A little-known pay measure, set to become law, could turn into a budget-busting problem for the Defense Department, officials said.
At issue is "concurrent receipt." If enacted, the legislation may cost DoD around $58 billion extra over the next decade.
Concurrent receipt is sometimes called "double dipping." Since the 1890s, Congress has prohibited the receipt of two pays for the same purpose. The specific instance of concurrent receipt at issue deals with Veterans Administration disability payments and military retirement.
Currently, military retirees who receive VA disability payments have their retired pay reduced dollar-for-dollar by the VA payment. So, for example, if retired pay is $1,000 a month and the VA disability payment is $500 a month, the member receives $1,000 per month-the entire VA payment and $500 in retired pay.
Retired pay is fully taxable; VA disability payments are not taxed.
Charles Abell, assistant defense secretary for force management policy, says the theory behind the current system is that if a service member completes military service and receives retired pay, and then also receives a VA payment for a condition related to that service, "it is two pays for the same event."
The government has always treated this as double dipping. According to a study commissioned by DoD, VA disability compensation is intended for veterans who separated from military service without retirement, but who suffered service-connected conditions that affect their earnings. Alternatively, service members "receiving military retired pay are considered to be fully compensated for their service, including any disability."
The concurrent receipt legislation, part of the fiscal 2003 National Defense Authorization Bill, would allow retirees receiving 60 percent disability or more to receive their full disability and their full retirement. Money spent on this, the Office of Management and Budget argues, would be better spent in developing warfighting capabilities.
The 10-year, $58 billion cost estimates floated by OMB and Congressional Budget Office are soft, Abell said. The amount is based on the idea that 700,000 to 800,000 veterans would qualify. The number could go as high as 1.2 million, he said.
"We don't know," Abell said. "Right now, some don't put in for this because there is no benefit to them. They might apply if there is a benefit." There are more than 25 million veterans in the United States.
DoD research shows that the small number of veterans who would benefit from such a repeal are already doing well financially, Abell said. He maintains that the money to pay the double-dip will have to come from accounts now going to readiness and quality of life programs.
"Active duty soldiers, sailors, airmen and Marines are going to live in substandard quarters and work in hangars where the roof leaks or try to perform the mission without all the spare parts they need because $58 billion will flow over to a group that, when measured against the American population at large, is certainly well-off," he said.
Abell said he could find nothing in the public or private sectors with a truly analogous pay situation.
DoD has made its position on concurrent receipt known to the House and Senate authorizers.
"In our view, this is not good government," Abell said. "We should know in the next 30 days what Congress will do. When the legislation gets to the White House, advisers will look at it and provide their recommendations to the president, and he'll decide what to do."