Points of Interest: Commission Aims to Modernize Veteran Transition Benefits

By Tom Philpott

Principi, a lawyer and California businessman, previously served as deputy secretary of Veterans Affairs under the Bush administration and was chief counsel and staff director of the Senate Armed Services Committee. The other 11 commissioners are former congressional staffers, retired officers, and veterans group executives. Ronald W. Drach is with the Disabled American Veterans and Richard W. (Dick) Johnson is with the Noncommissioned Officers Association.

Principi hopes to convince fellow commissioners to support a tax-deferred savings plan for service members, as well as an increase in Montgomery GI Bill benefits. The commission also is studying ways to offer affordable temporary health insurance to veterans and their families as they look for work, and a business loan program to help launch second careers.

Congress won't support such gains, Principi said, unless the commission finds ways to curb waste and inefficiency in veterans benefit and training programs now spread across four federal departments. Some savings might he achieved by scaling back the VA home loan program. This program began when long-term mortgage money was scarce, Principi said. Today, veterans can get commercial mortgages at competitive rates for 2-3% down. Perhaps it still makes sense to guarantee loans to first-time home buyers but should that no money-down guarantee last a lifetime? Principi asked. Or are there better ways to spend that money on veterans?

"Times have changed since 1945," said Principi, a Naval Academy graduate who saw combat as a river patrol commander in Vietnam. "Society, the workplace, education have changed. Military demographics have changed, dramatically." Ideally, said Principi, all veterans' programs would be under one roof. But that might be too ambitious a goal, he conceded. Major recommendations can be expected, he said, on veteran and retiree health care, education, home and business loans, even dual compensation rules and discourage retired officers from taking federal civilian jobs.

Principi favors a Thrift Savings Plan (TSP) for active duty members, like the one being debated by the Joint Chiefs of Staff. It would allow service members to set aside up to 5% of basic pay each month in a tax-deferred account. Army and Air Force officials fear a TSP plan might invite fresh attacks on military retirement, but that shouldn't happen, according to Principi.

"I want to distinguish a Thrift Savings Plan from a 401(k) program, which some might perceive as a substitute for, or as offering in-roads to, military retirement. I believe strongly in the retirement program, given hardships we ask people to incur," he said.

"But the opportunity for young people . . . to put 5% into a savings plan, to be invested in stocks, bonds, or Treasury bills, [to] have something in four years to buy a set of tools or open a business, has a lot of merit." Commission fact-finding trips have confirmed strong support for TSP among service people, "It's an empowerment issue," said Principi. "Service people are saying, 'Give me a little bit of power to make decisions that impact my life.'"

Principi wants Congress not only to boost education benefits but also to add flexibility in the way they are paid. Only 34% of veterans who contributed $1,200 to enroll in the Montgomery GI Bill are using benefits after leaving service. That's disturbing, he said. In contrast, 60% of Vietnam-era veterans used education benefits.

Two reasons are cited for the low usage rate. Montgomery GI Bill benefits haven't kept pace with education costs, so college remains unaffordable for many. Also, 60% of members discharged today are married. For them, finding work often has a higher priority than returning to school. Only 10% of separating service members during the Vietnam era were married.

The type of education veterans seek also has changed, said Principi. Montgomery GI Bill is geared toward college, with $15,000 in benefits spread over 36 months. A veteran who wants to take an intensive computer training course lasting only six months but costing $5,000 is not well served. MGIB payments of $400 a month would cover less than half of that cost.

But the commission also will recommend ways to cut redundancy and waste from benefit programs. "In many cases we have organizational structures rooted in the past," said Principi. Why, for example, does a service member who receives a thorough physical before separation need another conducted by the VA to receive a disability rating?

"This commission is not here to dismantle programs. It's here to ensure the right programs are in place for the 21st century," he says. "We have to recognize change and be willing to make tough tradeoffs." 

 

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