Despite a veto threat from the Bush administration, Congress moved this summer to restore full retired pay to some, if not all, career military retirees who draw tax-free veterans' disability compensation for service-related injuries or illness.
Entering August, however, three key questions remained unanswered:
- Would all disabled 20-year retirees, or only those with the most severe ratings of 60% or higher, see an end to the dollar-for-dollar offset of military retirement required for retirees who draw tax-free veterans' compensation?
- Would their retired pay be restored all at once and as early as 1 October, or be phased in over five years, starting on 1 October 2002, or 1 January 2003?
- Would President George W. Bush veto the 2003 defense authorization bill, as aides have warned, if it includes any relaxation of the 110-year-old ban on "concurrent receipt" of both full military retirement and veterans disability pay?
A House-Senate conference committee on the defense bill plans to decide the first two issues by September while wary veterans' groups are preparing strategies for a veto fight they hope will not come.
On 19 June, the Senate approved an unfunded amendment to restore full military retired pay immediately to more than 600,000 retirees who draw disability compensation. Under current law, their retired pay is reduced by the amount they receive from the Veterans Administration for "service-related" injuries or illnesses.
The House earlier had passed a defense bill with language to restore full retired pay over five years but only for retirees with disability ratings of 60% or higher. This initiative was fully funded and would mean a sharp jump in pay for at least 90,000 retirees.
The Bush administration opposes both concurrent receipt initiatives, and listed them among reasons the President might veto the bill.
That veto threat, in an unsigned 19 June letter from the White House Office of Management and Budget to Senator Carl Levin (D-MI), chairman of the Senate Armed Services Committee, surprised defense officials as well as veterans' groups. The Defense Department had not advocated a veto to stop concurrent receipt, said a senior department official, although Defense Secretary Donald Rumsfeld and his staff do oppose it. The White House letter did not promise a veto but said, "senior advisors would recommend" it.
Steve Strobridge, director of government relations for The Retired Officers Association, said he did not "believe the President would veto the authorization bill for the express purpose of taking retirement pay away from disabled retirees."
Bob Manhan, assistant legislative director for the Veterans of Foreign Wars, agreed. Even if there is a veto, he said, 83% of senators and 90% of House members are cosponsors of concurrent receipt legislation.
"If the co-sponsors stick to their guns," said Manhan, "those numbers could override the President's veto."
But some administration officials said President Bush might be alarmed enough by projected costs of full concurrent receipt—$58 billion over ten years—to take heat from angry retirees.
"This President isn't afraid of defense [controversies] like the last President was," said a White House official who said he saw opposition to concurrent receipt stiffen after a "statement of administration policy" on the defense bill (S. 2514) was reviewed by the White House in early June.
As House-Senate conferees began to iron out differences in their respective bills, a rising worry among some concurrent receipt advocates was that House negotiators, swayed by administration arguments and climbing cost estimates, might toss in the towel on limited concurrent receipt for the most severely disabled and give senators their false (i.e., unfunded) victory on full concurrent receipt. This would invite a veto and could kill any progress on concurrent receipt for another year.
David Chu, Under Secretary of Defense for Personnel and Readiness, told a group of defense writers that raising the pay of career disabled retirees would pinch funds for more pressing needs such as improved housing for active forces.
Combining payments "is not necessarily the right answer," Chu said. "The two systems were constructed with very different purposes in mind."
Retirees argue that the offset in retired pay, in effect, has them subsidize their own disabilities. In addition, other disabled veterans can draw veterans compensation while working as federal civilians, apply military years toward civil service pensions, and, once retired, draw full annuities plus disability money.