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Leaders of the Pentagon got something they really wanted in a congressional budget deal. They are restraining future pensions paid to American troops. Cutting veterans' benefits is never popular, but on this program last month, Defense Secretary Chuck Hagel said benefits are getting so costly, it's hard to keep troops ready for war.
(SOUNDBITE OF ARCHIVED INTERVIEW)
SECRETARY CHUCK HAGEL: Personnel costs right now, including retirement compensation and health care, are about 50 percent of our total budget. We know what the trend lines are on that. We know we can't afford it.
INSKEEP: So, starting in 2015, future pensions would be restrained, saving $6 billion. Politico reporter Juana Summers is following the story.
JUANA SUMMERS: If you listen to Defense Secretary Chuck Hagel, before him, Leon Panetta, the statement's always been it's simply eating the Defense Department budget alive. Personnel costs - including pensions, the cost of military health care - are overwhelming the department. And even though we're drawing down the wars, obviously, in Iraq and looking to pull out of Afghanistan by the end of 2014, it's just not able to keep pace. And so lawmakers are always looking for ways to cut that. But anything that would cut care and benefits for the military, not a very popular prospect back home, and that raises a lot of problems.
INSKEEP: Every time that any defense secretary has tried to do that, even in a minor way - Defense Secretary Robert Gates wanted to change the costs of health care for service personnel a few years ago, and couldn't even get a few dollars out of people.
SUMMERS: That's absolutely right. And you saw the same thing this year in the debate over the defense authorization bill. The president's budget request actually looked at cutting for TRICARE - the military program - to cut some of those benefits. And lawmakers in both chambers just are fundamentally opposed to it, despite the fact that they're constantly asking the Pentagon to do more with less and saying it needs to curb its budget, particularly with sequestration - so, a perennial problem that no one seems to know how to fix.
INSKEEP: And it's an emotional argument, because you've got people who've served their country, who in many cases were wounded in action, who have seen terrible things in many cases, and you don't want to cut them short.
SUMMERS: Absolutely. And it also comes at a time where you're seeing a lot more younger veterans come home from these two new conflicts, and particularly after more than a decade of war, this is a hard time to make that argument.
INSKEEP: Now, we're talking about pensions that are paid to people who serve for, what, up to 20 years?
SUMMERS: Absolutely. But it's caused a lot of alarm, particularly as there is currently no exemption for disabled veterans.
INSKEEP: They would also get fewer benefits than would otherwise have been the case under this.
SUMMERS: That's right. This is completely across the board. It does look like Senate budget chairman Patty Murray has said she'd like to see a fix so that disabled veterans are exempted from this. But still, veterans' organizations have been blanketing the Hill. They are really unhappy with this provision.
INSKEEP: When do these cuts take effect?
SUMMERS: So, this is not supposed to take effect until 2015. And talking to lawmakers on the Hill, they're working very hard, a number of pieces of legislation already introduced to find savings equal to that 6 billion, so that these cuts can be repealed.
INSKEEP: So might this be a fix that never really takes effect?
SUMMERS: If I was a betting woman, I would say this is not likely to take effect. It is just not popular to take away money from servicemen and women and veterans.
INSKEEP: But let's think about that for a moment, because there was just this budget deal that included a certain amount of savings in it. That was part of the deal, to reduce the deficit at least a little bit. And you're saying that it's been structured in such a way that there's time to get out of it, wiggle out of it in the end.
SUMMERS: There is. If they were to wiggle out of it, though, they would have to find a way to amount to that $6 billion over 10 years.
INSKEEP: Find some other savings tomorrow.
SUMMERS: Exactly. It's a matter of finding savings identical to repealing this cut that would have to happen.
INSKEEP: The argument for reducing personnel costs at the Pentagon is that they're crowding out other costs, like for weapons systems, which is money that goes to defense contractors. If personnel costs are going down, does that mean defense contractors are going to get more?
SUMMERS: Not necessarily. But I think it's a really great point. I was at an industry luncheon the other day, and a CEO of a defense organization was making the case that her people, her workforce, is suffering under the weight of sequestration. It's also important to note that this deal does give 63 billion in sequester relief over the next two years. So I do think that this deal could possibly be a boon for contractors, depending on what you see play out in early 2014.
INSKEEP: That must affect the politics in a lot of different ways.
SUMMERS: It absolutely does. Particularly if you're a House or Senate member in a defense-heavy state like Virginia, I can certainly see there being a very powerful argument to take back home your constituents if you're looking for reelection.
INSKEEP: Juana Summers of Politico, thanks very much.
SUMMERS: Thank you for having me.
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