19 Age, length of service, and future retired lifetimes for military retirements in fiscal year 1971 1 The number of military retirements omits persons who retired and died in fiscal year This is the original age at entry into the service if the service was continuous; otherwise, the original age at entry has been increased by the number of years absent. This includes constructive service in some instances. The retired lifetime can be terminated by death or in some instances by recovery from disability. disability. The average age at the time of termination of retired pay by death or recovery from Commuted value of future retired pay at time of retirement, calculated at 31⁄2 percent interest. Use of a higher interest rate would reduce the commuted values. Mr. STRATTON. With that introduction we will now hear from our first witness, and that will be the Honorable Charles Bennett, a distinguished member of this committee. Mr. Bennett, we are happy to have you and hear your testimony. STATEMENT OF HON. CHARLES E. BENNETT, REPRESENTATIVE FROM FLORIDA Mr. BENNETT. Thank you very much, Mr. Chairman. I appreciate this committee, in these trying and very time-consuming times, giving the effort that is being made. I sincerely appreciate the opportunity which has been given to me today to testify before this Special House Subcommittee on Retired-Pay Revisions studying recomputation legislation. I have pending H.R. 522 which would bring about a recomputation of retired military pay. This legislation bears the support of every major veterans' organization in the country at this time. Until 1958, career retired pay was a percentage of current activeduty pay scales. Increases in retired pay were automatically geared to increases in the basic pay of active-duty forces. Legislation passed in 1958 changed this method of adjusting retired pay. At that time, the Congress passed, with the strong support of the administration, a rather large active-duty pay bill. This was a necessity as retention was a very serious problem at that time, especially in the upper ranks who were leaving the service. The 1958 legislation provided for substantial increases in the basic pay of upper commissioned and enlisted grades. If the recomputation principle had been used in the 1958 act, it would have provided for substantial retired-pay increases in the upper grades-10 percent for a lieutenant colonel and up to 75 percent for former Chiefs of Staff, but for some individuals and some grades there would have been no increase whatsoever. The fact is that if there had not been a "saving clause," there would have been decreases in retired pay for some grades. Put in another way, some officers would have received substantial increases but some 38,000 others would have received less than a 6-percent increase, or none at all. To improve the equity of the 1958 act it included a separate provision for all to receive an across-the-board 6-percent cost-ofliving increase in retired pay. As a result of legislation passed by the Congress in 1963, and improved upon in 1969, military retirees do now receive automatic pay increases based on cost-of-living index rises, but this does not in many cases equal what they would have received had their retired pay been based on current active-duty military pay as formerly was done while they served on active duty. The administration has recommended a one-time recomputation as of January 1, 1971, for pay scales for those retired before that date. This would only partly meet the logic of protecting the former retirement-pay system for those who served on active duty while the old system existed. The bill I have introduced protects those who served on active duty while the old system existed. I hope the committee will approve this concept. Mr. STRATTON. Thank you, Mr. Bennett. I haven't had a chance as yet to analyze all of these bills in detail. I take it your bill differs from Mr. BENNETT. It does, yes. It is probably one of the most expensive bills, but I feel when a matter of principle is involved, you have to look at it. The fact we have given other benefits is no real answer, because these people served under a system where they had a right, I think, to expect this kind of thing. Mr. STRATTON. Do I understand your legislation is a one-shot recomputation? Mr. BENNETT. No, sir; it is the full works on recomputation. Mr. STRATTON. This is a full recomputation reinstitution for everyone who was on active duty? Mr. BENNETT. Who served under the old system. Mr. STRATTON. Everyone who served under the old system at some point or other? Mr. BENNETT. There is no moral obligation to continue the system, except for those who served under it. But for those who served under it, there is a moral obligation to a degree. Mr. STRATTON. By saying "served under the old system," you mean they were on active duty at the time that this system was in effect? Mr. BENNETT. Correct. Mr. STRATTON. What date would that be, do you happen to know? Mr. BENNETT. 1958. Mr. STRATTON. In other words, anybody that served prior to 1958? Mr. BENNETT. Yes. Mr. STRATTON. But Mr. BENNETT. That is not the logic. The logic is the fact they served under that system. Mr. STRATTON. You would then continue this recomputation arrangement for them until everybody who served prior to 1958 had passed on? Mr. BENNETT. Correct. Mr. STRATTON. Do you have any financial estimate of the cost of that? it. Mr. BENNETT. I don't have it with me. I think the committee has Mr. STRATTON. I will ask Mr. Ford if he has estimated that? Mr. FORD. We have it in the committee print, Mr. Chairman. The estimated first-year cost is $1.1 billion, and the cumulative cost to the year 2000 is $137 billion. Mr. BENNETT. Does this include cutting it off for those who came on after 1958? Mr. FORD. This is the cost of H.R. 522. Mr. BENNETT. I didn't ask you that question. Mr. FORD. I am sorry. Mr. BENNETT. I asked you if your figures included money for people who came on after 1958 ? Mr. FORD. No; it just includes those covered by your bill, those on active duty before June 1, 1958. Mr. BENNETT. Well, my point is, I am really testifying here for the idea of those who served under that system. Now whether my bill is defective and goes further and continues the program, I don't know. But my testimony is for those who served prior to 1958. So I am asking you, is the figure you have given me a figure which takes into 83-066-72-No. 78 3 consideration that this will eventually end and have no applicability to people that came on after 1958 or not? Mr. FORD. It is the cost of the bill which provides immediate and continuing recomputation for those who served on active duty or in an active status before June 1, 1958. It doesn't provide recomputation for anybody who started their active service after 1958. Mr. BENNETT. I understand. Mr. STRATTON. This, I suppose to some extent, Mr. Ford, would have to be based on an estimate of what the pay increases would be from now until the estimated time of the demise of the people still living, right? Mr. FORD. That is correct, Mr. Chairman. All of these estimates are based on assumption of 5 percent per annum increase in activeduty pay, and a 1.5 percent per annum increase in retired pay which is slightly less than we have experienced over the last several years. Mr. BENNETT. I may say, Mr. Chairman, if I may be so bold as to say this. I don't really understand why we look at this long-time thrust of retired pay for military when we don't generally do it with regard to something like, for instance, Federal revenue sharing, which is at least $5 billion a year, far in excess of this, and by the time that thing comes around and gets to that year you mention there, it will be many, many times this. So we just don't generally approach bills like this in the way of saying what it is going to cost in the year 2000, or cumulative costs to that time. We don't do this with regard to the $24 billion antipollution bill we passed the other day, or the $30 billion revenue-sharing bill. We don't put that kind of a figure on it. We talk about either the bill as it passed, to cover the number of years that are authorized. Or we talk about the annual cost of the bill. It is hardly fair to pick out retired soldiers and sailors and airmen and give them a special look at this thing that way, in my opinion. Mr. STRATTON. Mr. Bennett, the committee is not attempting in any way to be argumentative. All we want to do is to try to find out-and you are one of the strongest supporters on the committee of this proposal, and one of the most knowledgeable members of the committee and the Congress-to find out exactly what it is we are getting into. Mr. BENNETT. I am not in any way being critical. Mr. STRATTON. Nobody is trying to be argumentative at all. We are just trying to see what the various possibilities represent. If I understood Mr. Ford correctly, he said that your proposal would be $1.1 billion in the first year. I believe the Hartke amendment, although there was some dispute one way or the other, would be roughly $343 million the first year. So it gives the committee an opportunity to see what the differences are between the various proposals, and I don't see how we can do our work without that. It is quite true that every program that we get I don't think this committee would be doing its job if we didn't also try to explore what those costs would be, even if the other committees of Congress don't. Mr. BENNETT. I am in no way critical of this committee. After all, I am coming here as a supplicant, and an advocate of my point of view. The only point that I wanted to make was not addressed to the committee by way of criticism, but addressed to the country and the Congress as a whole by way of perspective. I think it would be unfair to attach a very large figure to this program and not to others. We do not approach the welfare program that way. Nobody has suggested what the welfare program is going to cost by the year 2000, cumulatively down the pike. Nobody has suggested how much the revenue-sharing program is going to cost cumulatively way down the pike. To put the thing in perspective, you really should look at the annual cost. În order words, I want to be sure we know we are comparing apples and oranges. Mr. STRATTON. Mr. Pirnie, did you want to ask a question? My question was directed toward the objective that has just been outlined, and that is of being sure that the figures which are applied are comparable. I would disagree with the witness to this extent, that I think we are discussing something in an actuarial field, where it is much more susceptible to specific projection than it would be in the areas that he mentioned. Does your measure envision the continuing cost-of-living incre ments? Mr. BENNETT. Not on top of this. Mr. PIRNIE. No: increments for Mr. BENNETT. The thrust of my legislation is to live up to a moral responsibility to those who served under a particular retirement system. I think we should meet that, and I don't think it is any answer to say we have given other benefits. I think when we gave those other benefits, or when we give future. benefits, we must consider this already existing obligation. Mr. PIRNIE. Well, that is true, but in determining the moral role, we certainly should credit the cost-of-living increases that have been added Mr. BENNETT. Oh, yes. Mr. PIRNIE. Because that wasn't in the original recomputation. Mr. BENNETT. I have no idea of adding the recomputation and the cost of living together; no, sir. I don't think my bill does that; does it? Mr. PIRNIE. I am not saying your bill does, but in our discussion, I think you would agree that that is pertinent for us to consider what we have done Mr. BENNETT. Correct. Mr. PIRNIE (continuing). For the retiree in the way of legislation. |