AFA Members, Congressional Staff members, Civic leaders, DOCA members, this week the good news is we finally got a budget deal to offset increasing the borrowing limit with spending cuts. The bad news is Defense spending could be impacted in a way never seen in our country. First it’s important to review the facts as we know them. President Obama has tasked DOD (in April) to come up with $400B over 10 years, taken out of the base budget. The Air Force share of that is $49B over the Future Years Defense Plan (five years). To do so, the AF will have to get smaller, and, as stated by a senior AF official, “won’t be able to be in two places at once.” The budget deal may make these cuts much worse – perhaps twice as much or more. To our knowledge, never before has the United States cut defense spending to such an extent in a time of war.
We argue, in our briefings on the Hill, that we need to focus on what really counts. The US has many interests around the globe, but a select set are fundamentally existential in nature:
• Stemming nuclear proliferation
• Managing the rise of near-peer competitors
• Ensuring access to key resources
• Maintaining strategic alliances
• Protecting open access to the global commons
• Defending the homeland
The familiar missions of deterring … and defeating aggression through large-scale power-projection operations have not diminished in importance. These are not obsolete Cold War missions. States have had competing objectives throughout history, and nothing has changed to diminish such dynamics. The force of the future is one that is focused on fundamental objectives, is flexible, limits the loss of life (both adversaries and friendlies), does not project vulnerability, and is capable of operating throughout the threat spectrum. Occupation—based strategies are risky. They impose tremendous costs upon our nation—huge resources are required, both military personnel and civilians are thrust into tremendous points of vulnerability, and it takes a significant period of time to secure the strategic objective of a stable society. Any budget cuts must take into account a strategy which protects our interests, accomplishes the key missions above, and takes advantage of American strengths. Cuts should not be “salami-sliced” across the Services. They must be strategy driven. In a zero-sum budget environment, any funding directed against lower priority missions will come at the cost of addressing fundamental interests. We can no longer afford that approach.
Secondly, the Defense Business Board is reviewing major changes to the military retirement system. They have a draft briefing which transitions it from a defined benefit plan to a defined contribution plan (much like a 401k). The brief can be found here:
http://www.afa.org/members/CommTools/APA/OpEds/2933_001.pdf. One of our most thoughtful members and a former AFA leader has offered his comments to the brief. They are below my name.
Finally, I came across a piece of data on the C-17. The highest-time C-17 has over 18,000 hours on it … and is 22 years old. Compare that with the average Southwest Airlines aircraft of 11 years old and less time.
For your consideration.
Mike
Michael M. Dunn
President/CEO
Air Force Association
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Comments on Modernizing the Military Retirement System
Defense Business Board Task Group
July 21, 2011
The problem with the DBB Task Group’s work on the military retirement system begins with the Terms of Reference for the study. No problem statement is given – the Task Group is to support the SECDEF’s “efficiency initiatives” (whatever they are) and to “Begin with a review of the current reform thinking on military retirement benefits.” What “reform thinking”? The Task Group is to “provide recommendations for optimizing…the…retirement system” – against what criteria? I have read the TOR several times, and I still do not know what problem the DBB is trying to solve.
Chart 4. The Task Force points out that military pay, healthcare benefits, and retirement benefits exceed that of the private sector today. No data was presented to back up that claim, but even if it is true, it is irrelevant. I know of no company in the private sector that asks its employees to sign a piece of paper saying that, if called upon to do so, they will give their lives in the defense of the parent corporation. Comparisons with the private sector are interesting, but they do not dictate what is appropriate for military members.
Charts 5-8. Interesting information in the Findings charts, but they do not lead to the conclusion in the Assessment chart that the current retirement plan is “Unfair.” Unfair to whom? By what definition of fairness? In over 45 years of my association with the military, I have never heard a member say that they thought the retirement system was unfair.
Charts 9-10. The Task Force may believe that the current retirement system is unaffordable, but that has nothing to do with the TOR for the study. What they may be saying is that the “volunteer force” concept for the defense of our country is not a viable concept. That may be true or untrue, but it is beyond the scope of this study. The cost curve in Chart 10 is useless, because the reader is not told whether the amounts are in constant-year or then-year dollars – big difference. Also, I could not find a payment line, although that is what is implied by the chart title.
Chart 11. The Task Force asserts that a modified retirement system would “create an effective force shaping tool” without any substantiating evidence that this would be the case. It is a conclusion without benefit of supporting data.
Charts 12-14. The Task Force presents its recommendations for a retirement system based on a defined contribution plan without demonstrating that the recommended plan would address the shortcomings it asserts exist with the current retirement system. It also touts the “good” features of such a plan without pointing out its negatives. It also fails to address the mitigation of the negatives or any unintended consequences of the recommended plan.
Concluding thought. There may be good reasons why the current retirement system should be scrapped and replaced with something else. If there are, they certainly are not presented in this study. The study also lacks a compelling argument for why its recommended solution would be an improvement over what exists now…it is not clear what has been “optimized.” This is a very shoddy piece of work, in my view.