Shift in coverage means more cost

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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, its 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 budget cut of that size, which commissaries would be forced to absorb over the last six to nine months of fiscal 2013, “would be devastating,” said Tom Gordy, president of Armed Forces Marketing Council. The council represents manufacturers of products sold in military stores.Commissary shoppers would likely 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 co-located.  Commissary budgets are used almost entirely for wages and benefits for its 18,000 employees.According to Gordy, about two thirds of employees are family members of active duty service 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 impacted because they are self-sustaining, with staff salaries and other operating costs paid for through store-generated profits.Commissaries, however, rely on 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 5 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, 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 on 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.Gordy said DECA probably could absorb a 5 percent cut without shoppers being impacted. That could be handled by layoffs of some headquarter employees or by enticing older careerists to retire early.“There would be pain, but it’s manageable,” Gordy said.  RETIREES, DISABLED VETERANSFACE COST-OF-LIVING INCREASEMilitary 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. This COLA will be less than half of last year’s 3.6 percent adjustment.—To comment, send e-mail to or write to Military Update, P.O. Box 231111, Centreville, VA, 20120-1111

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