washingtonscene
Gates Targets Retirement and
I
Health Care Secretary considers personnel costs to balance the budget.
n speeches he delivered in May, De- fense Secretary Robert Gates asserted DoD needs to fundamentally change
the way it does business to rein in its costs. He said procurement overhaul already has produced significant savings, and he identified force size and structure, mili- tary 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 re- view of DoD’s future needs in late May 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” mili- tary retirement system in favor of a tiered and targeted retirement system that weights compensation toward the most in-demand specialties; and • increasing health care cost-sharing for working-age retirees. Considering the staggering debt fac- ing the nation, the reality is anything the government spends money on is going to come under great pressure for cutbacks in coming years. But it’s troubling to hear DoD leader- ship citing the same old arguments that led to the short-sighted changes of the 1970s, ’80s, and ’90s that ultimately caused signifi- cant retention and readiness problems. Sustaining pay comparability — through good budget times and bad — is a funda- mental underpinning of the all-volunteer
34 MILITARY OFFICER JULY 2011
force. We’ve spent the past decade recover- ing 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 cur- rent 20-year retirement system, because it’s the primary reason we’ve been able to sustain the force through the past decade of war. The last retirement reform — the REDUX system of 1986 that cut lifetime retirement value by 22 percent for subse- quent entrants — had to be repealed after it caused retention problems.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 service- members fund more of their own retire- ment, delaying eligibility for retired pay until age 57 or later, and changing the retirement contribution every year based on the shortage skills at the time. They pro- pose 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 still will 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, brushing off any po- tential negative consequences as their successors’ problem to solve. Their fatal flaw, from a national-read- iness standpoint, is they plan only for the
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