guest post

by Dave

I'm a Naval Officer. It is a decent-paying gig. But the best part is--for me--retirement is only 6 years away.

It may come to a surprise to some readers that I will start receiving a life-long fixed-benefit pension when I am 42 years old.

In the US, military retirement pay is triggered by 20 years of active service. As currently constituted, a military retiree receives 50% of his base pay and full medical for himself and his dependents ("dependents" is military talk for spouse and kids under 18 ... or 23 if they are in college). Serve 19 years and 11 months, and you get nothing. But once you get to 20, the benefits last for life. Stay on active duty past 20 and the percentages increase ... my dad retired after approximately 30 years and got 75% of his base pay instead of 50%, and his base pay after an extra decade was substantially higher. When my dad developed a brain tumor, essentially the entire medical bill was born by the government. His untimely death was not a financial windfall for the government; because he had agreed to take a somewhat smaller monthly payment, the government now pays a portion of his pension to my mom, who will continue to draw payments (and receive full medical benefits) until her death, or the unlikely event she were to remarry.

That system is bound to end, and I think it is going to end quite quickly. I would say it will end much quicker than the military sub-culture expects, except that the military has no sense that it is even in question.

I've tried to explain this to military co-workers. Almost to a man, my arguments are dismissed in a cloud of entitlement-fueled self-delusion. The military sub-culture, lulled to sleep by repeated chants of "thank you for your service," really expects that in the upcoming budget fight that its stake will be protected by an appreciative middle class. They're in a for a rude awakening.

I generally dislike the "thank you for your service" comments, but I never express my discomfort. And I generally believe that the people who express their appreciation generally mean what they say. But as the federal coffers run empty, politicians will decide whose benefits get cut, and thus the decisions will be inherently political. And military members, prevented (properly) from organizing politically, will find themselves unrepresented and ignored in the political process. And once the Afghanistan and Iraq adventures finally wrap up, the yellow ribbons will go away and an increasingly grumpy and nervous middle class will view 20-year pensions as an unreasonable and unaffordable threat to their financial security. We're already seeing local discussions that relatively generous pensions for police are unaffordable ... once the wars end it is only a matter of time until those sentiments are transferred to the military. The middle class primarily values economic security (understandable I suppose if you have a 30 year mortgage) and will support military pay only until it is perceived as a threat to its collective benefits. Robert Gates stated that the US can have a welfare state or be a world power. Britain faced the same choice after WW2 and ditched their empire with remarkable speed. Until now, the US was able to avoid such a choice due to a combination of economic advantages and borrowing. As that comes to an end, there is no reason to think that the US population won't make the same choice the British did.

Discussions about whether military members deserve their retirement pay largely miss the point. Politicians will cut benefits based on short-term political calculations, not moral considerations. And the military class, largely separated from the general population and and feeling quite entitled to public deference after a decade of "support the troops" rhetoric, will be shocked, and will not be happy. The consequences ... perhaps a discussion for another day.


Gino said...

they cut benefits previously, back in the early 80's. not sure by how much, but i know it was trimmed somewhat for new enlistees.

Dave said...

From what I remember, the last serious benefits reduction effort came at the beginning of the Clinton administration when then Sec of Defense Les Aspin suggested reducing 20 year retirement from 50% to 40% of base pay ... there was a fairly loud outcry from the retirement lobby and the idea was shelved. At that time, there were still plenty of Cold warriors in the armed forces, and there was a lot more available cash ... now, my sense is that things are different.