Major veterans organizations expressed outrage at House Republican leaders for a proposal floated Sept. 5 that would restore full retired pay for 710,000 retirees drawing VA disability pay, but would dramatically narrow disability compensation eligibility for future veterans.
Military associations with a higher proportion of retiree members, however, who stand to gain if the ban on "concurrent receipt" of full retired pay and VA disability pay is lifted, took a more cautious approach to the proposal.
At least the Bush administration, they suggested, appears willing to strike a deal on an issue it threatened last year to kill with a presidential veto.
Perhaps a more deliberate approach to reforming the VA disability system, like setting up a commission to study the issue, could end the stalemate over what retirees now prefer to call the Veterans Disability Tax.
Whatever the House decides, a new concurrent receipt initiative still could be killed in negotiations with the Senate.
John Warner, R-Va., chairman of the Senate Armed Services Committee, negotiated the Combat-Related Special Compensation program last year, calling it a "beach head" in the battle for full concurrent receipt.
Warner wants to let the CRSC program run at least a year — it began in June — before considering whether more needs to be done.
But after Labor Day, the action on this issue was in the House.
Rep. Michael Bilirakis, R-Fla., long-time sponsor of legislation to allow concurrent receipt, briefed the compromise proposal to service organizations.
Sources said Rep. Roy Blunt, R-Mo., majority whip, drafted the deal with the White House's Office of Management and Budget. House Speaker J. Dennis Hastert and Rep. Duncan Hunter, R-Calif., House Armed Services Committee chairman, are said to support it.
Current law requires an offset in military retired pay equal to the amount a retiree draws in tax-free disability compensation from the Department of Veterans Affairs for service-related injuries or illness.
Critics of the VA disability system say what needs reform is a legal presumption that any injury or illness that occurs on active duty is service-connected, even if caused by a hereditary condition or an off-duty mishap.
Under the draft proposal, full concurrent receipt would be phased in over five years. In the first year, 2004, all retirees with 20 or more years of service would see some retired pay restored: $20 a month for retirees rated 10 percent disabled and up to $750 a month for 100 percent disabled.
The formula becomes more complicated beyond that, but retired pay would be fully restored by Oct. 1, 2008.
The cost of phasing in concurrent receipt would be covered by savings expected from tightening disability rules for future veterans, including persons now serving on active duty.
Only disabilities tied to "performance of duty" would qualify for compensation. Disability ratings set at retirement could not be raised as the retiree aged.
The changes would slash VA disability pay to future veterans by two-thirds, according to one government estimate. Veterans' groups are angry. Some also must be concerned about the possible long-term impact on membership rolls if the pool of potential new members falls sharply.
Disabled American Veterans announced the proposal with a Web site headline, "Congress Declares War Against Disabled Veterans." DAV called it "the most brazen attack on veterans' benefits in recent history."
Veterans of Foreign Wars described the proposal as "a blatant attempt to unfairly pit one group of veterans against another by forcing one group to pay for another's disabilities."
The American Legion promised its members it would not support "paying for repeal of the [veterans disability] tax by tinkering with the disability-compensation process."
But the Fleet Reserve Association, the largest enlisted organization for the sea services, struck a more conciliatory tone. Joe Barnes, FRA's national executive secretary, called the proposal a positive development overall.
Yet he cautioned that changes in VA disability rules should be "thoroughly evaluated" by the veterans committees with consideration of comments from the Department of Veterans Affairs and veterans' organizations.
Rep. Jim Marshall, D-Ga., sponsor of a discharge petition to try to force House colleagues to vote for the Bilirakis bill to end the retired pay offset, labeled the Republican proposal "outrageous."
"There is no way in hell anybody who cares about our troops and veterans can justify trying to link doing right on the veterans disability tax with doing wrong by current men and women on active duty," Marshall said. "The proposal is simply a pay cut and nothing more."
Marshall's discharge petition has 202 signatures, all but one a Democrat. Sixteen more Republicans need to sign it to force a floor vote. Rep. Walter Jones, R-N.C., has vowed to do so, and believes other Republicans will join him, if House leaders don't come up with an acceptable concurrent receipt compromise.
Jones said he isn't happy with the current effort. Removing an unfair tax on disabled retirees shouldn't be tied to VA disability system reform.
"I've told leadership [that] if this is what the option is, I'm going to sign the discharge petition," said Jones. "In fairness, they are trying very hard to work out a resolution. But there will come a deadline."
Jones said he doesn't like to go against his party leaders but in this case the stronger commitment is to military retirees in his district.
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