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September 17, 2006
Buying-Out Disabled Veterans
Politically-stacked Vets’ Commission looks at lump-sum
buyouts of veterans’ disability
payments
by Larry Scott
Fiscal conservatives called David Stockman “The Budget Wiz” and rallied
‘round his concept of a smaller government which was enshrined in his
phrase, “Starving the Beast.” Stockman was the Director of the Office of
Management and Budget (OMB) during the Reagan administration and is
well-remembered for labeling military retirement pay as “scandalous,”
calling it a dangerous drain on the economy. Stockman then proposed
lump-sum buyouts of military retirement pay because he deemed it less
expensive to pay once than to pay for life. (He even toyed with the idea
of buyouts for Social Security payments.)
Stockman’s buyouts never happened but his cost-cutting ideology lives on
today in the person of arch-conservative Grover Norquist who urges the
current administration to get government “…down to the size where we can
drown it in the bathtub.” President George W. Bush, while spending
hundreds of billions on the war in Iraq, is echoing the
Stockman/Norquist mantra.
President Bush often speaks of controlling spending on entitlement
programs and lumps Medicare, Medicaid and veterans’ benefits under the
“entitlement umbrella” by consistently using them in the same sentence.
This campaign of disinformation is used to sell the concept that all
three of these programs are some kind of welfare, are out of control and
therefore should fall under a sharp budget knife. This ignores the
reality that Medicare is an insurance program and veterans’ disability
compensation is provided to those who have been wounded or injured while
serving the country.
The Veterans of Foreign Wars (VFW) has labeled White House veterans’
budget proposals “a disgrace and a sham.” Peter S. Gaytan, director of
health care and benefits at the American Legion, testified before
Congress that the Bush administration is trying to "balance the…budget
on the backs of America's veterans."
Now, the Stockman/Norquist philosophy has trickled-down to the
Department of Veterans’ Affairs (VA). The Secretary of Veterans’ Affairs
is Jim Nicholson, a multi-millionaire land developer and former Chairman
of the Republican National Committee. Nicholson has consistently asked
for less funding than the VA needs to treat eligible veterans, even to
the point of faking budget numbers (see #1 below). So, it’s not
surprising that one of Stockman’s little-noticed recommendations has
caught the eye of Nicholson and other conservative political appointees
who run the VA. Stockman proposed the buyout of VA disability
compensation.
Key to the argument for the buyouts is a report from the VA’s Office of
Inspector General (VAOIG) which recommended that the VA “revise
[disability] rating criteria to reflect expected lifetime impairment so
that VA could offer lump-sum payments to veterans…”
The VA is the second-largest government agency with a budget of over $80
billion for fiscal year 2007. The largest portion of the VA budget goes
to disability compensation for veterans wounded or injured while on
military active-duty. Lump-sum buyouts of VA disability compensation
could save the government billions of dollars every year.
Last week, the Veterans’ Disability Benefits Commission (VDBC) met in
Washington, D.C. and, once again, took up the issue of lump-sum buyouts
(see #2 below). The VDBC was created by the Bush administration in 2003
and tasked with determining “…whether the death or disability of a
veteran should be compensated…” and at what level, if any. The 13-member
VDBC is a politically stacked-deck with nine members being appointed by
Republican politicians.
And, Secretary Nicholson supported the buyout concept in a response to
the VAOIG report, saying that the VA will “review prior VA studies
concerning lump-sum payments to veterans with disability ratings…and
[support] the [VDBC] as it considers this public policy issue.”
The VDBC has tasked the Center for Naval Analyses (CNA) with studying
the concept of lump-sum buyouts. In the CNA’s Literature Review they
write of “…substantial potential savings associated with a lump-sum
disability settlement both in terms of reduced debt cost and
administrative burden.”
There is a great deal of support on Capitol Hill for the lump-sum
buyouts. Leading the charge is Rep. Steve Buyer (R-IN), Chairman of the
House Committee on Veterans’ Affairs, who sees the buyouts as a logical
cost-cutting move (see #3 below). When it comes to the work of the VDBC
and what cost-cutting moves they should study Buyer has stated, “I think
everything should be on the table.”
But, there is opposition. Not one veterans’ service organization is in
favor of the move. The American Legion, arguably the most conservative
veterans’ organization, has reminded its members that “…Chairman Buyer
and other government officials have publicly expressed their desire to
use the VDBC as a vehicle to institute radical changes in the VA
disability system that would negatively impact and restrict entitlement
to benefits for a large number of veterans.” This statement from the
American Legion can only be labeled “prophetic” as the VDBC ponders
lump-sum buyouts of VA disability payments.
How would the lump-sum buyouts work? Initially the VDBC will look at
lump-sum payments to veterans who receive 10 per cent or 20 per cent
disability payments, those veterans currently receiving $112 or $218 a
month. The buyouts would be based on life expectancy with only a
percentage of the total value offered. Most commonly mentioned is a 50
per cent buyout, but some have mentioned 30 per cent as a more prudent
offer. (Example: If a veteran gets $218 a month from the VA and has a
life expectancy of 20 years, his total compensation would be $52,320.
The proposed buyouts would offer a cash settlement of somewhere between
$15.696 and $26,160.)
One of the main arguments for lump-sum payments (besides saving the
government money) is that the veteran can then invest his buyout and do
much better financially in the long run. However, the CNA says the
literature doesn’t support that theory and told the VDBC “…younger, less
educated, and lower ranking personnel would be more inclined to accept a
VA lump-sum offer,” and, “…funds received in lump-sum payments are often
spent on consumer goods rather than spent on long-term investments,”
and, “…the decision to take a lump-sum payment may often not be an
informed one.”
There are more questions than answers. Here are just a few of the
potential problem areas –
• If the veteran's service-connected condition worsened, would he be
able to file a claim or would the condition now not be compensable? Many
veterans will initially receive a 10 per cent or 20 per cent disability
rating and then see it jump to as high as 100 per cent as they age and
their particular condition worsens.
• Would the VA continue to treat the veteran for the condition even
though he wasn't getting compensation? Or, would the condition now be
considered not to exist? The cost-savings to the government would be
great and the cost to the veteran could be catastrophic.
• What about another condition that occurs that is secondary to the
original service-connected condition? How would that fit in? An example
would be a veteran who receives disability for a bad knee. As that knee
gets worse with age, back problems can arise and that could constitute a
secondary disability that could be compensated.
• Would the VA stop at the 10 per cent and 20 per cent disability
ratings? Many feel that this would be just the beginning and that once
the door is open, all disability ratings could be up for a lump-sum
buyout.
• Would the buyouts be retroactive? Or, would only “new” veterans fall
under the plan? The largest savings for the government would be gained
by including veterans currently receiving disability.
• And, would the buyouts be mandatory or optional? The savings for the
government would be greatest with a mandatory buyout plan. Could this be
imposed on veterans?
The biggest question of all is: How can you buy-out a disability?
Veterans receive disability compensation because their ability to
perform everyday tasks has been diminished by wounds or injuries
sustained while on active-duty. The compensation paid by the VA is meant
to make up for income lost due to the disabilities. A lump-sum payment
is antithetical to the concept of on-going compensation for an on-going
disability.
Veterans and their families cannot underestimate the power being wielded
by the VDBC. They truly are an instrument for “radical changes in the VA
disability system.” Their recommendations could forever alter the system
of veterans’ benefits in this country, leaving our veterans, their
widows and children with fewer benefits and less compensation. Is this
what our veterans deserve? Veterans’ benefits are not a gift. They are
not a welfare program. They are earned through service to country. They
must not be diminished in any way.
Washington watchers feel the VDBC will approve the concept of lump-sum
buyouts. We know the White House will approve. But, will Congress fall
into line? Just another thing to think about when we go to the polls in
November.
The VDBC’s report to the President and Congress is due in late 2007.
#1 More on Jim Nicholson --
http://www.vawatchdog.org/milcom/cookingthevasbooks.htm
#2 More on the VDBC --
http://www.vawatchdog.org/milcom/vdbcstackeddeck.htm
#3 More on Rep. Steve Buyer –
http://www.vawatchdog.org/milcom/areyoureallyaveteran.htm
© 2006 Larry Scott / VA Watchdog dot Org
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Larry Scott
