The View from the Ledge: The Fiscal Cliff and How it Affects Military Families

By Maranatha Bivens, Communications Editor

Soldier Standing on a cliff

You’ve seen the scene before—the football playing, letterman jacket wearing, small-town-sweetheart finds himself on the wrong side of the tracks, and accepts a drag racing challenge from the east side toughs. The game is chicken, with both drivers racing toward dead man’s bluff to see who bails out first. Racing toward the cliff, small-town-sweetheart tries to get out of the car, but his seatbelt is stuck. Will he make it out before reaching the edge?

All fictional melodrama aside, our country is facing a similar challenge: reduce the national debt by early 2013 or go off the cliff. The fiscal cliff.  “The fiscal what,” you say? Although the financial crisis of the last few years has likely touched most people’s lives in some way, many don’t know what the fiscal cliff is, let alone what our rapid approach toward it will mean for the country and military families.

Fiscal Cliff 101

The fiscal cliff refers to the effect of a number of laws which, if unchanged, could result in mandatory and automatic tax increases and spending cuts in 2013 to reduce the budget deficit.  But first, some background.

In August 2011, the national debt hovered at almost 15 trillion dollars, and in a compromise to raise the debt ceiling, Congress passed the Budget Control Act of 2011. The Budget Control Act required $900 billion in tax cuts over 10 years (that’s 15% a year) and called for a Super Committee to find additional savings, split between Defense and non-Defense. Unfortunately, the Super Committee failed to agree on those savings and so, the Budget Control Act requires automatic spending cuts of $1.2 trillion over 10 years, of which $600 billion would come from the defense budget. In a process known as sequestration, the money would be held by the Treasury instead of given to agencies.  Its effects will directly impact the lives of military families. 

Sequestration: What Cuts Are On and Off the Table

Losing $600 billion dollars in the Defense budget will be devastating to military operations and is viewed as a threat to national security issues. But what, specifically, is in the line of fire?

Subject to Cuts

Most DoD accounts will face up to 9.4% in cuts equaling 54.67 billion dollars every year for the next 10 years and military service members and their families will see the immediate impact. Among the items to be cut are:

  • Spending accounts for the war in Afghanistan
  • Operations and Maintenance budgets: Think of everything that happens on your military installation—family programs, training, equipment, facility maintenance, DoD schools. All are funded out of Operations and Maintenance accounts.
  • Defense Health Program accounts: Fewer funds available for DoD to purchase medications, pay civilian doctors for care, and operate military hospitals and clinics will affect access to care for military families.
  • Commissaries: Budget cuts to commissary operating funds could lead to staff reductions, restricted hours, and possibly some store closures.

Cannot Be Cut

By law, some items are not subject to the sequestration cuts.

  • Military pay and allowances accounts are exempt; however, sequestration will increase pressure to cut the DoD civilian workforce, most of which is funded out of those Operations and Maintenance accounts that are subject to cuts.
  • Military retiree pay
  • TRICARE for Life
  • Social Security payments
  • Medicare: except for 2% reduction in provider payments
  • Medicaid grants to states
  • Federal civilian pensions, health care, and pay rates

The only federal agency to be 100% exempt from any budget cuts is the Department of Veterans Affairs.

What Happens to the DoD Budget in 2013

Do the math. Here’s what happens to the amount proposed for some accounts important to military families if sequestration goes through.

 Proposal for Fiscal Year 2013  With Sequestration
 $32.5 billion for Healthcare  $29 billion
 $8.5 billion for family programming and DoD Schools  $7.9 billion
 $1 billion health care facilities  $.9 billion
 $1.7 billion for family housing  $1.5 billion

 

It’s important to realize that sequestration isn’t just about Defense cuts. Many military families receive help from programs that could potentially be affected by the non-defense sequestration cuts. The WIC Nutrition Program faces cuts of 8.2%, and the projected $543 million in cuts to WIC could mean that 700,000 moms and babies will not receive the food vouchers and nutrition education they need. Federal education programs also face an 8.2% cut, which would include $106 million in Impact Aid money that supports civilian schools educating military kids, $1 billion in cuts to special education programs, $140 million in cuts to student financial aid, and $1.3 billion in cuts to programs for disadvantaged youth.

As the lame duck 112th Congress (Members finishing out terms before the new Congress is sworn in in January 2013) resumes its work, no budget has passed for fiscal year 2013 and the U.S. debt has now reached $16.2 trillion. Although the President has signed a continuing resolution to fund the government through March, the debt ceiling will again be reached in early 2013. If changes are not made by the end of 2012, the average family tax bill will increase by $3,500 and after-tax income will decrease by 6.2%. Economic growth estimates will be reduced by 2.9% in the 1st half of 2013 and the unemployment rate is predicted to rise to 9.1% by the end of the year.

What Can/Will Congress, DoD, and the President Do?

After the November election, the President and Congressional leaders began meeting to see what could be done to keep the Fiscal Cliff from happening on January 1. No one knows whether they will come to an agreement or what mix of tax changes and spending cuts will be put in place. Many economic and business experts predict the lame duck Congress will delay sequestration and keep some of the tax cuts that are expiring at the end of the year. Although these actions seem like a good temporary fix, they could only prolong the nation’s uncertainty, prompt hiring and spending freezes, and increase the likelihood of another debt ceiling debate. Some economists and Members of Congress say the cuts should go through as scheduled and then the new Congress can look at what cuts work and what ones don’t (known as the “cliff diver” approach).

Either scenario keeps things uncertain for the Defense Department. Defense leaders insist DoD is only a small player in the bigger budget picture and that DoD is not planning for sequestration, but continuing to spend as usual. They also point out that, at least in the short term, DoD has some flexibility to move funds between accounts where needed.

The National Military Family Association believes what’s most important for our Nation’s leaders to remember is that the country is still at war. Military families need stability when recovering from deployments and need to feel secure when making other financial decisions. The solution to the nation’s financial issues starts with Congress, and with the military families facing impact from both Defense and non-Defense sides of the equation, their decisions couldn’t be more important.

 What are your recommendations for resolving the fiscal cliff?

Nickname
Comment
Enter this word:

Submitted by: a real-patoric
Posted:
December 19, 2013
Comment: Cutting ss, medicare, food stamps, farm bill,while not addressing tax loope for the affluent this is not even good ecomontics,101 what are going back to the mid-evil times



Submitted by: Old vet
Posted:
December 17, 2013
Comment: Cut the 3.5 + billion to Israel. They are not a poor nation. All Israeli get universal health care, dental care, subsidized food prices and day care.



Submitted by: skydiver-1
Posted:
August 3, 2013
Comment: Replacing DOD civilians with active duty personnel would save bundles of money.



Submitted by: skydiver-1
Posted:
August 3, 2013
Comment: Here's my recommendations for resolving the fiscal cliff: #1: Cut the DOD civilian work-force overseas. 70% of these folks aren't even needed. #2: Except for doctors, abolish TDY travel. Stop DOD civilians from abusing the TDY travel policy, especially in Korea, and in Hawaii. #3: Stop military officers from converting their job-positions to civil-service job positions, then retire and go back to work a few days later as a high ranking D0D civilian drawing full military retired pay and civil-service pay. This scam needs to stop now. #4: Require DOD civilians to pay all, or a portion of their housing and utilites fees. Presently these people overseas, are getting a free ride on rent and utilities. #5: Stop overtime pay and this scam of DOD civilians wanting to sit in their offices on weekends and draw overtime pay. #6: Consolidate base-gyms. one gym per military base is plenty. #7: Soldiers get too much time off. Go back to a 24/7 military. Presently soldiers get off 5 months of the year, ridiculous! #8: Place all military dental clinics under contract. Too many folks assigned to dental clinics who aren't getting the job done. #9: Abolish the rank/grade of Sergeant Major. Sergeant Major is the most wasted rank in the military. Go back to the old field-first policy where the senior E-8, in the battalion is the field-first. #10: you don't need a Colonel, or Lt. Colonel in charge of AFN radio, or TV. Good job for a Second Lt. #11: Abolish the Department of Public Works (DPW) and appoint one active duty engineer company to provide post maintenance. DPW is costly and worthless. #12: Stop the misuse of military vehicles overseas. Three passengers in the front and six in the back sleeping, spells...DPW.



Submitted by: nwo
Posted:
July 8, 2013
Comment: Commissary are waste of tax payer dollars. Private companies such as walmart, costco, sams club can do a better job of management.



Submitted by: Diane
Posted:
May 10, 2013
Comment: Cut-all unnecessary spending but do not cut off the low- income families because they are the most whom do suffer more then any others!



Submitted by: The Latin woman
Posted:
May 10, 2013
Comment: All citizens should be aware of the unbalance system that there has been a lot un accepted indirectly fraud activity !!! The Obama re-election "He promise he would bring back all the military and civilian personal and it's already May 10,2013 and he has not announce no official date when is going to bring back all the D.O.D military civilians contractos?? When is that ever going to happend? Obama needs to cut off all unessary expenses and pay all low- income a fair share of more then average of benefits !!!



Submitted by: Kim
Posted:
March 18, 2013
Comment: Why not withdrw from Afganistan as Obama promised 5 years ago and then again last year? I am so tired of candidates who promise something, get elected, do nothing. Then hey I know, what a great idea! I'll promise the same thing again like it's a totally new idea we and say "GREAT!" Then re-elect him. The Democrat/Republican thing is not working. Lets all decide that we live in the same countryand do what is best for our country.



Submitted by: Tina
Posted:
March 16, 2013
Comment: why don't they eliminate those baby machines living off of welfare. They keep reproducing to live off the gov't and we allow it. This has gone on to many years and needs to be stopped. Many feel if u have a child on welfare you are thrown off the system.



Submitted by: Tina
Posted:
March 15, 2013
Comment: Don't let the baby machines keep having children on welfare. The gov't encourages this. If you have a child while on welfare the payment ends...



Submitted by: fancystitch
Posted:
March 6, 2013
Comment: Get rid of Obama.



Submitted by: Jack
Posted:
March 4, 2013
Comment: Don't pay the 100 billion in aid to Afganistan over ten years. Give it to the military Familys. Most of this is waste not food.



Submitted by: Charolette
Posted:
March 3, 2013
Comment: A quick resolution for the nations cliff would be for our President to withdraw the $60 million dollars that was sent overseas to the Syrian rebels for whatever reason. Why does the United States always seem to retaliate to the same decision to send money to some other country with the mindset that it will benefit us in the long run. What happened to making an initial mistake and then learning from it and not making the same mistake over and over again. What happened to using common sense both in our political government and throughout our military defenses???? Further more, how do you justify increasing the income to our politicians while at the same time decreasing our budget regarding education and health care that is most vital to our own country!!!!!!!!



Submitted by: navy wife
Posted:
March 2, 2013
Comment: Congress, DoD, and the President can take a 50 to 75% pay cut and only get a retriement after 20 in congress and 2 terms as president. More Cuts that affect them cut their insurance and tax the hell out of any one who makes more that 500,000.00 We make less than 90,000.oo. I was taxed all year and still had to pay at the end. But Bill Gates recieved a refund??? HUMM someting is off.



Submitted by: HAWKEYE
Posted:
February 27, 2013
Comment: IF CONGRESS FAILS TO DO THE JOB, THEY SHOULD NOT BE PAID!!!



Submitted by: boat
Posted:
February 26, 2013
Comment: So what happens to all of those unemployed families, I'm mean will the government contact bill collectors for those affected, or put food on the table, what about medical care. You can't take a piece if the pie without affecting the rest of the pie, your stealing from peter to pay Paul it didn't work then and it won't work now.



Submitted by: msgt
Posted:
February 23, 2013
Comment: Congress should not be paid and should not leave D.C. until this problem is resolved in a balanced way. It is patriotic to pay your fair share of taxes!



Submitted by: Sparrow
Posted:
February 12, 2013
Comment: Let the cuts begin. Government never has enough taxpayer dollars to waste. Hogs at the trough. That's why northern VA/DC/western MD has the highest per capita income in the nation.



Submitted by: androo
Posted:
February 12, 2013
Comment: You had your chance in November. Quit cryin' and accept the bounty of the seeds that you've sown. Lotsa programs gonna get axed. Military gonna take it in the shorts again. Fair tax would be good, but, who will check the state response? Some public assistance due to the FDR plan for America has ballooned. What are you doing to fix yourself? I work in pain everyday. No freebies for this disabled veteran. But, baby machines get all of their bills paid? We have to rebuild this country. The politicians want to control the message. VOTE!!!



Submitted by: Common Sense
Posted:
February 3, 2013
Comment: Read the Constitution. Audit the Federal Reserve. No pay or allowances for congress until they balance the budget. 2 Term Limit. Elect No more Lawyers. Bounty on Lobbyists. Get out of Afghanistan. No more foreign Aid. Welfare for 12 months then Workfare.



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