In early September, Congress moved nearer to ending the century-old ban on "concurrent receipt" of both military retired pay and Department of Veterans Affairs (VA) disability compensation, for the most severely disabled among career retirees.
White House budget officials continued to wield a veto threat over the measure, however, and defense officials tried to persuade lawmakers to keep the ban in place with a new, perhaps final argument that most disabled retirees are not so bad off financially that they need the extra money, which would total $2,100 or more per month to a person rated 100% disabled.
Dr. David Chu, Under Secretary of Defense for Personnel and Readiness, became the Defense Department's lead critic of concurrent receipt. In an interview he noted that results of a 1996 department survey showed average household income among all military retiree families, officers and enlisted, at $60,000 per year. That average held steady, he said, regardless of a retiree's disability rating, suggesting VA-rated disabilities are not keeping retirees from productive second careers.
"So it's unclear to us what problem we're solving," Dr. Chu said. Lifting the ban on concurrent receipt, he added, "is a bad choice for the American public. It's not really targeted on the veterans who are our greatest concern [and], therefore, the administration opposes it."
A House-Senate conference committee should iron out any differences between separate versions of the 2003 defense authorization bills. Concurrent receipt was to be one of the last issues resolved.
Under current law, 20-year military retirees see their retired pay reduced, dollar for dollar, by any amount they draw in tax-free VA disability compensation for service-related ailments or injuries. The House voted to phase out the offset over five years, but only for about 90,000 of the most disabled retirees, those with disability ratings of 60% or higher. The Senate, by contrast, voted to end the offset immediately for all 700,000 career retirees drawing VA disability pay. Lured by the dollars involved, another 700,000 nondisabled retirees were expected to apply for VA disability ratings once the retired pay offset ends, according to VA estimates.
"It would be lovely to send the additional payments to everybody. But the bill to the taxpayer—whether that means higher taxes or that means some other federal program must be diminished or forgone—is significant," Dr. Chu said.
The administration agrees retirees with disabilities must be compensated properly, he said. "Where we disagree is [over] what's necessary to do that."
As House-Senate conferees prepared to debate the issue behind closed doors, Dr. Chu hoped they would heed a presidential veto threat and vote to kill both concurrent receipt initiatives. If that would happen, he said, "we are prepared to discuss if there is a group who has a need we have not met properly."
Congress, he argued, does not understand the current ban, and if it is removed, lawmakers will come to regret it. The Senate plan would cost $58 billion over ten years. The House plan would total $18 billion over its first decade.
Proponents for concurrent receipt say it is a matter of equity, because other veterans who leave service short of retirement and take federal civilian or private industry jobs can draw VA compensation without suffering an offset in pay from civilian pay or retirement.
That is an appealing argument, Dr. Chu conceded, but it ignores the "generous" nature of military retirement, with annuities payable after only 20 years and fully protected from inflation. Retired pay is so generous, he said, in part to compensate for the danger of service life and for ailments or injuries that can occur.
Mitchell Daniels, director of the Office of Management and Budget, will recommend a presidential veto if either provision is enacted, Dr. Chu said. One factor conferees should weigh is how retiree benefits have been enriched the last few years, first through repeal of retired pay cuts for persons who entered service after 31 July 1986, and later through enactment of TriCare for Life, a valuable health insurance plan for elderly beneficiaries.
Concurrent receipt advocates usually cite cases of retirees too disabled to work, Dr. Chu said. But most disabled retirees do work, he added, and even earn civilian retirement benefits. A third of retirees who will gain from concurrent receipt, he pointed out, are officers who "typically stand in the top 10% of the American income distribution. This is not a disadvantaged class."
Steve Strobridge, director of government relations for the Retired Officers Association and a concurrent receipt advocate for the Military Coalition, an umbrella group of service associations, said Under Secretary Chu is wrong to apply a "needs" test to a dispute over earned benefits.
"According to that logic, we shouldn't pay senators because most of them are millionaires," Strobridge said.
"The issue is: did people earn their disability compensation? Did they earn their retired pay? If they did, then anything they get for the disability should be in addition to retired pay. They should not be forced to give up their retired pay."
Strobridge said he had not detected much wavering by lawmakers as a conference vote neared. With concurrent receipt, he said, "90% of Congress has their name on the line."