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Lawmakers on pay reform: Not so fast

2013 defense bill neuters plan to change compensation, retirement

Dec. 26, 2012 - 08:03AM   |   Last Updated: Dec. 26, 2012 - 08:03AM  |  
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The 2013 defense authorization bill blunts a major Defense Department effort to force budget-cutting changes in military compensation.

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The 2013 defense authorization bill blunts a major Defense Department effort to force budget-cutting changes in military compensation.

Deficit-reduction efforts could still force changes, but in the defense policy bill approved by congressional negotiators Dec. 18, lawmakers have foiled a Pentagon scheme to force Congress to vote on legislation that could eliminate the 20-year retirement benefit.

An independent commission, made up of members appointed by President Obama and congressional leaders, will still study ways to reform compensation and retired pay, but there is no requirement that Congress ever vote on recommendations that come out of the panel.

"I think we have to be very satisfied with that," said Steve Strobridge of the Military Officers Association of America, one of the many organizations trying to preserve benefits. "Right now, it is just another study. There is no requirement for a congressional vote, at all."

Lawmakers also put the brakes on overall personnel reductions and included provisions that could reduce the pain for those whose careers are cut short.

The 1,613-page bill also extends authority for the services to pay about 30 different bonuses and special pays that expire Dec. 31. There could be a brief lapse in authority, depending on how long it takes for the bill to become law, which could briefly prevent new bonuses, special pays or incentive pays from being approved. But continued payments for those previously approved will not be affected.

Members of the House Armed Services Committee were fiercely opposed to being railroaded into endorsing a Defense Department initiative to reform military retired pay.

The legislation the Pentagon proposed to Congress required defense officials to submit a draft retirement plan to the independent commission, which would use it as a blueprint for whatever recommendations it might make. Congress would then vote for or against the recommendations, with no opportunity to make changes.

The compromise bill removes the requirement of a vote, but expands the commission's reach to all military pay and benefits — not just retired pay — and still allows the Defense Department to shape the debate by submitting its recommendations for the commission to use as the basis for its discussions.

"It is still troublesome that it gives the secretary of defense more time to come up with a proposal than it gives the commission time to review it and make recommendations," Strobridge said.

There are limits, though, to the reach of the recommendations. The nine-member commission is barred from making any recommendations that would reduce the compensation or retired pay of any current service members, and none of the retired pay changes would apply to anyone already retired.

Pay raises

In terms of immediate pay increases, the compromise bill does not interfere with the 1.7 percent hike in basic pay and drill pay, the 1.1 percent increase in subsistence allowance and the average 3.8 percent in basic allowance for housing that will take effect Jan. 1 and first appear in mid-January checks.

The basic pay and allowance increases follow formulas set in permanent law, with Congress able to modify only the amounts. The basic pay raise matches the average private-sector pay increase for 2011; the modest hike in subsistence allowance is based on the Agriculture Department's estimate of food prices; and housing allowances are based on surveys of local rental costs.

Force sizing

Lawmakers worked to both prevent the military from being cut too quickly and make the cuts less painful.

Overall, the compromise proposes a 21,000-person reduction in the number of people on active duty by the end of the fiscal year, with 9,900 cut from the Army; 4,800 cut from the Marine Corps; 3,340 cut from the Air Force; and 3,000 cut from the Navy.

To prevent the services from cutting additional personnel, Congress establishes minimum personnel levels preventing the Army from falling below 542,700, the Air Force from falling below 329,460, the Navy from falling below 322,700 and the Marine Corps from falling below 193,500.

There is one more step to prevent big drops: limiting the Marine Corps from cutting more than 5,000 people a year and the Army from cutting more than 15,000.

Lawmakers want the Marine Corps prepared to provide up to 1,000 additional Marines for embassy security. The bill asks the White House and Defense Department to determine whether this requires more Marines or just the reassignment of existing people. Extra funding, if needed, would have to be requested as part of future defense budgets.

At the Pentagon's request, the final bill includes several provisions aimed at easing the pain of future force cuts, but it is not clear whether any of the authorities will be used. These are not new initiatives but extensions of drawdown authorities used in the post-Cold War drawdown.

For example:

• It extends through Dec. 31, 2018, the possibility of selection boards to discharge regular officers below O-4 who are not on a promotion list and not eligible for retirement.

• Officers with eight years of commissioned service who previously served as enlisted members might be allowed to voluntarily retire as an officer, a provision that expires Sept. 30, 2018. The current requirement is 10 years of commissioned service.

• Time-in-grade requirements to retire at that grade could be relaxed for O-5s and O-6s, under authority that expires Sept. 30, 2018. Instead of needing three years in grade, they could retire with two years, but the number of people being offered the waiver would be limited to 4 percent of the officers serving in that grade in their service.

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