slashed compensation during the 1990’s, and had to restore comparability with the private sector to bolster recruiting and retention. This spike in personnel spending in the beginning of this century is not a reliable indicator of future cost growth.
Sens. Kelly Ayotte (R-N.H.), Graham, and Roger Wicker (R-Miss.) held a press conference after the hearing stating the SASC will seek repeal of the COLA cut provision. Graham went on to say that the COLA cut awoke a “sleeping giant,” – the military and veterans community – which campaigned relentlessly on the issue of repeal.
Although the hearing was a significant milestone, challenges remain. MOAA will continue to advocate forcefully for a bipartisan solution to fully and immediately repeal the COLA cuts.