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Hearing of the Senate Armed Services Committee - Recent Changes to the U.S. Military Retirement System


Location: Washington, DC


Senator GRAHAM. Thank you, Mr. Chairman. Thank you for having this hearing and all the things you've done over the years to keep us focused in Congress about what's the right thing to do for our military. I really appreciate your leadership.

It seems to me, as Senator Reed said, we've all reached a consensus that we would like to undo what we all consider to be an unfairness here. As far as timing, I think the sooner the better. I'll just make this observation. Senator Wicker kind of expressed the
idea that nobody thought we would engage in sequestration, but here we are. So I just think the sooner we can go back to the status quo the better. There's enough anxiety among our military service personnel now. We don't need to add any more. That would just be one thing off their plate. So that's why I would advocate doing it now.

I'd also like to associate myself with Senator Kaine. It's good to have a budget. You make mistakes in the budget process, but, quite frankly, I'm very pleased with my colleagues. We raised this early on with Senator Wicker and Ayotte and myself, and the way the Congress has responded to looking at this with an open mind and trying to fix it in a bipartisan way--I think this is a good thing for the body. Everybody makes mistakes, but you really judge people by their willingness to right wrongs. It seems like we're on a good glide path to find $6 billion, hopefully, to set aside what we've done with the CPI Minus One Percent.

But the idea of reforming compensation, count me in. I just think the time has come prospectively to look at the sustainability. Now, there's a difference, Admiral, between what you're saying about the overall cost of personnel within the military budget and what some of our veterans organizations are saying. What percentage of DOD's budget is personnel-related?

Admiral WINNEFELD. The military compensation by itself is about a third, and overall compensation, to include civilians, is about half of the budget. But I'd hasten to add that the more I've dug into this and the more we as a body deliberating this have dug into it, the less sophisticated that metric sounds, because there are so many variables that go into it. How big is our top line? How many people do we have? What is the cost of health care? Do you include OCO or not?

It's just a squishy number, and you wouldn't want to pin, here's the goal, it should be 32.5 percent, because if that changed it would disrupt things. So we really want to find out what it takes to recruit and retain the best and pay them fairly.

Senator GRAHAM. One thing I would suggest is get with some of our veterans groups here that have a different view of what the personnel costs are. Because I remember Chairman Dempsey talked about 54, 50 percent of the current budget is absorbed in personnel costs. And when you look in the out years, the growth of TRICARE, where are we headed in terms of personnel costs inside the budget over a 15 or 20-year period?

Admiral WINNEFELD. I think when Chairman Dempsey was referring to the 50 percent he was including civilian compensation.

Senator GRAHAM. Right.

Admiral WINNEFELD. You also have to ask do you include indirect benefits that are provided as well as direct pay.

Frankly, it's probably going to stay stable. There was some initial information--and the information's all over the place----

Senator GRAHAM. Even if you don't do reforms, it will stay stable?

Admiral WINNEFELD. If we do reforms, the percentage would probably stay stable.

Senator GRAHAM. Without reform?

Admiral WINNEFELD. Without reform--without reform it might go up a little bit. With reforms, it's going to go down a little bit. But again, the more sophisticated, we believe, way to look at it is what is the best way to recruit and retain the best America has to offer, take the best possible care we can of them, and get the best value for the American taxpayer? That's an isolated look. It's not a ""what's the right share of the budget?''

You can imagine, if you picked a budget share and the budget went down, does that mean we reduce pay? We wouldn't want to do that.

Senator GRAHAM. No, I understand what you're saying. Secretary Fox, I guess the point I'm trying to make is that if about half the budget is going to be personnel costs, direct or indirect, the other half will be spent on readiness, modernization, being able to actually go to the fight. The reason we're looking at reforming compensation is because over time we think it's unsustainable; am I right or wrong?

Ms. FOX. Yes, sir, you're correct. These statistics--this budget share includes the number of people we have and the amount they are compensated. So if compensation costs were allowed to grow unsustained, we'd just take it out of the people. We'd have fewer and fewer people.

Senator GRAHAM. Well, you'd have fewer and fewer people with less equipment to fight with.

Ms. FOX. Yes, sir.

Senator GRAHAM. The goal is not--the goal is to have a well paid, well trained military that can win the war, right?

Ms. FOX. And come home safely, yes, sir.

Senator GRAHAM. And come home safely, and not have a fair fight. We're not looking for a fair fight in the future, right? We want overwhelming force on the battlefield so the war ends as quickly as possible, with the least amount of casualties. That means we have to have the equipment and the training. Is that right, Admiral?

Admiral WINNEFELD. You're absolutely right, Senator. We want to win 100 to nothing.

Senator GRAHAM. 100 to nothing. We don't want to go to war because those who go to war have to believe they will lose, and those dumb enough to go to war will lose. It's just that simple. But you've got to keep the people around to make sure you win the war.

Now, GDP on defense. Historically, in a time of peace what's been the historical average, say since World War I, GDP spent on defense?

Ms. FOX. Sir, I don't remember. I'll have to take that for the record.

Admiral WINNEFELD. I know you have very good command of those numbers, sir. I don't have them memorized. But I think it has changed over time, as you well know.

Senator GRAHAM. Does 5 percent sound about right? Okay.

Where will we be at the end of sequestration, even with the relief we have provided, in terms of GDP spent on defense?

Ms. FOX. Senator, I think you know the answer to that question, sir, and I think it is less than 5 percent.

Senator GRAHAM. Yes, but I'm not in the Pentagon. I need somebody in the Pentagon to tell me this.

Ms. FOX. I'll have to take that for the record to get you a precise number.

Senator GRAHAM. The reason I want you to find out, because we need to make an intelligent decision about sustainability of benefits prospectively, telling people if you sign up in the future you may not be able to retire at 38 and you may have to wait a few years.

We're going to tell the retired community we're not going to dump on you, we're going to do this prospectively. But somebody has to have a vision of where we will be as a Nation at ten years from now in terms of budgeting.

That takes me back to sequestration. It's my belief that we're going to be dramatically under 3 percent of GDP if we keep this glide path intact.

In 15 seconds, what are our allies doing in NATO? Are the people we fight with spending more or less in the next 10 years on defense?

Admiral WINNEFELD. In 7 seconds, less.

Senator GRAHAM. So our allies are spending less. If we leave sequestration intact we could be well below what we spent in time of peace. Do you consider--what's the likelihood the war on terror will be over in the next decade, Admiral?

Admiral WINNEFELD. We think that we're going to have to continue to suppress, contain, defeat al Qaeda until it collapses of its own internal contradictions, and that's going to take some time, absolutely.

Senator GRAHAM. Likely not to occur in ten years?

Admiral WINNEFELD. We would love for it to occur within ten years, but I don't think we can count on that.

Senator GRAHAM. So let's plan for the worst, right?

Admiral WINNEFELD. Yes.

Senator GRAHAM. Thank you.


Senator GRAHAM. Thank you.

I think we are firmly committed to fixing this problem. Without those emails, I'm not so sure we would be as firmly committed as we are. So I just want your membership to know it matters that you weigh in, that you go visit people. The Congress is very friendly to our military. Sometimes we make decisions that upon a second look maybe were not that smart. The fact that we're responding appropriately I think is a good thing. But do not underestimate how urging helps.

Now, isn't there a social contract, even though it's not in writing? Your kids, your sons, your daughters, individuals, will not have to be drafted because others will come forward and do the job voluntarily.

Isn't that the deal? I don't know what that's worth to somebody out there, knowing that your son or daughter doesn't have to be drafted. I don't know how you put a number on that. But think about it in terms of the family budget. What would you pay, if you had to, to avoid your family from being drafted?

That's kind of an odd way, I guess, to look at it. But you're trying to put a value on something that's hard to actually put a value on. So when we talk about retirement--you're a master sergeant, is that right? What was your retirement when you first retired?

Sergeant DELANEY. Right at 21,000 a year.

Senator GRAHAM. Here's the deal. $21,000 after 20 years of service, multiple deployments, whatever risk comes your way. That is a good retirement, but by no means an exorbitant retirement, given the value to the country. Given the fact that your son, your daughter, your loved one, doesn't have to go, would you be willing to pay somebody $21,000 or contribute your part to it? I think most Americans would say yes.

Now, having said that, now that we're going to right this wrong--and we will--who is advocating for the defense budget?

You're out there talking about the troops and their quality of life and what we should be doing in terms of TRICARE in the future and how we should be sensitive to any changes we make to the benefit package, because that's who you represent. Who is representing the equipment? Who's representing the number of people?

If it's not the Congress, who?

General SULLIVAN. Well, at the risk of breaking in--

Senator GRAHAM. Please.

General SULLIVAN.--I'll tell you, the Association of the United States Army is advocating for that. We're advocating for mission accomplishment, and that is a very finely tuned relationship between young men and women who are developed as leaders and trained to fight and their equipment and the doctrine and so forth and so on.

Senator GRAHAM. Is that true of everybody else at the table?

General SULLIVAN. Well, I don't know.

Senator GRAHAM. No, I'm asking them.

General TILELLI. Yes, sir. Yes, sir, I think it's true of all of us, because when you look at readiness for the country, it's not only people; it's the modernization, the equipment, it's also the training.

So it's the triad. I think we all support that, and I think the reason we're not talking about that today is because of the subject of the panel.

Senator GRAHAM. Can I make a proposal to you, that if you believe, as I do, that at the end of the sequestration period of time we're going to have a greatly reduced military capability at a time when we may need it the most, is it unreasonable for a member of Congress to say over the next decade the GDP we spend on defense should be at least consistent with peacetime spending? Is that an unreasonable position?

General SULLIVAN. No, I don't think it's unreasonable. I think it's also not unreasonable to ask all of the people who are suggesting otherwise or that we continue with this sequestration to state, could you please tell me what you think you're getting for a defense establishment at the end of this journey?

Senator GRAHAM. What kind of capability.

General SULLIVAN. What kind of capability are we going to have in 10 years or 15 years if we just have this mindless approach to budgeting and programming?

Senator GRAHAM. As my time is about to expire, I guess what I'm trying to suggest is that historically we've been spending around 5 percent of GDP on defense in time of peace, more in war. I would like some organization out there to start advocating for a ten-year number consistent with the threats we face.

So I know you're here to ask about the COLA changes and they need to be changed. But I'm asking you to think even bigger, to come back up on Capitol Hill and remind us all, who many haven't served who are great people, who kind of defense capability will you have if you keep invoking sequestration? And look where the average has been and see how far away. Would you be willing to help us in that endeavor? I feel incredibly lonely in this exercise.

General SULLIVAN. Sir, I'll be up soon.

General TILELLI. Absolutely.

Senator GRAHAM. Thank you. God bless.

Chairman LEVIN. Thank you so much, Senator Graham.


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