This is Gonna Hurt

The H.M.O. That Kills Terrorists

That’s what the Pentagon is in danger of becoming unless something’s done about military benefits, experts warn.


The reaction was swift, and it was powerful. Defense Secretary Hagel put a reduction in military benefits on the table; Pentagon officials point to what they describe as unsustainable personnel costs, everything from health care to day care to discounted commissary privileges. Veterans groups called it unconscionable to inflict cuts of any kind on a force that has endured repeated deployments.

According to the non-partisan Congressional Budget Office, benefits received by active-duty military together with millions of retirees have grown more than 40 percent faster than inflation in the decade between 2001 and 2012. Benefits were sweetened and others added in the aftermath of the 9/11 attacks, reflecting the thanks of a grateful nation—not to mention the instinct of politicians about where the votes are.

After Congress in December shaved one percent from the annual COLA (cost of living adjustment) increase for working-age military retirees, the House and Senate reversed itself, voting earlier this month to repeal the measure by huge margins (95 to 3 in the Senate; 326 to 90 in the House). The attitude seems to be that in a $500 billion dollar defense budget, there’s enough money that the Pentagon shouldn’t be nickel-and-diming military retirees.

With a generation of veterans facing physical challenges in earlier wars they wouldn’t have survived—including brain injuries that defy easy treatment—it takes some courage to make the case that benefits need to be reined in or the whole enterprise is threatened. It’s a case that Maj. Gen. Arnold Punaro has been making since June 2011.

A former Marine and a member of the Defense Business Board that advises the Pentagon on best financial practices, Punaro likens the Defense Department to General Motors, overwhelmed by the cost of the health and pension benefits promised to workers and retirees. “General Motors did not start out to be a health care company that occasionally built an automobile,” Punaro said. “Today we’re on the path in the Department of Defense to turn it into a benefits company that may occasionally kill a terrorist.”

It’s a powerful analogy, and one which Paul Rieckhoff, the founder of Iraq and Afghanistan Veterans of America (IAVA), strongly rejects. “No one at GM was getting blown up for the last ten years,” he says, adding, “The military has done everything the country asked for; you can’t say that about GM.”

Rieckhoff sees himself and his organization fighting “a continuing and escalating attack on veterans benefits.” He says the attacks are “like a military operation; they test for weak points, see how Congress responds, how vets respond.” The repeal of the one percent COLA cut was a victory; now he’s pushing hard against a proposed billion-dollar cut in subsidies for commissaries, which he says would boost grocery bills 30 percent for everything from toothpaste to baby formula to pasta. “For us, it’s about diapers on babies and bread on the table,” he says, pointing out that a significant number of active-duty military families and vets rely on food stamps.

Still, the argument Rieckhoff makes about the government breaking faith with the military echoes what former UAW (United Auto Workers) President Bob King said when defending the integrity of the social contract Detroit’s auto workers entered into with GM, and that the car company sought to violate. King eventually made concessions, believing that otherwise GM might not survive. The resulting pact is cited as a model.

“Here’s the deal. No matter how much you pay a person, you can’t adequately compensate them for putting their life on the line,” says Lawrence Korb, a former defense department official during the Reagan administration, now with the Center for American Progress, a liberal think tank. Nevertheless, he rejects the assertion that government is breaking a contract. When you enlist, he explains, you get a piece of paper that says Congress at any time can change the benefit package. And those who enlisted after July 31, 1986, were told that when they retired after 20 years, their benefit would be 40 percent of their pay, not the 50 percent earlier enlistees would receive.

Congress pushed it back up to 50 percent in 1999, so when critics complain about a broken promise, which promise are they pointing to, Korb asks. He says premiums for health care, known as Tricare, haven’t been raised so the government instead of paying 75 percent of the cost now pays 92 percent. After a veteran turns 65 and goes on Medicare, Tricare picks up what Medicare doesn’t. A new G.I. bill was passed with the bonus that the educational benefit could be passed on to the next generation, a laudable policy that supporters see as an investment in the future, but it is “a 100,000 benefit,” says Korb.

As for those commissaries, Korb says they were intended for remote posts “where you don’t have a Giant or Safeway. It was for General Custer!” he exclaims. “Do you need one at Fort Meyer [in northern Virginia, across the river from Washington] for God’s sake. It’s one of those things that kept growing,” an observation that describes many government programs, and the lobbies that protect them.

These two men—Korb and Rieckhoff—ably represent the two sides in an ongoing struggle to both keep the faith with America’s vets and prevent a GM-like meltdown where there is “less and less money to do training and buy equipment if you’re paying people who don’t work there anymore,” says Korb.

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“My dad worked at a GM factory, I get that,” says Rieckhoff, “but we’re still at war. Maybe we can have this discussion in a year or two, but not now. What kind of message does this send to our troops in the field that we’re talking about cutting their benefits?” Rieckhoff’s passionate defense of the young veterans he represents is likely to carry the day, especially in an election year. But the cold hard numbers that Korb advances foreshadow a day of reckoning, just not yet.