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Another proposal endorsed by a group of senators calling themselves the “Gang of Six” includes initiatives similar to those proposed by the president’s 2010 National Commission on Fiscal Responsibility and Reform. That proposal would dramatically reduce military retirement value for new entrants, require holders of Medicare sup- plement policies (including TFL) to absorb an extra $3,000 a year ($6,000 a couple), and raise TRICARE fees for retired military families under age 65 by up to $2,000 a year or more, among other things. As this article went to press, lawmakers and the president had negotiated a budget- cutting deal to raise the debt ceiling, how- ever the details still were unknown.
Defense Spending
Measure Moves House approves bill.
O
n July 8, the House approved the FY 2012 Defense Appropria- tions Bill (H.R. 2219) by a vote
of 336-87. Its $530.5 billion price tag is an increase of $17 billion over last year’s level, but it is $8.5 billion less than the Pentagon requested. The bill would fund a 1.6-percent mili-
tary pay raise for personnel and provide $32.2 billion for the Defense Health Pro- gram ($118 million less than requested). It would fund active forces of 1,408,000,
a reduction of 2,400 from FY 2011. • Army: 547,400 • Marine Corps: 202,100 • Navy: 325,700 (-3,000 ) • Air Force: 332,800 (+600) The bill was forwarded to the Senate for action in mid-July.
Chained CPI:
It’s a COLA Cut The proposed formula change would hurt over time.
O
ne of the most frequently mentioned options by most par- ties at the deficit-cutting table is
a “technical correction” to the CPI called the “chained” CPI. It’s gone under the radar for the most
part. But if implemented, it could affect the lives of almost all Americans — espe- cially servicemembers, federal civilian employees, Social Security recipients, and other retirees and survivors. This isn’t a new idea. It’s been pushed
for years by some economists who believe the CPI overstates inflation by failing to ad- equately recognize that consumers change their behavior when prices of some prod- ucts and services rise sharply. When that happens, economists say, people simply buy cheaper substitute products — carrots instead of peas or tea instead of coffee. While coffee drinkers might rebel at that, the case gets even stickier with other substi- tutions. Is hamburger a reasonable substi- tute for steak? Is a compact car a reasonable substitute for a full-size one? Is pasta a rea- sonable substitute for fish? Is shopping at a discount store a reasonable substitute for shopping at a high-end department store? We’re not just talking about price sub-
stitution here. It’s also about quality-of- life substitution, and that’s where MOAA thinks a line must be drawn. Over time, this mentality leads to substantial changes in living patterns — from steak to ham- burger to hot dogs to … let’s not go there. While critics might argue this
wouldn’t actually happen, there’s no SEPTEMBER 2011 MILITARY OFFICER 33
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