In a time of national belt-tightening, most military veterans are, I believe, amenable to the notion of some reforms to the retirement benefits system that has been in place for many decades. All of us hope, assume and expect that the worthies of the Defense Business Board will make their recommendations to reform that system in the same good faith displayed by those who served their country for decades in peacetime and at war.
Via John Donovan, a chart that portrays the flaw in that assumption.
The most important thing when attempting to solve a problem is to initially scope the problem’s magnitude. As John points out, there is reason to question whether accounting chicanery is going on here:
At issue is the only data chart in the DBB Presentation: Modernizing the Military Retirement System Task Group, Dated July 21, 2011.
Simply put, they don’t adjust the numbers to constant dollars – which would compare oranges to oranges. They instead use year by year actuals, which ends up comparing an aircraft carrier to a kayak. Both are boats, but after that they don’t have a lot in common. Perhaps a more apt comparison would be they compare a Sherman Tank to an M1.
An M1 is more capable and, therefore, more expensive than a Sherman, even in constant year dollars. But we’re not talking technology, we’re talking people, whose capabilities and requirements have remained more or less stable over the years. So really, the issue is comparing an M1 tank procured in 1941 valued dollars (should that have been possible) to one procured in 2011, seventy inflation years later.
This is binary: If the DBB is not clever enough to use net present value calculations to determine the time value of money over a long planning horizon, they are not clever enough to perform the work that they have been charged with. If they deliberately declined to use those calculations to suit some political end, they are too clever by half.
These are the only possible conclusions.