Cuts coming out of defense budget

The “super committee” that Congress and President Obama created in August to make tough budget choices and slow America’s runaway debt has left military people confused and divided over whether to cheer for its success or pray for its failure as its Thanksgiving deadline nears.

Success will be achieved if seven of 12 lawmakers on the Joint Select Committee on Deficit Reduction agree by midnight Wednesday on a plan to trim projected budget deficits by at least $1.5 trillion over the next decade.

But that success plan could include higher out-of-pocket health care costs for military retirees and their families, and a hike in beneficiary co-payments on drug prescriptions filled through the TRICARE network of retail pharmacies. Also, all federal retirees, social security recipients and disabled veterans might see annual cost-of-living adjustments dampened a little each year through adoption of a new “chain” COLA formula.

Whatever impact higher beneficiary co-payments might have on military morale, Defense Secretary Leon Panetta is warning it will pale in comparison to the damage done to national security if the super committee fails to reach a deal. That warning is echoed by leaders of every service, and by the chairmen and ranking members of the armed services committees.

They are worried because the same Budget Control Act that gives unprecedented power to a special panel of six Republicans and six Democrats also comes with what Panetta calls a “doomsday mechanism” in case of a majority of committee members refuse to reach a deal.

The mechanism — sequestration — forces future defense budgets and some popular entitlement programs to take across-the-board cuts. For defense, the deepest cut would occur in 2013, followed by automatic cuts of up to $55 billion a year for eight more years. This would be on top of $465 billion in defense cuts the president and Congress already have agreed to and Defense officials are studying how to implement over the next decade.

Newt Gingrich, former speaker of the House and a candidate for president in 2012, has called the sequestration gambit “suicidally stupid” for putting “the security of the United States at risk because of an arbitrary budget number.”

The various debt-cutting proposals aimed at TRICARE and brought to the super committee by independent commissions, the White House and leaders of the Senate Armed Services Committee have been described here in earlier columns. Sen. John McCain (Ariz.), ranking Republican on armed services, even suggested that working-age retirees be bumped from TRICARE Prime, the managed care network, and pay higher costs under TRICARE Standard, the fee-for-service health insurance option or rely instead on civilian employer-provided insurance.

On Monday, Panetta gave McCain more political cover for backing these entitlement cuts when he laid out for the senator in new detail what will befall defense programs if “maximum” sequestration is triggered so defense cuts total almost $1 trillion over the decade.

“The impacts…would be devastating,” Panetta wrote. In fiscal 2013, assuming the president exercises his authority to exempt military personnel accounts from automatic cuts, a 23-percent cut “would have to be applied equally to each major investment and construction program” of the Department of Defense, leaving “most of our ship and construction projects unexecutable — you cannot buy three quarters of a ship or a building…”

Many civilian workers would have to be furloughed, Panetta said, breaking faith with valued personnel and “seriously damaging readiness.”

“The situation does not get better” beyond 2013, he added, with cuts of up to $100 billion a year possible compared to the 2012 defense budget.