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CBO Offers New COLA, Pay, Benefits "Options"[/FONT]
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Last fall, the Congressional Budget Office (CBO) put out a book of budget options for consideration by the new Congress to increase or cut spending on health care issues, including an option to charge TRICARE For Life beneficiaries thousands of dollars a year. In the end, the President's budget didn't include any of the military health care options. [/FONT]
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Now, CBO has come out with Volume 2 of its budget options book (PDF), outlining possible ways Congress might hike or cut spending on military force levels, military pay and benefits, VA disability compensation, Social Security, COLAs, and taxes. [/FONT]
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Here's a selection of some of the options listed in the new CBO publication. [/FONT]
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Army manpower: One option envisions adding 23,000 to "fully staff the active Army," as recommended in the Senate version of the FY2010 Defense Authorization Bill (S. 1390). Another would roll back recent increases and cut 65,000 from the active duty Army and 9,200 from the Army Reserve. [/FONT]
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Military Pay Raise: This option would cap military pay raises .5% below private sector pay growth for each of the next five years and have the services offer additional bonuses as needed to meet specific skill needs. [/FONT]
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Commissaries and Exchanges: This option would consolidate all service commissaries and exchanges into a single retail system and raise prices by 5%. Instead of subsidizing commissaries, DoD would provide active-duty servicemembers who receive subsistence allowances (but not retirees or reservists) a tax-free grocery allowance of $600 per year. [/FONT]
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Retired Pay/VA COLAs: This option would base the annual COLA adjustment for federal and military retired pay and VA disability compensation on the chained consumer price index for all urban consumers (CPI-U) instead of the current CPI-W (for all urban wage earners and clerical workers). CBO estimates this would depress COLAs by about .3% per year, which would be particularly disadvantageous for beneficiaries who retire earlier and live longer.[/FONT]
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Social Security: Various options would raise the Social Security retirement age to 70, base benefit calculations on price changes rather than earnings changes, base COLAs on the chained CPI-U, reduce spousal annuities by one-third, or increase the maximum taxable earnings amount for current workers, among other ideas. [/FONT]
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VA Disability Compensation: This option would reduce VA disability compensation by the amount of any Social Security Disability Insurance received. [/FONT]
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Income Taxes: Options range from permanently extending some or all of the tax cuts approved in recent years or reducing the number of taxpayers subject to the Alternative Minimum Tax to raising tax rates by 1 percentage point for various segments of the population, limiting charitable deductions, or extending charitable deduction eligibility to taxpayers who don’t itemize.[/FONT]
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For perspective, CBO publishes these options books for each new Congress. Relatively few of the ideas in them have ended up getting enacted. Many are rehashes of ideas put forward many times in the past. [/FONT]
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At this late stage of the legislative year, we don't expect them to get serious consideration for FY2010. [/FONT]
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But as federal budgets tighten and deficits deepen in the years ahead, it's virtually certain that we'll have to contend with renewed threats to pay raises, COLAs, commissaries and TRICARE fees - and more -- down the road. [/FONT]
