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USD Chu Interview on Concurrent Receipt

Presenters: David Chu, USD P&R
November 01, 2002

(Interview with Jennifer Sergent, Scripps Howard News Service)

Q: Thanks for making time for me. I just wanted to talk to you a little bit about the reasoning behind the Defense Department's objection to both versions of the concurrent receipt in the Defense Authorization Bill.

I guess specifically my first question would be veterans are saying they deserve those payments and they're totally different things. They shouldn't be locked in with the same group.

Chu: First of all let me emphasize that I think everyone agrees we want to be sure we've treated our military personnel and our veterans properly and to provide adequate support for their needs through our various programs. And I should also emphasize the issue here is not just the Department of Defense's issue, it's the Administration's position on this issue.

Indeed, for 100 years it's been the Congress' position too. This is, after all, the current law of the land and has been so since I think 1897. Because, just as you point out, these are two very different programs. They were set up for different purposes. And much as is true in the civil sector, Congress over 100 years ago took the position you can have one or the other but not both. Actually, Congress has blurred that line slightly. I'll come back to that later on but the first principle here is this has been the Congress' position. Now obviously some in Congress want to change that position. That's really the news is Congress now wants to change its mind. The Administration, the Executive Branch is saying no, the original prohibition that you indeed enacted over 100 years ago is sound policy.

The reason is that military retirees, and that's what this is about. This is not about all 25 million veterans. This is about a small class of veterans, those who have been fit enough to serve 20 years or more in the military and by that service earn a retirement annuity. As you may be aware, that retirement package is actually one of the best retirement packages in America. If you serve 20 years you get 50 percent of your base pay and then it gradually increases to a maximum of 75 percent of your base pay if you serve 30 years of service. You receive lifetime health care which we pay for. There are some small payments you make yourself. You receive the right to continue to use the commissary system which is our grocery store system. And just to give you an idea of the benefit there, on average for brand-name goods, commissary prices are 30 percent below your local supermarket so it's a terrific benefit. You can use our exchanges, and there are a variety of other benefits which other veterans get too that also accrue to military retirees.

One of the reasons this package is available to you after just 20 years of service, which is unique -- only firefighters, policemen, other law enforcement classes in our society get such annuities so early -- is that we recognize military service is hard, arduous, difficult, demanding, and involves often substantial physical risk, including injury. So we want to be sure that you're well cared for and that we not ask something unreasonable in terms of how long it takes in order to earn this package so you can go out, it says you can enlist at 17. In fact the youngest retirees are, in terms of what they can legally admit to, 37. Now some people occasionally fib about their age and so there are some retirees who might have been actually a bit younger than that over the decades.

The irony here, in our judgment, is the Congress is not proposing, and hence I'm a little perplexed by some of the veterans' groups' great upset. The Congress is not proposing to do anything by this legislative change for the military retirees who have been hurt the most. And those are the people who were hurt so badly that they could not complete 20 years of service. And if that happens, for example, the lieutenant burned badly in the attack on the Pentagon on September 11th, he is medically retired from the Navy. You get the annuity calculated differently than if you had completed 20 years of service, and you are likewise, by this 1897, law barred from concurrently receiving your VA disability payment. But the great irony in this debate is Congress is not proposing to give these guys and gals access to both programs. It's only for the people who have reached 20 years of service, who were fit enough to get to the 20 year point.

So our point really is, we think we've done a good job of taking care of that group of people with our overall retirement package, our deferred compensation package, if you prefer to call it that. That there isn't the kind of need there that would justify the expense to the taxpayer and the sacrifices others will have to make if either provision passes the Congress. The House provision is estimated to cost $18 billion over a ten-year period and that's because the House establishes 60 percent disability rating as evaluated by the VA as the cutoff to get a dual compensation result. The Senate opens it up to everybody and the Senate bill therefore is particularly expensive. It's $58 billion over ten years. That is coming out of somebody's pocket. That's either the taxpayers' pocket or it's the current serving military person's pocket. It means we all have to say to the young soldier living in the somewhat decrepit barracks -- of which we have plenty if you'd ever like to tour them -- I'm sorry, we can't fix that now, you'll have to just suck it up and continue to endure whatever deprivation that entails, or it's a veteran who hasn't retired and who wants medical care in the VA hospital. As you know VA has a great controversy now about the ability to care for all the veterans eligible for medical care, struggling to meet that set of demands.

So this is not free, is the main point. This is coming out of someone's pocket, and we don't see that there is the kind of need there, however nice it would be to further honor the service of these individuals, but we don't see the kind of need there that would justify this kind of expense.

Indeed Congress has already passed -- this is coming back to the point I made earlier that they've already blurred the line a little bit -- they've already passed legislation about three years ago with a set of special pays, additional payments monthly to those with the highest disability ratings.

Question: Seventy and higher?

Dr. Chu: Seventy and higher. The so-called special pay legislation. So Congress has already addressed this problem. Our question is what more do you really need to do here?

It's always nice to give any group more, but it ought to for this price tag be based on a clear problem we're solving, and we don't see the problem we're solving. As you point out in your question, this has been posed as an issue of entitlement. We think that's the wrong way to think about the problem. It's also not the way the country's thought about the problem for over a century.

Sorry to be so long-winded.

Q: No, this is very helpful.

Chu: That's the essence of it.

By the way, as you also know it's not quite as black and white as some in the Congress would make it seem because you can in fact under current law accept your VA disability payment as long as you reduce your military pension dollar for dollar. That is advantageous to you because the VA disability payments are tax-free. So those in the higher tax brackets are already getting some of the benefit of the VA disability program.

Q: You mentioned earlier that there is an irony that those who are hurt so badly they can't finish their 20 years, they don't have access to both of these payments.

Chu: They don't under current law and they would not under the bill that's being considered by the Congress.

Q: Would the Administration support something like that? I'm assuming that also would come at a huge cost.

Chu: The Administration has taken the position that we're only commenting on what the Congress has initiated. Again, we think the programs for these people are adequate. We're very happy to join the debate over any special cases or any special groups that you can demonstrate are -- we do that all the time.

If you look at our President's budget request each year, we have -- the General Counsel gives me grief over this all the time -- We have 50 to 75 changes in a typical year, adjusting programs -- compensation programs I want to emphasize here -- to make sure they're adequate. This ranges from trivial issues like how we deal with your moving expenses to very significant issues like the structure of the pay table. And in fact --

Q: Every year you make 50 to 75 changes?

Chu: Every year we make 50 to 75 -- We request, I should emphasize. The Congress doesn't always honor these requests, and often it adds its own items. But we are constantly readjusting our programs to ensure that people are properly taken care of.

We run a volunteer force. We're very proud of that. It's a terrific force. It's the best military in the world. The way it gets and stays that way is the best young people in America are willing to say I'll join, I'll serve, I'll accept the risk. That means we have to be fair to them. We will be delighted to address any issue of inadequacy, on unfairness, etc. But just because a program exists does not mean that one should be entitled to its benefits. Unfortunately, I think that is too much the position of those who are campaigning for the repeal of the concurrent receipt ban.

Q: Okay, sir. Thank you so much for going over this with me. I really appreciate it.

Chu: My pleasure.

Q: I know you have a busy day.

Chu: I appreciate it and I look forward to your piece.

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