[Senate Hearing 113-572]
[From the U.S. Government Publishing Office]
S. Hrg. 113-572
DEPARTMENT OF DEFENSE PROPOSALS RELATING TO MILITARY COMPENSATION
=======================================================================
HEARING
before the
COMMITTEE ON ARMED SERVICES
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
MAY 6, 2014
__________
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COMMITTEE ON ARMED SERVICES
CARL LEVIN, Michigan, Chairman
JACK REED, Rhode Island JAMES M. INHOFE, Oklahoma
BILL NELSON, Florida JOHN McCAIN, Arizona
CLAIRE McCASKILL, Missouri JEFF SESSIONS, Alabama
MARK UDALL, Colorado SAXBY CHAMBLISS, Georgia
KAY R. HAGAN, North Carolina ROGER F. WICKER, Mississippi
JOE MANCHIN III, West Virginia KELLY AYOTTE, New Hampshire
JEANNE SHAHEEN, New Hampshire DEB FISCHER, Nebraska
KIRSTEN E. GILLIBRAND, New York LINDSEY GRAHAM, South Carolina
RICHARD BLUMENTHAL, Connecticut DAVID VITTER, Louisiana
JOE DONNELLY, Indiana ROY BLUNT, Missouri
MAZIE K. HIRONO, Hawaii MIKE LEE, Utah
TIM KAINE, Virginia TED CRUZ, Texas
ANGUS KING, Maine
Peter K. Levine, Staff Director
John A. Bonsell, Minority Staff Director
(ii)
C O N T E N T S
__________
may 6, 2014
Page
Department of Defense Proposals Relating to Military Compensation 1
Dempsey, GEN Martin E., USA, Chairman of the Joint Chiefs of
Staff.......................................................... 3
Winnefeld, ADM James A., USN, Vice Chairman of the Joint Chiefs
of Staff....................................................... 8
Odierno, GEN Raymond T., USA, Chief of Staff of the Army......... 10
Greenert, ADM Jonathan W., USN, Chief of Naval Operations........ 11
Welsh, Gen. Mark A., III, USAF, Chief of Staff of the Air Force.. 13
Amos, Gen. James F., USMC, Commandant of the Marine Corps........ 14
Grass, GEN Frank J., ARNG, Chief of the National Guard Bureau.... 15
Tilelli, GEN John H., Jr., USA, Ret., Chairman of the Board,
Military Officers Association of America....................... 55
Sullivan, GEN Gordon R., USA, Ret., President and Chief Executive
Officer, Association of the U.S. Army.......................... 63
Totushek, VADM John B., USN, Ret. Executive Director, Association
of the U.S. Navy............................................... 70
Questions for the Record......................................... 148
(iii)
DEPARTMENT OF DEFENSE PROPOSALS RELATING TO MILITARY COMPENSATION
----------
TUESDAY, MAY 6, 2014
U.S. Senate,
Committee on Armed Services,
Washington, DC.
The committee met, pursuant to notice, at 9:35 a.m. in room
SH-216, Hart Senate Office Building, Senator Carl Levin
(chairman) presiding.
Committee members present: Senators Levin, Reed, Nelson,
Hagan, Manchin, Shaheen, Gillibrand, Blumenthal, Donnelly,
Hirono, Kaine, King, Inhofe, McCain, Sessions, Ayotte, Fischer,
and Graham.
OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN
Chairman Levin. Good morning, everybody.
The committee meets this morning to review Department of
Defense (DOD) proposals relative to the growth of personnel
costs. We welcome the Joint Chiefs of Staff to testify on these
proposals, to explain why they support them, what their impact
is on the force, and their impact on other areas of the defense
budget.
Our witnesses on the first panel are General Martin E.
Dempsey, USA, Chairman of the Joint Chiefs of Staff; Admiral
James A. Winnefeld, Jr., USN, Vice Chairman of the Joint Chiefs
of Staff; General Raymond T. Odierno, USA, Chief of Staff of
the Army; Admiral Jonathan W. Greenert, USN, Chief of Naval
Operations; General Mark A. Welsh III, USAF, Chief of Staff of
the Air Force; General James F. Amos, USMC, Commandant of the
Marine Corps; and General Frank J. Grass, ARNG, Chief of the
National Guard Bureau.
We will have a second panel consisting of non-government
witnesses which I will introduce later.
It is not often that all the members of the Joint Chiefs of
Staff testify before us at a single hearing. It is not often
that we have the opportunity to thank them as one group for the
contributions that they and those that they lead make to the
well-being of our Nation. Thank you, gentlemen. Thank you for
the service of you and yours.
The distinguished nature of this panel reflects the
importance of the questions before our committee this year.
When we mark up the National Defense Authorization Act (NDAA)
for Fiscal Year 2015 later this month, the decisions that we
make on compensation, force structure, end strength, readiness,
and modernization will have a far-reaching impact on the men
and women of our Armed Forces and on the future of our military
and our country.
The DOD 2015 budget request comes at a time of tremendous
challenge and great uncertainty for the Nation and for the
military. DOD faces a highly constrained fiscal environment in
2015. The $496 billion top line for DOD remains the same from
the funding levels in fiscal years 2013 and 2014 and remains
more than $30 billion below the funding provided to DOD in
fiscal years 2010, 2011, and 2012. Sequestration has already
taken its toll on training, readiness, and modernization, and
sequestration threatens to return full blast next fiscal year
unless, hopefully, we act to mitigate its impact before then.
These fiscal constraints have led DOD to propose a number
of painful measures to reduce future expenditures. The budget
before us proposes significantly lower end strengths for the
ground forces through 2019, including a reduction of 50,000
more than had been previously planned in Active Duty Army end
strength with smaller percentage reductions in the Guard and
Reserve, as well as a reduction of over 16,000 in Active Duty
Air Force end strength this year alone. The budget calls for
retiring the Air Force's A-10 and U-2 aircraft, inactivating
half of the Navy's cruiser fleet, reducing the size of the
Army's helicopter fleet by 25 percent, and terminating the
Ground Combat Vehicle program. Those are among other cuts.
If the budget caps in law remain in effect in fiscal year
2016 and beyond, DOD has informed us that, among other cuts, it
would request further reductions in end strength, the
retirement of the entire KC-10 tanker fleet and the Global Hawk
block-40 fleet, reduced purchases of Joint Strike Fighters and
unmanned aerial vehicles, the inactivation of additional ships,
and the elimination of an aircraft carrier and a carrier air
wing.
The legislative proposals that we are considering this year
include a number of measures relative to military pay and
benefits, and that is what we will be discussing here this
morning. These include setting a pay raise for servicemembers
below the rate of inflation, freezing pay for general and flag
officers, limiting increases in the housing allowance below the
rate of inflation, reducing the subsidy to commissaries, and
making changes to TRICARE that would result in increased fees
and cost-shares for most non-Active Duty beneficiaries. In all,
these pay and benefit proposals would result in savings to DOD
of over $2 billion in fiscal year 2015 and more than $31
billion over the Future Years Defense Program (FYDP).
General Dempsey and his senior enlisted advisor, Sergeant
Major Bryan Battaglia, recently wrote to this committee that
``these difficult choices will reap large savings over time to
address the growing imbalance in our accounts, allow us to
invest in combat readiness and force modernization, and still
enable us to recruit and retain America's best.'' The letter
went on to say that ``delaying adjustments to military
compensation will cause additional, disproportionate cuts to
force structure, readiness, and modernization.''
We surely must do all that we can to minimize the adverse
effect of the personnel proposals. But as long as the statutory
budget caps remain in place, we do not have the option of
simply rejecting the compensation proposals. Under the
statutory budget caps, we would then have to make alternative
cuts.
I look forward to, as we all do, the testimony of our
witnesses. Again, we thank you all and those with whom you
serve for your great service to our country.
Senator Inhofe.
STATEMENT OF SENATOR JAMES M. INHOFE
Senator Inhofe. Thank you, Mr. Chairman.
Over the last decade, our Nation has depended upon the
courageous service and sacrifice of our military members and
their families for its security. In return, we have steadily
increased their pay and benefits, and rightly so. We should be
proud of this. It is exactly what we should do for those who
risk their lives to keep us safe.
However, misguided fiscal priorities of the Obama
administration and the runaway entitlement spending have forced
massive cuts to national security spending such as we have
never seen before. These cuts have driven our military into a
readiness crisis. Squadrons have been grounded. Ships have been
tied to piers. Training rotations for ground forces have been
cancelled while much needed modernization programs have been
delayed or cancelled. We all know this.
Retired Navy Admiral John Harvey recently said that we are
sending the wrong signal to the force that is serving today,
the one that fought two wars in the last decade, and the force
we are dependent upon to re-enlist tomorrow. We are telling
them they just cost us too much, that they constitute a ticking
time bomb, and that their sacrifice is eating us alive. We are
telling them that we are looking for a way out of fulfilling
our commitments to them. This is not the right signal to send
those who volunteered to serve in a time of war.
I think the chairman did a good job of listing the systems
that we have that we are no longer going to be able to keep.
The effects of these cuts are undermining the military's
ability to protect the Nation. Our military leaders have
painted a stark and troubling picture of this reality. Because
of misguided fiscal priorities, we are now being forced to make
false choices between paying our troops and their families what
they deserve and giving them the training and capabilities
required to accomplish their mission and return home safely to
their loved ones. This is an irresponsible and reckless choice.
If we spent what I think is necessary on national security, we
would not be in the mess that we are in today.
I am looking forward to hearing from our witnesses.
Thank you, Mr. Chairman.
Chairman Levin. Thank you very much, Senator Inhofe.
General Dempsey, welcome.
STATEMENT OF GEN MARTIN E. DEMPSEY, USA, CHAIRMAN OF THE JOINT
CHIEFS OF STAFF
General Dempsey. Mr. Chairman, thank you, and Ranking
Member Inhofe, and other distinguished members of the panel.
You are right, Mr. Chairman, we do not often appear as a
group before you and, in particular, with our senior enlisted
leaders right behind us. What I would like to do at the
beginning here is since it is unlikely we will see you as a
group in your role as chairman between now and the end of the
year--at least I hope not--we would like to thank you very much
for your steadfast and passionate support of America's Armed
Forces, the men and women who serve and their families. Thank
you.
Chairman Levin. Thank you very much, General.
General Dempsey. I want to thank you all for the
opportunity to discuss military pay and compensation, but as
you mentioned, this is only one part of a much broader effort
to bundle reforms in order to keep ourselves in balance. This
particular issue, pay, compensation, and health care, is an
important and deeply personal issue for our servicemembers and
their families.
As I have testified in the past, we are working to make
sure that the joint force is in the right balance to preserve
military options for the Nation in the face of a changing
security environment and a declining budget. We have been
tasked to reduce the defense budget by up to $1 trillion over
10 years while upholding our sacred obligation to properly
train, equip, and prepare the force. This requires carefully
allocating our resources across the accounts, restoring the
readiness we have already lost, and continuing to make
responsible investments in our Nation's defense.
As I have testified before, this requires certainty. It
requires time and it requires flexibility. While we have a
degree of certainty in our budget for the next 2 years--really
for this year--we still do not have a predictable funding
stream nor the flexibility and time we need to reset the force
for the challenges ahead. We cannot do this alone. Our
recommendations have lacked congressional support, notably our
request to reduce base infrastructure and retire weapon systems
that we no longer need and cannot afford.
In the meantime, we are continuing to hemorrhage readiness
and cutting further into modernization. Risk to the performance
of our mission and risk to those who serve continues to grow.
As one part of a broader institutional reform, the Joint
Chiefs, our senior enlisted leaders, and select mid-grade level
leaders have examined pay and compensation options for more
than a year. We support the three DOD-wide principles guiding
our proposals to rebalance military compensation.
First, we are not advocating direct cuts to troops' pay.
Rather, this package slows the growth of basic pay and housing
allowances while reducing commissary subsidies and modernizing
our health care system.
Second, we will ensure that our compensation package allows
us to continue to attract and retain the quality people we
need. If we step off on this path--and we will watch the way
the force reacts, and if it reacts, we will be back to you with
recommendations on how to adjust, but we have to take that
step.
Third, the savings will be reinvested into readiness and
into modernization.
In all cases, we will continue to prioritize our efforts
that focus on wounded warriors and on the mental health
challenges facing our force.
We have not requested any changes to military retirement.
We are awaiting recommendations from the Military Compensation
and Retirement Modernization Commission (MCRMC) expected in
February 2015. But to be clear and to restate it, we do support
grandfathering any future changes to the retirement program.
We are seeking $31 billion of savings in pay, compensation,
and health care over the FYDP. If we do not get it, we will
have to take $31 billion out of readiness, modernization, and
force structure over that same period. Delaying the decision
until next year will likely cause a 2-year delay in
implementation, which would force us to restore approximately
$18 billion in lost savings.
In short, we have submitted a balanced package that meets
budgetary limits, enables us to fulfill the current defense
strategy, and allows us to recruit and retain the exceptional
talent that we need. Our people are our greatest strength, and
they do deserve the best support we can provide.
As leaders, we must also exercise proper stewardship over
the resources entrusted to DOD. We have enough information to
make these changes now. We remain committed to partnering with
Congress to make these and other difficult choices facing us.
Thank you.
[The joint prepared statement of General Dempsey, Admiral
Winnefeld, General Odierno, Admiral Greenert, General Welsh,
General Amos, and General Grass follows:]
Prepared Statement by The Joint Chiefs of Staff
Chairman Levin, Ranking Member Inhofe, and distinguished members of
the committee, thank you for your invitation to address the critical
issue of pay and compensation. As the Joint Chiefs testified in March
and April 2014, we must rebalance the Joint Force to preserve military
power and maximize options for the Nation in the face of an uncertain
security environment and a declining budget. Achieving the right
balance is a significant challenge, but it remains a strategic
imperative for the Department of Defense (DOD) and our Nation.
It requires that we carefully allocate our resources across
readiness, modernization and force structure accounts, and that we
sufficiently compensate the Joint Force--while seeking to restore the
readiness and modernization we have already lost. Above all, we must
fulfill our sacred obligation to properly train, equip, and prepare the
Joint Force to fight and win. We cannot do this alone.
The Department needs congressional support to achieve institutional
reform on all fronts. We cannot continue to expend scarce resources on
unneeded and unsustainable weapons systems and infrastructure. These
reforms have often lacked congressional support, notably our requests
to reduce infrastructure and weapon systems.
We have examined pay and compensation options within our budget for
more than a year. This process included our most senior officer and
enlisted leaders and select mid-grade servicemembers--leaders who fully
recognize that it is our people who make us the most capable military
in the world. Our men and women will always be our greatest strength,
and they deserve the best possible support we can provide. However, as
leaders, we all must exercise good stewardship over the resources
entrusted to the Department, including competitive pay and compensation
consistent with a ready and modern force.
In our deliberations, we collectively assessed how a wide range of
compensation proposals would affect our troops at every rank, and over
the course of their service. We concluded that we can no longer put off
rebalancing our military compensation. Failure to approve this
compensation package will require us to take $31 billion in savings
over the Future Years Defense Program (FYDP) out of readiness,
modernization, and force structure.
The Joint Chiefs and our senior enlisted leaders support the three
DOD-wide principles guiding these proposals. First, we are not
advocating direct cuts to troops' pay. Rather, this package slows the
growth of basic pay and housing allowances in addition to reducing
commissary subsidies, and simplifies and modernizes our health care
system. Second, we will ensure that our compensation package allows us
to continue to attract and retain the quality people we need. Third,
the savings will be reinvested into warfighter readiness and force
modernization. In all cases, we will continue to prioritize efforts
that focus on wounded warriors and mental health.
Our proposals reflect well-informed choices that will reap
significant savings over time. They were reviewed by the
administration, have the full support of the Secretary of Defense, and
are submitted as part of the President's budget for fiscal year 2015.
Implementing this compensation package now will help us remain the
world's best-trained, best-led, and best-equipped military.
proposed pay and compensation proposals
In the late 1990s and through the post-September 11 period, with
the help of Congress, we substantially increased the glideslope of
compensation growth. We are now requesting more modest pay increases in
fiscal year 2015 to slow the growth rate of basic pay beyond 2015. Flag
and general officer basic pay will be frozen for at least 1 year. We
are also requesting that we slow the growth of tax-free housing
allowances, reduce the direct subsidy to commissaries, and modernize
our TRICARE health insurance program by creating a single plan that
promotes wellness and encourages members to use the most affordable
means of care. Slowing the rate of growth of these programs will
obviously affect buying power over time, but they do not directly cut
pay. As noted above, we have the predictive tools and can both assess
and illustrate the effect by rank and over time.
We have not requested changes to military retirement benefits. We
are awaiting the results of the Military Compensation and Retirement
Modernization Commission (MCRMC) before considering reforms in that
area. But, we want to reiterate our ardent support of the principle of
grandfathering for any future changes to military retirement plans.
Congress has taken some important steps in recent years to control
the growth in compensation spending, but we must do more. A holistic
and comprehensive approach is required. Continuous piecemeal changes
will only exacerbate uncertainty and doubt among our servicemembers
about whether important benefits will be there in the future.
The following proposals represent a carefully informed package that
enables each of the Military Services to invest more in critically-
important readiness and modernization while maintaining a well-trained,
ready, agile, motivated, and technologically-superior force. These
savings will still allow us to offer competitive and sustainable
benefits to ensure we recruit and retain the right talent across our
ranks. We also preserve special pay and incentive authorities which the
Services can use as levers to ensure they recruit and retain the
specialties they need.
Basic Pay
For fiscal year 2015, we have requested a 1 percent raise in basic
pay for military personnel, except general and flag officers whose pay
will be frozen for 1 year. Basic pay raises in future years will be
similarly restrained, though modest increases will continue.
Basic Allowance for Housing
We request gradually slowing the growth rate of the tax-free basic
allowance for housing until Basic Allowance for Housing (BAH)
ultimately covers approximately 95 percent of the average
servicemember's housing expenses. We also seek to eliminate renter's
insurance costs from the allowance. This will result in an average 6
percent increase in out-of-pocket cost from today, but far less than
the 18 percent out-of-pocket cost in the 1990s. Such changes will be
phased in over several years to allow members to plan accordingly.
Additionally, the rate protection feature already in place for BAH
will remain. A servicemember's BAH will not be reduced so long as that
member retains eligibility for BAH at the same location and does not
change dependency status or lose rank. Servicemembers in the same pay
grade but living in different areas would have their BAH rates adjusted
proportionally to ensure members retain the same purchasing power
regardless of the cost of housing in their respective areas. Adjusted
rates will remain publicly available to allow members to make informed
decisions about housing. Just like today, depending on servicemembers'
actual housing choices, they may or may not have to pay out-of-pocket
costs.
Commissaries
The DOD today operates 245 grocery stores worldwide and spends
about $1.4 billion per year to provide subsidized groceries ``at cost''
plus a 5 percent surcharge. The subsidy pays for employee and overhead
costs including transportation. The budget proposal would begin phasing
out much of the subsidy over 3 fiscal years, beginning with $200
million less in fiscal year 2015 and totaling $1 billion by fiscal year
2017. This phased approach will ultimately provide the Defense
Commissary Agency with approximately $400 million per year to continue
to pay overhead costs of operating about 25 remote locations in the
United States and 67 overseas locations.
We recognize the value of commissaries to our servicemembers,
military families, and retirees, and our plan does not direct the
closure of any location. Once fully implemented, commissary shoppers
will receive an average 10 percent discount compared to most private
sector grocery stores--and the level of savings may increase through
internal operating efficiencies. Overall, commissaries will continue to
be a valuable benefit to our people, particularly to those serving
abroad.
Healthcare
The costs to the taxpayer for military healthcare have risen from
$19 billion in 2001 to $48 billion in 2013. Increases have been caused
both by growth in private-sector healthcare costs and by the creation
of a new healthcare program for military retirees 65 and older, TRICARE
for Life. We propose simplifying and modernizing our TRICARE health
insurance program, as the fundamental structure has not been revised
since its inception in the mid-1990s. We would consolidate Prime,
Extra, and Standard into a single plan that encourages routine wellness
visits and use of the most affordable means of care such as Military
Treatment Facilities (MTF), preferred providers, and generic
prescriptions.
Servicemembers on active duty would have no out-of-pocket expenses
regardless of the point-of-care delivery (MTFs, network, or out-of-
network) and will have the highest priority for MTF care. Without
question, we will continue to fully fund and support our wounded, ill,
and injured warrior programs. To protect the most vulnerable, the
proposal treats survivors of members who die on active duty and those
who are medically retired and their family members as active duty
family members for purposes of enrollment fees, co-pays, deductibles,
and the annual catastrophic cap. Likewise, family members residing with
active duty servicemembers in areas remote from MTFs will continue to
be treated as ``in network'' families even if there are no network care
providers in the remote location.
In addition to moving to the new TRICARE Single Plan, we have
resubmitted our fiscal year 2014 proposal which seeks modest annual
enrollment fees for TRICARE for Life coverage and further adjusts the
pharmacy co-pay structure for retirees and active duty families. These
pharmacy changes provide incentives to use mail order and generic
drugs. For pharmacies, the increased co-pays will be phased in over 10
years, while enrollment fees for TFL recipients will only apply to
those who turn 65 after enactment.
The cumulative effect of the proposed TRICARE fee increases still
ensures beneficiary out-of-pocket costs remain far below costs to
military beneficiaries in the mid-1990s, and remain far better than
virtually every comparable employer in the United States today. By
fiscal year 2019, a retiree family of three utilizing civilian care
providers will pay about 11 percent of total health care costs--well
below the original 27 percent of the mid-1990s. Overall, the TRICARE
benefit will remain one of the most comprehensive benefits in the
country, as it should.
costs of delay or inaction
Current and future funding levels require adjustments to pay and
compensation now to avoid further degradation of readiness and
modernization. We are working with and waiting for the MCRMC
recommendations with regard to retirement, where we believe special
study is required. However, based on multiple internal and external
analyses as well as our review of Quadrennial Review of Military
Compensation (QRMC) efforts since the late 1990s, we possess the needed
information and senior leader consensus to make proposals now on other
aspects of compensation.
If Congress delays these pay and compensation changes by 1 year, we
would forfeit $10 billion in savings over the FYDP. Moreover, waiting
for the Commission would likely cause a 2-year delay in implementation,
and we will be forced to restore approximately $18 billion in lost
savings over the FYDP. Conversely, if we make these modest changes now,
we will see annual savings of nearly $12 billion by the mid-2020s. If
Congress rejects all of the proposals, we will not only have to find
$2.1 billion in 2015, but we will also have to find $31 billion over
the FYDP to pay for the shortfall. In the near-term, we will be forced
to take these funds out of readiness. In the mid-term, it will diminish
our ability to rebalance during the FYDP. Beyond the FYDP, we will see
substantial impacts to modernization and our ability to field the Joint
Force we need in the future.
It is also worth noting that today's readiness problem will be
tomorrow's retention problem. Young men and women who join the U.S.
military to lead a tank crew, fly an F-16, or serve on a submarine will
soon lose interest in joining or staying in the military if they lack
training or proper equipment to complete their mission.
Again, we have enough information to request these nominal pay and
compensation changes now. We are not infringing on the Commission's
charter. In fact, implementing these proposals this year will allow the
MCRMC to account for them in their recommendations in February 2015. We
look forward to working with Congress and the Commission when the MCRMC
recommendations are released.
We know that this budget features difficult choices. They were
difficult for us. Understandably, they are difficult for Congress. But
we have created a balanced package of changes that meets budgetary
limits and enables us to fulfill the current defense strategy, albeit
with increased risk in some areas.
part of broader institutional reform
Our pay and compensation proposals are only a part of a wider
effort to achieve balance across the Joint Force. Before recommending
these changes, we first focused on implementing management reforms and
reducing overhead and operating costs. This has included eliminating
duplication, reducing management headquarters, and pursuing
efficiencies from contracting and weapons systems to infrastructure.
We were successful in identifying approximately $94 billion in
efficiencies across the FYDP. This included a 20 percent cut in
headquarters' budgets, reduction in contractor funding, civilian
manpower restructuring, healthcare cost reductions (separate from those
affecting beneficiaries), terminating or deferring weapons programs and
military construction projects, a base realignment and closure round
for 2017, continued acquisition reform, and auditable financial
statements. These efforts are in addition to continuing to implement
the $245 billion in efficiencies we have submitted over the last three
budget cycles.
Reducing overhead continues to be important, but such savings will
not by themselves permit us to meet targets under either the
President's budget or sequestration levels. To meet reductions of the
scale required, we also had to reduce the size of our military force.
As a result, relative to levels expected by the end of this year, total
active duty military personnel will decline by about 6 percent by the
end of the FYDP in 2019; Guard and Reserve personnel will decline by 4
percent; and civilian personnel will decline by 5 percent.
Notably, although military pay and benefits account for about 33
percent of the budget, our pay and compensation proposals account for
only 10 percent of the planned cuts. The remaining 90 percent of the
cuts come from readiness, modernization, and force structure--making
the need for a balanced application of cuts across accounts, wherever
possible, even more urgent.
conclusion
As a global leader, the United States requires a robust national
defense strategy and a military that can implement that strategy
effectively and sustainably. We face increasing risk if we do not adapt
to provide more responsible stewardship of our Nation's resources and
security interests. This can only be achieved by strategic balance
across the Joint Force enabled, in part, by the compensation package
the DOD is presenting to Congress. It will require Congress'
partnership with DOD in making these and other difficult choices.
The opportunity is ours in the months ahead to carry the hard-
earned lessons from our Nation's wars into the context of today, to set
the conditions to prepare the Joint Force to address the challenges of
tomorrow, and to sustain and support our dedicated men and women in
uniform and their families. We look forward to seizing this opportunity
together.
Chairman Levin. Thank you very much, General.
Admiral?
STATEMENT OF ADM JAMES A. WINNEFELD, USN, VICE CHAIRMAN OF THE
JOINT CHIEFS OF STAFF
Admiral Winnefeld. Chairman Levin, Ranking Member Inhofe,
distinguished members of the committee, thank you also for the
opportunity to appear today.
I would like to add some additional context to Chairman
Dempsey's introduction.
I think it is important to recall that in the 1990s,
military compensation had fallen to a deeply unsatisfactory
level relative to the rest of the working population in
America. With the help of Congress, we took action to close
that gap which involved raising the trajectory of our
compensation well above inflation. Those increases worked.
In 2001, U.S. median annual household income equated to the
direct pay of an average E-7. Today it is roughly equal to the
direct pay of the average E-5 and trending towards the average
E-4 who now surpasses the U.S. median annual household income
about 8 to 10 years earlier in his or her career than before
and also receives health care, family services, leave,
educational benefits that well surpass the civilian sector,
along with the potential for a generous retirement. In the
process, this E-5 has moved from being in the 50th percentile
of civilians with comparable education and experience in 2000
to being around the 90th percentile today.
I do not think any of us at this table would say our people
are overpaid, and we would love to be able to maintain that
level of compensation. But if our joint force is to be sized,
modernized, and kept ready to fight, we are going to have to
place compensation on a more sustainable trajectory. We do not
want to return to the 1990s. We are only asking for gradual
adjustments to ensure we can recruit and retain the best our
Nation has to offer while doing everything else that is
required to fulfill our obligation to protect the United States
within the means we are given.
These changes would only account for about 10 percent of
our planned cuts within an area that accounts for fully one-
third of our budget. The other 90 percent of our cuts are going
to come out of the other two-thirds of our budget that buys
things.
We have carefully thought through every one of these
recommendations over the course of many meetings. Even though
they are fair and they are gradual, there is still some
disinformation out there. For example, some say we are cutting
pay. That is not true, as Chairman Dempsey said. We quickly
eliminated any proposal that would do that.
Others say we are trying to renege on promised health care
benefits. Again, not true. We are actually trying to simplify a
bewildering system while incentivizing our people to help us
contain costs. We will continue to provide the same high
quality health care to our troops and our retirees, and it will
continue to be free to those on Active Duty.
Still others say a 1 percent pay raise is not fair when the
Employment Cost Index (ECI) is going up at about 1.8 percent.
But I would point out that our DOD civilians have just been
through 3 years of no pay increase, and they just received 1
percent this year.
Finally, some are also suggesting that we want to close all
State-side commissaries. We have never considered that in any
meeting that I have ever attended. In fact, we believe our
commissaries are an important part of the benefits we offer our
families. But we want those stores to have to work as hard as
our unsubsidized exchanges in providing a good deal for our
people. We think the Defense Exchange Commissary Agency (DECA)
can find at least the first year's savings through
efficiencies, not price increases, especially since we exempted
them from the 20 percent staff cuts that everyone else is
taking.
Congress should also repeal legislation apparently lobbied
for by the food industry that prohibits the sale of generics at
our commissaries which takes money right out of our people's
pockets. It really does. I recently bought a generic bottle of
ibuprofen at a post exchange, which is not prohibited from
carrying generics, at a 73 percent savings over the brand name
that the commissary is required to carry right next door.
Efficiencies in generics could easily offset the savings we are
asking for in 2015 from our commissaries, savings that will
enhance the combat readiness of our warriors that they count on
us to provide.
Now, we were not confirmed for these positions by the
Senate to only make the easy choices. We have to make the hard
ones too, choices that have only gotten harder with recent
budget cuts. We need your support. My Service colleagues will
now describe what will happen if we do not receive that support
and we have to ask our young men and women to fight with $31
billion worth of a smaller, less modern, less ready force.
Thank you again for the opportunity to speak today, and I
look forward to hearing your views and your questions. Thank
you.
Chairman Levin. Admiral, thank you so much.
General Odierno?
STATEMENT OF GEN RAYMOND T. ODIERNO, USA, CHIEF OF STAFF OF THE
ARMY
General Odierno. Thank you, Chairman Levin, Ranking Member
Inhofe, all the other committee members. It is always a
pleasure to be here to discuss these important issues.
I have had the privilege to lead our men and women of all
Services in both peace and war. I have witnessed firsthand
their selfless service, dedication, and sacrifice. The All-
Volunteer Army has performed phenomenally during the longest
conflicts in our Nation's history. But it is imperative we
discuss and understand the appropriate level of compensation
not only to recognize the sacrifice of our soldiers and their
families, but to ensure we sustain the premier All-Volunteer
Force.
Pay and compensation benefits must remain competitive in
order for us to recruit and retain the very best for our Army
and the joint force. However, pay and compensation must be
balanced, along with end strength, readiness, and modernization
of our force. Thus, it is necessary that we take a
comprehensive look at every aspect of our budget.
I fully endorse these DOD proposals that do not directly
cut our soldiers' pay but slows the rate of growth from any
allowances that are simply unsustainable.
Additionally, it is essential that we gain more
efficiencies in our commissaries and our health care,
specifically TRICARE. I believe the proposals recognize the
incredible service and sacrifice of our soldiers and their
families by allowing us to better balance future investments in
readiness, modernization, and compensation. These are difficult
but necessary decisions.
Taking care of soldiers is not just about providing them
competitive pay and compensation benefits. It is also about
having the right capacity in order to sustain a reasonable
personnel tempo, invest in the most modern equipment, and
maintain the highest levels of training readiness.
If the Army does not get the $12 billion in compensation
savings over the Program Objective Memorandum (POM), we will
have to look at a further reduction in end strength, lower our
overall readiness posture, and slow even further our current
modernization programs. It is my opinion that if Congress does
not approve our compensation recommendations, then you must end
sequestration now and increase our top line.
We must keep in mind that it is not a matter of if but when
we will deploy our joint force to defend this great Nation. We
have done it in every decade since World War II. It is
incumbent on all of us to ensure our soldiers are highly
trained, equipped, and organized. We must balance our resources
effectively to do that. If we do not, our soldiers will bear
the heavy burden of our miscalculations on the battlefield.
I am proud to wear this uniform and represent all the
soldiers of the U.S. Army. Their sacrifices have been
unprecedented over the last 13 years. We must ensure we provide
them with necessary resources for their success in the future.
Thank you, Mr. Chairman.
Chairman Levin. Thank you very much, General Odierno.
Admiral Greenert?
STATEMENT OF ADM JONATHAN W. GREENERT, USN, CHIEF OF NAVAL
OPERATIONS
Admiral Greenert. Thanks, Chairman Levin, and many thanks
to you and Barbara for your service through the years. We
appreciate it.
Senator Inhofe and distinguished members of the committee,
I am proud to represent 633,000 sailors, Navy civilians, and
their families and especially the 50,000 sailors deployed
around the globe today, along with their fellow marines. Their
dedication and resilience continue to inspire me, and our
citizens can take great pride in the daily contributions of
their sons and daughters in places that really matter.
When I appeared before you in March, I testified that we
were compelled to make some difficult choices in our
President's fiscal year 2015 budget submission. 90 percent of
the reductions in our President's fiscal year 2015 submission
focused on procurement, force structure, and modernization, as
well as overhead reduction, contract efficiencies, and buying
smarter. The area of last choice that we addressed in the
budget was cost growth of our pay and compensation.
Now, for over a year, as the chairman mentioned, the Master
Chief Petty Officer of the Navy, who is with me today, and I
traveled around the fleet and bases, and we listened to our
sailors and families, especially those who would be most
affected by these proposed changes, both the increases and the
decreases. The vast majority of our sailors and families told
us that they believe their total compensation package matches
well with, and in some cases exceeds, their civilian
counterparts.
But let me be clear. I do not believe our sailors are
overpaid, nor do they believe that. Our sailors and families
are not enthusiastic about a compensation reform, but they were
clear to us that their quality of service, their work
environment needs to improve. They understand that in this
fiscal situation we face hard choices. We cannot have it all.
The reality within this given budget, the one that we have been
given, is we cannot sustain our current personnel costs
trajectory, and we need to address this problem sooner than
later.
Today, our total force personnel costs consume about 40
percent of our given budget, and that is up from 32 percent in
2000. That share continues to rise. In fact, since 2001, we
reduced Navy's end strength 60,000 sailors, but the growth in
personnel costs alone consumed 60 percent of those savings. In
other words, although the Navy manpower has shrunk
significantly, at the same time we reduced 25 ships in our
inventory, our personnel costs have spiked. That has been a
burden in our ability to balance our investments.
DOD's compensation reform proposals would generate savings
to the Navy of $123 million in 2015 and $3.1 billion over the
FYDP. We would intend to reinvest any and all of these savings
into these sailor quality-of-service enhancements and that
includes increasing sea pay and critical skills incentive pay
to assure retention, improving 30 barracks, training buildings,
morale welfare and recreation and fitness centers, constructing
barracks, fitness centers, and trainers, providing schools and
travel for about 7,500 sailors, purchasing tactical trainers
and simulators, purchasing spare parts, improved tools, and
providing more maintenance opportunities. All of these
reinvestments would address the disatisfiers that I mentioned,
our sailors' quality of their service. They are designed to
help sailors get their jobs done effectively and safely while
addressing our critical man, train, and equip challenges.
If Congress denies authority for all the compensation
savings, however, Navy would be forced to back out of these $3
billion sailor quality-of-life improvements, and we would also
face an additional $4 billion cost resulting from pay raises
reverting to the ECI. That would compel us to reduce readiness,
shipbuilding, and aircraft procurement even further. We cannot
afford the equivalent of another $7 billion bill. Our Navy
would be less ready, less modern, and less able to execute the
missions outlined in our Defense Strategic Guidance (DSG) and
the Quadrennial Defense Review (QDR).
Mr. Chairman, this is a tough decision, but it is also an
opportunity. Not seizing the initiative now means billions of
dollars of additional costs on other programs that we can ill
afford. Given our current situation, I think it is necessary to
better balance our sailors' needs to ensure our Navy remains
forward and, more importantly, ready where it matters when it
matters.
I look forward to your questions.
Chairman Levin. Admiral, thank you so much.
General Welsh?
STATEMENT OF GEN. MARK A. WELSH III, USAF,
CHIEF OF STAFF OF THE AIR FORCE
General Welsh. Thank you, Mr. Chairman, Ranking Member
Inhofe, and members of the committee. It is an honor to be
here, especially with the members of this panel.
Mr. Chairman, might I add from all the men and women of our
Air Force thank you for your distinguished service to this
country.
Chairman Levin. Thank you.
General Welsh. You are a statesman, sir, and you have the
respect and admiration of everybody on this panel.
Chairman Levin. Thank you.
General Welsh. For the past 23 years, U.S. airmen have
maintained an extremely high operations tempo deploying
routinely alongside their joint partners to the Middle East,
nonstop since Operation Desert Storm ended in 1991, and they
performed spectacularly well. I believe they have earned every
penny they have made. You have been remarkably supportive in
increasing their pay and benefits over time.
But today we are in a precarious position. Per capita costs
for an airman have grown over 40 percent since 2000. Last year,
our readiness levels reached an all-time low. As we struggle to
recover, we do not have enough units ready to respond
immediately to a major contingency, and we are not always able
to provide fully mission-ready units to meet our combatant
commanders' routine rotational requirements.
Our modernization forecasts are also bleak. Roughly 20
percent of our aircraft were built in the 1950s and 1960s. Over
half of the others were built more than 25 years ago. Now, due
to sequestration, we have cut about 50 percent of our currently
planned modernization programs.
We cannot ignore the fact that the law, as currently
written, returns us to sequester-level funding in fiscal year
2016.
This has forced us into some very difficult decisions. Pay
and compensation reform is one of those very tough decisions.
No one takes this lightly, but we feel it is necessary to at
least try and create some savings. If we are not willing to
make some tough calls, our Air Force will be neither ready to
fight today nor viable against the threats of tomorrow.
My most sacred obligation as Chief of Staff of the Air
Force to my airmen is that when we send them to do difficult
jobs in dangerous places, that they are prepared to succeed and
to return home safely. Although slowing the rate of pay
increases, gradually reducing Basic Allowance for Housing (BAH)
rates relative to the market, reforming TRICARE, and reducing
commissary subsidies will certainly hurt, what my secretary and
I owe the Nation, the joint team, and our airmen more than
anything else are the training and tools necessary to fight and
win and survive.
If the proposed compensation reforms are rejected, the Air
Force will be forced to cut $8.1 billion from readiness,
modernization, and infrastructure accounts over the next 5
years. We will take significant cuts to flying hours and weapon
system sustainment accounts, reduce precision munitions buys,
and lower funding for training ranges, digging our readiness
hole even deeper. We will likely have to cancel or delay
several critical recapitalization programs. Among those
probably impacted would be the combat rescue helicopter and the
T-X trainer. Abandoning the T-X program would mean that future
pilots will then continue to train in the 50-year-old T-38. We
will also be forced to cut spending on infrastructure beyond
the $5 billion we have already recommended to cut over this
FYDP.
Of course, these cuts would be on top of the difficult
recommendations we have already made, some of which the
Chairman mentioned this morning, lowering our end strength by
nearly 17,000 airmen next year, divesting the entire A-10 and
U-2 fleets, and if sequester-level funding returns, divesting
the KC-10 fleet as well.
None of these options are good ones, but we are simply out
of good options. It is time for courageous leadership. We
simply cannot continue to defer every tough decision in the
near term at the expense of military readiness and capability
over time. We need your help.
Chairman Levin. Thank you very much, General.
General Amos?
STATEMENT OF GEN. JAMES F. AMOS, USMC,
COMMANDANT OF THE MARINE CORPS
General Amos. Chairman Levin, Ranking Member Inhofe, and
members of the committee, the current period of fiscal
austerity has exacerbated an imbalance across the Marine Corps'
budget. I nor my fellow Service Chiefs and, more importantly,
the men and women who wear our Service's cloth, those who have
served our Nation so faithfully did not set the conditions for
the fiscal calamity that we find ourselves in.
As Service Chiefs, we are obliged to live within the budget
and the laws passed by Congress. Senators, none of us like
where we find ourselves today. We have spent a greater part of
a year restructuring each of our Services under the cold
reality of a fully sequestered budget. While the Bipartisan
Budget Act (BBA) provided much needed relief in 2014 and 2015,
I am advised by many of your colleagues in Congress to expect
to return to full sequestration in 2016 and beyond.
We have made difficult choices--all of us have--as we have
attempted to build a balanced and combat-ready force. We have
restructured and downsized our Services to live within our
means. We have done all of this knowing full well that the
world that we live in is a dangerous one, an international
landscape that is simply getting more challenging as each day
goes by. I see no indication there will be a peace dividend
once we complete the mission in Afghanistan later this year.
Mr. Chairman, we will not do less with less in the decade to
come. We will do the same with less.
From a personnel perspective, our men and women have been
compensated appropriately for their many sacrifices over the
past decade of war. I make no apologies for that. They have
deserved every penny that Congress has afforded them. They have
faithfully fought our Nation's battles, all while successfully
keeping the enemies of America far from our shores.
Because of my loyalty to them, there is much about today's
discussion on compensation reform proposals that frankly I do
not like, but I am stuck with them. I am stuck with them
because I have raided every other pot of money available to me
to pay for a ready Marine Corps. As a Service Chief, I am first
and foremost responsible for the defense of our Nation. That
task comes before all others. It is the sole reason why America
has a Marine Corps.
To accomplish this, the Marine Corps must maintain a high
state of readiness. That is accomplished by having combat units
that are highly skilled and highly trained. It is done by
having the right equipment in the hands of warriors who may be
headed into harm's way. The most important way that we can keep
faith with our men and our women is to send them into combat
with the best possible training and the freshest of equipment
and to take care of them then when they come home.
My challenge lies in balancing readiness, manpower, and
modernization, all under the umbrella of sequestration. Our
goal of consistently fielding a highly trained and combat-ready
crisis response force for America is pressurized by a military
personnel account that has grown to 63 cents of every
appropriated dollar. Balanced against readiness requirements
and an anemic military construction account, the Marine Corps'
modernization and investment accounts comprise a mere 8
percent. 8 cents on the dollar. This is the lowest it has been
in well over a decade.
At the end of the day, I am ultimately responsible for
taking care of the marines, the sailors, and our families. This
includes ensuring our people are well compensated for their
service while also afforded the best training and equipment
available to fight and win our Nation's battles. For marines,
their quality of service is as important as their quality of
life. They understand that they must be prepared for
uncertainty, and they must be prepared for their next mission.
Thank you for the opportunity to represent your Marine
Corps and its men and women. I thank the committee for your
continued support and I stand prepared to answer your
questions.
Chairman Levin. Thank you so much, General Amos.
General Grass?
STATEMENT OF GEN FRANK J. GRASS, ARNG,
CHIEF OF THE NATIONAL GUARD BUREAU
General Grass. Chairman Levin, Ranking Member Inhofe,
distinguished members of the committee, it is an honor for me
and Chief Brush, my senior enlisted advisor, to be here today
representing the men and women of the National Guard.
The men and women of the Guard serve with distinction as a
primary combat Reserve of the Army and Air Force. We are also
the first military responders on site in times of domestic
crisis.
I echo the concerns of the Chairman and my colleagues
regarding the critical need to achieve fiscal balance across
the joint force. Future fiscal challenges will dramatically
constrain decision-making about the size, shape, and rolls of
our military. This certainly will be the case when the Budget
Control Act (BCA) funding levels return in fiscal year 2016.
Therefore, it is important that we act now.
Despite the Guard accounting for only 8.4 percent of the
defense compensation and benefit budget, these proposals will
significantly impact operational Guard. The Guard we have today
is equipped, trained, and tested over the past 12 years of
combat. Modest investment keeps your Army and Air National
Guard ready. But if we do not act now to rebalance military
compensation, we risk future training, readiness, and
modernization cuts across the joint force.
Our success is unquestionably due to our most important
resource, our people. Every servicemember--Active Duty, Guard,
and Reserve--deserves the best we can provide within a fiscally
sound solution. I believe the proposal before you provides the
level of compensation and is consistent with a ready and modern
force.
Mr. Chairman, Senators, the National Guard has been and
will remain always ready, always there.
Thank you and I look forward to your questions.
Chairman Levin. Thank you so much, General.
I think we have a good turnout here. We also have a vote at
11 a.m. One vote, I believe. Let us start with a 6-minute first
round.
A number of you have mentioned the impacts of these budget
caps and the impacts of sequestration. These are legislatively
required, but we need to do something about them. I can assure
you and members that we will have an opportunity to do
something about the looming sequestration for the next fiscal
year. I hope we take that opportunity. In the meantime, as you
all put very well and very clearly, we have to live with the
current year's budget caps, and that is what you are trying to
help us do with your recommendations.
By the way, I believe, Admiral, you mentioned something
about generics in our commissaries. We are going to check that
one out. We do not think that the law requires it. We think
that the commissaries have to be competitive, and so we are
going to try to find the origin of that additional cost to our
men and women in uniform.
We have a budget in front of us which must meet the caps in
law. We have no choice. Again, if we do not adopt these
particular reforms or some of them, we are going to have to
make up for it with reductions somewhere else, and the
somewhere else has taken a bit hit already, as you have pointed
out, our readiness, our modernization. We have the
responsibility of being law-abiding and we have the
responsibility to the security of this country. We are going to
do the very best that we can to accomplish both goals.
Chairman Dempsey, you have mentioned what the impact would
be if we delayed these kind of changes. Can you be a little
more specific? You said it would be a 2-year delay, for
instance, if we waited for the final report of the MCRMC. Why
would that be a 2-year impact? Be a little more detailed as to
why you believe, as you have testified, that you have
sufficient information now to make these recommendations even
though when it comes to the retirement issues, you believe that
we can delay any changes in that until the MCRMC reports.
General Dempsey. We believe it will be a 2-year delay
because the commission will not report out until February 2015,
and that is inside of our decision cycle for the submission of
the budget. Waiting until February seems to us to make it clear
we would actually have to move along with 2 years at our
current state and prevent us from making the changes that we
know we need to make right now.
Chairman Levin. In terms of your preparation and
recommendation, it would be a 2-year delay, but from the
congressional perspective, we would have time in the next
fiscal year, if we get those recommendations in February, to
take those recommendations into account. Is that correct?
General Dempsey. It seems to me that is correct. I know
less about your process than I do about our own, and preparing
the budget to justification book level of detail is a pretty
remarkable enterprise every year. By the way, for the past few
years, we have had to prepare budgets against alternative
futures. I would be surprised if you could act that quickly on
a recommendation that came to you in February.
But more importantly, to the second part of your question,
we have spent the better part of a year analyzing direct and
indirect compensation with the team that you see here
represented here today and our programmers. We believe that we
can articulate what the impact would be at various grade
levels, an E-5, an O-5, both what it would do to them today and
what it would do to them across the course of a career. We have
all the information we need, and we have actually provided it.
We are ready to move on it because we need that $18 billion.
Chairman Levin. You have taken steps, you have assured us,
to consult with others in making these recommendations,
including your senior enlisted personnel.
General Dempsey. We have, sir.
Chairman Levin. I would just say this that they are all
sitting here behind you, I believe you have told us, and we
again give special thanks for their service as well. I would
just invite them, any of them, to personally contact me if in
fact they do not agree with any or all of these cuts. It is
very difficult for us to ask them here today or to put them on
the spot generally. But it is important that we hear from them.
I would assure them that I would keep the privacy of their
remarks, and I would assure them to the best of my ability in
guaranteeing that privacy and anonymity, share them with my
colleagues to the best I could. I would welcome any personally
delivered comments from those senior enlisted personnel to me.
General Dempsey. Sir, if I could. They did testify before
the Subcommittee on Personnel. I will also attest to the fact
that there is not a bashful one among them, and you do not have
to ask for their views. They will provide them and they are
free to do so.
Chairman Levin. We welcome that and I am sure our
Subcommittee on Personnel would also welcome any privately
delivered comments that might differ from their testimony or
from your testimony. Thank you very much.
Senator Inhofe.
Senator Inhofe. Thank you, Mr. Chairman.
Not a bashful one among them. Let us see how bashful they
are here.
First of all, a lot of us have seen this coming, and I know
we do not talk about it very much, but when we see money that
otherwise should have gone into our military, into our defense,
we see the construction of the biofuel refineries, $160
million. We see the Navy purchased the green fuel at $26 a
gallon, which could be purchased on the market for $3 a gallon.
The climate change initiatives have gone up now $120 billion
since President Obama has been in office. I commented the other
day, General Welsh, that for the $120 billion we could buy
1,400 new F-35s. Food stamps, $42 billion additional every
year.
I would like to ask you in this climate--and I am going to
submit for the record, because there is not time to read them
all, all of the quotes from everyone, up to and including
Secretary Hagel, about the dilemma that we are in and the
fiscal situation that we are in right now.
[The information referred to follows:]
Quotes on Military Readiness and Ability to Execute Strategic Defense
Guidance
Secretary Hagel said 2 weeks ago, ``American dominance on the seas,
in the skies, and in space can no longer be taken for granted.''
I believe that under sequestration, we will have to assume so much
risk that it is immoral.
General Dempsey agreed when he told the Senate Armed
Services Committee, we are putting our military on a path where
the ``force is so degraded and so unready'' that it would be
``immoral to use the force.''
Admiral Winnefeld in January 2013, stated that ``there
could be for the first time in my career instances where we may
be asked to respond to a crisis and we will have to say that we
cannot.''
General Amos agrees with me on increased risk, ``We
will have fewer forces arriving less-trained, arriving later to
the fight . . . This is a formula for more American
casualties.''
The Department of Defense's Chief of Technology, Under
Secretary Frank Kendall, said on 3 January: ``We're cutting our
budget substantially while some of the people we worry about
are going in the opposite direction. We've had 20 years since
the end of the cold war [and sort] of a presumption in the
United States that we are technologically superior militarily.
I don't think that that's a safe assumption.''
Each of the Service Chiefs agree. Here's what they said about the
ability to execute the current Strategic Defense Guidance:
Army Chief of Staff General Odiemo said that under
sequestration: ``Such reductions will not allow us to execute
the 2012 Defense Strategic Guidance, and will make it very
difficult to conduct even one sustained major combat
operation.''
Chief of Naval Operations Admiral Greenert said
``[Sequestration] will preclude our ability to execute the 2012
Defense Strategic Guidance both in the near term and the long
term. ''
Marine Corps Commandant General Amos said: ``To meet
the requirements of the Defense Strategic Guidance, we need a
Marine Corps of 186,800 . . . '' but a force of 174,000 marines
quite simply is the largest force that we can afford [under
sequestration] . . .''
General Dempsey on Quadrennial Defense Review and Budget: ``The
smaller and less capable military outlined in the QDR makes meeting
these obligations more difficult,'' Dempsey said. ``Most of our
platforms and equipment will be older, and our advantages in some
domains will have eroded. Our loss of depth across the force could
reduce our ability to intimidate opponents from escalating conflicts.''
He added, ``Moreover, many of our most capable allies will lose key
capabilities. The situation will be exacerbated given our current
readiness concerns, which will worsen over the next 3 or 4 years.''
Under Secretary Jessica Wright Statements on Readiness:
``The Secretary of Defense has been very clear that
sequestration funding limits imposed by the BCA of 2011 will
yield a force that is too small, and not ready enough to meet
the Nation's security objectives.''
``The budget does not provide adequate funding for
modernization, increased training, and facility sustainment
needed to resolve the Department's readiness challenges.''
Senator Inhofe. Could each one of you briefly describe
something in concrete terms that this fiscal climate means in
terms of what your Service will not be able to do to adequately
train men or women, to deploy them, and bring them safely home?
I would like to have some specifics. If you cannot do it now, I
would like to get that for the record. Would any of you,
General Odierno, have any specific thing that you would want to
do that you are going to have to sacrifice doing in terms of
training?
General Odierno. Senator, thank you.
Beginning first in 2015, we have to reduce home station
training. It all affects the collective level of training,
which is the most important for our forces, and it is the
ability to synchronize and integrate air, ground, and the many
different types of maneuver that we have to do in case we have
to respond, whether it be in Korea, whether it be in the Middle
East, whether it be in Europe. We have had to cut back on this
training. What that means is we have less capability and lower
readiness levels than we would like to have in case we are
asked to deploy.
This will continue to exacerbate itself in 2016 and 2017
and 2018 until we get our end strength down to a level that
would enable us to balance, and that will not happen until
about fiscal year 2020.
If we do not get these, we now add another $12 billion bill
that I have to find. That means we might even have to take more
end strength out. I have already testified to the fact that I
do not believe we have enough end strength now if we go to
sequestration in order to meet our national security needs.
This will further exacerbate this problem.
Senator Inhofe. General Welsh, can you think of anything
specific in terms of grounding of units?
General Welsh. Senator, last year was a pretty good example
of what sequester-level funding will do to our Air Force. We
grounded about a third of our combat squadrons. We cancelled
Red Flag exercises, both U.S. Red Flags and coalition Red
Flags, which is the full spectrum, high end part of training
for the United States Air Force. It is what separates us from
other air forces. It is where we integrate with the other
Services and with ground forces and with our allies. We cut
weapon school classes where we develop our Ph.D. warfighters.
All the things that take us from doing low intensity work to
being able to fight a full spectrum fight were affected
dramatically.
Senator Inhofe. Yes. I think we saw after the grounding of
the squadrons that the cost of getting them back to a state of
readiness, as well as the equipment that was grounded with
them, exceeds the amount that would have been saved at that
time. Is that accurate?
General Welsh. Senator, that is accurate.
Senator Inhofe. Anybody else? Yes, sir.
Admiral Greenert. Senator, you were down in Norfolk. You
talked to our people, and they said these long deployments are
killing us.
Senator Inhofe. Yes.
Admiral Greenert. The problem is if somebody is deployed
and we need another carrier to deploy due to a contingency in
Syria or the issues in Europe, those that are out there now
have to stand that watch because we do not have the response
force for a contingency that we would normally have. The folks
are not trained up to do that. It takes longer to train them up
to deploy. We are deploying just on time. We need a better
contingency force to deal with the contingencies today.
Senator Inhofe. Okay, I appreciate that.
General Amos, anything specific that comes to your mind
that you cannot do now in terms of properly preparing these
kids?
General Amos. Senator, we have made decisions to move money
into training and readiness of our units. Those units are at a
fairly high state of readiness and will be so for the next 2
years. To do that, though, we pulled money out of all our other
accounts, to include procurement. That is where we are feeling
the pinch right now. We have $983 million total to reset the
Marine Corps and modernize the Marine Corps for this year. That
is less than 4 percent of our entire budget. We are feeling it
in the modernization, Senator, because we have paid the bill
for readiness and training out of that account.
Senator Inhofe. Yes, and I bring this up because I know
this is a hearing on compensation, but if you change that, that
does not happen in a vacuum and it cannot be at the expense of
our training and, as you say, our modernization.
My time is about expired, but in terms of our combat
readiness codes, C-1, C-2, C-3, and C-4, because we have
already experienced some losses in terms of our readiness
capability, how are we doing now on those that we were
deploying, General Odierno? They should be C-1 when they are
deployed. Is that correct?
General Odierno. That is correct.
We made progress in 2014 because of the BBA. We are
beginning to increase the readiness of our brigade combat
teams, and we have added about four to five more brigade combat
teams.
Senator Inhofe. Are they all either C-1 or C-2?
General Odierno. They are C-1 or C-2. The problem is in
2015 and 2016, that goes down again because of the
sequestration. If we lose what we have asked for in the
compensation savings, that will bring the readiness down
further. So it will impact readiness in the out-years
significantly.
Senator Inhofe. Readiness, risk, lives. Right?
General Odierno. That is right.
Senator Inhofe. Thank you, Mr. Chairman.
Chairman Levin. Thank you, Senator Inhofe.
Senator Reed.
Senator Reed. Thank you very much, Mr. Chairman.
Thank you, gentlemen.
General Odierno, you are, I think for the first time in
decades, actually involuntarily separating personnel this year,
and that will continue if some of these savings are not
realized. Is that a fair judgment?
General Odierno. That is correct, Senator. We are
involuntarily separating captains, majors, lieutenant colonels,
colonels, and also non-commissioned officers. It is also the
first year that people who are eligible to re-enlist will not
be able to re-enlist because of the reduction in the size of
the Army.
Senator Reed. There are a lot of issues at play here, but
we are already seeing the effects of these constrained budgets
in terms of the opportunities for people who are competent,
capable in their ability to serve until at least retirement and
to retire.
General Odierno. That is correct, Senator.
Senator Reed. Some of these savings, if they are realized,
will help alleviate that pressure. It will not end it, but it
will help alleviate that pressure.
General Odierno. It will not end it, but it will help
alleviate it. If we do not get it, it will increase.
Senator Reed. Accelerate.
General Odierno. Right.
Senator Reed. Admiral Greenert, we talked about the
savings. Let us assume for the moment you get some savings. How
would you apply them this year? In what specific programs could
we see with general savings applications?
Admiral Greenert. Getting those savings the first year, it
would be career sea pay and it would be special pays and
allowances, incentive pays. It would be increases to our base
operations. Our ports shut down. They run 9 a.m. to 5 p.m. We
want to keep them open so when ships complete training, they
can come home Friday not go anchor out and then come in
Saturday during daylight hours. That is 2015. That is about
$123 million right there.
In 2016, it is again starting to repair 30 barracks, buy
trainers and simulators for small arms for our submarine
trainers, for our surface trainers to put money in to get
people to training, that is, travel money and trainers. That is
about 7,500 sailors that we just have backed up. This is the
quality of their service, Senator, as I was saying. This is
what they are asking for. Spare parts.
Senator Reed. One of the points, I think, in Senator
Inhofe's question to General Welsh was it is a more efficient
use of resources too. Rather than keeping a ship just standing
idle off port, that ship could be brought in, the crews could
see their family.
Admiral Greenert. Yes, sir. Obviously, they will be
happier. They are back home and their families waiting for them
rather than just hanging out overnight waiting for the port to
open.
Senator Reed. This is a very difficult issue. I do not have
to tell anyone around this table or at the witness table. There
is one view and I think a reasonable view that there is no way
you can pay these men, women, and their families for what they
do. There is no benefit. There is nothing. But at some point,
we have to make very difficult judgments about pay, allowances,
et cetera.
But one of the other impressions I have is that training
and having the best equipment is really key to the morale and
to the sense of service. Ironically, we could be increasing
compensation, but with poor training, and poor equipment, et
cetera, the morale and the satisfaction and the sense of pride
of the service would deteriorate. Is that unreasonable, General
Dempsey?
General Dempsey. No. It is absolutely correct, sir. I have
said before and I believe it today as well that today's
readiness problem is tomorrow's retention problem. If you came
into this military to be a man or woman of action and go to sea
and fly and train and you are sitting around watching your
equipment or just simply maintaining it with no possibility of
training on it, you are not going to stick around very long.
Senator Reed. My experience is limited, but it was that
good training was one of the key factors in any unit. If you
did not have it, the other was important but not as critical.
Let me ask a question, General Dempsey, about the
commissaries. Essentially your testimony is that you would like
to get some efficiencies out of the system and that they can
generate these efficiencies. If that is not the case, then they
are going to have to curtail some of their operations. Have you
thought about criteria for curtailment?
General Dempsey. We have, sir. I will tell you that
commissaries has been the most difficult issue to wrap our arms
around because it is very difficult to understand the
functioning of the commissary and the effect that a reduction
in the subsidy will have until you make the decision to do it.
That is why we are supportive of taking this first step this
year, $200 million. As the senior enlisted, when they do talk
to you, Senator, will tell you, let us see what happens. Let us
see how much efficiency we can wring out of it in order to gain
some savings. But left unaddressed, we will be providing a $1.4
billion subsidy in perpetuity, and that just does not seem to
be a reasonable course of action.
Senator Reed. So your first step--and the number is about
$200 million--would be to essentially charge the system with
coming up with efficiencies either through operation,
techniques, different purchasing approaches, different
managerial approaches that would save the money. There is no
thought in this first year of closing any commissary. Is that
fair?
General Dempsey. Yes. Let me ask the Vice Chief to comment,
sir, because he has actually done most of the heavy lifting on
this.
Admiral Winnefeld. I will be very quick. We have not
directed any commissaries to close. That is not part of the
plan. What would happen, as you correctly point out, look for
efficiencies first. Whatever they cannot wring out of
efficiencies would be a price increase. You might go from the
30 percent claimed advantage right now--if all $200 million in
the first year came out, it looks like that would go to 26
percent. We think we can do better than that. Then you look at
the competitiveness of the commissary in the market in which it
exists, and most of them, I think, at 26 percent savings will
remain very competitive. If not, then there are probably
situations where you might close one or two, but that is not
what we have specified. It is, I think, a lot gentler than it
looks.
Senator Reed. Thank you very much.
Thank you, Mr. Chairman.
Chairman Levin. Thank you, Senator Reed.
Senator McCain.
Senator McCain. Thank you, Mr. Chairman.
I thank the witnesses.
General Amos, with all of these proposals that we are
examining today, it seems to me from previous testimony that
the biggest problem really is sequestration. Would you agree?
General Amos. Yes, sir, I would.
Senator McCain. By far?
General Amos. By far.
Senator McCain. General Odierno?
General Odierno. I agree, Senator.
Senator McCain. Unless Congress and the President act
together, all of these savings will pale in comparison to the
challenge you will face as a resumption of sequestration. Would
you agree?
General Odierno. I think we have said before that under
sequestration, we cannot meet the DSG. We have many concerns.
It also affects compensation and other things we want to
accomplish within our budget.
Senator McCain. By the way, on commissaries, I have a
thought. Why not have people compete to provide those services?
Why not just open it up for competition? No subsidy. Just see
who wants to provide the best services. That might be a thought
you might consider.
General Welsh, should we be purchasing rockets for our
Evolved Expendable Launch Vehicle (EELV) program from Russia,
including the fact that the person in charge of that aspect of
Russia's defense has been sanctioned by the United States of
America and a Federal judge has ruled that that is a process
that should not be pursued?
General Welsh. Senator, we already have purchased some of
those rockets. We have a backlog. We certainly are not
purchasing them currently as we work through----
Senator McCain. You have a backlog?
General Welsh. Sir, I am sorry. We have an inventory that
will cover the next 2 years of planned launches, if we are
allowed to use them.
Senator McCain. Do you think you should continue to
purchase them?
General Welsh. Sir, it is clear that right now we may not
continue to purchase----
Senator McCain. I am asking your opinion whether you think
we should continue to purchase them.
General Welsh. Sir, I think the best answer for the United
States of America is to have the option of an organic booster.
Senator McCain. Thank you.
General Grass, do you believe that the movement of Apaches
out of the Guard is a wise move?
General Grass. Senator, the adjutants general submitted a
proposal to me that I have submitted to the Army about that. We
actually agree with two-thirds of the move of the trainer and
also moving the Kiowa Warriors, and we submitted a proposal to
keep a strategic depth of Apaches in the Guard.
Senator McCain. It is your view that the Apaches should
remain in the Guard.
General Grass. A certain amount, sir.
Senator McCain. General Odierno, you mentioned a couple
times in previous testimony you thought that the A-10 was by
far the most superior close air support (CAS) weapon that we
have.
General Odierno. Senator, what I said is our soldiers have
the most confidence in the A-10. They are used to working with
it. I also said that the Air Force is providing CAS with other
platforms, which has also been successful.
Senator McCain. Does it give you comfort to know that the
B-1 is one of the replacement ideas that the Air Force has put
forward presently in Afghanistan? That would mean a 6-hour
flight from its base in a different country as opposed to a
minimum of 1 hour, and those weapons are delivered from very
high altitude.
General Odierno. Senator, first off, I have confidence that
the Air Force understands the immediacy of the necessity of
CAS. I believe the systems they have in place will provide us
that immediacy.
Again, as we use different platforms, we will work through
with the Air Force how we use those and how they are best
effective in supporting our ground forces as we move forward.
Senator McCain. I find it curious that you come over here
with all the necessity for cost savings and the A-10 cost per
flying is $17,000 per flying hour and the B-1, $54,000 per
flying hour. As I said before, General Welsh, I challenge you
to find an Army or Marine Corps commander who has functioned in
the field and needed CAS that would feel comfortable with the
B-1 replacing the A-10. I will look forward to you providing me
with those individuals. The fact is that the B-1 is much more
expensive. It flies at high altitude and it attacks static
targets. That does not fulfill the mission of CAS as I know it.
I would be glad to hear your response.
General Welsh. Senator, the B-1 also provides about 5 hours
times on station, and up to 32 joint direct attack munitions.
Senator McCain. At $54,000 per flying hour.
General Welsh. Yes, sir, and in some scenarios where the
ground forces are not in direct contact with the enemy, it is
an exceptionally good CAS platform. I would be happy to provide
people who will tell you that.
It is also not the planned replacement for the A-10, sir.
The primary airplane doing CAS to take the place of the A-10
will be the F-16. It has already done more CAS in Afghanistan
than the A-10 has, and it will work with other aircraft, if the
scenario allows it, to provide the best possible CAS for our
troops on the ground. We are absolutely committed to it. We
have been and we will remain so.
Senator McCain. Well, you tried to get rid of it before,
General, and did not succeed. We will try to see that you do
not succeed again.
Finally, Mr. Chairman, my time has expired. But I gave a
speech again yesterday on the floor of the Senate. We have now
spent 57 percent of the $300 billion that was spent in fiscal
year 2013 on non-competitive contracts, 80 programs, according
to the Government Accountability Office, with $500 billion in
cost overruns. The EELV. The Air Force Expeditionary Combat
Support System over $1 billion which as of now has no result.
The Expeditionary Fighting Vehicle, $3 billion. Former Marine
One helicopter, $3.2 billion. The acquisition system in DOD is
broken. It still has not been fixed, and when we have as much
as a $3 billion cost overrun for a single aircraft carrier, the
American taxpayers will not sustain it.
I thank you, Mr. Chairman.
Chairman Levin. Thank you, Senator McCain.
Senator Blumenthal.
Senator Blumenthal. Thank you, Mr. Chairman.
Thank you all for your service, your extraordinary
dedication and contribution to our Nation. I join Chairman
Levin in saying to you and the men and women who serve under
you that we owe you a tremendous debt of gratitude both in
peace and war.
General Dempsey, I had not intended to ask this question,
but I am encouraged to do so by one of Senator McCain's
questions. On the purchase of Russian helicopters for the
Afghan military, what would it take to convince you that we
should stop those purchases today since the money that we are
spending on them goes to Rosoboronexport, the Russian arms
agency that, in turn, is fueling and financing Assad in Syria
and also now the troops that are on the border with Ukraine?
What would it take to convince you that we should stop those
purchases right away?
General Dempsey. An alternative, Senator. I just came back
from Afghanistan on Saturday, and the Afghan Security Forces
did an absolutely remarkable job of managing their elections.
They peaked for the big events, but they are not ready to
sustain themselves over the long term. We have to get them a
lift capability and an attack capability, and currently there
is no alternative.
Now, we are looking inside DOD to see if we can find an
alternative supply chain and repair parts. Believe me.
By the way, the other thing that it would take is if a
sanction were to be placed against them, that would be the law
and we would have to react to that.
Senator Blumenthal. A sanction against the Russian arms
agency.
General Dempsey. That is right. A sector sanction.
But at this point, we do not have an alternative, though we
continue to seek one.
Senator Blumenthal. Is there a military reason that we
should not impose sanctions on Rosoboronexport, the Russian
export agency?
General Dempsey. The military reason is what I just
expressed, which is a concern that we would leave the Afghan
Security Forces without an air component for some time.
Senator Blumenthal. But can we not provide those components
from another source and the training to fly American
helicopters?
General Dempsey. We have talked about the American
helicopter, Senator. That would take a very long time, much
longer than it does with the Mi-17. But we are looking at
alternative sources of supply and repair parts.
Senator Blumenthal. I do not want to dwell too long on this
issue, and you have been very gracious in talking to me about
it on previous occasions, both on and off the record. I
appreciate your attention to it. But I would like to follow up
further with it, and I appreciate your responding.
A question for you, General Dempsey, and perhaps to General
Odierno and General Amos. One of the biggest factors as a cause
of suicide is financial stress, and the rates of suicide I know
have been of great concern to every member of this panel. Do
you anticipate that any of these cuts or changes in
compensation will impose greater stress? Obviously, that is an
emotional term. It may not be objectively a cut in the standard
of living, but the idea of stress comes with reductions in
compensation and the threat of additional reductions in
compensation.
I ask this question very cognizant of the fact that many of
our best and brightest who are fortunately serving now go into
the military without the idea that compensation is going to be
the key to their future. As the father of two who have served,
who are serving, I am well aware that the training and the
challenge and the mission are the primary motivations for any
young man or woman who goes into the military. But in terms of
retention and continued service, are we not creating additional
financial stress which, in turn, aggravates suicide rates and
could have other down sides physically and emotionally?
General Dempsey. I will let the Service Chiefs talk about
the many programs in place to help service men and women deal
both with stress and, in particular, with their financial well-
being.
Personally, Senator, my belief is that the uncertainty of
all of this is a greater cause of stress than the slowing of
growth that we have prepared. As I have gone around into
townhall meetings, that echoes. That resonates. They are more
concerned because they do not know what the future will be in
terms of our ability to raise and maintain a force over time.
But let me ask if any of the Service Chiefs want to talk
specifically about this.
General Odierno. If I could, Senator, I want to really
piggyback on what the Chairman just said. Their concern is am I
going to have a job? Am I still going to be part of the best
Army? Am I going to have the best equipment? Am I going to be
ready when you ask me to deploy somewhere around the world?
Certainly they are concerned about their compensation. But in
reality, we are not reducing their compensation. We are
reducing the rate of growth. Nobody will see a cut in their
paycheck. Their paychecks will continue to increase. In my
opinion, that is the bigger issue, sir.
Senator Blumenthal. Can you talk perhaps, General Dempsey
or General Odierno, about the Study to Assess Risk and
Resilience in Servicemembers (STARRS) program, in terms of
addressing the suicide issues in the Army?
General Odierno. I can, Senator.
STARRS enters its fifth year of the program. To date, more
than 100,000 soldiers have voluntarily participated. This is
allowing us to gain new data that is enabling us to see where
the stresses are, what are causing soldiers to think about
suicide, to have suicide ideation, in some cases with those who
have actually attempted suicide. It is really giving us high
quality information that we are able to put back in our
program. We are continuing to fund that program because the
information we are getting is allowing us then to pass that
information to the commanders and allowing them to better help
and understand what the stressors are on our soldiers. We are
continuing to invest in that program as we move forward.
Senator Blumenthal. Thank you.
Thank you very much, Mr. Chairman.
Chairman Levin. Thank you, Senator Blumenthal.
Senator Fischer.
Senator Fischer. Thank you, Mr. Chairman.
General Dempsey, some have suggested that maybe there are
other areas in the budget that we can cut. I guess I would like
you to speak to that. I know that research and procurement
funds have been cut, but do you believe that there are any
additional savings in those areas or other areas that can
offset these compensation changes? How do you weigh that?
General Dempsey. Yes, Senator, not only are there other
areas that could be cut, we have actually cut nearly every
area. In fact, I would actually prefer to allow some of the
Service Chiefs to talk about how they have tried to balance the
reductions against pay, compensation, health care,
modernization, training, infrastructure. There are five or six
or seven places you can find money in a budget. They have
looked. There is nothing left under the mattress. We have to do
this in a balanced way.
Anybody want to add to that?
Senator Fischer. General Amos?
General Amos. Senator, in my Service, as I testified in my
opening statement, 63 cents on every dollar goes to manpower.
We are the highest of all. By the way, that does not mean the
marines cost more. We actually cost less because we are a
younger Service. But it is a percentage of budget and a
percentage of top line. We are at 63 percent.
That leaves 27 percent available for readiness. You want me
to be in a high state of readiness so we can deploy today, and
we do that often. 27 cents of every dollar applies to that.
Then really all that is left over, for the most part, is
about 8 percent, which is equipment, modernization. You
mentioned research and development (R&D). 4 percent is R&D and
4 percent is modernization. When you think about our Service,
we have been at war for 12 to 13 years, and 4 cents on every
dollar is going to modernize the Marine Corps after 12 or 13
years of war.
General Dempsey's point is that we have looked in a lot of
places. For me, my manpower account is 63 cents on every
dollar. 64 percent of that is pay, health care, and BAH. If I
am going to make a change, even if it is a modest change, for
me I get a pretty high return on the money considering the
amount of money I am paying for modernization.
General Odierno. Senator, if I could just add to that.
Currently we are only funding our installations at 50
percent of what they should be funded at. We do not have a Base
Realignment and Closure (BRAC) round. We are going to have to
continue to sustain the number of installations that we have.
We cannot fund our installations fully. That is already the
case. We are cutting the Army by 34 percent in the Active
component. We are cutting the Army by potentially 20 percent in
the National Guard, 10 percent U.S. Army Reserve. Our research,
development, and acquisition account has been cut by 39
percent. We have slowed down every one of our programs, which
is causing cost overruns because we have now slowed down how
long it is taking us to procure aircraft. What that means is
each aircraft costs more because we have slowed it down and we
have reduced the amount of aircraft we are buying. We are not
only past efficiencies. We are becoming more inefficient
because of how we are trying to deal with the problems that we
are dealing with. Our military construction (MILCON) is at the
lowest level ever in the Army right now. We have taken as many
efficiencies as we possibly can to pay a $170 billion bill that
we still have to pay over the next several years.
Senator Fischer. You have strategic requirements that you
have to meet. So just how far are you going to fall short of
those if the sequester continues?
General Odierno. Until we can get the end strength out,
which is going to take us about 3 or 4 more years, we are going
to continue to be out of balance. We are taking a portion of
the force, a very small portion of the force, and making them
as ready as possible to meet our operational commitments. The
problem is the rest of the force is paying a significant price
in readiness. What that means is as we get unknown
contingencies, we are not going to be able to respond with the
readiness and capabilities that we are used to responding. That
is my real concern, Senator.
Senator Fischer. We have talked a little bit about the
MCRMC that is out there and the recommendations that they may
come up with. I guess I will start with you, General Dempsey.
Are any of you concerned about the changes that you are
proposing here that you are contemplating for the budget? What
happens if the MCRMC rejects those and goes in another
direction? How are you going to address that?
General Dempsey. The commission's work is on changes to
structure of pay, compensation, and health care and retirement,
which is a longer look at this than we are proposing right now.
I think our suggestions are going to harmonize quite well,
frankly, with what they are doing.
Senator Fischer. What would you see for savings if the pay
is going to be capped at an increase of 1 percent down the
line?
General Dempsey. I am not sure I understand the question,
Senator.
Senator Fischer. If you are looking at savings on pay in
the budget that you are proposing, you are talking about a 1
percent this year or fiscal year 2015 instead of the 1.8
percent?
General Dempsey. Right.
Senator Fischer. There will be savings there. Do you
anticipate that that will continue into the future and how far
into the future? Would you cap that?
General Dempsey. I think that is one of the things that we
would expect to get some advice from from the commission
because that is a structural issue. But the savings on that 1
percent vice 1.8 is about $3.8 billion over the FYDP, and that
is money we really need.
Senator Fischer. I see my time is up. Thank you.
Chairman Levin. Thank you, Senator Fischer.
Senator Donnelly.
Senator Donnelly. Thank you, Mr. Chairman, and thank you
for all your service.
I want to focus for just a minute on mental health
assistance. I appreciate all the efforts of all the Services in
trying to get this right.
General Grass, the National Guard is limited in its ability
to provide medical treatment to its members. You cannot access
the Defense Health Program's funding and have to use operations
and maintenance funds. Does this impact the quality of mental
health support that you can provide for your members?
General Grass. Senator, we have 167 trained mental health
clinicians across the States. Those are primarily in the State
headquarters as well as in the flying wings. Thanks to
Congress, we got a $10 million plus-up for this year. We have
been able to bring on additional clinicians that we can put in
the high risk areas. That has been very helpful.
My concern is probably more looking to the future and
especially as we bring men and women off of Active Duty into
the Guard that maybe have had multiple deployments and they are
coming back to their hometown and will we be able to expand and
provide the health care they need, as well as our own men and
women. In the past, we have had a 50/50 split on prior service
and non-prior. During the war, that actually went down to a 20
percent prior service and 80 percent non-prior. We have to
tackle this issue.
Senator Donnelly. We continue to need to do a better job of
assessing the mental well-being of our servicemembers every
year for every servicemember regardless of whether deployed or
not. This goes for Active Duty, Guard, and Reserve.
General Dempsey, I was wondering your views on conducting
annual mental health examinations or screenings for the Active
Duty and Reserve members.
General Dempsey. We have programs in place pre-deployment
where we screen them. Let me ask the Service Chiefs if you
extend those into routine presence deployments. John?
Admiral Greenert. We have pre-deployment, as the Chairman
has said, and then post-deployment, we have a 30-day, 90-day,
and 6-month checks which include--I do not know that I could
call it a mental health screening but delves into issues of
mental health of our individuals. When you take that across a
spectrum--and folks deploy every 2 years or so--that is quite a
few checks.
General Odierno. We conduct assessment prior. Then we do
one during deployment, and then we do one after the deployment.
But then we are now making a part of the routine sustainment,
as we do physicals and other things, behavioral health is
becoming a part of that.
There are two things with the National Guard, if I could.
We have increased the tele-behavioral health. We have to
continue to invest in that because that then allows them from
external places to get behavioral health.
The other thing is the TRICARE Reserve Select, which is a
low-cost premium that allows them to get care. We are
subsidizing that. We subsidize that by 72 percent. That is an
investment that we have made to help them to get care outside
of the military health structure which should assist our Guard
and our Reserve in order to get the behavioral health and other
care that they need.
Senator Donnelly. You in previous hearings here had
mentioned about the possibility or the use of off-base mental
health assistance as well. That seems like in certain cases
that could be a very good fit.
General Odierno. We are trying to build a civilian military
consortium of capability that allows our soldiers and their
families to get the care. We are making some progress on that.
We are also working with many outside organizations on our
major installations in order to have this cooperative effort
because sometimes they would much rather go to someone in the
civilian community than in the military structure because of
their concern about stigma and other things. We are trying to
open that up as much as possible as we move forward.
Senator Donnelly. General Amos, I just wanted to ask you.
You mentioned 63 cents of every dollar goes to personnel, 4
percent for modernization. With that 4 percent, how modern will
that allow the Marine Corps to be in about 10 years if it
continued at that rate?
General Amos. Sir, it is part of the decision we made last
summer as we were facing sequestration. We said what is good
enough. So in 10 years, the Marine Corps will not be a very
modern Service with regard to ground tactical vehicles. It will
be modern with regard to aviation and a few other, but we will
be living with legacy vehicles in the ground tactical vehicle
arena.
Senator Donnelly. This would be for all of you, and I will
do it quick.
Is there an upper limit like on the personnel costs? I
remember, Admiral Greenert, we were at a dinner with you where
you said at some point, if things do not change, the Navy's
personnel costs will be two-thirds of every dollar and it will
be very difficult to run the operations of the Navy if that
occurs. Is there an X crosses Y point for the different
Services?
Admiral Greenert. That was at a rate that we were on at the
time, and that would notionally arrest itself. But I think what
we are suggesting is to slow growth. For the Navy, we are about
right now at about 25 to 35 percent. Now, if you add
reservists, I am talking about sailors, reservists, and
civilian personnel. We are talking about arresting it to the
area we are right now.
Senator Donnelly. Okay.
Sir?
General Odierno. For the Army, historically it is 42 to 45
percent. Today we are about 48 percent and growing, and that is
the concern we have. As the budget comes down, it will probably
grow as a bigger percentage. We are still working the numbers,
but it will continue to grow if we do not watch this very
carefully.
General Welsh. Senator, one of the concerns that I have is
that the percentage for the Air Force has stayed the same
between 2000, 2001, and today. It is roughly in the mid-30s. 30
to 35 percent of our budget is costs we pay to people. The
problem with that is we have cut 50,000 airmen during that time
frame. Our top line has gone up. We have cut 50,000 people and
the percentage of the budget we put toward those people is
exactly the same. That is the impact of the cost growth.
Senator Donnelly. Thank you very much, Mr. Chairman.
Chairman Levin. Thank you, Senator Donnelly.
Senator Ayotte.
Senator Ayotte. Thank you, Mr. Chairman.
I want to thank all of you for your leadership in the
military, for your extraordinary service to our country during
challenging times.
I just have a comment up front, and I want to echo the
comments that Senator McCain made. This really is about
sequestration. As we look at these issues in terms of
compensation and also the readiness issues and challenges that
you are facing right now, it seems to me that when we look at
the overall budget, taking it out of the DOD realm, 60 percent
of what we are spending our Federal dollars on are on mandatory
spending, entitlement programs, that if we do not get together
collectively as a Congress and address the bigger picture in
the budget, then those programs, by the way, go bankrupt but
also it continues to squeeze out the priorities in terms of
defending this Nation at a very challenging time.
Sequester, let us not forget, was set up to be something
that would never happen, and yet, here we are. I think that we
need to show an iota of the courage that our men and women in
uniform do every day and really address the big picture problem
here with sequester because we are going to continue to face
this down.
As I look at it, the one thing that worries me is that when
we went though the cost-of-living adjustment (COLA) discussion
in the budget agreement, there seemed to be somewhat of a
disconnect that there were comparisons made between civilian
personnel and the sacrifices that our men and women make every
day. When you are married to someone in the military and you
have to move around, you cannot have the same career as someone
who is on the civilian side. When you are missing those
weekends, those holidays, it is not the same. You cannot make
those comparisons, and we cannot lose sight that the 1 percent
of this population, the men and women in uniform who go out and
defend the rest of us, that the sacrifices they made are very
different.
What I would like to make sure of is that we do not lose
sight of that as a Nation and that we actually hopefully can
get this Congress to the place where we are taking on the big-
picture, hard questions that need to be taken on so that we do
not diminish the best military in the world.
That is my comment upfront, and I know that many on this
committee share those sentiments and really what we need to
address if we want to make sure that our men and women in
uniform are supported and the defense of this Nation is sound.
I want to ask, in particular, just real quick to follow up
on what Senator McCain had asked General Odierno. Just so we
are clear on the A-10, our men and women on the ground--do they
have as much confidence in the F-16 in terms of the CAS mission
as they do in the A-10?
General Odierno. If you go ask people on the ground, they
will tell you that they believe in the A-10. They can see it.
They hear it. I think a lot of times they are not aware of the
F-16 as much because it is not actually visible to them. If you
ask them on the ground, they are very clear that they----
Senator Ayotte. Do you believe the F-16 is the equivalent
of the A-10 on the ground in terms of re-attack times, in terms
of ability to go low and slow in terms of survivability in
those real close settings?
General Odierno. They both have very different
capabilities. They both can conduct the missions, but the A-10
has certain characteristics that enable them, visual
deterrence, able to see, the type of munitions. But the F-16
also has been capable of developing and delivering.
Senator Ayotte. Let us be clear. The F-16 is not the
equivalent of the A-10 when it comes to the CAS mission on the
ground. Is it?
General Odierno. It is not the same.
Senator Ayotte. General Amos, would you disagree with that?
Is the F-16 the equivalent of the A-10 in terms of CAS on the
ground?
General Amos. Senator, I cannot comment on the F-16. I can
comment on the F-18, and the marines would rather have F-18s
overhead than A-10s. I will say that caveated. During Operation
Iraqi Freedom-1, I had 60 F-18s, 72 Harriers, and General
Mosley gave me a 100 sorties of A-10s every day. It was a nice
blend. The A-10s in those days were nonprecision. I think that
is taken care of now. I think they have precision systems.
Senator Ayotte. They are precision guided now.
General Amos. Yes, and so they have all that. That makes
them the better platform.
I think it is a blend. But if you ask the marines on the
ground, they would rather have their F-18s and the Harriers
overhead. That does not mean they did not appreciate the hell
out of the A-10s, and I know for a fact that they did.
Senator Ayotte. I guess my question is do you think that
the F-16 is the equivalent of the A-10 on CAS. Yes or no?
General Amos. Senator, I do this for a living, and I think
they are two completely different platforms with overlapping
missions. Now, one is very old. The other one is not quite so
old. I think what you would probably like to do is have a
blend, if we could afford it. We are at a point right now where
we are trying to make decisions on what we can afford and
modernization.
Senator Ayotte. Well, it seems to me when I think about
what the men and women in uniform on the ground have told me
when I visited Afghanistan, we should be able to afford what
they believe is the best CAS platform, especially given the
cost per flying hour and what we have previously invested in
the A-10.
I have a question for the whole panel that I really think
we need to get to the bottom of. When we add up the fiscal year
2014, fiscal year 2015 pay caps, and the proposed BAH pay
reductions, the reductions in commissary savings, and the new
TRICARE fee structure, the Military Officers Association of
America (MOAA) has given us an estimate that an E-5's family of
four would experience a loss of about $5,000 in purchasing
power annually, thinking about their overall compensation
package as opposed to just pay or one area.
Do you all agree with that estimate? Have you done the
analysis in terms of thinking about our junior enlisted
officers and what it will mean for them in terms of these
proposals on a gradation? Because I have not yet seen that.
Perhaps you produced it, but I think it is important for us to
see especially for thinking about the sergeants in our Army and
our Marine Corps, the staff sergeants, the petty officers 2nd
class, all of those who are really at the junior enlisted level
who are making a lot less money. Some of them, unfortunately,
in some instances I know in the past have been on--it is a
shame, but have been on food stamps and other things. I think
those numbers are particularly important for us to see.
General Dempsey. Senator, we will take it in general for
the record and give you--we do have that data. The Chief of
Naval Operations (CNO) actually has the specific answer to that
question that you asked.
[The information referred to follows:]
We do not agree with the Military Officers Assocation of America's
(MOAA) estimated impact of the Department's pay and compensation
proposals on junior enlisted servicemembers.
- Baseline: MOAA is inconsistent in base lining each proposal.
For example, MOAA depicts the total impact of the BAH and
Commissary proposals, which are not fully implemented until
fiscal year 2017, but only depicts the impact of slower Basic
Pay raises in fiscal year 2014-2015.
- Timeframe: MOAA includes the impact of the 2014 pay raise,
which was less than the employment cost index. Analysis should
be bounded by the PB15 horizon (fiscal year 2015-2019).
- Assumptions: The impact to the servicemember varies based on
the underlying assumptions, including: dependency status, years
of service (YOS), health care usage, and shopping habits. In
fact, of all the PB15 pay and compensation proposals, the
commissary impact is the most sensitive to varying assumptions.
- YOS. MOAA depicts an E-5 with 10 YOS. An average E-5
has about 6 YOS.
- Family Size. MOAA depicts a family of four. The
average servicemember has a family of three.
- Commissary. MOAA assumes 100 percent commissary
usage, resulting in annual savings of $4,500. The
average servicemember does not shop exclusively at the
commissary and independent analysis shows the
commissary may only save the average servicemember
$600-$2,250 annually.
The below table depicts the OSD estimated average monthly increase
in pay and benefits from (fiscal year 2014 to fiscal year 2017) after
implementing all the PB15 pay and compensation proposals.
----------------------------------------------------------------------------------------------------------------
E-3 (2 E-4 (3 E-5 (6 E-6 (12 O-1 (<2 O-2 (3 O-3 (6
YOS) YOS) YOS) YOS) YOS) YOS) YOS)
----------------------------------------------------------------------------------------------------------------
Single............................. $98 $107 $135 $167 $128 $186 $230
Family............................. 52 62 0 35 81 133 185
----------------------------------------------------------------------------------------------------------------
Assumptions:
Single:
- No dependents
- Shops at the commissary 80 percent of the time
Family:
- E-3-E-4 & O-1-O-3: servicemember is married with no children
- E-5-E-6: servicemember is married with two children
- Shops at the commissary 80 percent of the time
Admiral Greenert. If you look at the literal pay today--
this is an E-5 in the Navy, about 6 years in the Navy, three
dependents--they make $64,300. I will back this up. In 2019,
which is at the end of this pay period we are talking about,
they would make $76,000. Now, that gives them inflation. If you
look at buying power, to be straight with you, they get about a
4 percent loss in buying power as a result of this. That is
about $2,500, not $5,000. Does that make sense?
Senator Ayotte. Yes. Basically you would say that the
estimate that MOAA gave us--your estimate would be half that.
Admiral Greenert. Yes, ma'am.
Senator Ayotte. I appreciate that. I just think it is
important for us to understand in the buying power dollars
because that is how families operate. It is the junior enlisted
level that really are going to have the toughest time with
this, and I want to understand that.
General Amos. Senator, on the commissary issue, which is a
sore point for me personally, DECA advertises 30 percent
savings across the market for us out there right now. They are
saying that as we go down and we put these efficiencies in,
this over $1 billion worth of efficiencies over time, it is
going to go down to 10 percent savings. That is a 66 percent
drop in savings for my marine. I do not like that. I do not
think that is the solution set. I think the solution set is to
force DECA to become more efficient and figure out how to do it
and do not put that burden on the backs of our young enlisted
marines, our lance corporals, our sergeants, our airmen, or
seamen.
I think the commissary piece is important. We do not need
to turn our back on it. But I think we are going at it the
wrong way. I think we need to force DECA to do some of the
things that the Services have had to do over the last year to
try to live within our means, if that makes sense.
Senator Ayotte. It does.
Thank you all. I appreciate it. I know I am beyond my time.
Chairman Levin. Thank you, Senator Ayotte.
Senator Hagan.
Senator Hagan. Thank you, Mr. Chairman.
Mr. Chairman, I just wanted to express my thanks to
Commandant Amos for his incredible leadership over the marines,
as well as your wife, Bonnie, for all that she has enjoyed and
been through over these so many years. Thank you for your
steadfast dedication to our Marine Corps, to our country, and
to the State of North Carolina.
General Amos. Thank you, Senator. I will pass that on to
Bonnie.
Senator Hagan. Please do.
We certainly face difficult decisions in fiscal year 2015,
as we all know and have been discussing. It is something that
this committee will be closely examining in the coming weeks as
we consider the NDAA. Looking ahead, however, we also face the
return of sequestration in fiscal year 2016 and beyond.
North Carolina, as all of you know, has one of the largest
military footprints in our Nation. I am particularly concerned
about the effect that it would have on our servicemembers. I am
committed to finding a balanced solution that is going to put
an end to sequestration in future years.
My question, General Amos, with this likely being your last
appearance before our committee as commandant, I am interested
in your most blunt view of the impact that the return of
sequestration would have on our Marine Corps in the future.
General Amos. Senator, just trying to pull the figures
out--we have testified on this so many times on this in the
past. There is absolutely no doubt in my Service and in
particularly your State. You are going to go from almost 50,000
marines, a little bit more than that, down to just about 41,000
marines in your State alone, all as a result of the force
drawdown, which is driven a lot by sequestration. It is not
dollar for dollar, but it is significant.
I think more importantly than that is you are going to take
a force whose raison d'etre is to be ready today, to go
tonight. We will continue to do that for about 2 more years,
but if sequestration returns in 2016, then you are going to see
the readiness of those units that are designed to and assigned
to be ready tonight--you are going to see the readiness in
those units fall under sequestration. We have not even talked
about modernization, equipment, and all that other stuff. Just
the operation and maintenance, the training readiness, the
ranges, the ammunition, the fuel, the ability to train those
young marines is going fall starting in about 2 years.
Senator Hagan. That is certainly one of the very reasons
that I think it is very important that we take notice of this.
We listen to what you all have to say and we certainly work
very hard together to be sure that we can stop sequestration.
General Dempsey, as I am chair of the Emerging Threats and
Capabilities Subcommittee and I am concerned about how, once
again, the continued sequestration could affect our ability to
meet the challenges in the future, if sequestration returned in
fiscal year 2016, what threats concern you the most in terms of
our ability to be prepared?
General Dempsey. I think three things, one I mentioned to
Senator Blumenthal, which is the uncertainty that will persist
within the force, and that is going to have issues in the human
dimension. These are real people we ask to do this work. We owe
them a little certainty in their lives.
Second, it will affect our ability to maintain forward
presence to the degree we believe we should. When we are
forward, we deter our adversaries and we reassure our allies.
If we have fewer forces forward, we will be less deterrent and
less reassuring to our allies.
Third, as General Odierno mentioned, should a contingency
arise, we will have less in readiness back here to flow forward
to respond to that crisis.
Those are the three things I would suggest we should take
very seriously. In the aggregate, they define a level of risk
that at sequestration levels we believe to be unacceptable.
Senator Hagan. Thank you.
I did want to ask a question similar to what Senator Ayotte
was talking about in her last question. Unlike the private
sector, where most companies can easily recruit mid-level
employees, in the Armed Forces we do not have an alternative
but to build and develop our mid-grade officers and non-
commissioned officers from within. As our servicemembers reach
that midpoint of their careers, they are making these critical
decisions about whether or not to make the military a career.
These officers and noncommissioned officers obviously have a
wealth of experience with multiple deployments many times to
Iraq and Afghanistan.
How do you think they will view DOD's proposed compensation
proposals? I would put this out to anybody.
Admiral Winnefeld. I can give you some numbers that are
rough numbers. We find that in retention, which is I think the
question you are asking, that a 10 percent pay increase
historically--we have had more increases over the last decade
than decreases--for first-term retention increases retention
about 10 to 15 percent. For second-term retention, it increases
at about 10 to 13 percent, and it increases career retention
about 5 percent. If you were to take a 10 percent decrease,
which is not at all what we are talking about here--we are just
talking about lowering the trajectory of increases. They are
smaller increases--presumably you would have a commensurate
effect.
I think what we are hearing from our people is that there
might be some small impact on retention but that based on the
current economy and a number of other factors, we think we are
going to be okay. We carefully considered that as we designed
these proposals to not end up with a break in retention.
Right now, the Air Force is retaining and I would defer to
the chief over there. But in 10 of 11 categories, the Air Force
is exceeding its goals. In career retention, they are at 96
percent, just as an example.
Senator Hagan. Thank you. Once again, General Amos, thank
you.
Senator Nelson [presiding]. Thank you, Senator Hagan.
Now, Senator Kaine.
Senator Kaine. Thank you, Senator Nelson.
To members of the panel, thank you for your service and
your testimony today.
I just want to associate myself with the comments about
sequestration. One of the first votes I cast when I came into
the Senate was to eliminate sequester as needless and poor
budgetary strategy. Together with colleagues, Senator Nelson,
Senator King, and others on the Budget Committee, we worked to
at least reduce the effect of sequester in fiscal years 2014
and 2015. Those of us who are on the Budget Committee, those of
us on Armed Services, many of us are going to be trying to do
the same thing with 2016 and carrying it forward.
General Dempsey, just to open my questions in this vein
about sequester, are the recommendations that are part of this
budget, including the compensation recommendations we are
discussing today, driven primarily by optimal defense strategy
or by budgetary caps imposed by Congress?
General Dempsey. This is a bundling of reform. There are
some things in there that we would have clearly wanted to do
whether sequestration was a fact or not. Then there are things
that are very clearly the result of sequestration.
We are trying to recover from 12 years of conflict, restore
skills lost, rebuild readiness, recapitalize the force. It is
really the aggregate of effects. I would certainly say that
sequestration has dramatically exacerbated our challenge. It
would have taken us 3 years or more to reset the force whether
sequestration was upon us or not, but this really exacerbates
it.
Senator Kaine. I think that is an important thing. The
optimum for the Nation would be if our budgetary decisions were
driven by our strategic choices, especially in defense but in
other areas as well. The distant second place is if we let
strategy be dictated by budget realities, but what we have
really been doing is letting strategy be dictated by budget
uncertainties, budgetary gimmicks, and that is the far distant
third in terms of the way we ought to be doing defense and
other strategy in my view.
Before I came to the Senate, the Senate agreed, as part of
the 2013 NDAA, to embark upon the MCRMC process. One of the
issues that I have just found kind of compelling, as folks have
advanced it, is regardless of the justifications for particular
compensation-type changes--and all those that you are advancing
seem to me to be good faith efforts to tackle budgetary
challenges. Nevertheless, there is an argument that is being
made that the Senate embraced a notion that there ought to be
this full-scale, 360 degree examination of these changes, and a
recommendation would be circa February 2015, and that you
should not make changes until then.
What is your thought about whether we break faith with a
commitment that we made even if these changes are made in good
faith and they are justified, if we embark on those changes
prior to the full set of recommendations from the MCRMC early
next calendar year?
Admiral Winnefeld. I think it is important to reiterate
what Chairman Dempsey said a minute ago, and that is we fully
expect the commission to take a holistic look not only at
retirement structure but also the pay structure, how do we
structure compensation for our people, what is BAH, what is
basic pay, all those sorts of things. What we are talking about
here is really tweaks to the existing structure that we would
not really expect the MCRMC to say, well, we think base pay
should be raised at this percent next year, whatever. I think
they are taking a more fundamental look at how we structure
compensation overall.
But we believe we need to get going now. We cannot wait for
this commission to report to get the savings we need in order
to give these young men and women the tools they need to fight.
We look forward to the MCRMC's recommendation on structure.
Senator Kaine. Admiral Winnefeld, is it your understanding
that the commission, just to use one example, would not be
addressing items like what should the level of subsidy be for
the commissaries? Do you think that is outside the scope of the
work that they are going to be doing?
Admiral Winnefeld. They might address the level of subsidy
there. They can address the full range of things, but our view
is their principal role is the structure of compensation. Let
us take a fresh look at how we pay our people to see if we have
this right in the 21st century. I would not want to rule out
that they would look at individual numbers, but we felt we had
all the data that we needed right now to get moving on this so
we can get the savings we need sooner to get these young men
and women the tools they need to succeed in combat.
Senator Kaine. One of the things that I think is most
important about the work that the commission does is that they
really have a great sense, kind of a scientific survey sense,
of what service men and women at all levels feel about the kind
of relative priorities of compensation and retirement items.
Senator Cornyn and I have today introduced a bill, the
Servicemember Compensation Empowerment Act, that directs them,
as part of their recommendations, to make sure that they have
done a survey. They may already be underway in surveys of that
kind, but we think that is pretty important.
Let me ask about this idea that the work of this commission
looks at structure. We had a wonderful hearing last week,
General Welsh, on the Air Force force structure analysis that
really was getting at some of these structural issues. There
are more ways to save money in a personnel system than adjust a
COLA or adjust a salary increase. The entire structure of a
Service operation is a way to find savings and promote the
mission as well. You talked about the continuum of service as
an idea within the Air Force.
Are the other Services doing things similar to the Air
Force force structure analysis, or is that more being done as
part of the MCRMC?
General Welsh. Senator, we look at our structure every
single year, and we do a comprehensive review of our structure
and how it fits and what the cost is and how it fits within our
requirements. We are constantly doing this.
We also look at optimizing the grade plate within the
structure, what are the right grades that we should have. What
is the right leader-to-led ratio? What is the right leader-to-
led ratio in the operational force versus the generating force.
We are constantly doing this assessment. Every year we look at
it anew to make sure we keep it in balance and have it right,
and that is part of this.
But we are all in different places. We are significantly
reducing end strength and structure now. We are doing about
everything we can in that area, and that is why for us it is
important to take a look at some of these other areas as well.
Senator Kaine. Admiral Greenert?
Admiral Greenert. We do a 30-year shipbuilding plan and
submit it to Congress annually and a 30-year aircraft building
plan. We roll into that the strategy of DOD and the
requirements of the combatant commanders. Then we do what is
called a force structure assessment where we balance
predominantly ships, but we look at all capabilities, our
ability to meet the combatant commanders' present requirements
and the operational plans, as well as the scenarios of DOD. We
roll those factors in. That is done every time we change the
strategy or make a tweak to the strategy and at a QDR.
Senator Kaine. Briefly, General Amos?
General Amos. Senator, we have done three of them in the
last 3\1/2\ years. The first one took over a year, a force
structure review going on right after I took this job. The last
one was in the face of sequestration last year. That designed
the force to come from 202,000 down to 175,000. Within that,
though, we looked to how we can afford that 175,000 force. We
looked at pay structure inside grade plates, that is what we
are talking about.
We are the youngest of all the Services, and so we have the
lowest numbers of what we call top-six ranks. They are the most
expensive both in the officer and the enlisted side of the
house. We look at can we make it even more less top heavy. The
answer is no because we are so lean right now at that level. We
have about 11 enlisted marines for every officer. That is the
ratio. I think it is the best.
The answer is yes, we have looked at it, and sir, we are
about where we are.
Chairman Levin. [presiding]. Thank you, Senator Kaine.
Senator King.
Senator King. We have just a few minutes left before this
vote, so I am going to try to be quick.
These hearings must drive you guys crazy. I have been
coming to these hearings with you for a year and a half.
Everybody talks about sequester and yet nobody does anything
about it. Then we are acting like sequester came from Mount
Olympus. It is self-imposed. I call it the Wile E. Coyote
budget theory. You remember Wile E. Coyote in the Road
Roadrunner cartoons? You throw an anvil off the cliff, run to
the bottom, look at the camera, smile stupidly, and then it
hits you on the head. We created this problem, and we can do
something about it. You guys must go and tear your hair out.
Perhaps not you, General Odierno. [Laughter.]
Chairman Levin. Actually he did have hair before
sequestration. [Laughter.]
Senator King. That is right.
But it is entirely self-imposed, and we act like everybody
around this committee, both parties, talks about how terrible
it is, and yet, we do not really move to do anything about it.
General Dempsey, I assume you do not want to make these
cuts that you have presented, but you have to because it is a
zero-sum game. Is that not correct?
General Dempsey. I it is certainly in our best interests to
be the best stewards of America's resources, and there are some
things we would do anyway. But as I said earlier to Senator
Kaine or to Senator Blumenthal, sequestration has made this
almost a mind-numbing experience.
Senator King. But the reality of the world that we are in
right now that you are facing--it seems to me it is a new
reality for Congress--is that it is a zero-sum game. If we do
not accept your recommendation, then that is $2.1 billion a
year, $30 billion over 5 years that has to come from somewhere
else.
General Dempsey. Absolutely, and that is why I mentioned to
the chairman if we wait 2 years, it is $18 billion.
Senator King. Your professional judgment unanimously--and I
heard on the Personnel Subcommittee from the senior enlisted
unanimously--was that this is a sensible alternative
particularly when compared to the cuts to readiness that would
otherwise have to take place. It is not a ``both/and.'' It is
an ``either/or.'' Is that correct?
General Dempsey. That is correct.
Chairman Levin. Let me interrupt, if I could, for one
second. We have a vote. We are near the end of it. When you are
done, Senator King, if you could recess this, if there is
nobody here, for 10 minutes. Senator Nelson is coming back, I
know. He has not had his first round. If you all could stay
during that recess, we would appreciate it.
Senator King. I think we can recess now, Mr. Chairman. I am
set.
Chairman Levin. We will recess until someone else comes
back, and give you folks a chance----
General Dempsey. It is the story of our life, Mr. Chairman.
[Laughter.]
[Recess.]
Senator Nelson [presiding]. The committee will come back to
order after the recess.
Senator Graham.
Senator Graham. Thank you, Mr. Chairman-designee. You would
make a great chairman.
Thank you all for being here today.
First, I would just get my advice out of the way. We have a
commission that is supposed to report back to Congress here I
think next year, and I would like to hear from the commission
before we make any real substantial changes. I understand what
you are telling Congress. You have some things that you need to
do now because of budget cuts.
Senator McCain asked a good question. Your big fear is
sequestration. I want to turn it around a bit. Even if you had
all of the money you could possibly ask for within reason,
would you still want to make personnel changes, reform the
personnel system?
General Dempsey. Yes, absolutely, Senator. We have actually
testified to that in the past. We have a new demographic.
Different things appeal to different kids, and we would want to
take a look at all that.
Senator Graham. Whatever personnel footprint you have, you
have to make it sustainable.
We are having a dilemma here. We are trying to make sure
the pay and benefits are consistent with the sacrifice, as much
as possible. It is good for retention. It is fair, and the tie
goes to the soldier, sailor, airman, and marine because if
there is a doubt, I want to give them more, not less. But it
has to be sustainable.
Now, General Grass, we have offered TRICARE to reservists
and Guard members. Is that correct?
General Grass. Yes, Senator.
Senator Graham. How has that been received?
General Grass. Senator, about 12 percent of our force has
bought into it.
Senator Graham. I think over time more will buy into it,
and I think it is a good retention and readiness tool. When we
deploy from the Guard and Reserve, sometimes we find that
health care problems are the biggest impediment to getting
people in order. Having continuity of coverage, I think, makes
sense from readiness, and as far as retention, if a member of
the Guard or Reserve could sign their family up for TRICARE, it
is a real inducement to stay in. That is an example of
expanding benefits.
When it comes to taking care of our troops, we are doing
more on the sexual assault front. Is that right, General
Dempsey?
General Dempsey. Yes, Senator.
Senator Graham. I want to applaud everybody on this panel
for taking the issue seriously. I like the way you are headed.
We are providing Judge Advocates General (JAG) to every victim.
I just think what we are doing on the sexual assault front will
pay dividends.
We have post-traumatic stress disorder (PTSD) problems. We
have suicide prevention programs. All these programs cost
money. Is that right, General Dempsey?
General Dempsey. They do, Senator, and it is money well
spent.
Senator Graham. I could not agree with you more.
On one side, you are increasing benefits based on reality
of retention and problems associated with long-term service in
a very dangerous world. On the other side, we are trying to
create sustainable pay and benefits.
From the Marine Corps point of view, what percentage of
your budget, General Amos, is personnel cost?
General Amos. Sir, it is 63 percent.
Senator Graham. Navy? Please, everybody answer that
question, if you could.
Admiral Greenert. It is about a third, sir.
General Odierno. 48 percent.
General Welsh. Sir, roughly 48 percent with the military
and civilian together.
Senator Graham. General Dempsey, one of the things that we
are looking at is prospectively maybe redesigning retirement.
You are going to wait on the commission as far as that is
concerned. Is that correct?
General Dempsey. That is correct, Senator.
Senator Graham. Count me in the camp of putting retirement
on the table, making it more sustainable, more efficient, but
still generous.
The real big issue I think is TRICARE. Is that a fair
statement from all of your perspectives?
General Dempsey. I think the big three are actually pay,
TRICARE, as well as BAH.
Senator Graham. Okay. As we look at the big three, we are
going to be looking at trying to make the pay/benefit system
more sustainable but yet still appropriate for the sacrifice.
Is that correct?
General Dempsey. Yes, sir.
Senator Graham. You are asking Congress to be a partner in
this.
General Dempsey. Yes, sir.
Senator Graham. I am asking Congress to keep an open mind
to our veterans organizations. We will listen to you. We
should, but we have to get a handle on this because over time
TRICARE becomes a larger part of the budget. Is that correct?
General Dempsey. That is correct, sir.
Senator Graham. Very much like Medicare. We are going to
have to deal with the cost of health care in a responsible way.
If we make these personnel changes and we adopt a reform
package like you just said, some kind of reform, how much do
you think it would save over time for DOD?
General Dempsey. The submission that we have currently
proposed----
Senator Graham. No. I am talking about pay and benefits. I
mean, what is your goal?
General Dempsey. I think the goal is to actually slow the
growth. As you noticed, each Service has a different model, and
each Service would probably be better able to answer that
question.
Senator Graham. What is your goal in the Marine Corps after
all these reforms, General Amos?
General Amos. Senator, right now in this FYDP, I am looking
at $1.2 billion over the next 10 years.
Senator Graham. You do not have to answer this question
today. Pick a number that you think is a sustainable cost, a
percentage of your budget, and let that be your goal. The goal
is going to be each Service is going to pick a percentage of
your budget. What do we have to do to get there? That is
running the place like a business. Personnel costs have to be
managed. Let us pick a fair amount of the budget to go to
personnel, understanding that is the heart and soul of the
military. They have to be well taken care of. Their families
have to be well taken care of, but it has to be sustainable.
Now, I will end with this. Once you put all these numbers
together, can you please, for the 555th time, tell Congress
that no amount of personnel reform is going to save the
military from being a hollow force if you do not fix
sequestration. Is that still a true statement?
General Dempsey. It is truer today than the last time we
had this conversation.
Senator Graham. Does everybody agree with the Chairman's
assessment?
General Odierno. Yes, Senator.
Senator Graham. Let the record reflect everybody nodded in
the affirmative.
Thank you.
Chairman Levin [presiding]. Thank you, Senator Graham.
Senator Hirono.
Senator Hirono. I got back just in the nick of time.
I start by thanking all of you for your service, of course.
I join my colleagues in saying that we need to get rid of
sequestration because it has done so much damage to our
readiness and other aspects of the military. I am with my
colleagues who are going to commit ourselves to getting rid of
sequestration.
I have a question for General Amos regarding the
commissaries. That is something that our service people
understand. Their families go to the commissaries. They know
what the price differentials are. General Amos, you said that
we should force DECA to become more efficient rather than
raising the prices so that the differential becomes so much
less. I am completely in agreement with you.
Does that mean that you know of examples, or perhaps any of
the other chiefs? Do you have examples of where commissaries
need to find efficiencies? What is inefficient that they are
doing that they should just address right away in your view?
General Amos. Senator, first of all, you are absolutely
correct on what our families are saying. The commissary issue
itself is radioactive. Again, our efforts never even suggested
closing commissaries. That was never on the table and it is
still not today for us.
But we have already talked about some of the efficiencies.
Admiral Winnefeld talked about that.
Senator Hirono. Excuse me. Are you talking about the
generic drugs?
General Amos. Yes.
Senator Hirono. I completely agree with you on that. I
cannot understand why we do not allow generic drugs to be sold
in our commissaries.
Admiral Winnefeld. It is not just drugs. It is generics
across the board. I used the drug example because I could
compare it to the exchange, which does not sell food. But there
are similar stories across.
Senator Hirono. Thank you for that clarification.
That is a change that should occur, and you are saying that
you cannot do it on your own, that it would require some change
in the law?
Admiral Winnefeld. That is our understanding. We would like
to see it happen. I can give you the example. I went out
because my knees hurt and I use ibuprofen. I went out in town
to a chain store. $8.99. The commissary sells it for $7.98, a
pretty good deal. But the chain store sells a generic for
$4.49, and the exchange sells it for $2.10. I think that there
are some substantial savings that we could put right back in
our people's pockets that would easily offset at least a
portion of any subsidy.
Senator Hirono. I agree with you. That sounds like low
hanging fruit that we ought to pick immediately, if not sooner.
General Amos, do you have any other areas where you can see
efficiencies by our commissaries?
General Amos. Senator, I do not have specific areas, but I
will just say this across the board. Years ago, the Marine
Corps exchange--and I think it was that way in the other
Services as well--received what they called appropriated funds.
In other words, they were subsidized so they were not forced
into making good business decisions. It is a little bit like
Senator Graham was just talking about being a good steward of
your money. That is not the case here. This is a subsidized
institution, and I think it is time to change that. I think it
is time to force them to go back and do things economically.
Now, economically in my mind does not equal taking the 30
percent savings away from our families. That is not what I am
saying. I am saying figure it out. We cannot sit at a hearing
and understand all that that means. But I am confident that
they can, the same way that our Marine Corps exchange did years
ago. You can go the Marine Corps exchange today and you still
get a pretty good bargain.
Senator Hirono. I agree with you because in earlier
hearings, the number of the savings or the price differential
would go down to only 10 percent instead of 30 percent. That
sounded like that was going to be the result. But now you are
saying that, no, there should be some other avenues before they
start raising those prices. I completely agree with you. I hope
we are all on the same page on that.
Admiral Winnefeld. Ma'am, one of the things that I
mentioned in my opening statement was that we exempted the
commissaries from the 20 percent staff cuts that the rest of us
are taking. We did that to help them with the first year's $200
million. I am not even going to suggest that they could make 20
percent. They have to run their enterprise. It is a
distribution network and they have stores they have to man. But
we think they ought to look there. Certainly it is one of the
efficiencies that you talked about.
Senator Hirono. General Dempsey, you said that for you to
come up with the kind of suggested savings in personnel costs,
it was a 1-year process, and it included most senior officers
and enlisted leaders and select mid-grade servicemembers. That
says to me that the vast majority of our servicemembers are not
aware of your suggestions. Maybe you are doing some things to
get the word out because I think it is really important to
educate our servicemembers, explain to them that the cuts that
are being made are not mainly coming on their backs because it
begins to feel like that if their housing allowance is not what
it is or that the commissary prices are going up or that their
pay is slowing down.
I think it is going to be very important, as we go forward,
knowing that these cuts represent just a smaller percentage of
what personnel costs actually represent, 30 percent versus
these cuts, 10 percent. I think it is important to get the word
out to the servicemembers because, believe me, if that does not
happen successfully, I do think that we are going to start
hearing from our constituents and pretty soon it is going to be
hard for us to support these cuts.
Can you tell me what you all are doing to get the word out
so that we know we are all in the same boat here?
General Dempsey. All of us and those behind us and those at
every echelon of command are engaging our population on this
very subject. Whenever I travel--and I travel quite
extensively--I will always hold a townhall meeting. This is
always a topic of conversation.
I offer the chiefs the opportunity to elaborate, if you
would like.
General Welsh. Senator, Chief Master Sergeant of the Air
Force Cody and I have been visiting Air Force bases all over
the world. Like the Chairman, we hold large audiences and
forums everywhere we go. We talk about this subject every time.
We take questions about it. We answer concerns. We make sure
they understand what the proposals are and what they are not.
Our force is actually aware of what is going on. I do not think
you will find any individual who says he likes the idea of
anybody slowing cost growth if it benefits their family, but
they also will tell you that they would really like to have the
best tools in the world. They really would like to be trained
better than anybody else, and they take great pride in being
the best in the world at what they do. If they cannot do that,
they will find other employment.
Senator Hirono. That is reassuring. Thank you. I believe my
time is up.
Chairman Levin. Thank you, Senator Hirono.
Senator Nelson.
Senator Nelson. Thank you, Mr. Chairman.
General Dempsey, some have suggested that instead of the
recommendations on changes in military compensation, that we
should cut the civilian workforce. Some estimates are that you
would need to cut 100,000 in the civilian workforce. Do you
believe that cuts of that magnitude of civilian workforce is a
feasible alternative?
General Dempsey. No, I do not, Senator. In fact, it has
been our advice in these conversations with DOD that the
reductions in the size of the end strength of the combat power
of the Nation should be matched by a commensurate reduction in
the overhead of DOD and it includes out into what we call the
fourth estate, the defense agencies. Secretary Hagel has
directed a 20 percent reduction across the board. But I think
that would devalue the contribution of the civilians who are
our wing men and foxhole buddies and swim buddies in this
enterprise.
Senator Nelson. Mr. Putin continues to be very aggressive,
and whether it is uniformed personnel on the border of Ukraine
or whether it is the non-uniformed people that are proxies that
are stirring up things inside, he has now moved on Odessa.
What can you share publicly are the plans of the U.S. Armed
Forces, as well as the North Atlantic Treaty Organization
(NATO), with regard to this aggressive action by Russia?
General Dempsey. What I can say publicly, Senator, is that
the United States has three instruments of national power:
economic, diplomatic, and military. They are all being applied
to this challenge of an assertive and aggressive Russia. The
military instrument at this point with regard to the Ukrainians
is support in terms of nonlethal assistance, intelligence
sharing at some level. The military instrument is principally
involved in reassuring our NATO allies by the deployment of
additional resources, the deployment of planners, the conduct
of exercises to assure our NATO allies that we will live up to
our Article 5 responsibilities under NATO.
Senator Nelson. An example of that would be the F-16s that
you recently sent to Poland.
General Dempsey. F-16s to Poland, an increase in ship
presence, deployment of company-sized elements out of the 173rd
Airborne out of Vincenza into the Baltics and Poland. Yes, sir.
Senator Nelson. Thank you, Mr. Chairman.
Chairman Levin. Thank you very much, Senator Nelson.
Senator Sessions.
Senator Sessions. General Dempsey, thank you and thanks to
all of you for your service. You have been given a thankless
task. You have led us magnificently in combat. All of you have.
I know how many hours you work.
When people think about how much you should pay a person in
the military, often they forget there is no overtime. There are
weekends and full deployments of months at a time often in
dangerous areas that we are asking them to go. I do believe
there is a bond that the American people must have with those
we send into dangerous places--and we ask them to leave their
families for an extended period of time--that cannot be broken.
I think that is fundamental.
Now, I had to leave to go to the Budget Committee where I
am ranking member. I am seeing this from both sides, and I know
how much of a danger this Nation faces from the debt. The
Congressional Budget Office director, Mr. Elmendorf, told the
Budget Committee a few months ago that last year we spent $221
billion on interest. That is about half the defense budget. We
get nothing for that. It has to be paid first. He projects,
however--and this is a dangerous thing--by 10 years from today,
we will pay $875 billion in interest in 1 year. That is a $650
billion increase in the amount we are paying for interest over
this period of time. We had the Secretary of Education before
us, and I told him it is going to threaten your education
budget.
First of all, I think DOD is taking this seriously, and I
respect you for it. I am totally of the belief that you are
being asked to do more than any other department in the
Government is being asked. I think the numbers will show that.
But it is a huge department and we have agreed to certain
budget limits on spending, and we need to adhere to them.
Relief was given in Ryan-Murray earlier this year, and I am
hopeful that that would be sufficient, that we could get
through this period with the help from that act. Maybe not. We
will just have to hear from you.
This really worries me. It keeps me up at night. It is the
toughest thing that causes me frustration because the President
is also saying if we increase any spending for DOD, we have to
increase non-defense spending an equal amount, doubling the
amount so it busts the budget that he signed. He is the
Commander in Chief. You would think he would be here more
forcefully advocating priorities that need to be set.
General Dempsey, you have heard former members of DOD and
others question the number of civilian personnel. I believe
Senator Nelson mentioned that earlier. One estimate that I
heard that I think is accurate, that since September 11, we
have added about 100,000 civilian personnel. That was
presumably to support an increase in Active-Duty Forces which
was considerable, but as those Active-Duty Forces return to a
level, which I understand your plans call for--returns to a
level of what it was in 2011, why should we not be able to
reduce civilian personnel by 100,000?
General Dempsey. Senator, there are three groups of
individuals, all of whom make up the total force, and that is,
of course, the service men and women, civilian DOD employees,
and then contractors. Contractors will take a more significant
cut followed by the DOD civilians and the uniformed military.
Senator Sessions. But on a percentage basis, General
Dempsey, personnel--will you not be reducing military uniformed
personnel in a bigger percentage than civilian?
General Dempsey. That will probably vary slightly. Not
slightly. It will probably vary Service by Service.
But you do know, Senator, that 90 percent of the people we
are talking about are not in Washington, DC. They are out in
shipyards and depots and training areas. They are doing
important work.
If I could, sir, I think maybe one of the Service Chiefs
would want to talk about that aspect of the way they build
their force.
Senator Sessions. Let me just say I fully respect their
contributions, and many of these are former military people.
They will deploy. Many of them from Alabama were in Iraq and
Afghanistan during hostilities assisting the military in their
mission. However, it may be a bit harder personnel-wise to
reduce a civilian employee as compared to a military employee.
As for me, I do not think that should be. I think we should
make sure that civilian personnel face the same evaluations
that uniformed people do.
General Dempsey. I agree with that, Senator.
Do any of the chiefs want to talk about the civilian aspect
of this?
General Odierno. Senator, in the Army, we are reducing. As
the Chairman said, there is a triad of military, civilian, and
contractors. The military is much easier because it is a
billet, it is a face. It is very easy to understand. But we
have also cut the budget on our contractors. We have cut the
budget on our civilians. That is what controls the number of
civilians and contractors, the number of dollars allocated. We
have come down about 20,000 civilians so far in the Army, and
that will continue to come down at a rate equal to what our
military members will come down as we continue to look at out-
year budgets.
We are also looking very hard at reducing our contract
support to our sustainment and maintenance and try to do more
with uniformed personnel, and we are looking at that very
carefully.
We are also looking at the contracts we have that we think
are more service-related that can be done by others.
If, for example, I cut contracts and installation, then I
have to use borrowed military manpower. It is one or the other
because it still has to get done. If I cut the contracts for
cutting grass and doing other things, then I have to have
military cut the grass. I have to have them work in our dining
facilities. I have to have them do these other things that
contractors have been doing. It is all things that have to get
done.
We can cut contractors and we will. We will cut some of our
civilians, but some of them we cannot because they are too
valuable, as you mentioned, to everything we do. But if we do,
the military is going to have to take over some of those
responsibilities. It is just stuff that has to be done.
Again, I would just throw out there right now we are not
reducing any installations because there is no BRAC. We are
reducing 150,000 men and we have to sustain these
installations, and it costs us a lot of money. We have to hire
contractors. We have to hire civilians. If we cannot do that,
we are going to have to use borrowed military manpower to do
it. That is the bottom line.
Senator Sessions. Thank you. I will submit some questions
about the numbers. But my impression is that you are having a
larger percentage of reduction in uniformed personnel than we
are in civilian personnel, and I am troubled by that.
Chairman Levin. Will you give us that Service by Service
for the record? Thank you.
[The information referred to follows:]
General Odierno. The Army's programmed and projected reductions
across the Future Years Defense Plan (FYDP) for fiscal years 2015-2019
are as follows. The fiscal year 2011 data is provided for comparison
only.
----------------------------------------------------------------------------------------------------------------
Fiscal Year
-----------------------------------------------------------------------
2011 2015 2016 2017 2018 2019
----------------------------------------------------------------------------------------------------------------
Active Army Personnel................... 565,463 490,000 470,000 450,000 430,000 420,000
ARNG Personnel.......................... 361,561 350,200 336,300 328,900 321,500 315,000
USAR Personnel.......................... 204,803 202,000 195,000 190,000 185,512 185,000
Civilian Full-Time Equivalents.......... 260,929 238,300 229,558 225,084 219,043 218,681
----------------------------------------------------------------------------------------------------------------
Admiral Greenert. The Navy has planned modest reductions in active
and Reserve component military end strength (700 E/S, 0.2 percent) from
fiscal year 2014 to fiscal year 2019. Conversely, the Navy is reducing
Navy Secretariat and Service government civilian full-time equivalents
(FTE) by 3,800 (2 percent). In addition, our fiscal year 2015
President's budget aggressively pursues contracting efficiencies and
proposes a collection of business transformation initiatives, including
contractual services reductions (about $14.8 billion FYDP).
In the Navy, the factors used to determine appropriate military
end-strength and contractor/civilian FTE levels are different. Military
end strength is directly tied to force structure, or the number of
ships, aircraft and equipment the Navy has to staff. The Navy mans
equipment, vice other Services that equip their manning. Contractor/
civilian FTE levels are more aligned to business operations, which are
not directly tied to force structure. For example, as the Navy builds
ships with more advanced systems that require smaller crews, military
end strength may decrease, but contractor/civilian FTE levels may
increase as the ship will require more complex maintenance work in the
shipyards. Thus, I feel that the planned military end-strength and
contractor/civilian FTE levels are right for the Navy, but they are
largely independent from each other, so there is no right ratio.
General Welsh. From fiscal year 2014 through fiscal year 2019 we
anticipate an overall reduction of 4.9 percent of Air Force Total Force
military personnel, with a reduction of 3.4 percent of our civilian end
strength during this same period. This equates to an overall Air Force
reduction of 4.5 percent in our total workforce. While the percentage
of change between these types of manpower is relatively comparable, the
Air Force did not target either of these segments specifically. Rather,
the Air Force looked at headquarters and whole systems and/or weapon
systems to find the means of achieving the fiscal savings driven by the
Budget Control Act targets.
The Air Force's fiscal year 2015 budget submission aligns program
priorities and resources with fiscal realities and will drive the Air
Force to become smaller. The resultant personnel reductions are tied
directly to the divestiture of weapons systems, headquarters
realignments, and a rebalancing of aircrew-to-cockpit ratios in a post-
Afghanistan environment, the majority of which resulted in military
reductions. Efforts to downsize our headquarters activities allowed the
Air Force to plan civilian reductions.
Absent changes in Base Realignment and Closure and Depot
legislation, the Air Force will be hindered in finding additional
civilian personnel savings. In the last four budget cycles (i.e.,
fiscal year 2012 PB, fiscal year 2013 PB, fiscal year 2014 PB, and
fiscal year 2015 PB), the Air Force has reduced its civilian workforce
by 25,000 billets. These reductions, along with a 3-year pay freeze,
furlough, and government shut-down, have significantly impacted the
civilian workforce. Arbitrary, non-programmatic reductions to the
civilian workforce would be untenable and would severely compound
readiness shortfalls.
General Amos. The optimal Marine Corps Active-Duty Force remains
186.8K with a commensurate civilian workforce of 17.5K full-time
equivalents (FTE). In the PB14 submission, the Marine Corps accepted
risk in the Active-Duty Force and was funded at 182.1K. Solely as a
result of the fiscal constraints, particularly with the continued
threat of sequestration or a significantly reduced top line, the PB15
submission reflects the Marine Corps' plan to draw down to an active
duty end strength of 175K and a civilian workforce of 15.7K FTE by
fiscal year 2017. This equates to a 6 percent and 10 percent reduction
respectively from our optimal force structure requirements. While the
Marine Corps will continue to support the President's National Security
Strategy, the Defense Strategic Guidance, and posture to meet steady
state forward presence and crisis response requirements around the
globe, it comes at the expense of risk to major combat operations,
infrastructure sustainment and equipment modernization, and increased
stress on the force.
Chairman Levin. Senator Gillibrand?
Senator Gillibrand. Thank you, Mr. Chairman.
Thank you all for your service. Thank you for testifying
today before our committee. I am very grateful.
Obviously, these are very tough times, and we are all
concerned about how to manage our mission and operations to the
best of our abilities. As the chairman of the Personnel
Subcommittee, I am very worried about tradeoffs we are making
in terms of military families, particularly those who are the
lowest paid.
General Dempsey, you mentioned in your opening statement
that you are unable to retire weapon systems that you no longer
need and cannot afford. Can you tell us more about these
systems and what kinds of savings you could find if you do
retire them? Every time we pass a budget in Congress, it is all
about priorities. I want to hear a little bit about that as a
source perhaps for funding for things that we think are higher
priority.
General Dempsey. Yes, thanks, Senator. I would like to take
that one for the record as well.
[The information referred to follows:]
The attached document was provided to Senator Gillibrand's office
on 19 May via a separate request.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
General Dempsey. I will give you one example because it
would cross all Services. Let me take one that is not at all
controversial, the A-10. [Laughter.]
If we retire the A-10, it is $3.5 billion in savings to the
Air Force over the FYDP. If we do not, he has to find $3.5
billion someplace else. Each Service has an example of
something like that.
Senator Gillibrand. Thank you, and I look forward to your
full response on the record.
Another issue that I care deeply about--and General
Dempsey, we have talked about it, as has Admiral Winnefeld--and
that is the men and women who serve in our military and their
families and the sacrifices they make to do that. One of the
sacrifices I do not think they should have to make is not being
able to afford treatment for their kids who have autism or
other developmental disabilities. I think it is so unfair that
just because you will sacrifice everything for our Nation and
serve for our Nation that your kid, your child, who needs these
important therapies to learn, to grow, and to develop are
denied it because we do not want to make them a priority. I
think that is a mistake. I think it is morally wrong.
I would like your thoughts on what is going to happen with
regard to that process because I know we are combining all the
programs specifically for autism. I have not seen what that is
going to look like yet. But I want to know are there going to
be barriers to care for children with disabilities and
particularly autism.
Admiral Winnefeld. Senator, it is a great question. Last
time you and I dealt with this, we made a little stink over in
DOD, and I think we actually fixed that problem. But I do not
have the specifics for you. I would like to take that for the
record. I believe we are on track. If we are not, I want to
know about it because this is something that is terribly
important to us. We are on the same sheet of music here.
[The information referred to follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Gillibrand. You do not want Federal employees' kids
to have better access to care than military families' kids.
That is just not right. I do want to just raise it because it
is one of the most expensive and painful things to make sure
your child gets the education they need. A lot of the therapies
are developmental. It actually affects how their brains form
and whether they can reach the level of capacity that they can.
Thank you.
Admiral Winnefeld. I think the Assistant Secretary of
Defense for Health Affairs tackled that, but I do want to get
back to you to make absolutely certain.
Senator Gillibrand. Thank you.
Similarly, as I meet with the troops around my State, both
National Guard, Active Duty, and Reserve, the stress on mental
health access is very high. Access to mental health services to
treat PTSD and traumatic brain injury is still quite intense.
My question is as we have had a number of families coming home,
under the current TRICARE requirements, there are co-pays for
these services. Do you believe that those co-pays will cause
barriers to care specifically for the mental health of our
troops and their families?
I held a hearing to discuss the increase in suicide rates,
11 suicides a day in our military, but there is also an
increase in suicide of family members because of multiple
deployments, because of PTSD of servicemembers coming home.
Obviously, that raises serious concerns to me. I would like to
hear a little bit from any of you who want to talk about
whether you see barriers to care here.
General Odierno. If I could, I think we are doing a good
job increasing behavioral health to Active-Duty Forces, and we
are trying to get more access to our Reserve and Guard. My
concern I think is where you are headed with this--and I agree
with you--is for family members because, frankly, even under
TRICARE it is difficult to always get care covered for
behavioral health under TRICARE for our family members.
Sometimes it is accepted; sometimes it is not. Our behavioral
health rules for health care need to be looked at, especially
as we look at the impacts that the wars have had on our
families, especially our children, and that is who I worry
about significantly.
I know specific cases where a lot of out-of-pocket expense
has to be expended either because it is not covered or there is
a co-pay because they do not recognize certain treatments, and
so in my mind, this is something we have to absolutely get
after over the long term.
Senator Gillibrand. I would like your commitment that you
will work with me on this to come up with some solutions for
how best to protect our servicemembers or their families. Thank
you.
Then my last set of questions are for any who want to take
it, but what is the DOD's plan for the increased demands at the
medical treatment facilities (MTF)? Does DOD plan to hire more
medical providers to handle the increase of patients at the
MTFs? What will the impact on military families, both Active
and Reserve, who do not live near the MTFs--are they going to
be penalized for not being able to use the MTFs?
General Dempsey. I will give you a general answer. That
question probably would be best addressed to the Defense Health
Agency, and Dr. Woodson. But I can tell you that our
recommendation on our support for forming a single TRICARE
system as opposed to multiple systems that are not
interoperable with each other is to try to encourage use of
MTFs and then in-service care or in-network care and then only
out-of-network care as a last resort. That is our role, working
with Dr. Woodson because we want to make sure that while we are
incentivizing use of MTFs, for example, there may be another
process that might be trying to reduce the level of care at an
MTF. We are deeply involved in that process right now.
Senator Gillibrand. Thank you. Thank you all.
Chairman Levin. Thank you very much, Senator Gillibrand.
Gentlemen, thank you. Thank you for all you do for our
Nation, for our troops and their families.
We will now move to our second panel. We now welcome our
second panel: four so-called outside witnesses. A strange word
for folks who have been inside just about every important
military operation or thinking that we have done in the last
few decades.
Retired Army General John H. Tilelli, Jr., Chairman of the
Board of the Military Officers Association of America; retired
Army General Gordon R. Sullivan, President and Chief Executive
Officer of the Association of the U.S. Army; retired Vice
Admiral John B. Totushek, Executive Director of the Association
of the U.S. Navy; and retired Air Force General Craig R.
McKinley, President of the Air Force Association.
Gentlemen, we thank you for your past service. We thank you
for your current service to our servicemembers, the retirees,
and their families.
I believe that the order that we are calling on you is to
first call on General Tilelli. General, thank you for being
here and please give us your statement.
STATEMENT OF GEN JOHN H. TILELLI, JR., USA, RET., CHAIRMAN OF
THE BOARD, MILITARY OFFICERS ASSOCIATION OF AMERICA
General Tilelli. It is like old home week, Mr. Chairman.
Chairman Levin, Ranking Member Inhofe, members of the Senate
Armed Services Committee, thank you for the opportunity to
appear before you today to discuss the administration's fiscal
year 2015 budget affecting the entire military community. On
behalf of the over 380,000 members, Active Duty, Guard,
Reserve, families, veterans, survivors, and retirees, of the
MOAA, I have the honor and privilege of being here today to
represent them.
At the heart of DOD's budget challenge is the devastating
effect of sequestration--and we have heard that several times
today--and the BCA of 2011.
While debt reduction is a national priority, we believe
that such a disproportional share of this burden must not be
imposed on DOD and especially on the backs of the military
members and their families. MOAA believes that continued
sequestration cuts for 2016 and beyond will place national
security at risk, and we strongly urge Congress to eliminate
sequestration and fund our military to levels that enable all
components of the Armed Forces to adequately be manned,
trained, equipped, and compensated. No Federal obligation is
more important than protecting our national security, and the
most important element of national security is the sustainment
of a dedicated top-quality All-Volunteer Military Force.
The past 12 years of unprecedented demands and sacrifices
highlight how radically different Military Services' conditions
are from civilian life. These are the things that many budget
analysts and think tanks do not understand. The times the All-
Volunteer Force has been jeopardized have been due to budget-
driven cutbacks in the military compensation packages that gave
insufficient weight to the extraordinary demands and sacrifices
inherent in a service career. Yet, today we hear that Congress
must slow the growth. They state that personnel costs have
risen above 40 percent more than growth in the private sector
since 2000 and are squeezing out dollars for training and
equipment. We believe that pitting pay and benefits against
readiness is a false choice.
It is important to put the growth since 2000 in context.
The All-Volunteer Force is the key to readiness. Have costs
risen since 2000? Yes, they certainly have, but using 2000 as a
baseline without reflecting that in a historical context is
misleading as it implies that it was an appropriate benchmark
for estimating what reasonable personnel and health care
spending should be. Nothing can be further from the truth.
What caused military personnel costs to grow higher than in
the private sector? By the late 1990s, retention was on the
ropes because years of budget cutbacks had depressed military
pay to where there was a 13.5 percent pay gap. We cut
retirement value by 25 percent for post-1986 entrants. We had
military families paying 18 to 20 percent out of pocket for
housing costs, and we moved beneficiaries over 65 out of
military health care facilities.
This committee worked diligently--and I thank them for
that--over the next decade to restore pay comparability, repeal
our retirement cuts, zero out housing costs, and restore
promised health care coverage for older retirees. We thank you
and all the members thank you.
Since 2010, Congress has already implemented changes to
slow the growth. In fact, the growth has slowed. These have
included significant health care fee changes, end strength
reductions, pay raises that have either mirrored the private
sector or in the case of this year, have been capped below the
private sector. The fact is that between 2000 and 2011,
personnel and health care costs experienced an average 7.8
percent rate of growth, but that cost was essential to keep the
previous commitments and avoid retention and reenlistment
issues and from breaking this All-Volunteer Force.
However, between 2011 and 2014, personnel cost growth has
not just slowed, it has declined an average of minus 1.5
percent per year, according to the Office of Management and
Budget historical tables. The growth has slowed. In fact, it is
negative at this point. When you look at the DOD military
personnel costs, which include military personnel and the
defense health program, these costs average 30 percent of the
overall DOD budget.
Between 2014 and 2015 pay caps, the promised housing
reductions, the planned reductions in the commissary savings,
and in new health care consolidation and fees, an E-5 family of
four--that is a sergeant--with 10 years of service, looking at
the pay tables, would lose $5,000 in purchasing power. An O-3,
an Army or Marine Corps captain, not a Navy captain, family of
four would experience a loss of $6,000, that is a large
percentage of their overall pay. Contrary to when I came into
the military, we have a married force today. It is not a single
force.
MOAA believes these budget proposals would be a major step
backwards towards repeating some of the mistakes and measures
which led to retention and readiness problems in the past and
would undo the needed compensation improvements Congress put
into place since 2000 and again set us up in the future for
another parity issue that will have to be resolved.
These piecemeal budget reductions are doubly inappropriate
since we have a congressional commission that will be offering
even broader reform proposals next year.
America will remain the greatest power only if it continues
to fill its reciprocal obligation to the only weapon system
that has never let our country down, our extraordinary,
dedicated, top-quality volunteer men and women who serve our
country and the families who stand behind them.
Now that we are drawing down from Afghanistan, we cannot
place these volunteer members of our Armed Forces in our rear
view mirror. They listen. They know what is going on, and they
do not agree with these proposals.
I thank you. I look forward to your questions. I thank you
for your service to our country, and I thank you for all you
have done for our men and women who serve. Thank you, sir.
[The prepared statement of General Tilelli follows:]
Prepared Statement by GEN John H. Tilelli, Jr., USA (Retired)
Mr. Chairman and Ranking Member Inhofe. On behalf of over 380,000
members of the Military Officers Association of America (MOAA), we are
grateful for this opportunity to express our views and appreciate the
committee for hosting this hearing on the fiscal year 2015 defense
budget submission and the related personnel program proposals.
MOAA does not receive any grants or contracts from the Federal
Government.
We are truly grateful for your unwavering commitment to men and
women who defend our fine Nation and we appreciate that Congress have
given personnel issues top priority in the past decade.
You have had difficult choices to make while bolstering a weak
economy and addressing budget deficits. The past few years have been
arduous, with our military winding down operations in Afghanistan and
the Nation dealing with the effects of sequestration.
sequestration
Sequestration was thought to be so harmful that it would have never
come to pass. But it is a reality with DOD still taking a
disproportionate share of the burden.
The Bipartisan Budget Act of 2013 mitigated the sequestration
spending cuts for fiscal year 2014 and 2015. However, the original
sequestration cuts of fiscal year 2016 thru 2021 remain in effect,
continuing to place national security at risk.
This concern for readiness and national security was reinforced
during Secretary Hagel's Feb 24, 2014 press conference \1\ outlining
the fiscal year 2015 budget submission when he stated `` . . . the only
way to implement sequestration is to sharply reduce spending on
readiness and modernization, which would almost certainly result in a
hollow force . . . the resulting force would be too small to fully
execute the President's defense strategy.''
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\1\ Hagel, Chuck. ``Fiscal Year 2015 Budget Preview.'' Defense.gov
Secretary of Defense Speech: Fiscal Year 2015 Budget Preview. http://
www.defense.gov/Speeches/Speech.aspx?SpeechiD=l831.
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The Services have been forced to slash flying hours, cancel the
deployment of ships, renegotiate critical procurement contracts,
temporarily furlough civilian employees, and are in the process of
reducing force structure by some 124,000 personnel.
As a result, sequestration caused the Pentagon to submit proposals
in fiscal year 2014 that have started to reverse some of the needed pay
and benefits fixes Congress put in place over the past decade--
specifically, the military pay raise cap below the Employment Cost
Index (ECI) of 1 percent, the lowest pay raise in 50 years.
The proposed fiscal year 2015 defense budget assumes some
additional monies will be forthcoming to mitigate sequestration
impacts. However, the budget proposes additional force reductions of
over 78,000 personnel. If sequestration is not ended, additional force
reductions will likely go deeper and training and modernization will be
further impacted--further putting our national security strategy at
risk.
What greatly concerns MOAA and should concern the committee are the
fiscal year 2015 budget submission proposals that impact personnel
costs--a second year of capping the military pay raise below ECI with
the possibility of 4 additional years, increasing out-of-pocket housing
expenses for military families, significantly reducing commissary
savings, and a consolidation of TRICARE plans which will have all
beneficiaries except those in uniform paying more for their health care
while eliminating access standards.
Several of these are broken promises to our service members and
families. Fortunately the House Armed Services panel agrees and
rejected these proposals last week.
While debt reduction is a national priority, such a disproportional
share of this burden must not be imposed on the backs of military
families who already have sacrificed more for their country than any
other segment of Americans. Since the conflicts are ending we cannot
place those who voluntarily serve in the rear view mirror.
We believe Congress should end the harmful effects of sequestration
by supporting a bipartisan debt reduction package that avoids
disproportional penalties on the Pentagon and on service members and
their families.
military personnel and healthcare overview
What makes our national defense strong is sustaining a top-quality,
All-Volunteer Force. This requires a pay and benefits package that is
fundamentally different from those of the private sector in order to
induce young men and women to wear the uniform for not only one term of
enlistment, but also for 2 decades or more.
But military pay and benefits continue to come under attack. For
many years, critics have claimed military personnel costs are rising
out of control and, if left unchecked would ``consume future defense
budgets.'' \2\
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\2\ Eaglen, Mackenzie. ``There's a Storm Brewing in the Pentagon's
Budget.'' US News. http://www.usnews.corn/opinion/blogs/world-report/
2013/07/29/congress-ignores-obamas-attempt-to-rein-in-military-health-
care-spending.
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They've attacked pay, retirement, health care, and other military
benefits in hopes of diverting funds to hardware or non-defense
programs. But time and some hard experiences have proven such claims
wrong in the past--and they are still wrong today.
But with this year's budget rollout, defense leaders are suggesting
cuts to pay, the housing allowance, the commissary, and health care
stating spending on pay and benefits for servicemembers has ``risen
about 40 percent more than growth in the private sector'' since
2001.\3\
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\3\ Garamone, Jim. ``DOD Takes Holistic View of Slowing Military
Compensation Growth.'' Defense.gov News Article: DOD Takes Holistic
View of Slowing Military Compensation Growth. http://www.defense.gov/
news/newsarticle.aspx?id=121701 (accessed April 29, 2014).
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In addition, late last year there have been other alarming
statements on the glide path that personnel costs are on, such as: ``by
2025 or so 98 cents of every dollar [will be] going for benefits.'' \4\
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\4\ U.S. Senate Committee on Armed Services. ``Testimony on the
Impact of Sequestration on the National Defense.'' http://www.armed-
services.senate.gov/imo/media/doc/13-68%20-%2011-7-1311.pdf.
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[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: OMB Historical Tables 3.2
and 16.1 \5\
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\5\ http://www.whitehouse.gov/omb/budget/historicals.
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The truth is the same one-third of the defense budget has gone to
military personnel and health care costs for the last 33 years. That's
no more unaffordable now than in the past and they are just as
important.
the fiscal year 2015 budget
The fiscal year 2015 budget submission proposes several significant
pay and benefit cuts which are inconsistent with the sacrifices
exemplified by the last 12 years of war.\6\
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\6\ Department of Defense. ``United States Department of Defense
Fiscal Year 2015 Budget Request Overview March 2014.'' http://
comptroller.defense.gov/Portals/45/Documents/defbudget/fy2015/fy2015--
Budget--Request--Overview--Book.pdf.
Capping pay below the Employment Cost Index (ECI) for
a second straight year (with more planned)
Reducing Basic Allowance for Housing (BAH) by 5
percent, reversing DOD's own initiative to eliminate out-of-
pocket housing cost completed in 2005
Reducing commissary savings for uniformed service
families
Restructuring the TRICARE benefit where active duty
families and retiree beneficiaries will pay more for their
health care
The Pentagon is suggesting these cuts, in order to ``slow the
growth'' of personnel costs stating personnel costs have ``risen about
40 percent more than growth in the private sector'' since the turn of
the century. Growth has slowed significantly since 2010.
But this is statement needs to be put in the proper context.
Personnel cost growth has gone up at a rate greater than the private
sector since 2000 . . . that's true.
But using 2000 as the baseline without reflecting on the historical
context is misleading--it implies that 2000 was an appropriate
benchmark for estimating what reasonable personnel and healthcare
spending should be--it's not.
Years of budget cutbacks led to a 13.5 percent pay gap, a 25
percent reduced retirement value for post-1986 entrants, a point where
servicemembers were paying nearly 20 percent out-of-pocket for their
housing costs, and beneficiaries over 65 were completely thrown out of
the military health care system.
In the late 1990s, retention was on the ropes, and Congress was
being asked to correct these problems to prevent a readiness crisis.
Congress did so over the next decade restoring military pay
comparability (slide next page), repealing the retirement cuts,
zeroing-out member out-of-pocket housing costs, and restoring promised
health coverage for older retirees.\7\
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\7\ Department of Defense. ``Military Compensation Background
Papers (Seventh Edition)'', page 38. http://www.loc.gov/rr/frd/pdf-
files/MilitaryComp-2011.pdf.
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[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Cost growth since 2000-2001 was essential to keep the previous
compensation cutbacks from breaking the career force.
Between 2000 and 2011, personnel and health care costs experience
an average rate of growth of approximately 7.8 percent annually.
However, between 2011 and 2014, cost growth has slowed and actually
declined at an average rate of minus 1.5 percent per year.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: OMB Historical Tables 3.2
and 16.1 \8\
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\8\ http://www.whitehouse.gov/omb/budget/historicals.
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The rate of military personnel and health spending will only
decline further in the out-years due to:
Significant pharmacy copay increases which started
last year (fiscal year 2013)
Significant savings from requiring mandatory mail-
order/military pharmacy refills of maintenance medications for
Medicare-eligible beneficiaries starting this year
Savings from tying annual adjustments for Prime and
pharmacy to retiree's cost of living adjustment
Savings associated with shrinking TRICARE Prime
service areas
Significant reductions to end strength
Recent changes to the retirement system for new
entrants (COLA -1 percent provision)
Savings from sustaining pay with private sector pay
growth (ECI) since 2011
MOAA believes the proposals in this year's defense budget are a
huge step backwards repeating many of the same bad habits during past
drawdowns--cutting end strength, capping pay, and attacking benefits--
that led to the difficult retention times of the late 1990s.
Past experience of capping military raises below private sector pay
growth has proven that once pay raise caps begin, they continue until
they undermine retention and readiness--and this is the second year of
proposed pay caps with a possibility of 4 more.
One pay cap is a data point, two is a line, and three is a trend.
Six years of planned caps is definitely a bad trend and does not bode
well for the currently serving.
This proposal is not limited to pay. This ``quadruple whammy'' of
capping pay, increasing out-of-pocket expenses for housing, slashing
commissary savings, and having military families pay more for their
health care, would be major steps backward on the road towards
repeating the insidious measures which led to retention and readiness
problems in the past.
Each may seem small by themselves . . . a pay cap of .8 percent. A
5 percent out-of-pocket housing cost. Copays for family off-post doctor
visits. Reduced savings at the commissary.
However, the elimination of the $1 billion subsidy for the
commissary benefit itself will reduce the purchasing power of a
military family of four by nearly $3,000 annually.
When you add up the fiscal year 2014 and fiscal year 2015 pay caps,
the proposed BAH reductions, the reductions in commissary savings, and
the new TRICARE fee structure, an E-5's family of four would experience
a loss of nearly $5,000 in purchasing power annually; and an O-3's
family of four would experience a loss of nearly $6,000.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
These are very conservative projections seeing that it only
includes 2 years of pay caps and the new TRICARE consolidation/fees
will be very dependent on a military family's access to an MTF and
special needs.
In several recent hearings, many Service and Pentagon leaders have
stated troops are willing to accept the pay and benefit changes as long
as they can get the training and equipment needed to do their jobs--
feedback that is something we must question.
MOAA conducted a non-scientific survey in March and of over 4,700
currently serving who responded, over 65 percent were least satisfied
with their basic pay.
Additionally, in a more recent survey conducted by the Washington
Post and the Kaiser Family Foundation of post-September 11 veterans and
currently serving members, 83 percent indicated they do not favor the
Pentagon's fiscal year 2015 proposed reductions.\9\
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\9\ The Washington Post. ``After the Wars--Post-Kaiser survey of
Afghanistan and Iraq war veterans.'' Washington Post. http://
www.washingtonpost.com/politics/polling/wars-postkaiser-survey-
afghanistan-iraq-war/2014/04/02/3e8f2380-b7a6-11e3-9eb3-c254bdb4414d--
page.html.
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tricare consolidation
DOD again is proposing similar disproportionate pharmacy fee
increases and a means-tested TFL enrollment fee as they did last year
and in the past that thankfully Congress has rejected.
But it also includes a plan to consolidate the three major elements
of TRICARE--Prime, standard, and extra--into what is being
characterized as ``streamlining'' or ``modernizing.''
In this proposal currently serving families and retirees will pay
more and get less. It retains the TRICARE prime enrollment fee by
relabeling it as a ``participation'' fee yet eliminates the one element
that the enrollment fee assured . . . guaranteed access standards.
But even more disconcerting is that the proposed change includes
fees where fees never existed before and provides no discernable value.
For the first time, this proposal would have working-age retirees
paying to be seen in the military treatment facilities.
The Pentagon proposal will have military families paying more for
their health care when they have limited or no access to military
facilities.
MOAA wants to make one thing clear. The military TRICARE benefit is
by and large an excellent one.
But it has to be, in order to induce large numbers of top-quality
people to accept the extraordinary demands and sacrifices inherent in a
multi-decade military career.
Military people already pay much steeper premiums for health
coverage than any civilian ever has or ever will by serving at least 20
years in uniform--most of it paid in-kind, not in cash.
That's why assertions that military retirees pay far less for their
health care than civilians do are so aggravating to the military
community.
Defense leaders say they'll keep faith with the currently serving
on retirement reform, and would apply changes only to new entrants.
But if it's breaking faith to change the rules for someone with 10
years--or 1 year--of service, it's doubly so to impose new fees on
military families who don't have access to the MTFs as well as imposing
fees for use of the MTF on those who already completed 20 or 30,
whether they'll retire next year or are already retired.
We believe DOD must look at making the system much more efficient
instead of simply shifting costs. For example, there's still no single
point of responsibility for budgeting or delivery of DOD health care.
We've accepted mail-order requirements in lieu of higher pharmacy
copays and annual adjustments to pharmacy and Prime fees tied to
retired pay cost of living adjustments.
All of these changes we accepted will save DOD billions in the
coming years and has slowed the growth of health care costs.
Now we think it's time to develop management efficiencies that
won't impact beneficiary fees, access to care, or delivery of quality
care and simply shift more of DOD's costs onto them.
summary
In closing, Secretary Hagel stated before the fiscal year 2015
budget release that, ``Continuous piecemeal changes will only magnify
uncertainty and doubts among our servicemembers about whether promised
benefits will be there in the future.'' \10\
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\10\ Garamone, Jim. ``DOD Takes Holistic View of Slowing Military
Compensation Growth.'' Defense.gov News Article: DOD Takes Holistic
View of Slowing Military Compensation Growth.
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We couldn't agree more. Any changes to pay, compensation, and
benefits, to include health care, should be looked at comprehensively--
not in a piecemeal manner.
Since the congressionally-directed Military Compensation and
Retirement Modernization Commission has been tasked to take a holistic
and comprehensive look at the entire compensation package, and propose
broader reform proposals next year, these piecemeal, budget-driven
changes are even more inappropriate.
What's needed is to sustain pay and benefits for the men and women
in uniform and their families as well as those that have faithfully
served 2 decades or more.
MOAA remains concerned that the Pentagon is heading down a
previously taken path, repeating some of the very same mistakes that
led to significant retention problems the Nation experienced by the
late 1990s and undoing the needed compensation improvements Congress
has made since 2000 to match the extraordinary demands and sacrifices
of military service and a military career.
History shows comparability can't work unless it's sustained
through both good and bad budget times. We are still a nation at war-
capping pay and forcing troops and their families to pay more for their
housing, health care, and groceries sends the wrong message.
The most important element of a strong national security is the
sustainment of a dedicated, top-quality mid-level NCO and office force.
These changes will significantly devalue the compensation and benefits
needed to sustain those seasoned, trained, and talented troops and
ultimately have a negative impact on recruiting, retention, and overall
readiness.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Levin. Thank you so much, General.
General Sullivan.
STATEMENT OF GEN GORDON R. SULLIVAN, USA, RET., PRESIDENT AND
CHIEF EXECUTIVE OFFICER, ASSOCIATION OF THE U.S. ARMY
General Sullivan. Mr. Chairman, Ranking Member Inhofe,
honorable members of the committee, before I begin my formal
remarks, I want to thank each of you for your personal support,
certainly the three of you that I have in front of me right now
who were here when I was battling times such as this back in
the early 1990s. Senator Kaine, we appreciate your support now.
I want to note that during that time, for some reason we
seemed to have more stability primarily due to the
appropriations and authorization environment, which reflected
regular order. I always felt as if you had an open ear for me
when I came over to talk and give you a problem. Sometimes you
at least believed me and gave me more money, if you had it and
if you could get it. But you permitted us to navigate difficult
terrain without a lot of constraints such as the chiefs have
now. You set limits on funding and manpower and let us strike
the balance as we saw fit and gave us the latitude to act. For
that I thank you.
Senator Levin, I probably will not see you in this kind of
a role again. I want to thank you publicly for everything that
you have done for the Services and everything you have done for
our country.
Chairman Levin. Thank you so much, General.
General Sullivan. Thanks for the opportunity to present the
views of the Association of the U.S. Army (AUSA). This
committee has, as I said, provided extraordinary support of our
Active Duty, Guard, and Reserve, retired members, veterans of
the Army and the other Services, their families and survivors.
Your efforts are very positive and have impacted the lives of
the entire uniformed services community.
We are keenly aware that Congress and the administration
have had to make difficult choices while bolstering a weak
economy and addressing budget deficits. While we recognize that
debt reduction is a national priority, AUSA believes that a
disproportionate share of this burden has fallen on DOD.
Requiring that 50 percent of mandatory budget cuts come from
defense, even though the defense budget is only 17 percent of
the Federal budget, is in my view misguided and misdirected.
How in such a dynamic and dangerous world can such a system be
permitted to continue?
The result is that defense officials, most of the uniformed
people involved, sat at this table just 15 minutes ago--is they
are trying to find balance among readiness, training,
education, operational activities, and modernization, as well
as soldier and family program funding. Uncertain times are
demanding agility and adaptability by these defense leaders
here in Washington, as well as on the front lines wherever they
may be. After all, look at what is happening now in Eastern
Europe.
Yet, the funding policies in place that are guiding them
are so rigid and so constraining and damaging to our long-term
national security that continuing this formula for the better
part of the next decade defies logic.
AUSA and its members urge Congress and our elected and
appointed officials to eliminate sequestration or modify these
unrealistically rigid budget control measures in ways which
would enable responsible and accountable leaders to exercise
their responsibilities in a manner that is consistent with the
challenges we all face.
Now, providing for the common defense--and I do not have to
tell you, but I need to say it for the record--is a shared
responsibility among the American people, Congress, the
President, those of us in uniform, and the citizens of the
United States. Sometimes I often get the feeling that shared
responsibility is a concept which has disappeared somewhere.
Shared responsibility and accountability is what we are talking
about here, and each one of these people who sat here is
accountable to the American people. They are being asked to
make major tradeoffs in a very constrained budget environment.
AUSA believes that the primary source of the budget
challenges that face DOD is the devastating effect of
sequestration and the provisions of the BCA of 2011.
The BBA of 2013 mitigated this, as one of the chiefs
pointed out--I think it was the Chief of Staff of the Army,
General Odierno--when he said he could buy back readiness
because of the Murray-Ryan bill. However, the original
sequestration cuts scheduled for 2016 through 2021 remain in
effect and will exacerbate the situation that existed before
the Murray-Ryan bill. You heard General Odierno say that he
would see a diminution of readiness in some of those units he
brought back. It is having a profoundly adverse effect on the
defense of this Nation and it will do so well into the next
decade.
Over the last 2 years, sequestration has set America on a
path to reduce military readiness and reduced ability to secure
our national security. Sequestered budgets are rapidly
shrinking our military forces to unacceptable levels, thereby
creating unready forces. All of this while even a casual
observer might suggest that the world is more dangerous today
than it has been in recent years.
Sequestration has also reduced our military's war-winning
capabilities to unacceptably low levels and it has created
unnecessary divisiveness, acrimony, and tensions within the
Armed Forces as they struggle to meet budget goals and juggle
requirements around Active Duty, Guard, and Reserve. I believe
we must enable all components of the Armed Forces to be
adequately manned, trained, and equipped to focus on the
mission and not fighting over an arbitrarily depressed defense
budget.
One of the chiefs mentioned--there were a couple of them--
that developing three POM alternatives in a year is really
destabilizing both within DOD, and it ripples down to the field
because the people at Fort Sill, Fort Benning, Fort Hood--they
know when DOD is coming up with different alternatives for
their particular units. It has created an atmosphere of
desperation that leads to false arguments and false choices
when it comes to compensation and benefits provided to all
servicemembers and families who make up the All-Volunteer
Force.
Sequestration, by the way, also affects the defense
industrial base. Whether everybody understands that, that the
industrial base today is much different than the industrial
base which fueled World War II, the Korean War, and even the
Vietnam war. The industrial base is much more sophisticated and
diverse, and some of these weapons cannot be made overnight.
I believe the Services are being forced into a mobilization
posture, whether by design or inadvertently. But if we become
involved in any kind of a large-scale operation, we must turn
inward to enhance ourselves or to grow ourselves. That is
Active Duty, Guard, and Reserve. Interestingly enough, it took
the Active Army multiple years to create the 4th Brigade or the
101st. It does not happen overnight, and there is this great
myth, the great American myth, that you can just ring the bell
on the village green, everybody shows up, and off we go. The
world does not work quite like that anymore, if it ever worked
that way.
We must rely on the force we have in being, the Active
Duty, Guard, and Reserve, and we need a balanced force.
Sequestration is throwing that necessary equilibrium out of
whack.
Now, I would note interesting things were said this
morning. General Dempsey said if the BCA kicks back in, it will
cause unacceptable risk. Unacceptable risk he said. The Chief
of Staff of the Army and Secretary of the Army John McHugh in
their testimony last week said ``risk'' a number of times. Most
significantly, the Chief of Staff of the Army said there could
be serious risk to being able to perform his assigned missions
in the war plan.
Gentlemen, this is a huge step, and I do not believe
everybody is appreciating the implications when the Service
Chiefs and the Chairman of the Joint Chiefs says ``unacceptable
risk.'' We have to pay attention to these words. They mean
something, and they do not say these words lightly.
Not only is sequestration, being combined with the
declining defense budget, having an adverse effect on military
readiness, we are seeing an emergence of international doubt.
You can see it on the covers of The Economist this week. We can
see it in all of the national papers on whether the United
States is a reliable ally and partner. I do not want to go into
the politics of that. I do not intend to. But we must be seen
as a credible ally and a dangerous enemy. Credibility in this
context is found in the perception of strength and national
resolve to be responsive to not only our treaty commitments but
to our partners with balanced and ready forces.
Adversaries, by the way, are watching us also, and they
could make miscalculations and so forth. A credibly sized
force, not just a reasonably sized force, is what is necessary.
We must maintain a viable All-Volunteer Force.
Despite extraordinary demands, men and women in uniform
still answer the call, thanks in no small measure to the strong
and consistent support of this committee, but this is only now
at the cost of ever-increasing personal sacrifices.
Service personnel are now facing even greater uncertainties
with their jobs, force reduction measures, and now compensation
adjustments. No Federal obligation is more important than
protecting national security. It is principle number one. We
all know that. You know that, and I know that. The most
important element in national security is sustainment of a top-
quality career force backed by dedicated DOD civilians.
By the way, I served with General Tilelli for a number of
years, and interestingly enough, we did not collaborate on what
I am going to say now. I acknowledge the power of high tech
equipment and new equipment. But I am convinced, after being in
or around the Army for 60 years, that it is not equipment which
wins wars. It is high-quality men and women, our most adaptive
weapon system, our most loyal, and people who will never quit.
If we can continue to recruit, train, and develop and retain
these people, America will remain the world's greatest power
only so long as it fulfills its commitment to their training,
their well-being, and their education. Our extraordinarily
dedicated, top-quality, All-Volunteer Force is critical. You
have consistently recognized the cost of sustaining this
current military career incentive package is far more
acceptable and affordable than any alternative.
Now, in the matter of compensation, AUSA does support the
MCRMC. We do not want to see a return to the recent era of pay
caps at this critical juncture, but it is imperative that
funding be available for training and some modernization. Pay
caps must not be permanent. Military pay comparability is
important to the recruiting and retention of high-quality
soldiers and will become more important in the future.
We are committed to military pay raises that match the ECI,
but this year, because of sequestration, the funds freed up by
a slightly smaller pay increase is the price that had to be
paid for soldiers who are trained and ready. But I do believe
that cuts to COLAs must be reflective of decisions made each
year based on the dynamics of the economy and the dynamics
within DOD.
I want to end my testimony as I began it. Sequestration is
patently unresponsive to needs of this Nation, which is part of
a rapidly changing world which we cannot predict the future. We
never could predict the future. People a lot smarter than me
have said that, not the least of whom was the former Secretary
of Defense Gates and Panetta. I mean, countless people. We all
know it. It creates a paradox in my mind in which this Nation
is locked into a creaky, slow-moving, lockstep budget process
that is irresponsible and unaccountable. No one seems to be
accountable.
Sometimes it is like people do not listen. The Chairman of
the Joint Chiefs of Staff said unacceptable risk. The Chief of
Staff of the Army says he is at risk of performing the mission,
his battlefield mission. Those are serious pronouncements.
Sequestration profoundly affects all parts of the national
security community, the Department of State, the Central
Intelligence Agency, National Security Agency, Department of
Veterans Affairs, and parts of the Department of Energy which
are included in that particular budget line. The impact on our
national security writ large must be considered.
I urge you to pursue some kind of a modification of this
budget device which is being used so that we can get back to
full order so that we can have a dialogue like we are having
here today and appropriate decisions can be made based on the
needs of our Nation for our security and our national defense.
Thank you very much for your patience while I went through
that. We at AUSA appreciate anything you can do to get rid of
the burdensome sequestration. There has to be a better way.
[The prepared statement of General Sullivan follows:]
Prepared Statement by GEN Gordon R. Sullivan, USA (Retired)
Mr. Chairman and Ranking Member Inhofe: Thank you for the
opportunity to present the views of the Association of the U.S. Army
(AUSA) concerning issues relating to the Army and its soldiers and
families. This committee has provided extraordinary support of our
Active Duty, Guard, Reserve, retired members, and veterans of the
uniformed services, their families and their survivors and its efforts
have had an enormously positive impact in the lives of the entire
uniformed services community.
AUSA is keenly aware that Congress has had to make difficult
choices while bolstering a weak economy and addressing budget deficits.
While we recognize that debt reduction is a national priority, AUSA
believes that a disproportionate share of this burden has fallen on the
Defense Department.
Requiring that 50 percent of mandatory budget cuts come from
defense--even though the defense budget is only 17 percent of the
Federal budget--is patently misguided. How in such a dynamic and
dangerous world can we be so shortsighted?
The result is that defense officials now face a no-win situation.
They can fund readiness, training, education, operational activities,
and some modernization but doing so requires cutting soldier and family
program funding. Continuing this formula for the better part of the
next decade defies logic. Uncertain times demand agility and
adaptability--look at what has suddenly occurred in Eastern Europe.
AUSA and its members urge that Congress and our elected and
appointed officials eliminate sequestration or modify these
unrealistically rigid budget control measures in ways which would
enable responsible and accountable leaders to exercise their
responsibilities in a manner that is consistent with the challenges
they face.
``Providing for the Common Defense'' is a shared responsibility
among the American people, Congress, the President, and the Army. We
have lost that sense of shared responsibility because of the mindless,
automatic and arbitrary cuts that sequestration brings.
Military leaders in order to properly execute their national
security mission need authorization authority and appropriations to be
completed on time and with regular order. Operating under a series of
continuing resolutions limits the capability to properly plan and
execute a budget.
sequestration
AUSA believes that the primary source of the budget challenges that
face the Department of Defense (DOD) is the devastating effect of the
sequestration provision of the Budget Control Act of 2011.
The Bipartisan Budget Act of 2013 mitigated the sequestration
spending cuts for fiscal year 2014 and 2015. However, the original
sequestration cuts scheduled for fiscal year 2016 thru 2021 remain in
effect and will exacerbate the situation by continuing to place
national security at risk.
Sequestration is having a profoundly adverse effect on the defense
of the Nation--and it will do so well into the next decade.
Over the past 2 years sequestration has:
Set America on a path to reduced military readiness
and national security. Sequestered budgets are rapidly
shrinking the Nation's military forces to unprecedented and
even unacceptable levels thereby creating unready forces unable
to accomplish the tasks assigned by the defense strategy. All
of this while the world security environment is becoming
increasingly uncertain and dangerous.
Reduced the military's war-winning capabilities to
unacceptably low levels, and has created unnecessary
divisiveness, acrimony, and demonization within the Armed
Forces between servicemembers and leaders who just months ago
were serving side by side in combat. We must enable all
components of the Armed Forces to be adequately manned,
trained, and equipped to focus on the mission--and not on
fighting over an arbitrarily depressed defense budget.
Created an atmosphere of fiscal desperation that leads
to false arguments and false choices when it comes to the
compensation and benefits provided to the servicemembers and
families who make up the All-Volunteer Force.
mobilization and the defense industrial base
Whether by design or inadvertently, sequestration has forced our
Armed Forces back into a mobilization posture. Many who refuse to
acknowledge that the United States might again become involved in a
large land operation have set us on a path where a too-small Active
component force can just be reinforced when needed by a mobilized
Reserve contingent or by simply recruiting more soldiers (as the
likelihood of a return to the draft is remote).
GEN George Marshall in 1956 said that ``. . . the hardest thing in
the world to train is a ground army''. Marshall had it right some 60
years ago when he concluded that the complexity of land conflict (more
so in today's unstable security environment) requires our land forces
to maintain ``a very high state of training, higher than that of any
other force that I know of.'' George Marshall knew what he was talking
about.
Unfortunately, recent history has shown us that it takes the U.S.
Army as much as 3 years to organize, train, and equip a newly formed
brigade combat team--that's not rapid enough in today's security
environment where crises like the Crimea can emerge in literally days
(think Korea in June 1950 and even today) and linger for years as in
Syria. The myth of small to big in short order is just that--a myth.
So, we must rely entirely on the force we have in being--Active,
Guard, and Reserve. But with the effects of sequestration steadily
decreasing the size and readiness of our military, the depth of the
force and its ability to mobilize is being severely degraded.
What is needed is a balanced force--balanced among land, air,
maritime, space, cyber, and Special Forces. Balance is also required
between Active and Reserve Forces. Equally important is the balance
between mission readiness and soldier and family programs. But
sequestration is throwing that necessary balance out of whack,
especially with land forces, and is creating risky, even dangerous
vulnerabilities.
Likewise, sequestration is having a devastating effect on the
defense industrial base. In both DOD's own organic industrial base and
the commercial industrial base, sequestration cuts are putting our
ability to equip a mobilized force when it is needed at growing risk. I
am alarmed that there is a gross lack of awareness among national
leaders how dire this situation is becoming. Only legislative relief
from sequestration can rectify this.
a crisis of credibility
Not only is sequestration and a declining defense budget having an
adverse effect on military readiness, we are also seeing an emergence
of international doubt as to the credibility of the United States as a
reliable ally and partner. I am convinced we must be seen as a credible
ally. Credibility in this context is found in the perception of
strength and national resolve to be responsive to our treaty
commitments with balanced, trained, and ready forces.
Similarly, adversaries are most certainly watching the steady
decline of American military power and could take more and more risk to
challenge U.S. leadership. Moreover, the decline in U.S. military
strength can lead to strategic miscalculation by potential adversaries.
A credibly sized force--not just a reasonably sized force--provides a
deterrent effect that is withering under the constraints of
sequestration.
viability of the all-volunteer force
Sequestration has created a perception that the troops ``cost too
much'' and are to blame for our growing military unreadiness. The facts
do not bear this out and the troops know it. But it has sown a growing
distrust among servicemembers who are increasingly and unfairly
portrayed as an entitlement special interest group.
The past 12 years of unprecedented demands and sacrifices highlight
how radically different military service conditions are from civilian
life. Decades of dire predictions about ``unaffordable'' personnel
costs have proved consistently wrong. Yet budget critics persist in
asserting military pay, retirement, and health care benefits are
unsustainable and should be slashed to resemble civilian benefit
packages.
Existing career incentives have sustained a strong national defense
through more severe and protracted wartime conditions than even the
strongest volunteer-force proponents thought it could survive.
Despite extraordinary demands, men and women in uniform are still
answering the call--thanks in no small measure to the committee's
strong and consistent support--but only at the cost of ever-increasing
personal sacrifices.
Service personnel are now facing even greater uncertainties with
force reduction measures and pay caps. No Federal obligation is more
important than protecting national security. The most important element
of national security is sustainment of a top-quality career military
force backed by dedicated DOD civilians.
America will remain the world's greatest power only so long as it
continues to fulfill its reciprocal obligation to the only weapon
system that has never let our country down--our extraordinarily
dedicated, top-quality, All-Volunteer career force.
Congress has consistently recognized that the cost of sustaining
the current military career incentive package is far more acceptable
and affordable than the alternative.
compensation and benefits
In the matter of compensation, AUSA supports the establishment of
the Military Compensation and Retirement Modernization Commission. The
members of that body are fully capable of recognizing the unique
contributions and sacrifices required by military service when they
consider changes to military compensation and the retirement system.
AUSA expects that any changes made must and will take into account the
services' need to compete for talent in the labor market.
AUSA does not want to see a return to the recent era of significant
pay gaps, at this critical juncture in the life of the Army and DOD. It
is imperative that funding be available for training and maintaining a
ready national defense force. The capability to accomplish the mission
is of paramount importance.
Pay caps must not be permanent. Military pay comparability is
important to the recruiting and retention of high-quality soldiers and
will become more so as the economy rights itself. AUSA is committed to
military pay raises that match the Employment Cost Index, but this year
because of sequestration, the funds freed by a slightly smaller pay
increase is the price that must be paid to have soldiers who are
trained and ready. However, Congress must ensure that this type of
budgeting does not become routine as it will have long-term detrimental
effects on the All-Volunteer Force.
In the matter of Military Compensation and Retirement Reform, AUSA
believes that any permanent changes in the military compensation and
retirement system should be withheld pending the report of the Military
Compensation and Retirement Modernization Commission and not be made
piecemeal. Further, any changes to retirement benefits must apply only
to those who volunteer after the changes are implemented.
Grandfathering of the currently serving force and current retirees is
imperative. Finally, any change must recognize the unique and
extraordinary demands and sacrifices that military service requires.
The profession of arms is not equivalent to a civilian job.
sequestration
I end my testimony as I began it.
Sequestration is a disruptive piece of legislation indicative of a
government seemingly unable to function as a responsible democracy.
Furthermore, sequestration is patently unresponsive to the needs of a
nation that is part of a rapidly changing world in which we cannot
predict the future. It creates a paradox in which the Nation is locked
into a creaky, slow moving, lockstep budget process that is
irresponsible and unaccountable and ignores the world around it, while
its defense forces must be flexible and agile.
Further, sequestration profoundly affects all parts of the national
security umbrella--the Department of State, Central Intelligence
Agency, National Security Agency, Department of Veterans Affairs, and
parts of the Department of Energy budgets. Its impact on national
security writ large must be considered.
Members of the committee, as you pursue your duties related to the
personnel issues of DOD, I urge you to get at the root cause of the
budgetary problems consuming DOD and end sequestration permanently
before more damage is done and before we are left with an inadequate
national defense force in 2021.
Thank you again for your support of the uniformed services and for
considering this testimony of the Association of the U.S. Army.
Chairman Levin. Thank you, General Sullivan.
Admiral Totushek, we are going to have to leave here in
about 15 minutes. We will have to leave a few minutes before 1
p.m. We want to leave some time for questions. If you can
adjust accordingly, that would be great. We do not want to cut
you short.
STATEMENT OF VADM JOHN B. TOTUSHEK, USN, RET. EXECUTIVE
DIRECTOR, ASSOCIATION OF THE U.S. NAVY
Admiral Totushek. I will endeavor to do that, Chairman
Levin. Thank you very much. Ranking Member Inhofe, members of
the committee, it is always a pleasure to be with you, and I
thank you for your service to our country and the things you
have done for our men and women in the military.
I will cut through part of this, just to highlight a few
things.
The first is that we basically heard a lot of people say
today that cuts will not harm the quality of life for our Navy
families, but I would say that all aspects of compensation, not
just pay, are part of what they look at as their pay. It is
going to definitely impact decisions they make when they are
out there trying to live their lives, especially things like
BAH that are reductions in what they take home each month to be
able to pay their bills.
We basically are the voice of sailors at AUSN, and we did a
recent study asking some people to tell us what they thought
about these impending kinds of changes that DOD has proposed.
Ninety percent of them did not like what is being proposed, a
little bit contrary to what I think the chiefs are hearing when
they go out there. By the way, we do not envy the chiefs--the
position they are in to try to make this balance that is
typical of the tough choices they are trying to make today. It
is just that we think there is a bigger impact to our force
than they are seeing when they go out and hold their all-hands
calls.
One sailor said the cost of living has not gone down in our
area. Yet, DOD has made a decision to knock down the BAH for
Hampton Roads.
Another one said I think that DOD is breaking faith with
what we signed up for. Things are going backwards.
Now, you may have seen today that the Web site military.com
had a survey that said the same thing ours said. 90 percent of
those surveys--and they surveyed 8,400 Service people--do not
like the proposed cuts. What the Chiefs are hearing when they
go talk maybe is not the real thing that is going on.
I would tell you also that the sequestration, as General
Sullivan says, makes big impacts to our readiness, to our force
structure, and to our training, but it also has an impact on
Navy families because the CNO said we are now forced into
longer cruises and when we retain people, we do not retain just
that service person. We retain the family. The families will
vote with their feet. I believe that the committee does not
need to be reminded of that fact.
I will cut to the chase so that my colleague to my left has
a couple of moments to spend. But I would tell you that for the
last 30 years, the cost of personnel in the military has
remained constant at 30 percent to 33 percent. The President's
budget for 2014 is 33 percent. To say that these compensation
percentages are higher, you have to be including some things
that military compensation does not include like the civilians
or something else is in those numbers that you heard from the
Service Chiefs today.
In summary, we think that really the biggest factor today
that is keeping people in the military is the poor jobs market
on the outside. When you couple these kinds of changes with
that, we are actually going to see people walking with their
feet despite what the chiefs are hearing.
With that, thank you very much for your attention, and I
look forward to your questions.
[The prepared statement of Admiral Totushek follows:]
Prepared Statement by VADM John B. Totushek, USN (Ret)
summary
Chairmen Levin, Ranking Member Inhofe, and members of the Senate
Armed Services Committee, the Association of the U.S. Navy (AUSN)
thanks you and your Committee for the work that you do in support of
our Navy, veterans, retirees, and their families. Your efforts have
allowed significant progress in creating legislation, through 50 plus
years of consecutive National Defense Authorization Acts (NDAA), that
has left a positive impact on our Navy and military community.
On 4 March 2014, the administration sent to Congress the
President's budget (PB) request for fiscal year 2015. The PB requests a
total of $495.6 billion for the Department of Defense (DOD) budget,
about $31 billion less than fiscal year 2014 requested levels. Despite
some programs seeing positive steps forward, there are significant
`cost saving' measures being proposed which could impact overall
morale, recruitment, retention and readiness in the military. Of
particular concern are proposals within DOD's budget to reduce military
pay raises, lower Commissary subsidies, reduce the Basic Allowance for
Housing (BAH) and merge three different TRICARE plans: Prime, Standard
and Extra into one Consolidated TRICARE Health plan, while instituting
TRICARE for Life (TFL) enrollment fees and increasing pharmacy copays.
All of these changes are being proposed before the Military
Compensation and Retirement Modernization Commission (MCRMC), mandated
by Congress in the NDAA for Fiscal Year 2013, which has finished its
work and should come up with its final report in February 2015.
The 6 percent reduction in BAH will result in higher out-of-pocket
costs for those servicemembers living off base. Base barracks are not
built to accommodate 100 percent of the servicemembers stationed there,
so this will undoubtedly affect many sailors. The housing allowance is
calculated based on the average cost-of-housing for the area and is
meant to provide servicemembers with the ability to live in
satisfactory accommodations. The proposed budget also puts the base pay
cap below private sector pay growth determined by the Employment Cost
Index (ECI), with an increase of 1 percent rather than 1.8 percent.
This is the second year that DOD has tried to cap the pay increase at 1
percent. Before last year, servicemembers' last three pay increases
averaged at 1.4 percent, and the NDAA for Fiscal Year 2014 pay increase
was the smallest in almost 50 years. In addition, the proposed
reduction in savings at the Commissary would result in a roughly 20
percent price spike. The PB also plans for TRICARE pharmacy copay
increases and the establishment of enrollment fees, while also creating
a consolidated TRICARE plan, eliminating the managed care option and
leaving only a fee-for-service option for retirees and families.
We have heard DOD officials say that the cuts will not harm quality
of life; however, there is no doubt that it will have a substantial
effect on purchasing power and affect day-to-day financial decisions.
For instance, the total loss in purchasing power for an Active Duty E-5
family of four would be $4,993 per year based on the proposed changes
to TRICARE, BAH, pay raise cuts and Commissary savings put together.
For an Active Duty O-3 family, the total loss of purchasing power would
be $5,890. There are some who justify these cuts by saying military
compensation is already very generous, but that's not necessarily true.
Military compensation is fair and carefully constructed to sustain the
stability of the all-volunteer force. AUSN shares the concern, along
with many lawmakers, that these cuts will end up being a disincentive
to serve. As the ``Voice for America's Sailors,'' AUSN has always been
a people first association, since it is our servicemembers, Veterans
and retirees who help/helped make our Navy the finest force in the
world. The readiness of our Navy follows in importance since our
sailors need the training, resources, and modern equipment to carry out
its mission.
AUSN Questionnaire of Active Duty, Reserve, Veteran and Retirees on
Fiscal Year 2015 Proposals
In order to better understand the concerns of the military and Navy
community, beginning in mid-April, AUSN conducted a questionnaire of a
couple hundred of our members who also passed along to friends and
shipmates to hear how they were impacted or not impacted by the
proposals being vetted in regards to military compensation and
benefits. Overall, with results compiled on 28 April 2014, of the over
100 participants in the poll, 59 percent of respondents were Veterans/
Retirees and 41 percent were Active Duty. Respondents were asked, ``In
the fiscal year 2015 PB request, I am most concerned with . . . '' and
had the choice of Military Pay Raise Cut, BAH Reductions, TRICARE
Proposals, Commissary, None or All of the proposals. Comments were also
submitted whereby one Active Duty sailor stated, ``I understand the
need to tighten our belts, but [military personnel accounts] are not
the places to do it,'' whereby another Active Duty sailor stated,
``Enlisted are already severely underpaid. Taking away more of their
pay would be detrimental to morale.'' An additional comment came from
one Active Duty sailor who said that, ``The cost of living has not gone
down in our area, yet [DOD] has made the decision to knock down the BAH
for Hampton Roads, VA!'' A Navy Veteran commented, ``I appreciate the
opportunity to have my input considered. DOD is breaking faith with all
of us who serve/served faithfully, and I consider these proposals will
negatively affect retention and recruiting.'' Another Navy veteran
stated in his submission, ``While good equipment is important, it seems
that the DOD has misplaced their priorities and are not taking care of
the troops.'' The final compiled results showed that ALL of the
proposals had a majority of concerns with TRICARE, with the military
pay raise cuts following behind.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Before going into detail on the Military Compensation fiscal year
2015 budget proposals, we'd like to take the time to discuss a few
pending concerns which are driving many of the proposals coming out of
DOD. Most notably we will address sequestration and ask ourselves: is
the current military compensation and benefits system truly
unsustainable as many DOD officials claim, and haven't we seen the
mistakes of drastic changes before?
sequestration impact
The national security environment we face today is as perilous as
any in recent memory. Over the past several years, our defense budget
has been struck time after time with reductions. The Budget Control Act
(BCA) of 2011 started a $487 billion loss in the defense budget, and
now we are at even greater risk threatened by a sequestration law
cutting another $500 billion over the next decade.
We were told sequestration would never happen. But here we are in
year two facing the blunt and irresponsible approach to taming our
annual deficits and reining in the enormous debt we and future
generations face. Despite sequestration being `held at bay' for now due
to the Bipartisan Budget Act (BBA) of 2013 agreement, the ongoing
threat of it returning for fiscal year 2016 continues to have looming
consequences that must be paid attention to.
Under sequestration, defense, which accounts for less than 15
percent of the budget, is forced to take 50 percent of sequester cuts.
It is disproportionate by any measure of understanding and incredibly
detrimental to our national security. The results of these cuts have
already been devastating to our national security, with our Navy alone
at a historic low level of ships, facing worse than pre-World War II
levels, should sequestration persist.
The readiness impact of sequestration not only threatens our
military and forward presence but also has a significant impact upon
the Navy family. For instance, the recent announcement in the fiscal
year 2015 PB to defer the decision on whether or not to early retire
the USS George Washington (CVN-73) in fiscal year 2016 has dire
consequences for our fleet's capabilities. Scheduled to undergo
Refueling and Complex Overhaul (RCOH), this vital but costly regularly
scheduled carrier maintenance, threatens to reduce the fleet of Carrier
Strike Groups (CSGs) from 11 to 10 and with any further delays of the
Ford-class aircraft carrier, potentially down to nine. What is missing
from this discussion to the effect on our national security that this
has is the impact upon our military families, as we have seen with
other RCOH delays of carriers. Delays and reduction in ships means
longer deployments for other CSGs and, consequently, more time our
sailors are away from their families, impacting overall morale of our
Navy community.
In addition, DOD recently released an April 2014 report titled
``Impacts of Sequestration Level Funding'' which noted not only the
RCOH concerns with CVN-73 but also the Navy consequently having eight
fewer ships procured throughout the remainder of the Future Years
Defense Program (FYDP). Three fewer Arleigh Burke Class destroyers
(DDGs) would be procured from fiscal year 2017 through fiscal year
2019, resulting in a smaller and less capable surface combatant force.
Sequester level funding would also result in the fiscal year 2016
Virginia-class submarine procurement to be unaffordable and prolong the
period where the force is below the desired level of fast attack
submarines by 4 years. The Navy would also delay six P-8A ``Poseidon''
aircraft until fiscal year 2020, substantially increasing per unit
costs, and would procure two fewer F-35C variants in fiscal year 2016.
The entire Armed Services would also lose more than 530 Advanced
Medium-Range Air-to-Air Missiles, and the Tomahawk Cruise Missile
program would be eliminated. Perhaps the largest impact would be to the
Operation and Maintenance (O&M) accounts, which include installation
services and service readiness, which could be reduced by $40 billion
over the course of the FYDP. Not funding Navy O&M accounts severely
limits force structure, readiness and capability.
AUSN insists Congress eliminate sequestration and fund our military
to levels that enable all components of the Armed Forces to be
adequately manned, trained and equipped to focus on the mission-- and
not on fighting over an arbitrarily depressed defense budget. While
debt reduction is a national priority, we believe that such a
disproportional share of this burden must not be imposed upon DOD and
especially on the backs of military members and families who already
have sacrificed more for their country than any other segment of
Americans.
slowing the growth? (is it really that bad? are we repeating past
mistakes?)
Today sequestration is still the `law of the land' and continues to
impact the decisions made regarding cost savings within DOD,
particularly when it comes to military compensation and benefits. We
have faced similar budget scrutiny before, and the impact upon our
military had significant consequences. AUSN is concerned that attempts
to change compensation and retirement will cause the same negative
effects that have been seen in the past. Military compensation and
benefit changes, like our overall military readiness, should not be so
heavily budget driven but rather should reflect strategy and
modernizing for a 21st century force. Recent military compensation
studies within DOD have leaped to the erroneous conclusion that the
cost trends of the last decade will continue indefinitely. This is not
so. Yet, Pentagon leadership continues to focus on ``recent growth
trajectory.'' For example, the military personnel account, according to
Office of Management and Budget's (OMB) historical table 3.2, has
doubled between 2000 and 2012, from $76 billion to $152 billion. What
the Pentagon doesn't advertise is that the overall defense budget grew
over the same period from $281 billion to $651 billion, a 131 percent
increase. This alone shows personnel costs are consuming a smaller
share of the budget. So if any costs are ``spiraling out of control,''
they're not personnel costs.
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While AUSN supports responsible spending in defense, past attempts
to alter military compensation and retirement benefits have had
significant negative impacts. For example, the REDUX program in the
1980s comes to mind, which was cancelled in 1999, when its attempts to
reduce 20-year retirement benefits by 25 percent caused drops in
retention and readiness levels.
The REDUX system, enacted in 1986, was applied to service entrants
on or after 1 August 1986. It provided 2.5 percent times high-36-month
basic pay per year of service, except that 1 percent was subtracted for
each year of service less than 30 (e.g., 40 percent of high 36-months
basic pay after 20 years of service). Furthermore, REDUX retiree Cost-
of-Living Adjustments (COLAs) adjusted annually at a rate 1 percent
less than the Consumer Price Index (CPI); (CPI-1). Under the REDUX law,
retired pay was recomputed on a one-time basis when the retired member
attains age 62. At that point, retired pay was recalculated to the
amount that would have been payable under the high 36-month average
system. After age 62, CPI-1 COLAs continued for life. The REDUX system
further reduced lifetime retired pay value by up to 27 percent!
Congress repealed REDUX as the default system for post-1986
entrants in 2000, after the Joint Chiefs of Staff (JCS) complained that
it was undermining career retention and readiness. At the time, the
REDUX system was the most frequently mentioned reason for leaving
Service among separating personnel.
Under current law, the high 36-month retired pay system is the
default option, but servicemembers have the option at the 15-year point
of electing the REDUX option in return for a one-time $30,000 taxable
career retention bonus. Only a minority of servicemembers choose this
option, and AUSN, as well as our counterparts, believe strongly that
accepting this option is a very unwise decision.
Additionally, past attempts at military pay caps have caused
significant problems. A series of annual pay raise caps in the 1970s
led to major negative impacts on retention and necessitated a pair of
large ``catch up'' raises in 1981 and 1982. The same problem occurred
again in the 1980s and 1990s, with pay caps contributing to an eventual
peak ``pay comparability gap'' of 13.5 percent below the private
sector.
There have been three areas where DOD has stated that Military
Compensation and Benefits are becoming ``unsustainable'' and urged a
need to ``slow the growth,'' regarding ``spiraling'' compensation and
benefit costs. Those areas are pay, healthcare and retirement. All
three areas are vitally important to the recruitment and retention of
our All-Volunteer Force, and all three are areas that DOD constantly
sends proposals to change in each of the President's Budgets. Personnel
and healthcare costs have represented the same share of the defense
budget, about a third, which they have for the last 30 years,
indicating that these costs are not spiraling out of control as DOD has
claimed. In fact, looking at last year's fiscal year 2014 budget alone,
as requested in the PB request, there was $412 billion allocated for
total Military Personnel Costs, less than half of which is actually in
the DOD budget. That means, of the PB requested $526.6 billion for the
base budget of DOD, only $176.6 billion, about a third, is dedicated to
ALL Military Personnel Costs for DOD, which, again, is about the same
share of the DOD budget for the past 30 years. Hardly
``unsustainable.''
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Our successful all volunteer-force has been accomplished with the
same portion of the DOD budget being allocated for human resources as
there has been for the last 30 years. Less than one-third, of the total
DOD budget goes towards pay, healthcare, retirement and other
compensation, so, again, these are exaggerated claims that military
compensation programs are the most impactful financial issue.
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Thus, if we continue to let budget drive the conversation, like
REDUX did, then we risk consequences of adopting many of the proposals
within the fiscal year 2015 budget request as noted below which may be
detrimental to our military's most important asset, our people.
military compensation proposals in fiscal year 2015 president's budget
Military Pay Proposals in Fiscal Year 2015 Budget
Military pay is meant to offset the massive personal cost that
accompanies a servicemember's career. In exchange for their pay,
members of the military not only serve in foreign and often dangerous
locations but also accept abridgments of speech and organizational
rights enjoyed by those they protect. Military pay is a huge motivating
factor in attracting new recruits as well who are willing to make these
sacrifices as part of joining the all-volunteer force. Pay
comparability is also one of the most important factors in maintaining
stable retention. All of this has been accomplished with the same
portion of the DOD budget being allocated for military compensation as
there has been for the last 30 years. AUSN is very concerned that many
in the administration, and some Members of Congress, are unaware of the
history of compensation changes and their unforeseen outcomes.
Moreover, we are alarmed that some view these vital compensation
programs as a source of budget savings without regard to the impact
they may have on long term readiness, but most importantly, the
livelihoods of the All-Volunteer Force.
The historical context of military pay provides ample evidence that
capping military raises is an exceptionally slippery slope which has
never ended well with past attempts at military pay caps causing
significant problems. A series of annual pay raise caps in the 1970s
led to major negative impacts on retention and necessitated a pair of
large ``catch up'' raises in both 1981 and 1982. The same problem
occurred again in the 1980s and 1990s, with pay caps contributing to an
eventual peak ``pay comparability gap'' of 13.5 percent below the
private sector. To correct this, Congress has made great strides to
restore military pay comparability over the past 13 years. In 2003, for
the NDAA for Fiscal Year 2004, Congress tied the basis of pay increases
for military personnel to be equal to the Department of Labor's ECI, so
that increases in military pay matched the bare minimum increases that
civilians in the private sector received. Congress has even had the
ability to enact raises that exceed these ECI percentages, as they did
for 2008 and 2009 (see chart on following page for recent increase in
pay raises).
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Through these measures, the pay gap was closed, and servicemembers
were compensated at a fair rate equal to those in the civilian sector.
However, now that erosion of pay and associated retention-related
problems have abated, there are renewed calls to cut back on military
raises, to either create a new comparability standard or substitute
more bonuses for pay raises in the interests of deficit reduction. For
Congress to override the statutory linkage that they themselves have
passed does not bode well for our men and women in uniform, especially
in the midst of an on-going conflict. History shows that, once military
pay raise caps are implemented, the tendency has been by Congress to
continue them until retention problems arise, which then have to be
addressed through significant pay raise plus-ups. AUSN believes such
proposals are exceptionally short-sighted in light of the extensive
negative experiences we have had with military pay raise caps. The
whole purpose of sustaining pay comparability through both good times
and bad is to prevent significant fluctuations in retention and
readiness; to avoid going through an endless cycle of causing problems
and then repairing them.
A 2010 Congressional Budget Office (CBO) report asserted that,
considering adjustments in housing allowances, many military people
were actually paid more than their civilian counterparts in terms of
Regular Military Compensation (RMC), composed of basic pay, food and
housing allowances and the tax advantage that accrues because the
allowances are tax-free. Developed in the 1960s when all servicemembers
received the same allowances, regardless of location, and the
allowances were arbitrarily established, the RMC was an inaccurate
calculation of servicemember compensation. Since the 1960s, Congress
has transformed the allowances into reimbursements for actual food
costs and for median locality-based housing costs. Consequently, AUSN
believes the CBO's assertions to be fundamentally flawed and that
Congress would have a hard time explaining to troops why their pay
raises should be reduced because their taxes are rising. However, in
2013, the PB request for fiscal year 2014 established the 1 percent
smaller pay raise, instead of the 1.8 percent dictated by the current
ECI, which affected a total of 2.2 million Active Duty and Reserve
component members in order to save DOD $536 million, a small cut in a
$526.6 billion budget. AUSN was then exceptionally disappointed that
Congress agreed to that cap on Active Duty pay raises, as this sends
the wrong message to our servicemembers saying in order to save a small
amount of money, we are cutting your pay raise mandated by current law
by almost half. DOD continues to claim it would save over $3.5 billion
if pay increases were reduced at this rate in future years. Yet, as
previously mentioned, personnel costs have represented the same share
of the defense budget, about a third, for the last 30 years, indicating
that these costs were not spiraling out of control as DOD claims.
Furthermore, a 1 percent boost in military pay would continue to
be, as it was for fiscal year 2014, the lowest pay increase since 1963,
when no pay raise was authorized. This would represent a historically
significant reduction, as well as explicitly increasing the pay of
servicemembers less than the bare minimum that a similarly-employed
civilian would receive (which, in all honesty, both career paths cannot
and should not be compared). These actions are of significant concern,
since annual pay increases are not just raises or bonuses for
servicemembers but vital adjustments that are counted on by military
families as part of military service. For example, an E-5 Active Duty
family of four stands to lose a total of $593, and an O-3 Active Duty
family of four stands to lose a total of $1,130 aggregate loss for
fiscal year 2014/fiscal year 2015 in military pay. AUSN advocates for
the specified 1.8 percent increase as determined by the ECI for the
current NDAA for Fiscal Year 2015 to ensure that servicemembers receive
a fair increase. AUSN encourages DOD and Congress to adhere to this
standard of pay increases. As past experiences have shown, pay raise
caps tend to cause major problems in exchange for minor short-term
savings, which are then undone when larger adjustments must be made to
make up for the caps. If pay raise caps are instituted again by the
administration, ignoring current law from the NDAA for Fiscal Year
2004, we will likely see retention problems reemerge in exchange for an
extremely small cost reduction. In short, pay raise caps are not worth
the negative consequences, and therefore, AUSN strongly encourages
Congress not to approve the fiscal year 2015 PB request for having
military pay raises set at 1 percent instead of the mandated ECI rate
of 1.8 percent. By adding language to the NDAA for Fiscal Year 2015
supporting current law of the NDAA for Fiscal Year 2004 stating
military pay should match the ECI rate, Congress will have re-asserted
it's authority and counter the administration's use and interpretation
of title 37 powers to change military pay rates as they please.
Basic Allowance for Housing Proposals in Fiscal Year 2015 President's
Budget
In addition to base pay, servicemembers also receive a supplement
for housing. BAH is an allowance paid to Active Duty servicemembers
based on pay grade, dependency status and geographic location within
the United States. The PB request for fiscal year 2015 proposes to
gradually slow the annual BAH increases until rates cover only 95
percent of housing rental and utility costs on average. Additionally,
it proposes to eliminate renter's insurance from the housing rates. The
administration argues that this change only results in an out-of-pocket
cost of 6 percent on average, emphasizing that such a change is far
less than the 20 percent out-of-pocket costs in the 1990s. However, by
the late 1990s, the Defense Department persuaded Congress to make
military housing allowances meaningful by setting BAH at 100 percent of
median local housing costs. This standard was codified after years of
budget cuts reducing BAH rates below actual housing costs. Furthermore,
they maintain that in areas where average rates increase, DOD will slow
the growth of that increase until the 6 percent target is reached.
Additionally, the administration claims that the actual percentage will
vary by area, because it would be unfair to those who live in high
rental cost areas to make this change on a strict percentage basis.
Therefore, the administration proposes that servicemembers in the same
pay grade, but living in different areas, should see the same dollar
amount of out-of-pocket cost. In order to accomplish this, the
individual servicemember will know the amount he will contribute toward
housing and can make informed trades in his own budget. The rate
protection feature will also remain in effect. In other words, no one
who is currently living in a particular area will see his BAH decrease.
If the survey data in an area indicate that the BAH rate should
decrease, only members moving into the area will receive the lower
rate, which already happens under the current rules. Finally, the
administration expects that the out-of-pocket target of 6 percent will
take several years to achieve because the DOD is just starting to slow
the growth of future increases.
AUSN, however, disagrees with the administration's assessment and
asserts that the fiscal year 2015 PB proposal of a 6 percent reduction
in BAH will, because of its even spread over the entire force, prevent
troops in high-cost living areas from paying out more of their base pay
than troops in low cost of living areas. Under the administration's
proposal, servicemembers will only receive 95 percent of the BAH for
their rank and location, resulting in greater out of pocket housing
costs. This ``slowed growth'' of the BAH will affect families, whether
they rent or own their own home. All told, for example, an E-5 Active
Duty family of four under this proposal would stand to lose a total of
$1,224, and an O-3 Active Duty family of four under this proposal would
stand to lose a total of $1,584 annually. Additionally, the fiscal year
2015 budget eliminates compensation for renter's insurance, which is an
important component that goes into a servicemember's monthly housing
cost. While AUSN is appreciative that the lower BAH will not affect a
military family until their next duty assignment, we are concerned
about the long-term impact on families' ability to find and pay for
appropriate housing. BAH has a tremendous impact on servicemembers and
their families' lives and is an important service that military
families depend on to afford reasonable housing wherever it is they are
stationed. As a result, AUSN urges Congress to reject the BAH proposals
in the fiscal year 2015 PB and provide full BAH for any Active Duty
servicemember at the current BAH rate.
TRICARE Proposals in Fiscal Year 2015 President's Budget
The military healthcare system is built mainly to meet military
readiness requirements rather than to deliver needed care efficiently
to beneficiaries. These readiness requirements result in increased
costs across the healthcare system, as the system needs to be able to
not only provide for beneficiaries but also be able to meet the
readiness requirements the military has. But because the increased
costs have been incurred as a result of military readiness requirements
and out of convenience for the military, beneficiaries should not be
expected to bear any share of the military-driven costs. Instead of
imposing higher fees on beneficiaries as the first budget option, DOD
leaders should be required to fix/consolidate redundant,
counterproductive DOD health systems.
Currently, TRICARE is managed by the Defense Health Agency (DHA),
formally the TRICARE Management Activity (TMA). On 1 October 2013, TMA
was disestablished, whereby DHA took over. As a major component of the
Military Health System (MHS), TRICARE combines the healthcare resources
of the uniformed services with networks of civilian healthcare
professionals, institutions, pharmacies and suppliers to provide access
to high-quality healthcare services, while maintaining the capability
to support military operations. This integration allows for the men and
women of our Armed Forces to readily access care whether it is within
VA healthcare centers or the private sector. The healthcare needed for
servicemembers varies greatly throughout their military careers as they
transition throughout the stages of their service. This variety, with
multiple TRICARE plans, is designed in order to provide for the 9.66
million Americans who are eligible for benefits under TRICARE and have
different degrees of healthcare. However, out of that 9.66 million,
only just fewer than 5.5 million users are actually enrolled in a
TRICARE program as many eligible beneficiaries receive healthcare via
their current employers. In fiscal year 2012, more than 84 percent of
eligible TRICARE beneficiaries used some form of Military Health System
service, highlighting just how important the MHS and TRICARE systems
are to providing care for the members of our Armed Forces and their
beneficiaries.
The fiscal year 2015 PB provides for $47.4 billion, spanning
Defense Health Program, personnel and healthcare accrual. Despite large
savings in recent years, DOD feels it must pursue veteran and military
retiree healthcare reform. As part of this reform, the DOD has proposed
a ``Consolidated'' TRICARE plan, as opposed to the current system with
varied plans. Although there would be no change for Active Duty
servicemembers, the remaining TRICARE beneficiaries would see changes
to their plan. Cost shares would be implemented across all beneficiary
levels, excluding Active Duty, in an attempt to facilitate the
effective use of military clinics and increase the efficiency of the
military's fixed facility cost structure. Additionally, there would be
an annual TRICARE participation fee for retirees, their families and
survivors of retirees, which if unpaid, would result in the forfeiture
of coverage for that year. The annual consolidated TRICARE
participation fee would be inflated annually according to the COLA but
would start at $286 per person or $572 per family in 2016. Meanwhile,
the cost sharing initiative would see an in-network catastrophic cap of
$3,000 per fiscal year and a combined (in and out of network) cap of
$5,000. The budget request goes on to propose increased copays for
pharmaceutical prescriptions, with significant increases in what
TRICARE beneficiaries must pay every time they fill or re-fill a
necessary prescription over the next 10 years. Finally, there is a
proposal to implement an enrollment fee for TRICARE for Life (TFL)
beneficiaries. TFL, enacted in 2001, is an additional payment plan for
eligible beneficiaries over the age of 65 who are also enrolled in
Medicare Part B, which only covers about 80 percent of normal
healthcare costs. The TFL fee proposal would grandfather current
members in but would begin charging an annual fee, phased in over a 4-
year period, based on a percentage of the beneficiary's military gross
retired pay. This would result in annual fee ceilings above $600 per
beneficiary starting in fiscal year 2018.
In recent years, emphasis has been placed on achieving savings and
efficiency within the MHS. On the other hand, approximately $3 billion
are being saved annually in MHS with programs such as the Prospective
Payment system and the Federal Ceiling Pricing (a discount drug
program). There have also been increases to fees for TRICARE
beneficiaries, tied to annual COLA increases, over the past couple of
years, and those would continue to increase under the current TRICARE
system, in addition to savings seen via TRICARE Service Center
closures. Additionally, as mentioned in the Federal Ceiling Pricing
program, there have been significant savings achieved in pharmacy
costs, as major changes have been enacted to double and triple pharmacy
copays for military beneficiaries, and these will continue to increase
in future years. Even more savings would be achieved under the current
TRICARE system when the significant reductions in end-strength are
enacted. Currently there are plans for the end-strength of the Active
and Reserve Forces to be cut by 124,000 troops over 5 years, and the
fiscal year 2015 budget proposes an additional cut of 78,000 troops.
Such significant reductions will reduce military healthcare costs, as
there will be 202,000 fewer troops (and their family members) eligible
for TRICARE benefits.
AUSN continues to be alarmed at the many attempts over past PB
submissions for DOD to find savings off of those who have served and
looking at military healthcare as a solution. Healthcare costs are only
10 percent of DOD's base operating budget. Put in the proper context,
this is not very much. Healthcare costs account for 27 percent of the
Federal budget, 32 percent of the average state budget, 16 percent of
household discretionary spending and 17.2 percent of U.S. Gross
Domestic Product. This shows that the current system which DOD uses to
provide healthcare for nearly 10 million servicemembers and their
families does not need to see such drastic changes, changes which will
greatly impact the standard of living and quality of life many of our
military members currently experience. AUSN recommends that fee
increases be limited to the annual COLA and is opposed to any increase
in TRICARE costs for users that is not directly related to COLA. AUSN
also advocates that the healthcare provided by TRICARE (physical,
behavioral, mental or otherwise) be up-to-date with the most current
form of coverage and not consolidated for the needs of servicemembers
and their families, and not just the budget needs of DOD.
Commissary Proposals in Fiscal Year 2015 President's Budget
The military Commissary system is administrated by the Defense
Commissary Agency (DECA) and provides food supplies, beyond that
official rations, and savings to supplement the pay received by the
military. The Commissary system has been a cornerstone of the
military's non-pay benefits and has become an integral part of ensuring
that our young servicemembers and their families have the best possible
quality of life. Particularly, the benefits the system provides are of
great assistance to families stationed in high cost-of-living areas. On
average, servicemembers and their families save more than 30 percent on
grocery bills, which translates to around $4,400 in savings per year.
All the while, DECA strives to develop the Commissary system while
balancing cuts to Commissary subsidies.
The fiscal year 2015 PB proposes that the $1.4 million funding for
DECA should be reduced to $400 million over the course of the next 3
years. This is a two-thirds slash to DECA's budget and will eliminate
many of the discounts Commissaries provide. Overall, a military family
stands to lose a total of $2,970 of Commissary savings per year if the
fiscal year 2015 proposal is adopted. According to the fiscal year 2015
PB, for the system to survive, prices will have to be raised, but this
could further alienate the customer base who can no longer afford its
services. DECA operates 243 stores total, which includes 178 domestic
locations. Commissaries overseas or in remote American territories are
exempt from these cuts, but domestic bases will suffer a 20 percent
price spike in goods and services based on the proposal. The military
Commissary exchange and Moral Welfare and Recreation (MWR) programs are
contributing factors to national defense by sustaining livelihoods and
morale of its military and improving their quality of life.
AUSN supports responsible spending; however, lowering Commissary
subsidies causes several consequences. First, according to Title 10
U.S. Code, section 2485, the Commissary stores' operations are, by law,
required to reflect the cost of the items to DECA. Therefore, though
price changes will vary, the prices in the commissaries are only set
high enough to cover the recovered item cost. Also, built in Title 10,
these savings are inherent features of the military Commissary system.
Second, the savings commissaries provide is known to be a motivating
factor in recruiting those who are willing to make the sacrifices
associated with the military. Lack of proper compensation affects the
military's ability to retain and recruit, which adversely affects its
readiness capability. Third, these are not only incentives for
servicemembers but promises made to protect and benefit their families
upon joining the military. By cutting benefits there is a direct
reduction to quality of life and stability. These are services that our
military families rely on to fulfill their needs. While it affects
military preparedness and readiness, the cuts are a greater disservice
to the men and women who have defended our Nation who are left
wondering if their families are being properly taken care of on bases
when they are gone. Finally, AUSN is a strong supporter of two pieces
of legislation moving through Congress that have recognized the
detriment of lowering subsidies. H.R. 4215 and S. 2075, The Military
Commissary Sustainment Act of 2014, both seek to prohibit any cuts in
DOD's funding for commissaries until a final report has been filed by
MCRMC next year. These bills protect against unnecessary stresses that
military families might suffer due to a rise in cost of living and also
provide proper focus to an important benefit area that is owed to
servicemembers.
cost-of-living adjustment, retirement and proposal in dod white paper
The administration has already expressed a desire to wait on
decisions regarding military retirement overhaul until the report from
the MCRMC, established in the NDAA for Fiscal Year 2013, is submitted
in February 2015. The MCRMC is currently meeting to review findings and
come up with options for improvements to the current military
compensation methodology. However, DOD released its own report in early
March--``Concepts for Modernizing Military Retirement''--that proposes
two slightly different design concepts for modernizing the military
retirement system. The proposals, which AUSN appreciates and is
interested in learning more about, would create a ``hybrid'' structure
that combines a defined benefit plan (similar to the current system), a
defined contribution component (similar to a civilian 401k plan) and
supplemental pays. Secretary of Defense Chuck Hagel has also made it
very clear that he would wait to ask Congress for any proposed changes
in retirement until next year; however retirement, as well as the
ongoing COLA debate, is important to mention.
Ongoing Cost-of Living-Adjustment Concerns
AUSN was pleased to see the 1 percent reduction of COLA established
in the BBA of 2013 addressed with the partial fix in the fiscal year
2014 Omnibus Appropriations bill, passed January of this year, which
exempted disabled veterans and survivors. Additionally, the passage in
February of S. 25 covered the remainder of current retirees under 62.
Despite this, there are still many concerns. First, while S. 25 seemed
to have largely bipartisan support, some Members of Congress were
disappointed with the ``funny money'' additional 1 year of
sequestration offset, saying the Federal Government was ``robbing one
part of the budget to pay another.'' In particular, some Members of
Congress argue, and AUSN agrees, that no one can be sure what the
budget climate will be like for all Executive Branch departments,
including DOD and the Department of Veterans Affairs (VA) after 10
years of sequestration (2013-2023), much less adding on one more for an
11th year of sequester cuts (to 2024). Other Members of Congress were
displeased that the mandatory sequestered accounts being affected were
unrelated to defense spending at all. As of now, it appears that there
would be only two major DOD mandatory accounts that would be impacted
by the extension of sequestration: TFL and DOD Retirement
Contributions. This is, of course, relatively loose and subject to
change, but at this point, those would be the primary accounts impacted
by tagging on an additional year of sequestration to offset the COLA
cuts from the BBA of 2013. Among the defense community, however, aside
from the two mentioned mandatory accounts, it is hard to determine what
money will be available given the uncertainty surrounding the future of
sequestration.
Second, there are additional concerns regarding how the final bill,
S. 25, with the COLA repeal was negotiated. It appears that the deal
was brokered among the senior leadership of the House and Senate and
not vetted by major stakeholders such as the chairmen and ranking
members of the House Armed Services Committee, the House Veterans'
Affairs Committee, the Senate Armed Services Committee (SASC) and the
Senate Veterans' Affairs Committee. During a 28 January 2014 hearing of
this committee, both defense officials and SASC members stated that
they were not consulted during negotiations on the budget deal, the
2013 BBA, and wanted to be part of the conversation in the future to
exempt current servicemembers and retirees from any changes to the
pension system. This continues to set what appears to be a dangerous
precedent where the process of bringing legislation through committees
is undermined by Senate and House leadership taking control of forming
bills and putting them through each chamber for consideration. AUSN
asks the committee to keep these potential consequences in
consideration moving forward, as the full impact of these repeal
provisions will surely manifest themselves in the coming years.
Finally, while Congress has seemingly corrected the wrong that is
the reduction in COLA calculations (for disabled Veterans and survivors
through the fiscal year 2014 Omnibus Appropriation bill and passage of
S. 25 for all other affected current and future retirees for their COLA
calculations), the impact this will have on future servicemembers,
Veterans and retirees, moving forward is unclear. Although the COLA cut
repeal provisions passed earlier this year will grandfather those who
joined the Service before 1 January 2014, the BBA COLA cut will still
apply to all those who joined after 1 January 2014. AUSN recommends
that that the committee keeps an eye on the impact this will have upon
the livelihoods of future retirees and Veterans who will be joining the
Armed Forces after 1 January 2014.
Retirement Proposals and DOD White Paper
Critics of the current military retirement system cite costs
spiraling out of control, yet as the numbers have shown, retirement as
a percentage of DOD's total budget has remained steady for the past
decade, while other portions of the DOD budget increase every year.
Currently, the military retirement system is non-contributory, meaning
that servicemembers do not have to pay into their own retirement plans.
To qualify for retirement pay, servicemembers must serve at least 20
years, upon which they will be eligible to receive a fixed, inflation-
protected lifetime annuity beginning immediately following retirement
from service. Generally, members of the Reserve Component who qualify
for retirement pay do not begin receiving benefits until age 60. All
retired servicemembers can apply for a Survivor Benefit Plan (SBP),
providing surviving spouses with a lifetime annuity. Retirees with
service-related disabilities, who receive both disability compensation
and regular retirement benefits, experience a dollar-for-dollar offset,
also known as concurrent receipt. Programs such as the Combat Related
Special Compensation and Concurrent Retirement and Disability Pay are
in place to counter this offset. However, the sacrifices made by
servicemembers are not found in the civilian sector, and this could
have harmful effects on retention rates if servicemembers decide that
the compensation they receive does not compare to the unique costs they
face in their military careers.
In both of the DOD's proposed concepts, servicemembers would
qualify for full retirement after 20 years of service, but the annuity
would be reduced compared to current benefits, resulting in decreased
compensation in the long-term. Both design concepts plan to offset this
reduction by shifting some deferred compensation, payment received upon
retirement, to current pay. The difference between the two is most
apparent in how they actually dispense this pay.
Concept 1 is a two-tiered system, offering partial benefits to
members (both Active Duty and Reserve) after their retirement from
service but during their employable years. It does not begin to pay
members their full benefits, calculated with the same multiplier as the
current system, until after the servicemembers reach their 60s. Concept
1 assumes that most servicemembers hold civilian jobs after retiring
from the military, and therefore, are less dependent on their
retirement at that time. This might be a harmful assumption, as not all
military skills translate to the civilian sector. On the other hand,
Concept 2 is a single-tier system that pays the member full benefits
each year immediately following retirement from service. However,
members of the Reserve component would not receive retirement
compensation until reaching the age of 60, and the multiplier for
calculating payments would be lower for all members than the one that
is used today.
Both concepts offer supplemental pay: continuous pay after 12 years
and transitional pay at retirement, though the amounts would differ
slightly. Both concepts include a 401K-type contribution-based
component as well, the Thrift Savings Plan (TSP), for those who serve
beyond 6 years. The proposal also calls for modifications in the method
of calculating disability payments and the elimination of the dollar-
for-dollar offset currently required for servicemembers who receive
both retirement pay from DOD and disability compensation from the VA.
This would make the concurrent receipt programs in place today
obsolete. Additionally, survivors will also be able to receive unused
funds in TSP accounts in exchange for a cut in annuity payments from
the SBP. The cost for SBP premiums will also increase, from 6.5 percent
to 10 percent, but this will enable the elimination of the offset when
the survivor also qualifies for Dependency and Indemnity Compensation
(DIC) from the VA.
The report estimates that the modifications to the military
retirement system could save DOD anywhere between $500 million and $2.7
billion for Active Duty members and about $200 million for members of
the Reserve component. The timeline for visible DOD savings is
uncertain and will depend on the rate at which current servicemembers,
who are grandfathered into the current retirement system, retire, are
paid out and then are replaced by the new servicemembers receiving
benefits based on the new system. While overall payouts to retired
servicemembers will be less under both new proposals than in the
current system, the inclusion of TSPs, continuation pay and transition
pay offset some of the reductions in benefits. AUSN appreciates and
acknowledges this thoughtful proposal as well as the concept of
receiving a payout sooner, which could prove more valuable to some
servicemembers, as could the opportunity for growth in the TSP
accounts, which guarantee retirees compensation.
AUSN is also pleased that the white paper addresses areas of
concern such as the SBP and DIC offset, concurrent receipt for
disability and retirement pay and the Integrated Disability Evaluation
System. The proposal acknowledges that disabled retirees could have had
careers worth more had they been able to continue on and earn more
benefits in addition to regular pay. The proposed disability benefits
would be greater than the current compensation, mostly due to the
elimination of the offset. However, other issues can be found in the
details, such as the fact that to claim unused TSP funds and eliminate
the offset from the DIC payments survivors would face an increase in
SBP premiums and decreased pay-back. This could potentially devalue the
benefit.
Retirement Conclusion
An effective modernization of the retirement system needs to ensure
four things: that military careers are competitive with other
opportunities in the job market, that promotion opportunities are
available for young servicemembers, that retired servicemembers can
enjoy a certain level of economic security and that there is a pool of
experienced personnel capable of being recalled to Active Duty in the
event of wartime or an emergency.
AUSN is open to thoughtful dialog on retirement and recognizes the
need to `modernize' the current system. The 20-year benchmark has a
proven tool useful for recruitment and retention; however, AUSN
understands that providing more retirement options and/or a tiered
system for certain retirement `packages' that allow sailors to begin to
receive compensation earlier in their careers may be better suited in
the 21st century. Changes that ultimately improve the military
retirement system for servicemembers and lead to cost-savings for DOD
are welcomed by AUSN, provided that current servicemembers are
grandfathered into the system into which they signed. It is important
to keep faith with our men and women currently serving. Nonetheless,
AUSN is mindful of lessons of the past, such as the REDUX reforms of
the 1990s, where cuts to compensations resulted in harmful effects on
recruitment and retention. Grandfathering the current servicemembers at
the time did not mitigate the negative impact from REDUX, which had to
be repealed a decade later, and AUSN asks that the committee also be
mindful of the results from these changes in the past.
testimony conclusion
The Association of the U.S. Navy understands that a good, thorough
and honest look is needed in regards to the future of military
compensation and benefit programs for our current and future force.
However, we firmly believe that this must be done in a way that doesn't
inhibit the recruitment and retention within our military. Many of
these proposals are already being looked at by the MCRMC to examine and
send to lawmakers a report on recommendations for establishing a new
set of pay, compensation and benefits for our future forces. The MCRMC
has not yet finished its mandated duties and investigations, yet DOD is
moving forward with an aggressive set of compensation changes in its
proposals within the fiscal year 2015 budget. With an extension on the
report going into 2015, and a forthcoming preliminary report in May
2014, the Commission itself is still holding hearings, open and closed
door Executive sessions, listening to testimony and gathering expert
advice. AUSN's own Vice-Chairman of the Board, MCPON Jim Herdt, USN
(Ret), has already testified in a public hearing before the Commission
in November 2013, in an Executive session in March 2014 and has met
with Commission staff many times throughout the year. Consequently, it
seems rather premature to be taking action to change compensation,
benefits and retirement when a proper analysis being done by the MCRMC
is incomplete and such a detailed report with recommendation will not
be shown until at least 2015. AUSN has been very pleased with the open
dialog the MCRMC has had with Military and Veteran Service
Organizations (MSO/VSO) and expects their report to reflect many of the
thoughtful discussions on these issues being discussed in today's
hearing.
Finally, while the COLA cut issue has been extremely important to
AUSN and our members in the past few months, with its ability to affect
the finances of a multitude of retired and current servicemembers,
there is uncertainty about how the COLA reduction impacts our future
servicemembers after 1 January 2014. Those who have signed up and
joined the Armed Forces between 1 January 2014 and when S. 25 passed,
13 February 2014, will still see their COLAs reduced when they retire
before the age of 62. A ``breach of faith'' with our servicemembers
argument can be made to that effect and will be a future consequence
moving forward. In addition, an argument can be made that we will now
have servicemembers who joined prior to 1 January 2014 receiving one
type of retirement compensation serving with servicemembers receiving a
different type of compensation, whereby having a scenario of ``haves''
vs. ``have nots.'' Again, this is an issue that may or may not manifest
itself as a major problem, but concerns and questions on the impact of
the passage of S. 25 still lie ahead.
AUSN appreciates the work of this committee and this hearing which
seeks to look into how the future of our military compensation system
will be sustained to reflect the current needs of our military. AUSN
stands ready to be the ``Voice for America's sailors,'' abroad and upon
their return home, and looks forward to working with Congress, the Navy
and DOD on serving our Nation's sailors, veterans, retirees, and their
families. Thank you.
Chairman Levin. Thank you so much, Admiral.
General McKinley?
STATEMENT OF GEN. CRAIG R. McKINLEY, USAF, RET., PRESIDENT, AIR
FORCE ASSOCIATION
General McKinley. Thank you, Chairman Levin. I agree with
my colleagues to thank you for your great service to our
Nation. It has been nothing short of exceptional. Thank you.
Chairman Levin. Thank you.
General McKinley. Ranking Member Inhofe, members of the
committee, thank you for staying so late with us today. It has
been a long day but a very educational day.
I will try to hit the wave tops because I know we have some
questions from you and we would like to hear those.
On behalf of the Air Force Association's (AFA) 100,000
members and our chairman, George Muellner, I would like to
thank you and the entire committee for your support of our
Active Duty, Guard, Reserve, civilians, retirees, and veterans
of the Air Force, their families and survivors, and for the
significant concern and effort you have put forth for our
national security. AFA is grateful for your unwavering
commitment to the men and women who defend our Nation and
appreciate the priority Congress has given personnel issues in
the past decade.
We also acknowledge the increasingly difficult choices
before our Nation. It is an honor to be here with you and my
colleagues. I know we are all committed to the defense of this
Nation, to those who serve and have served and their supporting
loved ones.
Our airmen and retirees deserve every dollar they earn.
However, as you have heard today, personnel compensation costs
continue to climb at unsustainable rates, and for the Air
Force, we have a much smaller force. If not addressed, they
will consume much of our combat training and modernization
spending over the next few decades.
We along with the other associations believe that the
sequestration provision of the BCA of 2011 is destroying
military readiness and endangering national security. It has
normalized a dangerously low level of defense spending,
constrained defense decisionmakers, and this new normal has
created an unhealthy competition for resources within DOD's
base budget.
I will cut to the chase. I believe we can never pay a
military member enough for his or her willingness to risk their
life for this Nation. However, we can ensure military members
are competitively compensated to enable us to retain the All-
Volunteer Force. Thanks to increases in compensation and
benefits since 2001, our military members are compensated
equivalently with their civilian counterparts when all benefits
are included.
To conclude, with last year's grounding of 13 combat
squadrons, lost opportunities for real-world training, and
numerous course cancellations, to include our premier Red Flag
exercise, our Air Force is at a crossroads. Sending airmen out
to any contingency without the best training and equipment we
can give them could imperil the mission and jeopardize lives.
This is unacceptable.
Our members, stakeholders, and indeed our airmen are
committed to keeping faith with the American people by
providing them with an Air Force that is capable, ready, and
resourced appropriately for the future.
Thanks again for inviting us over here today. I look
forward to your questions.
[The prepared statement of General McKinley follows:]
Prepared Statement by Gen. Craig R. McKinley, USAF (Retired)
Chairman Levin, Ranking Member Inhofe, on behalf of the Air Force
Association's 100,000 members, I'd like to thank you and the entire
committee for your support of our Active Duty, Guard, Reserve,
civilians, retirees, and veterans of the Air Force, their families, and
survivors, and for the significant concern and effort you have put
forth for our national security.
We are grateful for your unwavering commitment to the men and women
who defend our Nation, and appreciate the priority Congress has given
personnel issues in the past decade. We also acknowledge the
increasingly difficult choices before our Nation.
It is an honor to be here with you, and my fellow colleagues. I
know we are all committed to the defense of the Nation, those who serve
and have served, and their supporting loved ones.
Our airmen and retirees deserve every dollar they earn. However, as
you have heard today, personnel compensation costs continue to climb at
unsustainable rates, and, if not addressed, they will consume our
combat, training and modernization spending over the next few decades.
We in the Air Force Association believe the sequestration provision
of the Budget Control Act of 2011 is destroying military readiness and
endangering national security. It has normalized a dangerously low
level of defense spending, constrained defense decision-makers and this
new normal has created an unhealthy competition for resources within
DOD's base budget.
We are facing an even greater hollowing of the military as we
strive to meet national security needs in a very dangerous security
environment.
We believe this is a paramount national security issue. We urge
lawmakers to end the political stalemate over taxes and entitlement
spending and agree to a compromise resolution that will replace
sequestration. Otherwise we will be forced to endure further manpower
cuts aircraft reductions and fewer new aircraft to replace the aging
fleet--creating not only dangerously low readiness levels, but a
diminished ability to recover a sufficient state of readiness to meet
the continuing challenges of national security.
We urge Congress to fund our military to levels enabling all
components of the Armed Forces to be adequately manned, trained and
equipped to effectively address the Nation's security challenges today
and tomorrow.
No matter what the funding level is for Defense, we must honor our
commitments to those serving today and to those who have served this
great nation. Any changes to the current compensation and retirement
system should include grandfathering the current force.
We could never pay a military member enough for his or her
willingness to risk their life for this nation. However, we can ensure
military members are competitively compensated to enable us to retain
the All-Voluntary Force. Thanks to increases in compensation and
benefits since 2001, our military members are compensated competitively
with their civilian counterparts, especially when all benefits are
included.
Changes to the military compensation structure should be based on a
holistic assessment of the total compensation package, rather than
piecemeal cuts. In fact, Congress should just as diligently examine the
entire Federal employment and benefits system, as it has focused on our
men and women in uniform.
We are working with Secretary Hagel's office to continue the
dialogue about changes to the current system, and we have testified
before the congressionally-mandated Military Compensation and
Retirement Modernization Commission.
We support a compensation package for our All-Volunteer Force
allowing us to recruit and retain the quality of Total Force airmen our
national security demands.
These are challenging times. The force is coming home from 13 years
of war . . . actually 2 decades of continuous deployment since
Operations Desert Shield and Desert Storm, for the U.S. Air Force . . .
to a nation that is struggling with pervasive financial crises. Yet . .
. this Nation's global national security commitments and obligations
continue to increase in scope and complexity.
With last year's grounding of 13 combat squadrons, lost
opportunities for real-world training and numerous course cancellations
to include our premier Red Flag exercise, our Air Force is at a
crossroads. Sending airmen out to battle without the best training and
equipment we can give them could imperil the mission and jeopardize
lives. This is unacceptable.
Our members, stakeholders and indeed our airmen, are committed to
keeping faith with the American people, by providing them with an Air
Force that is capable, ready and resourced appropriately for the
future.
Thank you again for your support of our force, and for the
opportunity to offer this testimony from the Air Force Association.
I look forward to your questions.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Levin. Thank you so much, General.
Let us just do 5 minutes here.
Senator Inhofe. Four.
Chairman Levin. Four minutes. Okay, I take that suggestion
to make sure we all have a chance to do this before 1 p.m.
First of all, perhaps two of you have mentioned that the
numbers that have been provided for us in terms of the increase
in personnel costs as percentages of the budgets of the
Services are not numbers that you think are necessarily on
target. What we would do is welcome any or all of you on that
subject or any other subject, but on that subject for the
record. Take a look at those numbers. I think they are probably
available to each of you. Tell us where you have differences
from those percentages, if you do. Just for the record, that
would be helpful to us.
[The information referred to follows:]
Information submtted by General Gordon R. Sullivan, USA (Ret.)
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Information submtted by General Craig R. McKinley, USAF (Ret.)
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Information submtted by VADM John B. Totushek, USN (Ret.)
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
AUSN Enclosure 1
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
AUSN Enclosure 2
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Information submtted by VADM Norbert R. Ryan, Jr., USN (Ret.)
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
MOAA Attachment
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Levin. I think many of us up here do not like
sequestration. You have heard me and you have heard others say
that it is an abominable way to budget. It was never was
intended to take effect.
We are going to be offering alternatives to sequestration.
We have been talking about this now for a long time, working on
alternatives for a long time, including frankly closing some of
the tax loopholes in our law which do nothing in terms of
productivity but are simply tax avoidance loopholes that I and
many others believe should be closed. That would be part of an
alternative. We also have to do something in the entitlement
area as well.
But all of the burdens so far of reductions have fallen on
discretionary accounts. There has been nothing done on the
revenue side. We have to, I believe, address that. I would hope
that when we come up with a specific bill, that we will send it
to you and your organizations and that you would then indicate
to us whether you can support these kind of alternatives to
sequestration because I happen to agree with Senator King who
phrased it I believe earlier today about the fact that we talk
a lot about getting rid of sequestration, but we have not done
much about it. We put in effect these budget caps. Nobody else.
We can do something to change them. So we will send you those
proposed alternatives.
Next would be the following, whether or not you could right
now indicate which of these proposed changes in these personnel
accounts are the most problematical, if you are able to
prioritize them. I know you probably do not like any of them,
and I can understand why. They all have consequences. But if
you could very briefly indicate if you are able to say which of
the ones that are in the budget proposal are the worst or the
most problematical from your perspective. Why do we not start
at the other end, but we will get to all four of you. Very
briefly. I only have about a minute left. General McKinley?
General McKinley. Thank you, Mr. Chairman.
I think from our membership's perspective and that of our
chairman, we felt that the COLA at 1 percent was a valid
approach. As General Sullivan said, I think we need to look
into the out-years, that we cannot sustain that over a period
of time.
TRICARE, commissary, and other issues obviously are a
concern to our members. But none of them rose to the level of
maintaining a strong and viable Air Force. I think if I could
leave you with one point, members do not join the Service, at
least the Air Force, for pay, benefits, and compensation. They
join because of a patriotic duty to their Nation. Over time, we
have seen adequate compensation provided to our military
members. I think we need to look very carefully over the next
10 years, look at what the Congressional Budget Office is
talking about in terms of the rapid growth in some of the
programs like TRICARE and things like that. But overall, our
members want to see a strong, viable, modernized, ready Air
Force.
Thank you.
Chairman Levin. Thank you.
Admiral Totushek?
Admiral Totushek. We did a survey, as I said, and 90
percent of the respondents had a problem with something. The
one that was the biggest impact was the COLA actually for them.
Second was TRICARE. The last was BAH.
As far as the commissary is concerned, the thing that I
kept hearing was there are efficiencies to be had, but I do not
see a forcing function that is going to require DECA and the
commissaries to take those efficiencies just instead of doing
the easy thing and raising prices. Unless we have something in
place for that, we are going to have that problem as well.
Chairman Levin. Thank you.
General Sullivan, do you have a priority list?
General Sullivan. We did sign up for the COLA at 1 percent
because we felt that General Odierno and Secretary McHugh could
buy back readiness. We were less enthusiastic about the others.
Our approach was to go with the COLA.
Chairman Levin. Thank you.
General Tilelli?
General Tilelli. Sir, in a real sense, these structural
changes that we are talking about are a reduction in
compensation, earned benefits. To prioritize them prior to what
we believe Congress' intent was, the commission who is going to
look at all of this, is preemptive. We can continue to
piecemeal year on year benefits, compensation for retirees,
servicemembers, survivors, and pretty soon you have created a
volunteer force that is no longer viable.
At this point, I support the commission and a true vetting
of their recommendations before we prioritize anything. In a
real sense, I believe waiting the year is very important to the
men and women who serve to keep the faith with them.
Chairman Levin. Thank you.
I take it from your nodding your heads that when I talked
about sending you proposals to get rid of sequestration, you
indicated that your organizations would be willing to take a
look at them.
General Tilelli. Yes, sir.
General Sullivan. I want to make one point. I did not sign
up for every year capping pay. It was 1 year.
Chairman Levin. I understand. I think that came through
very clearly. Thank you.
Senator Inhofe.
Senator Inhofe. Mr. Chairman, one observation, two quick
questions. I will not even take my full 4 minutes.
First of all, we got into this mess because here we have 16
percent of the budget having to take 50 percent of the cuts.
That is the problem that we have. It is one that is a political
problem that we cannot seem to address.
General Sullivan and General Tilelli, you said back on
January 28 that given the choice between compensation and
strong national defense, strong national defense wins. I assume
the other two of you agree with that?
Okay. Here is the problem. I look at strong national
defense. That is going to have to be modernization, training,
and readiness, and that is where we are not keeping up. I am
going to ask the four of you if you agree with the statement by
Acting Deputy Secretary of Defense Christine Fox when she said
our men and women are the first to say that they are well
compensated, that DOD does not have money to maintain their
equipment or supply them with the latest technology or send
them to get the training that they need and then they are being
done a disservice. Do you agree with that? I do too.
The last thing I would mention, would you all agree since
we have this MCRMC that is supposed to report back February
2015, that it might be a little presumptuous to try to do
something in this year's NDAA that could constrain the
commission with the recommendations that they are studying?
They might have to undo something that we have done in order to
come up with their recommendations. Do you agree with that?
General Tilelli. Absolutely. I agree with that, and I would
hope that we have the opportunity to vet that along with
Congress as we look at it for our servicemembers.
Senator Inhofe. Good.
Thank you, Mr. Chairman.
Chairman Levin. Thank you very much, Senator Inhofe.
Senator Reed?
Senator Reed. First, let me thank you all for your great
service to the Nation and to the men and women you represent.
One of the issues here is looking ahead regardless of
sequestration. Frankly, you are preaching to the choir. We have
to get rid of sequestration. Even if we eliminate
sequestration, there is a lot of analysis that suggests that
growing personnel costs will continually erode training,
modernization, and we know that is critical also. Echoing the
chairman, we have to get a handle on these numbers.
Today, we heard Admiral Greenert suggest that 50 percent of
every dollar goes to personnel costs in the Navy. It is going
to go up to 60 percent and then 70 in about a decade. I know a
little enough about numbers to suggest it all depends what you
are measuring.
Admiral, you mentioned a 33\1/3\ percent constant figure.
Is that Active Duty service? Is that the fully discounted cost
of a servicemember?
Admiral Totushek. If you look over the last 30 years--and
that is in my testimony for the record--at Total Obligation
Authority as opposed to the cost of our men and women--and that
is total cost, it is about 30 percent. It went up to about 33,
but remember, over these last 10 years, we have increased the
size of the force tremendously. You obviously are going to have
larger costs, and the percentages pretty much have stayed the
same.
As General Tilelli said, we actually have seen a downtick
now in the actual costs for DOD.
Senator Reed. We cannot settle it in the next 2\1/2\
minutes, but this issue of the right metric, of the right
measure, which we all agree upon, is going to be absolutely
critical going forward. I thank you and will ask you again as
we define what we are measuring that we are consistent so we
have a baseline. That I think will help us a lot.
Another issue here which we have all touched upon in our
question and comments and the chiefs did also. I think we are
of the vintage where we remember post support. I was shocked
going up to the Navy base at Newport and having the commander,
a relatively young captain, apologize to me because the grass
would be little longer because the contractors will not be here
as often. I said ``contractors cut grass?''
But what General Odierno and others suggested too is that
if we do not get a handle on some of these costs--it is going
to be mundane initially--you are going to see the old issue of
1 month not seeing your troops in a given month because they
are cutting grass and painting rocks. That is not the force
that we have trained today. These are superb professionals
because every day we try to get every bit of training, every
bit of--and that is a cost that we have to look at going
forward. I do not have much time remaining, but I just want to
put that one on the record too.
But I thank you again for your service, your excellent
testimony, and for what you do for the men and women who served
and continue to serve. Thank you.
Chairman Levin. Thank you, Senator Reed.
Senator Sessions.
Senator Sessions. I will just thank you all. I appreciate
your contributions to this discussion. It is very important. We
need an outside view from some former insiders, and I think
that helps us.
The BCA includes the sequester. It was passed in August
2011. We are projecting to increase spending over the next 10
years by $10 trillion. The BCA allowed it to increase by $8
trillion not $10 trillion. But as Senator Inhofe said, half the
cuts fell on defense. Particularly because it was so rapid, it
becomes destabilizing, and I wish we could have done better.
I one time proposed just increasing defense at 1 percent a
year every year instead of going out--and other big cuts and
going up at 2\1/2\ percent a year, which we will soon be in
track to do.
Thank you all for sharing this. The debt threat to America
is real, but we do not need to break the faith with the men and
women who say ``yes, sir,'' and go to be deployed to the worst
areas on the globe at great risk.
Thank you.
Chairman Levin. Thank you, Senator Sessions.
Senator King.
Senator King. Very briefly, Mr. Chairman.
I want to thank you gentlemen for joining us today and hope
that you can stay engaged in this issue. One question is, are
you being consulted? Have you been consulted by this
commission? Have you had an opportunity to testify and provide
your input?
General McKinley. Yes, sir, AFA has and we have also been
consulted by DOD. It is very helpful.
Senator King. We certainly want that to continue and we
want your good thoughts as we try to work through this.
You understand the box that we are in. The Chiefs presented
it very well, that if we do not make these changes, then we
have to take the money from somewhere else. We do not have the
luxury of saying, ``oh, well, we will just add to the budget,''
unless we are able to do something about sequestration.
I appreciate the statesman-like view that you took, for
example, General, saying that you understand that. It is a
tradeoff between readiness, training, and compensation.
With that, I just hope you will stay engaged with us and
help guide us through this difficult set of decisions. I
appreciate your joining us here today. Thank you.
Chairman Levin. Thank you very much, Senator King.
We have received statements from outside groups and
individuals, including from the following: the National
Military Family Association, the Reserve Officers Association,
and the Reserve Enlisted Association. They, and any other
statements which may be submitted to us, will be made part of
the record.
Chairman Levin. We thank you for your service in and out of
Government.
We will stand adjourned.
[Whereupon, at 12:58 p.m., the committee adjourned.]
[The prepared statement of the National Military Family
Association follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[The joint prepared statement of the Reserve Officers
Association of the United States and the Reserve Enlisted
Association follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[Questions for the record with answers supplied follow:]
Questions Submitted by Senator Richard Blumenthal
rosoboronexport
1. Senator Blumenthal. General Dempsey, I understand that 16 Mi-17
helicopters have yet to be delivered by Rosoboronexport to the
Government of Afghanistan to fulfill the remainder of the current
contract. If the contract were to be terminated before these
helicopters are delivered, what is the termination cost?
General Dempsey. Eighteen Mi-17 helicopters have yet to be
delivered. Financial liability for termination of the contract by
either party to the contract would be subject to negotiation.
2. Senator Blumenthal. General Dempsey, what is the cost of the
current contract?
General Dempsey. $552 million for 30 Mi-17s modified to a military
configuration with U.S. and the North Atlantic Treaty Organization
(NATO) standard cockpits, mission equipment and weapons; an initial
spares package; and a 1-year warranty.
3. Senator Blumenthal. General Dempsey, how much money has yet to
be paid to Rosoboronexport for the 16 remaining helicopters?
General Dempsey. $171.3 million has yet to be paid. Advanced
payments are made as manufacturing progresses with additional payment
upon Mi-17 delivery.
4. Senator Blumenthal. General Dempsey, I understand that $120.0
million is spent each year on the repairs and maintenance for the Mi-17
helicopters owned by the Afghanistan security forces. How much of that
$120.0 million is paid to Rosoboronexport?
General Dempsey. The contract with Rosoboronexport is for
procurement of aircraft, which does include an initial supply of spares
and a 1-year warranty. The $120 million for repairs and maintenance are
handled through contracts with U.S. contractors, specifically Northrop
Grumman and Lockheed Martin.
5. Senator Blumenthal. General Dempsey, of the $120.0 million
identified for repairs and maintenance this year, how much has been
paid to date?
General Dempsey. Approximately $70 million has been paid to
Northrop Grumman and Lockheed Martin for repair and maintenance
activities in Afghanistan this year.
6. Senator Blumenthal. General Dempsey, in addition to the Mi-17
and the RD-180, please identify all other contractual agreements--
research and development (R&D), procurement, defense cooperation--
between the Department of Defense (DOD) and any Russian manufacturer,
government agency, or other Russian entity.
General Dempsey. In addition to Mi-17 and RD-180, the United States
is engaged with Russia concerning contracts in several areas, from
small R&D research grants, water pollution engineering, supply
procurements, to logistics support items (excluding fuel and
construction), trucks, guns, laboratory equipment and supplies. One
example includes the U.S. Prisoner of War/Missing in Action office's
agreement with the Russian Government regarding archival research in
the Russian State Military Archives. Finally, United Launch Alliance,
in addition to using the RD-180 engine, purchases Antonov aircraft
flights from a private transport company based in the United Kingdom.
prescription opiate use within the military
7. Senator Blumenthal. General Odierno, General Welsh, Admiral
Greenert, and General Amos, testimony presented by Brigadier General
Norvell V. Coots, USA, at an April 30 hearing of the Senate Committee
on Veterans Affairs indicated that in 2011 over 26 percent of the
Active Duty military force used some form of opiate medication. In
2013, over 24 percent of the Active-Duty Force had used opiate
medication. I would like to gain clarity on these numbers. Over each of
the past 10 years, what percentage of your respective Service has been
prescribed an opiate medication at least once as covered by the
previous list?
General Odierno. The proportion of Active Duty Army servicemembers
prescribed an opiate medication at least once in a year for the last 10
years is as follows:
2004 - 21 percent
2005 - 22 percent
2006 - 25 percent
2007 - 26 percent
2008 - 26 percent
2009 - 26 percent
2010 - 27 percent
2011 - 29 percent
2012 - 29 percent
2013 - 27 percent
General Welsh. The percentage of Active Duty Air Force
servicemembers prescribed an opiate medication at least once in a year
for the past 10 years is as follows:
2004 - 22 percent
2005 - 22 percent
2006 - 23 percent
2007 - 24 percent
2008 - 24 percent
2009 - 23 percent
2010 - 24 percent
2011 - 24 percent
2012 - 24 percent
2013 - 23 percent
Admiral Greenert. The testimony provided by BG Coots was based on
data compiled by the Army Pharmacovigilance Center (PVC) on the
proportion of Active Duty members with at least one prescription for an
opiate agonist or partial agonist. The proportion of Active Duty Navy
servicemembers prescribed an opiate medication at least once in a year
is:
2004 - 27 percent *
---------------------------------------------------------------------------
* It is possible 2004 data may overestimate prevalence in active
duty due to error in source data that misclassified beneficiaries as
sponsors (i.e. AD).
---------------------------------------------------------------------------
2005 - 26 percent
2007 - 25 percent
2008 - 25 percent
2009 - 26 percent
2010 - 26 percent
2011 - 26 percent
2012 - 25 percent
2013 - 22 percent
General Amos. The testimony provided by BG Coots was based on data
compiled by the Army PVC on the proportion of Active Duty members with
at least one prescription for an opiate agonist or partial agonist. The
PVC has compiled 5 years of data for all Services from 2009 to 2013,
and is conducting data analysis to provide a response to opioid
medication use over the last 10 years.
The proportion of Active Duty Marine Corps servicemembers
prescribed an opiate medication at least once in a year is as follows:
2009 - 26 percent
2010 - 26 percent
2011 - 26 percent
2012 - 26 percent
2013 - 25 percent
8. Senator Blumenthal. General Odierno, General Welsh, Admiral
Greenert, and General Amos, over each of the past 10 years, what
percentage of your respective Service has been prescribed an opiate
medication for a chronic condition--whether physical pain or mental
health--as covered by the previous list?
General Odierno. Less than 1 percent of our forces are initiating
chronic opiate treatment at any given year in the past 5 years. All
soldiers receive a medication evaluation to determine deployment
eligibility. This evaluation includes a review of prescribed
medications. Soldiers who are prescribed chronic opiates require U.S.
Central Command (CENTCOM) surgeon waiver to deploy. Since the release
in December 2013 of Modification 12 to the CENTCOM Individual
Protection and Individual Unit Deployment Policy, deployment waivers
for chronic opiate use have rarely been approved. Those few exceptions
tend to be cases of short deployments located at or near Medical
Treatment Facilities and the low-risk condition of the soldier.
General Welsh. At the present time data analysis for opioid
medication use over the last 10 years is being conducted. We currently
have the last 5 years of data.
Chronic opioid use is defined as cumulative use of 90 or greater
days of use in a 6 month period for new users. This definition is in
agreement with the Veterans Health Administration. The percentage of
Active Duty Air Force servicemembers prescribed an opiate medication
for chronic use in a year is as follows.
2009 - 0.5 percent
2010 - 0.5 percent
2011 - 0.5 percent
2012 - 0.5 percent
2013 - 0.4 percent
Admiral Greenert. The Army PVC conducted data analysis to provide a
response to chronic opiate medication use over the last 10 years for
all Services.
The Army PVC defines chronic opioid use as, ``cumulative use of 90
or greater days of use in a 6 month period''. Previously, the Army PVC
defined chronic opioid use as, ``cumulative use of 90 or greater days
of use in a 6 month period for new users,'' which resulted in a lower
percentage of active duty being considered chronic opioid users. The
proportion of Active Duty Navy servicemembers with any chronic opiate
use in a year is as follows:
2004 - 1.12 percent
2005 - 1.14 percent
2006 - 1.24 percent
2007 - 1.22 percent
2008 - 0.91 percent
2009 - 0.81 percent
2010 - 0.85 percent
2011 - 0.90 percent
2012 - 0.90 percent
2013 - 0.79 percent
General Amos. At the present time the Army PVC is conducting data
analysis to provide a response to opiate medication use over the last
10 years for all Services. We currently have 5 years of data.
The Army PVC defines Chronic opioid use as, ``cumulative use of 90
or greater days of use in a 6 month period for new users''. This
definition is in agreement with the Veterans Health Administration. The
proportion of Active Duty Marine Corps servicemembers prescribed an
opiate medication for chronic use in a year is as follows.
2008 - 0.42 percent
2009 - 0.42 percent
2010 - 0.45 percent
2011 - 0.51 percent
2012 - 0.38 percent
From 2008 to 2012, the average percentage of U.S. Marine Corps
Active Duty Servicemembers prescribed an opiate medication associated
with a chronic condition was 0.44 percent.
9. Senator Blumenthal. General Odierno, General Welsh, Admiral
Greenert, and General Amos, what procedural measures have been
implemented within your respective Service to mitigate risk with regard
to prescription of opiate medication?
General Odierno. Army Medicine uses best practices that are
comparable to, or exceed, civilian programs, such as prescription drug
monitoring to identify polypharmacy cases. Positive interventions
include comprehensive medication reviews, sole provider programs,
limiting the dispensed supply of medication, restricting high-risk
patients to the utilization of one pharmacy, informed consent, use of
non-drug treatment options, clinical pharmacist referrals, and patient
and provider education.
General Welsh. Current Air Force practices and programs designed to
mitigate risk with regard to prescription of opiate medication include:
development of comprehensive pain management policy, urinalysis
testing, screening controlled substance prescriptions, Air Force
Alcohol and Drug Abuse Prevention and Treatment and Drug Demand
Reduction programs. Other provider specific programs include: ``Do No
Harm'' training for all prescribing providers, ``Sole Provider''
prescription restriction program, medication reconciliation, and the
use of pain contracts for chronic pain patients.
With the standup of the Defense Health Agency (DHA) and under the
new governance structure of the Military Health System (MHS), a tri-
Service/DHA working group has been established to develop a
standardized comprehensive pain management policy across the Services
which includes a multi-disciplinary approach using non-traditional and
holistic methods to control pain without or in conjunction with
prescription medications. This group will develop policy for safe
prescribing practices of opioids with tri-Service consensus to include
guidelines for urine drug testing, requirements for opioid care
agreements and consents, screening guidelines, specialty referral, and
improved provider education on opioid therapy. In addition, the working
group will align its efforts with the Defense and Veterans Center for
Integrative Pain Management which develops consensus recommendations
for the Air Force, Army, Navy, MHS, and Veterans Health Administration
integrated pain management communities for improvements in pain
medicine policies, practice, education, and research.
Military treatment facility (MTF) pharmacies screen controlled
substance prescriptions, review patient medication profiles, and use
the Pharmacy Data Transaction Service (PDTS) to help identify
potentially dangerous polypharmacy. PDTS monitors medication profiles
from MTF, mail-order and retail pharmacy points of service.
Admiral Greenert. The Navy in collaboration with DOD has undertaken
several actions to mitigate the risks of related to prescribing
pharmaceuticals. Specifically:
The DOD Pharmacy Operations Division utilizes the
PDTS, an online centralized prescription data repository, to
automatically check new prescriptions against a patient's
computerized medication history from all points of service
(Retail, Mail, MTF, and Theater) for possible adverse events or
therapeutic duplications before the new drug is dispensed.
The MTF Prescription Restriction Program allows a
provider or a nurse/pharmacist, on behalf of a provider/multi-
disciplinary team to restrict a patient's access to controlled
substances, or to exclude controlled substances or specific
non-controlled substance(s) at mail order or a retail pharmacy
The TRICARE Pharmacy 1-1-1 Program allows a
prescriber to limit at-risk patients' access to controlled
substances to one prescriber, and at only one pharmacy.
The Patient Centered Medical Home provides a
comprehensive, integrated approach to primary care, to include
treatment for acute and chronic pain. Incorporating a pain
management program that collaborates with DOD and VA as well as
provider specific training on pain management, the Navy looks
at a holistic approach to patients needs including non-
pharmacological therapies. In addition we have seven pain
management centers throughout the enterprise providing
therapeutic and invasive pain management care to Navy Medicine
beneficiaries.
Lastly, the Navy Alcohol and Drug Abuse Prevention
Office, part of the Navy's 21st Century Sailor Office, has also
developed the ``Prescription for Discharge'' campaign to
educate sailors, marines, and their family members on the safe
and proper use of prescription drugs. The campaign includes,
tips for all Navy personnel on the safe and proper use of
prescription drugs. Materials are available for distribution
and display at Navy medical clinics, pharmacies, waiting rooms,
barracks, and other locations; and resources are provided for
Navy leadership, medical personnel, and drug abuse prevention
personnel to present at safety stand downs, briefings, or
community health fairs.
General Amos. The Marine Corps in collaboration with Navy Medicine
and DOD has undertaken several actions to mitigate the risks related to
prescribing opiate pharmaceuticals. Specifically:
Interactions and duplication warnings are
communicated to the provider in real time during prescription
entry via the Composite Health Care System.
Provider and patient education related to VA/DOD
guidelines for providers prescribing opioids, Complementary and
Alternative Medicine training and access which provide non-
pharmacologic therapeutic options for pain management.
Medication verification and documentation in the
medical record at every patient encounter.
Force Preservation Councils (FPC) provide a clear
formalized process for units to identify at-risk marines and
focus appropriate attention and resources to assist the
individual. Use of opiate medications is a required reporting
condition for the FPC.
Marine Centered Medical Home (MCMH) provides a
comprehensive, integrated approach to primary care, to include
treatment for acute and chronic pain. The MCMH facilitates
education of both the patient and his/her family on the
etiology and management of acute and chronic pain, which may
reduce the likelihood of disability, address the under-
treatment of pain, and provide for individual tailoring of
treatment plans.
The Marine Corps also capitalizes on a number of
Bureau of Navy Medicine prescription restriction and opioid
management programs and processes including the Navy
Comprehensive Pain Management Program.
10. Senator Blumenthal. General Odierno, General Welsh, Admiral
Greenert, and General Amos, what is your assessment of force readiness
with regard to prescription opiate use?
General Odierno. At the present time, the Army Pharmacovigiliance
Center is conducting data analysis to provide a response to opiate
medication use over the last 10 years. We currently have the last 5
years of data, beginning with 2012.
Chronic opioid use is defined as cumulative use of 90 or greater
days of use in a 6-month period. The proportion of Active Duty Army
servicemembers initiating on an opiate medication for chronic use in a
year is as follows:
2008 - 1 percent
2009 - 0.9 percent
2010 - 1 percent
2011 - 1 percent
2012 - 0.8 percent
General Welsh. Force readiness is always our number one priority.
Our ability to fulfill the readiness mission is not hindered by
prescription opiate use. All personnel are medically screened prior to
deployment, including any medication therapy they may be on. If
servicemembers become ill or injured while deployed, their condition
and treatment regimen, including medication therapy, are evaluated for
any impact on their ability to perform the mission.
We will continue to use and improve current programs and processes
to appropriately treat patients and prevent and mitigate the impact of
drug use or abuse on the readiness of the force. These programs
include: development of comprehensive pain management policy through
tri-Service working groups, urinalysis testing, screening controlled
substance prescriptions, Air Force Alcohol and Drug Abuse Prevention
and Treatment and Drug Demand Reduction programs. Other provider
specific programs include: ``Do No Harm'' training for all prescribing
providers, ``Sole Provider'' prescription restriction program,
medication reconciliation, and the use of pain contracts for chronic
pain patients.
Admiral Greenert. Prescription opioid use has been stable over the
last 6 years in Navy. There are serious risks with opioid use to
include the risk of misuse, abuse and diversion. Opiate use requires
judicious management, education and monitoring to ensure appropriate
and safe utilization. Our Active Duty servicemembers suffering with
chronic pain are provided with interdisciplinary and collaborative pain
management services. Furthermore, by consistently fulfilling all
aspects of the Opioid Therapy Clinical Practice Guidelines, we are
continuously assured that we are safely prescribing opioids for our
Active Duty servicemembers who require pain care management and opiate
prescriptions.
Illegal use of prescription drugs, including opiates, undermines
combat readiness and is incompatible with our standards of performance
and military discipline. Accordingly, this past month we launched a new
``Prescription for Discharge'' campaign, designed to educate sailors
and their families on the safe use of prescription drugs and on the
health and career risks associated with misuse. Abuse of prescription
drugs is a violation of the Uniform Code of Military Justice.
General Amos. Force Readiness is our mission. There are serious
risks with opioid use to include the risk of misuse, abuse and
diversion. Opiate use requires judicious management, education and
monitoring to ensure appropriate and safe utilization. Our Active Duty
servicemembers suffering with acute and chronic pain require
interdisciplinary and collaborative pain management services. We are
strengthening the patient-provider relationship in our Marine Centered
Medical Homes to increase the effectiveness of pain management
practices and standardizing the care delivered using Clinical Practice
Guidelines. As we fulfill all aspects of the Opioid Therapy Clinical
Practice Guidelines that include opioid care agreements, urine drug
screening, assessment of contraindications, safe prescribing practices,
facilitation of self-care, patient education and more, we can safely
prescribe opioids for our Active Duty servicemembers who require pain
care management and opiate prescriptions. Prescription opioid use has
been stable over the last 6 years in the Marine Corps. The data does
not support a concern for force readiness.
______
Questions Submitted by Senator Joe Donnelly
compensation
11. Senator Donnelly. Admiral Greenert, in your answer to one of
Senator Ayotte's questions, you mentioned that an E-5 (6 years of
service) with three dependents currently makes $64,300 and will make
$76,000 in 2019, which would amount to a 4 percent loss in buying
power. Please provide the breakdown of the pay of an E-5 and how the
pay amounts were determined, to include where the basic allowance for
housing (BAH) rate was determined, if this was factored into the pay.
Admiral Greenert. After my testimony, we discovered that the
compensation amounts I presented for the notional E-5 with three
dependents were calculated incorrectly; they used a commissary discount
value for a sailor with only one dependent, which understated the
calculated purchasing power. The correct amount should have been
$66,071 for an E-5 today, $78,313 in 2019 (with no compensation
reform), and $69,804 (with compensation reform). When corrected for
inflation, $69,804 represents a 5.5 percent loss in purchasing power.
Our methodology and analysis follows:
Calculated purchasing power is composed of basic pay, basic
allowance for subsistence (BAS), BAH, and the commissary discount, less
TRICARE cost sharing. The notional E-5 has 6 years of service, three
dependents, and is stationed in San Diego. Calculated purchasing power
does not include any special and incentive pays that many sailors
receive, such as Career Sea Pay or Family Separation allowance (for
deployed sailors).
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The table above makes clear that, absent compensation reform, a
sailor's purchasing power is expected to increase faster than the
standard measure of consumer inflation, CPI. Because BAH is such a
large component of sailor compensation, total purchasing power without
reform is also expected to increase faster than civilian wages, as
measured by Employment Cost Index (ECI).
However, the traditional method to compare the purchasing power of
nominal cash flows at different points in time is to discount using the
CPI rate. Using the Congressional Budget Office (CBO) discount rate
detailed above, the total purchasing power in 2019 for the notional E-5
including proposed compensation reforms and expressed in 2014 dollars,
is $62,399, or, a 5.5 percent reduction in total purchasing power.
12. Senator Donnelly. Admiral Greenert, how was the analysis of
buying power determined? Please provide the detailed analysis.
Admiral Greenert. See response to question 11.
retirement pay for general officers
13. Senator Donnelly. General Dempsey, in 2007, Congress passed a
DOD-sponsored proposal that increased retirement benefits for three-
and four-star generals and admirals, allowing them to draw retirement
pay based off the basic pay chart and not restrained by Level II of the
Executive Schedule ($15,125.10 in the 2014 pay chart). According to a
USA Today article (January 9, 2014), this would mean that a four-star
general retiring with 40 years of service would receive a pension of
$237,150, when the base pay is only $181,501. Additionally, because
time in the military academies counts towards the pension, a retired
general could receive a higher pension. As you have considered changes
to the military retirement system, have the Joint Chiefs given
consideration to this issue?
General Dempsey. While serving, general and flag officer basic pay
is limited by Level II of the Executive Schedule. Once a general or
flag officer retires, that limitation is removed. Retirement pay is
based on the appropriate percentage of their actual basic pay. In some
rare cases, this results in retirement pay that is greater than their
capped pay while on active duty.
Time at military academies does not count towards pension except in
rare cases, such as prior service. Date of entry at military academies
does determine (in most cases) the retirement system that applies to a
military member. For graduates of a Military Academy with no prior
service, the date they entered the Academy is called the DIEMS (Date of
Initial Entry to Military Service). Academy graduates who entered the
Academy prior to, but graduated after, September 8, 1980, are under the
final pay system. For those that entered after that date, the high 36-
month system applies.
We do not object to review or recommendations regarding retired pay
for general and flag officers. However, because of the complexity of
the military retirement system, any proposal for change should be part
of a holistic, system-wide review under the congressionally established
Military Compensation and Retirement Modernization Commission (MCRMC).
14. Senator Donnelly. General Dempsey, if a general officer or a
flag officer has over 40 years of service, does the retirement
multiplier increase to calculate over 100 percent of base pay?
General Dempsey. Under the Final Pay and High 36-month retirement
systems, the retirement multiplier is calculated by multiplying 2.5
percent and the number of years of the member's active service. At 40
years, the retirement multiplier is 100 percent. For the few officers
who retire with over 40 years of service, the retirement multiplier is
over 100 percent.
15. Senator Donnelly. General Dempsey, what would be the
implication on the retentions of three- and four-star flag officers if
the 2007 provision was eliminated?
General Dempsey. We do not object to review or recommendations
regarding retired pay for general and flag officers. However, because
of the complexity of the military retirement system, any proposal for
change should be part of a holistic, system-wide review under the
congressionally established MCRMC.
______
Questions Submitted by Senator Kelly Ayotte
ukraine
16. Senator Ayotte. General Dempsey, in your professional military
judgment, is it in America's national security interests to deter a
Russian invasion of eastern Ukraine and to do all we can to help
Ukraine protect its territorial integrity and sovereignty?
General Dempsey. America's national security interests are aligned
with an independent, sovereign and stable Ukraine, firmly committed to
democracy and respect for human rights, minorities, and the rule of
law. DOD will continue efforts to support this end state.
17. Senator Ayotte. General Dempsey, in a conventional battle
against each other, how do Ukrainian forces compare with Russian forces
in terms of size and capabilities?
General Dempsey. [Deleted.]
18. Senator Ayotte. General Dempsey, what lethal assistance would
best help the Ukrainian military in the event of a conventional
invasion of eastern Ukraine?
General Dempsey. The United States aim is to encourage a diplomatic
resolution of this crisis. Our continued desire is that Russia will
move its forces back to garrison and cease such destabilizing
activities on Ukraine's border. Lethal assistance at this stage could
be counterproductive and would have very limited utility in deterring
Russia from further military actions.
19. Senator Ayotte. General Dempsey, what lethal assistance has the
Ukrainian Government requested from the United States?
General Dempsey. As of 12 June 2014, Ukraine has requested small-
arms, ammunition, anti-tank and air defense systems, armored vehicles,
combat support equipment, and logistical equipment from NATO and the
United States.
20. Senator Ayotte. General Dempsey, what, if any, lethal
assistance has the United States provided to the Ukrainian military?
General Dempsey. As of 12 June 2014, to the best of my knowledge,
we have not provided any lethal aid to Ukrainian forces.
We continue to assess the conditions under which we would provide
lethal support to Ukraine. Limited lethal assistance at this stage
would not deter Russia. Russia could use even limited U.S. military
assistance as a pretext to conduct further destabilizing activities
with respect to Ukraine.
21. Senator Ayotte. General Dempsey, in your professional military
judgment, would providing anti-tank and anti-aircraft weapons to the
Ukrainian military decrease the likelihood that Putin would undertake a
conventional military invasion of eastern Ukraine?
General Dempsey. President Putin's ultimate objectives for Ukraine
are unknown. We are working through diplomatic and military channels to
ease tensions and dissuade further Russian interventions.
22. Senator Ayotte. General Dempsey, what military training is the
United States providing the Ukrainian military?
General Dempsey. Over the years we have developed a routine
training and exercise relationship. We are in contact with the
Ukrainian Minister of Defense and the Armed Forces to assess future
training requirements.
23. Senator Ayotte. General Dempsey, can the United States provide
more military training to the Ukrainian military?
General Dempsey. We are in the process of assessing Ukraine's
training and capacity needs to best support its requests for military
training.
24. Senator Ayotte. General Dempsey, if the United States can
provide more military training to the Ukrainian military, what specific
training would you recommend?
General Dempsey. Ukraine's newly elected government will greatly
influence its military training requirements. Their specific needs
include defense in depth, intelligence-operations fusion, campaign
planning, strategic leadership, operational level logistics, and
interoperability with law enforcement agencies.
general officer retirement pay
25. Senator Ayotte. General Dempsey, the 2007 National Defense
Authorization Act made significant changes to the pay authorities of
flag officers. The 2007 legislation provided incentives for senior
officers to continue serving by extending the basic pay table from a
cap at 26 years to providing an increase in longevity pay out to 40
years of service. According to a January 9, 2014, USA Today report,
using 2011 numbers, the 2007 pay table changes could result in a four-
star officer retiring with 38 years of experience receiving $84,000
more per year in retirement than previously allowed (63 percent more).
The 2007 changes not only increased longevity pay for senior officers
but also allowed senior officers retiring with 40 years of service to
receive 100 percent of their Active Duty pay. Unlike the cap on annual
pay, there is currently no cap on retired pay for these senior
officers. Was the purpose of this legislation to encourage combat
experienced one- and two-star admirals and generals to continue to
serve during a time of war?
General Dempsey. The legislation provided greater incentive and
more appropriate compensation for individuals who the Services retained
beyond 30 years of service. At the time of the change, with the
exception of cost of living increases, most O-9s and O-10s were serving
for over a decade without adjustments in salary or retired pay. The
changes provided consistent recognition across an individual's entire
career, not just the first 26 years. For certain highly-skilled
officers and warrant officers, as well as general and flag officers,
the impact of the changes has increased leadership experience and
allowed the Services to retain highly-skilled senior leaders.
26. Senator Ayotte. General Dempsey, do you believe this program is
still necessary given the fact that we have withdrawn from Iraq and we
are withdrawing most of our troops from Afghanistan?
General Dempsey. I believe we benefit from senior leaders who are
more experienced. That said, moreover, although our conflicts in Iraq
and Afghanistan are nearing a point of ``normalization,'' the security
challenges facing our Nation are significantly increasing. In my
judgment we will need more not fewer experienced leaders to operate at
the strategic level. I do not object to review or recommendations
regarding retired pay for general and flag officers. Because of the
complexity of the military retirement systems, any proposal for change
should be part of a holistic, system-wide review under the
congressionally-established MCRMC.
27. Senator Ayotte. General Dempsey, what is the justification, if
any, for keeping this in place?
General Dempsey. I believe we benefit from senior leaders who are
more experienced. The current legislation provides deferred
compensation, in the form of retired pay, based upon rank and position.
Prior to the 2007 legislative changes, O-9s, O-10s, the Joint Chiefs
and combatant command commanders were compensated without recognition
of varying experience or responsibility, while on active duty and upon
retirement.
However, I do not object to review or recommendations regarding
retired pay for general and flag officers. Because of the complexity of
the military retirement system, any proposal for change should be part
of a holistic, system-wide review under the congressionally-established
MCRMC.
28. Senator Ayotte. General Dempsey, is DOD recommending the repeal
of this provision? Why or why not?
General Dempsey. We do not object to review or recommendations
regarding retired pay for general and flag officers. However, because
of the complexity of the military retirement system, any proposal for
change should be part of a holistic, system-wide review under the
congressionally-established MCRMC.
impact on junior enlisted servicemembers
29. Senator Ayotte. Admiral Greenert, the Military Officers
Association of America (MOAA) estimates that the family of an E-5 would
experience a loss of nearly $5,000 in purchasing power annually if the
current military compensation proposals are enacted. In the hearing,
when I brought this to your attention, you stated that, ``they [E-5]
get about a 4 percent loss in buying power as a result of this. That's
about $2,500, not $5,000.'' Please explain the difference between the
figure MOAA calculated and the figure DOD calculated.
Admiral Greenert. We used the below methodology to analyze a
notional sailor's buying power as a result of our proposed compensation
reforms. That sailor's total loss is approximately $3,700, or 5.5
percent.
The 5.5 percent calculation reflects one amendment since the
hearing. After my testimony, we discovered that the compensation
amounts I presented for the notional E-5 with three dependents were
calculated incorrectly. We used a commissary discount value (one factor
among several used in our calculation) for a sailor with only one
dependent, which understated the calculated purchasing power. The
correct amount should have been $66,071 for an E-5 today, $78,313 in
2019 (with no compensation reform), and $69,804 (with compensation
reform). When corrected for inflation, $69,804 represents a 5.5 percent
loss in purchasing power (approximately $3,700).
Calculated purchasing power is composed of basic pay, BAS, BAH, and
the commissary discount, less TRICARE cost sharing. The notional E-5
has 6 years of service, three dependents, and is stationed in San
Diego. Calculated purchasing power does not include any special and
incentive pays that many sailors receive, such as Career Sea Pay or
Family Separation allowance (for deployed sailors).
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The table above makes clear that, absent compensation reform, a
sailor's purchasing power is expected to increase faster than the
standard measure of consumer inflation, consumer price index (CPI).
Because BAH is such a large component of sailor compensation, total
purchasing power without reform is also expected to increase faster
than civilian wages, as measured by ECI.
However, the traditional method to compare the purchasing power of
nominal cash flows at different points in time is to discount using the
CPI rate. Using the CBO discount rate detailed above, the total
purchasing power in 2019 for the notional E-5 including proposed
compensation reforms and expressed in 2014 dollars, is $62,399, or, a
5.5 percent reduction in total purchasing power.
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