Budget cut threatens military commissaries

By Tom Philpott

Taxpayer support of base grocery stores this fiscal year would fall by $130 million, or 9.4 percent, if Congress fails to reach a debt-reduction deal by Jan. 2, the deadline to avoid arbitrary budget cuts mandated by the sequestration mechanism in last year’s Budget Control Act.

The Office of Management and Budget delivered that news to Capitol Hill in a larger report that Congress required to make the impact of the sequestration threat more transparent to voters.

A commissary budget cut of that size, which stores likely would be forced to absorb over just the last six to nine months of fiscal 2013, intensifying its effect, “would be devastating,” said Tom Gordy, president of the Armed Forces Marketing Council. The council represents manufacturers of products sold in military stores.

Commissary shoppers, Gordy said, likely would see store hours and staff services cut by next spring and might even see some stores closed in areas where two or more bases are located. Commissary budgets are used almost entirely for wages and benefits of 18,000 employees.

About two-thirds of employees, Gordy notes, are affiliated with the military — either family of active duty members or military retirees, retiree spouses or military veterans. Many employees would see work hours and, therefore, incomes cut by the sequestration knife.

Exchanges or base department stores would not be affected because they are self-sustaining, with staff salaries and other operating costs paid for through store-generated profits.

Commissaries, however, rely on an annual taxpayer subsidy of $1.4 billion. In return, military patrons see savings of about 30 percent on their groceries, a popular benefit worth about $2.8 billion annually. Goods are sold at cost plus a five percent surcharge. The surcharge money is used to modernize old stores and build new ones.

The commissary appropriation, like funding for most other defense and non-defense discretionary spending, would be hit by the sequestration process that both Republicans and Democrats agreed to accept as an intolerable result if they could not muster the political courage themselves to reach a fresh $1.2 trillion, 10-year debt reduction agreement.

Some key lawmakers — worried that this pitiable Congress still lacks leadership and character to negotiate a debt deal after the election, one with real compromises and meaningful tradeoffs — are said to be drafting stop-gap legislation to delay sequestration’s impact for at least several months.

The White House is signaling that President Barack Obama won’t accept anything short of a “balanced” debt deal to avoid sequestration, a deal that would include higher taxes on the wealthy, which is something most Republicans have pledged not to consider.

The Defense Commissary Agency, which oversees military grocery operations worldwide from its headquarters at Fort Lee, Va., won’t comment on the potential impact of sequestration. DECA is operating, like the rest of the Department of Defense, on the assumption lawmakers will act to avoid sequestration and compromise on a plan to address the nation’s $16 trillion debt crisis. With this Congress, however, the sequestration mechanism seems about as thoughtful as passing a loaded gun to a pouting child.

2013 COLA set

Military and federal civilian retirees, survivor benefit annuitants, disabled veterans and Social Security recipients will see a 1.7 percent cost-of-living adjustment in January.

Annual COLAs for federal benefits are based on inflation, as tracked by the Bureau of Labor Statistics’ Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This COLA was set by comparing average prices for a market basket of goods and services tracked by CPI-W in the third quarter of last year to average prices in the third quarter this year.

That comparison shows the CPI-W average has climbed 1.66 percent, which the BLS rounded up to 1.7 percent.

This COLA will be less than half of last year’s 3.6 percent adjustment, after two years without a cost-of-living raise when consumer prices fell during the recession and collapse of U.S. housing and financial markets.

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