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Military Update

Senators vow COLA cap repeal, commissary grocery price hike eyed

Democrats and Republicans on the Senate Armed Services Committee vowed Tuesday to clear with unusual speed a bill to roll back the cap on cost-of-living adjustments for military retirees under age 62, long before it can ding anyone’s retired pay or cause more damage to troop morale.

“It is our intention and belief that it should be immediately repealed, and as soon after (saying) ‘immediately’ as is humanly possible in a legislative body,” said Sen. Carl Levin, D-Mich., committee chairman.

“You guys have already won,” Oklahoma Sen. James Inhofe, ranking Republican, assured military association leaders who testified against the recent devaluation of military retirement as part of the Bipartisan Budget Act.

At the same hearing, senior Defense officials said for the first time since the COLA cap became law that they too want all retirees and the current force protected from it and any future changes to retirement.

Christine H. Fox, acting deputy defense secretary, and Navy Adm. James A. Winnefeld, vice chairman of the Joint Chiefs, clarified DOD support for full repeal of the cap. Defense Secretary Chuck Hagel had not yet done so, telling journalists and troops only that the cap should be modified to protect medically retired and survivors, which Congress has done.

But Fox said if Congress elects to retain the COLA cap for other younger military retirees, “we strongly recommend it be modified to include grandfathering.”

Winnefeld said COLA caps one percent below inflation, set to start January 2016, have caused “considerable and understandable anxiety” among retirees and careerists. It also ignores past guidance from military leaders who have said current retirees and members already in service should be protected from any changes to retirement.

Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, has defended the cap since he and Sen. Patty Murray, D-Wash., chairman of the Senate Budget Committee, included in their December budget deal, which has otherwise been hailed for avoiding another government shutdown and easing automatic cuts of sequestration, particularly for defense.

Indeed Ryan told “CBS This Morning” in mid-December that the cap was a reform “asked for by the defense folks, by DOD… This is a part of their budget that is squeezing all the readiness, all the things they want to buy.”

Though not mentioning Ryan by name, several senators asked Fox and Winnefeld whether they or anyone in DOD had proposed, consulted on or supported the COLA cap. Both answered no.

“To my knowledge,” Winnefeld said, “there were no DOD officials consulted. We heard about it in the end game, as other people did.”

A spokesman for Ryan declined comment on the discrepancy.

Sen. John McCain, R-Ariz., gave the budget committee a verbal slap for the cap, suggesting members are “not renown for their expertise on military personnel issues.”

“This didn’t come out of the budget committee,” Sen. Roger F. Wicker, R-Miss., who serves on that committee, shot back. “It came from behind closed doors and was authored by two individuals and presented to us as a package, take it or leave it.”

Wicker also rejected Fox’s recommendation that Congress delay repealing the COLA cap until after the Military Compensation and Retirement Modernization Commission delivers its report next February.

That “doesn’t make any sense if we’re all in agreement” on repeal, Wicker told her. “Unless you want to hold out the possibility that we may stick with this.”

Wicker reminded any colleagues inclined to delay COLA cap repeal, perhaps to avoid a near-term fight over how to pay for it, that Defense officials gave assurances over and over for more than a year that budget sequestration wouldn’t happen. And it did.

The COLA cap represents a broken promise, Wicker said.

“And now we are being told, ‘Let’s just wait 13 months before we fix that.’ I can’t go along with that,” he said. Committee colleagues soon became a chorus for swift repeal.

The next panel of witnesses added to it. Retired Gen. Gordon Sullivan, former Army chief of staff and president of the Association of the U.S. Army, told senators that in 36 years of service he never had to worry about the safety of his retirement. The COLA cap, however, has this force worried.

Sullivan urged swift repeal, too, so soldiers “sitting around a stove in Afghanistan in the middle of the night will not be talking about this issue.”

Are commissary prices at risk?

The Department of Defense is weighing a set of legislative proposals that would help to lower the $1.4 billion subsidy for base commissaries.

An industry source said the proposals, if adopted, would cut savings for patrons, which average 30 percent compared to prices in civilian stores, and perhaps over time put some stateside stores at risk.

For the fiscal 2015 defense budget request to be delivered to Congress in early March, he said, Defense officials are weighing a plan to make graduated cuts in the commissary subsidy so deep it falls to $400 million by fiscal 2017, as first reported by journalist Amy Bushatz with military.com

Tools sought from Congress to achieve such dramatic budget cuts, and still preserve attractive grocery discounts on base, include:

  • Lifting the ceiling of five percent on the surcharge patrons pay at checkout. Allowing the Defense Commissary Agency (DeCA) authority to raise the surcharge would help it meet lowered budget targets.
  • Passing on to suppliers more than $150 million in transportation costs now paid by DeCA. Suppliers could be expected to pass some of their added costs on to patrons in form of higher product prices.
  • Authorize “variable pricing” in commissaries to level out and lower overall patron savings. The business model would shift from selling groceries at cost plus a surcharge to cost plus a variable margin and a surcharge.

A decade ago, the Bush administration ordered a $500,000 study of variable pricing for commissaries. It found the complexity of such a move likely would lead to higher operating costs and so advised against it.

Send comments to Military Update, P.O. Box 231111, Centreville, VA, 20120, email milupdate@aol.com or twitter: Tom Philpott @Military_Update
 

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