By Steve Kelman

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A BRAC-like commission for DOD cost savings -- and how it could be better

Tucked away in the president's new budget is a proposal for a "BRAC-like" commission to propose cuts and contribution increases for military retirement programs. The changes would not apply to current retirees but to future ones (it is unclear whether any such changes would apply to current service members when they retire from the military, or only to future service members).

The acronym BRAC stands for base realignment and closure. The phrase "BRAC-like commission" means something legislatively analogous to the rounds of base-closing commissions that have occurred in the past, where a body comes up with a package proposal that then is voted up or down in Congress without the possibility for amendments.

The theory behind this is that if amendments are allowed, everyone will try to eliminate the change that gores their ox, resulting in a situation where no change ever gets passed. This same theory was applied in last year's Simpson-Bowles deficit cutting commission, except that the commission didn't attain a large enough majority to trigger the up-or-down vote provision.
 
The cost of retirement benefits, including healthcare, to which service members pay only minimal contributions, threatens to overwhelm the Defense budget. That’s why Panetta wants to take on this politically charged issue. It's not an easy issue even substantively, because it's likely that at least part of any savings from these benefits might have to be made up in current pay, though my instinct is that not too many 18-year-olds are thinking much about retirement when they sign up for or even stay in the military.
 
I like the idea of a BRAC-like commission, but I wonder why it should be limited to savings from retirement benefits. First, just picking out retirement benefits adds to the third-rail dimensions of this. One of the merits of the up-or-down vote is that you take a package, which has various elements, each with the support of a different constituency, and other constituencies that may also support, or at least not oppose, the change. By limiting the changes to retirement programs, you get opposition from all the people who want the most expensive retirement benefits, but offer no other changes that such groups might be willing to accept, and that would create larger savings. So you bring out the one-issue opponents with fewer supporters to balance them. And substantively, shouldn't we be looking for other opportunities for cost savings other than retirement benefits?
 
I wonder whether the Defense Department shouldn't be looking to expand the scope of a cost-cutting BRAC. I'm not sure exactly how you'd set the parameters. They would need to be narrower than the kinds of general deficit reduction proposals that the Erskine-Bowles Commission was charged with. You wouldn't want to have a cost-cutting commission looking at military policy like which weapons we should buy. It shouldn't include military bases, since those would be dealt with by a BRAC commission. If third rails are being approached, maybe such a commission might look at Buy America provisions or price preferences that add to the Defense Department's procurement costs? Cost competitions between in-house providers and contractors for more maintenance work? Other areas for such a commission?

Posted on Feb 16, 2012 at 12:09 PM


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