Advocacy Representing common interests Preserving the benefit Advancing member issues Work with...
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ALA Public Policy Advocacy
Advocacy Representing common interests Preserving the benefit Advancing member issues Work with White House/OMB, Defense, Homeland Security, Transportation,
Advocacy Representing common interests Preserving the benefit
Advancing member issues Work with White House/OMB, Defense,
Homeland Security, Transportation, HASC, SASC, HFSC, HAC-D, SAC-D,
SFC, GRO, HSGAC, W & M, Banking
Slide 3
Past year 3 percent withholding 1099 requirement Interchange
fees Coburn amendment Burr Bill (S. 277) Bowles-Simpson Defense
Budget Review
Slide 4
2011 Active2012 More Active Big issue is the budget Perennial
disagreement over cuts versus taxes Budget Control Act (BCA) August
2011 Raised the debt ceiling Pledge to cut deficits $2.1 T from
2012-2021 Half from Defense Chainsaw running in the basement
Sequester not neutralDefense represents 19 percent of budget but
would absorb 50 percent of cuts--$500 Billion more from Defense in
addition to $487 B already taken and $178 billion under Secretary
Gates13 percent of budget by 2017
Slide 5
Key Dates April 13, 2011President presents plan to reduce
deficit by $4 T August 2011Budget Control ActSupercommittee
November 21, 2011Supercommittee fails January 5, 2012President and
SecDef announce new defense strategy at Pentagon January 26DoD
budget released November 6Election day December 31Bush tax cuts
expire January 2Sequestration begins January--Debt Ceiling increase
January 1Payroll Tax Cuts Expire January 3113 th Congress
begins
Slide 6
Armageddon Perfect Storm Most predicting no action before
election January 2013 Debt Ceiling reacheddefault threatened Tax
cuts expire Continuing resolution needed Medicare doctor increases
Payroll tax cut expires Sequestration takes effect Combination4
percent hit on GDP
Slide 7
Defense Budget Timetable Pentagon and OMB lawyers already
studying how sequestered cuts would take place. Comptroller looking
at cuts to individual accounts, i.e., Navy shipbuilding or Army O
& M. PanettaAcross the board to all Defense Programs. Inflict
severe damage on Department of Defense. Planning would have to
begin this summer $56 B in added Defense Cuts in January 2013
Depends on baseline2013 real cuts under sequestration in $30 to $50
Billion range Comes in the middle of January 2013 Perfect Storm
Bush tax cuts of 2001 and 2003 expire at year end Sequester start
looms Need to raise debt ceiling (could be November 2012)
Slide 8
Budget Control Act of 2011 FY 2011 Continuing Resolution
Fight/Resolution Near-termGates Cuts Budget Control Act of 2011
2012DoD $525 B--$5 B below 2011, $25 B less than requested Beyond
2013Caps on overall discretionary spending- -$350 B to DoD over 10
years in line with $400 B Obama cuts by 2023 Next roundDoomsday
Machine--$54.7 billion in Defense cuts each year beginning in 2013
through 2021
Slide 9
Budget Control Act of 2011 Half of $1.2 T from Security (050)
Exempts health care, retirement, wars with option to exempt
military pay Ax falls on O&M, Procurement, R&DO&M
outlay rich Committee could come in under $1.2 Tdeduct passed
legislation from the $1.2 T Consequences January 2013 (after
election) Trigger worst case--$99B cuts in 2013, $970B over 10
years July 29, 2013 DoD budget proposals were submitted Cuts
already hitting some sectorsAir Force, Army, Navy base operations
reductionsi.e.,6500 IMCOM positions cut in 2012
Slide 10
Budget Control Act--Defense Cant touch wars DoD already
building budget for $400 B in reductions--will have to adjust for
new reductions Worst case, DoD another $600 Billion over 10 years
Appropriators already resetting their allocations DoD already
readjusting budget Debt ceiling deal forces appropriators to reset
their allocations to Defense DoD had planned on $400 B in
reductions on top of Gates reductions of $172 billion now must plan
for another $400 Billion to $1 Trillion over 10 years
Slide 11
Sequestration Indiscriminate cuts with half aimed at Defense
HBC Action March 29replace sequester with reconciliation
instructions to six committees for cuts, for subsidies for health
care insurance, child tax credits, and the social services block
grantopposed by Democrats E & C CommitteeApril 25Cut
healthcare, rescind funds for other programs opposed by Democrats
April 23Veterans programs ruled exempted Senate Budget Committee
Bowles-Simpson Majority Leader ReidAdhere to Budget Control
Act
Slide 12
Strategy and 2013 Defense Budget 2 more rounds of base
closures2013 and 2015 By 2017, the Army is projected to shrink by
72,000 soldiers to 490,000, the Marines will shrink by 20,000 to
182,000, the Navy will shrink by 6,200 to 319,500 and the Air Force
will shrink by 4,200 to 328,600. Pre-war levels. 80K
reductionMarines and Army Reduce EuropeBrigades out of Baumholder
and Schweinfurt About 30K each. Keep Vicenza and Vilseck brigades,
Okinawa 2500 personnel from Okinawa to Hawaii5000 to Guampares back
$21 billion ramp-up in Guam Military Retirement Modernization
Commission that will have the time and staff to look at this very
complicated area of military compensation and make
recommendations.
Slide 13
Strategy and 2013 Defense Budget Tricare fee increase Protect
number of (commissary) stores Cut DeCA $5 M Top line $525 billion2
percent less than 2012, $259 billion less than programed over 5
years--$487 billion less over 10 years still above 2008 levels
Personnelone-third of budget represents on 10 percent of the
reductions Efficiencies--$60 B over five yearsArmy--$19 B, Navy--
$6 B, AF--$7 Bother $30 Billusory?? Pay raises in 2013 and 14 but
more limited in 2015
Slide 14
2012 changes DeCAorganizational restructuring, $6M savings,
eliminate outreach and marketing, health and nutrition program,
annual commissary assessment, eliminate administrative positions
Convert commander AAFES and NEXCOM to SES
Slide 15
Appropriations Apportionment Hard decisions are made on outlays
in Appropriations Committees SAC 302 (b) allocations April 17--$511
B HAC April 24-- $519 B In past, would make up in supplemental
requests Flexibility door closes for restoration as supplementals
are more closely monitored.
Slide 16
FY 2012 NDAA Funds DeCA, Exchange, and MWR request Report on
extending commissary and exchange benefits to Federal employees
overseasreimbursed 3% withholdingexempt resale and MWR Treasury has
capability to certify compliance Judicious use of IRS capability to
determine tax status can be used to exempt DeCA, exchanges and MWR
without loss of revenue to government Exchanges may access Federal
Financing Bank. Saves $30-$50 M -- Sec 645
Slide 17
FY 2013 NDAAHASC Mark-up Extend through 2018 period of
eligibility for 2 years of commissary and exchange benefits for
involuntarily separated military Eliminates requirement for SecDef
to report changes in merchandise restrictions required to prevent
violation of treaty obligations of the U.S. & host nation laws
Establish guidelines for identification and purchase of fresh meat,
poultry, seafood, produce and other products raised through
sustainable methods Personnel S/C resale hearingsOctober??
Slide 18
CBO Budget Option Findings Included with Deficit Reduction
Commission Report Comments sought by OMB on proposal Components
Exchanges have more flexibility in procurement and personnel
practices than DeCA. Consolidate Exchanges and DeCA. Eliminate
duplicative administration. Convert commissary employees to NAF.
Consolidate over 5 years. At year 6 budget authority lowered by $2
billion/year. Return 1/3 of the $2 billion to active duty with
grocery allowance.
Slide 19
CBO Budget Option Components Grocery allowance phased in to
coincide with consolidation at each base Net annual savings by 2016
would be $1 billion. Save $8 billion in outlays over next decade.
Charge 7 percent more for groceries. Would cost active duty,
retired and reserve $1.4 billion annually. Active duty would pay
$400 more per year offset by grocery allowance.
Slide 20
CBO Budget Option Components Families benefit from longer store
hours, one-stop shopping, access to private label currently not
authorized in DeCA. Greater certainty in benefit not subject to
appropriations. $400 grocery allowance targeted to specific pay
grades with larger allowances to junior enlisted. Consolidated
system better able to compete with off- base enterprises. Retirees
would pay $325 more per year on groceries.
Slide 21
.S 277Senate Veterans Affairs Bill Passed full Senate Veterans
Affairs Committee Despite assurancesstill a threat Eliminates all
Title 10 prohibitions to CBO option Eliminates key Title 10
protectionspricing, stock assortments, consolidation restrictions
Single system by 2013 Self sustaining by 2016 CBO estimates 20
percent savings from efficiencies, rest from increased prices in
combined system7 percent price increase Saves $2.5 B from 2013-201
6
Slide 22
Other actions aimed at resale Coburn Back in Black Report
Coburn amendment to 2012 NDAA Bowles-Simpson adopts CBO proposal S.
277 still alive in committee H.R. 649Welch/Doggett Consolidate by
January 1, 2013 No appropriations used thereafter Referred to HASC
Title 10 currently prohibits Sitting in committee
Slide 23
March 6, 2012 testimony--SBC An End to Commissaries and
Exchanges. On benefits sidean end to commissaries and exchanges
should be seriously considered. These provide benefits unequally
and somewhat anachronistically to military service members and
their families, and it makes more sense to eliminate them than to
consider further cuts in compensation. Michael OHanlon Brookings
Institution
Slide 24
O&M Defense Commissary Agency and ExchangesHASC Report 9/11
Appropriated funds for commissaries and exchanges reduced in FY 13
and eliminated in FY 14 Grocery savings for families are decimated
(30% reduced to 15% or even zero Optionelimination of exchanges in
favor of self- sustaining enhanced commissaries exclusively selling
high profit exchange goods Exchanges on life support except where
they can sill make a profit selling limited range of goods and
overseas where they will required some appropriated fund
supportexchange support of MWR stops
Slide 25
ALA Mobilizing
Slide 26
Prevention Pre-emption Preservation
Slide 27
Total Market Capture What is the total amount of discretionary
spending for the military marketplace? 3 percent pay raises means
we lose ground each year if sales are flat What are we capturing?
Sales--$16 BMarketplace $200 B 1 percent increase--$2 billion Why
and Why not? Use it or lose itespecially for younger troops
Coalition driving to increase sales
Slide 28
ALA Assault on S 277 & CBO Cut Increase grocery prices
while increased food stamps Guts key part of White House military
family effort Throw 50,000 family members and Vets out of work Take
away benefit while fighting two wars Take away billions invested by
shareholders Force military overseas to shop off base Gut funding
for critical military community programs Kill key public/private
partnership program Kill programs rating highest on federal
accountability
Slide 29
ALA Testimony To HASC Personnel Subcommittee--February 10,
2011: Defend funding for full benefit 5:1 ROIsavings, COLAs,
infrastructure improvements, family employment, Industry in-kind
support, transportation efficiencies, retention value Cost
constantother programs increased 100-200% Accountable stewards DeCA
$1 billion in annual efficiencies since 1991Efficiencies
continueDeCA August 5 2011 announcement Exchanges inherently
efficient, direct mission support Cost cutting in DNA Single,
affordable base access cards
Slide 30
Congressional Support Gathering ALA, Marketing Council, COMID,
Military Coalition Appropriations Committees Chairmen Stated
Support 67 Members signed letter to Sec. Panetta commissaries and
exchanges should remain insulated from radical restructuring.
Letter to Defense Business Board by Wilson/Davis Wilson/Davis Op-ed
August 14Washington Times: the purpose, power and efficiency of the
commissary and exchange systems must not be overlooked. the need to
care for military families is a top priority for Congress.
(discontinuing) these programs would increase costs to military
families, cause higher unemployment for families, and would end one
of the governments most efficient programs.
Slide 31
69 Members of Congress to Secretary of Defense Panetta 7/21
Look past the rhetoric by budget-minded advocates and understand
the immense value and cultural necessity of the military resale
systems. Few programs can match the power of military commissaries
and exchanges to rally and solidify the security and strength of
the military community. Are among the most highly prized benefits.
Consider the purpose, power and efficiency of commissary and
exchange activities. Should be insulated from radical
restructuring.
Slide 32
HASC Committee Report 9/22 Breaking faith with the military.
Cuts of this magnitude require a fundamental cultural shift in the
commitment to DoD school systems, military commissaries and
exchanges, and other morale, welfare and recreation programs,
significantly reducing support of military families and retirees.
Family readiness will be degraded.
Slide 33
HASC to Defense Business Board We are aware that the Defense
Business Board has been examining commissary and exchange programs
in recent months (and) inclined to recommend the current military
resale systems be dismantled and the benefit reduced or eliminated.
Military resale stores contribute directly to the welfare of the
military communities that sustain the combat readiness of our
deployed forces. These programs are highly efficient and effective
in delivering this important benefit and we strongly believe it
would be a tragic waste of a treasured benefit if they were to be
discarded.
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The case Compassionate Economic National Security Mission
Slide 39
Build the economic case $20 billion over 20 years Challenge CBO
assumptions & findings Families save $6500 to $7000 per year
Boosting patronage & Protecting benefit one in same Resale has
constantly been in cost cutting or no growth mode Other QoL areas
realizing 30, 40, and often 100 & 200 percent increases Talking
about health care co-pays: Weve always had co- paysits called
mark-ups and surcharge
Slide 40
Economic Case 70 percent increase in food stamp redemption Sunk
costs buying the car but not putting gas in it Sales
imperativeincrease share of AD who use benefit Tax savings alone
justify benefit Family and Veteran employment Contribution to
economy/balance of payments
Slide 41
Economic case Strong force in our National economy and with the
military Member companies contribute nearly $1.2 trillion to the
economy and generate millions of jobs System builds nearly $600
million in facilities each year generating thousands of
construction jobs in the private sector Support for large
manufacturing jobs and a large number of small businesses that are
vital to the future growth of our economy Military market -- $18
billion sales and produce 30,000 jobs for American industry 100,000
jobs for military family membersbillions in additional household
income
Slide 42
Compassionate Case Military coming off fighting two wars
Families under stress Compensation being squeezed in other areas
Care for those deployed Care for those at home Multitude of
benevolent causes run through system Veteran and wounded warrior
hiring
Slide 43
National Security Mission case Ingrained in OSD fabric Not
inextricable without a major cost Adapts for force structure
Brigade re-stationing BRAC Schweinfurt, Baumholder, Okinawa
relocations Underpins transportation system Maintains ties with
installations Supports deployed forcesforward combat areas95 sites
in theaterresale workers deployed All things to all people
world-wide Underpins DoDs overseas transportation system $150,000
to $200,000 to train a troop and $1 million for pilots, doctors,
specialists
Slide 44
Equity Patrons are shareholders They have equity in the system
Management runs the system but patrons own it Have invested billion
in capital through surcharge and mark-ups and have capitalized at
nearly $50 billion Contribute $600 million each year $20 Billion to
facilities and programs since 1992 Have taken capital loss at
closed and realigned bases Cant take whats not yours
Slide 45
Wilson/Davis Op-Ed8/15 The commissary system delivers a
remarkable $2.08 return benefit for every dollar expended... one of
the federal governments most cost- effective operations Few
programs can match the power of the military resale systems to
rally and solidify the strength of the military community, the
bedrock of military readiness. Defense officials must weigh the
immense value and cost savings of the military resale systems
against fleeting political rhetoric.
Slide 46
Consistent with FLOTUS goals Support Military Quality of Life
Support healthy life style Support reducing child obesity ALA
taking initiative with exchanges and commissaries to put resale in
front of FLOTUS Presentation of all resale positives Cooperative
effort of industry and exchanges/commissaries
Slide 47
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Slide 52
Galvanizing Industry Support 250 of the major consumer packaged
goods companies in the United States. Brokers and distributors
Specialty vendors Already supports USO, Fisher House, Wounded
Warriors, NMFA, NIB, NISH and other causes
Slide 53
Industry/resale synergy with Joining Forces Large industry and
military community support system specifically established to take
care of the military member and family, responsive and ability to
quickly adapt. Leveraging the resale infrastructure and all
associated vendors to focus support to family members and programs.
Leverage a holistic community in a more focused way that is at the
very heart of the intent of Joining Forces
Slide 54
Comprehensive approach to supporting military families,
crossing traditional agency boundaries affording a coordinated
approach. Our industry partnerships can expand the capacity and
quality of support by channeling philanthropic and cause marketing
support while strategically expanding the communication about
existing support infrastructure already in place on base
Slide 55
Other support programs School feeding program OCONUS Facilities
at home Facilities downrange Welcome Home Events Personal Shopping
for wounded warriors Community engagement contests/prizes You Made
the Grade rewarding military kids Social Media Helping
friends/family connect Smooth Move Assisting with PCS transfers
Military Star proprietary credit card lower interest rate
www.shopmyexchange.com website www.shopmyexchange.com Help Our
Troops Call Home Gifts from the Home front
Slide 56
Next stepsWhite House Continuing strategy sessions to define
objectives and develop programs Orlando ALA ConventionAnnounce
Major Cooperative EffortIndustry Support Joining Forces umbrella
branding of major ALA & Resale initiatives including: Events
Sweepstakes Competitions Cause Promotions and Sales Living well and
family member employment
Slide 57
ALA Priorities Support Coalition Patron awarenessPower of viral
internetsales increasesbenefit valueget non-shoppers in Raise
visibility with White House and agencies Dont lobby each otherhave
meaningful outreach Support adequate budget levels Support shipment
of American products Support funding for BRAC affected sites
Protect immunities Affordable, one-card access Support Guard and
Reserve Support familiar war zone offerings Expand benefit to more
vets
Slide 58
ALA 2012Congressional and Public Policy Forum June 19 Rayburn
House Office Building Critical industry supports House and Senate
Issues based 2013 impact and 2014 Budget Deliberations, Basing,
Force Structure, Contracting in a volatile budget environment,
Congressional actions affecting resale, Executive Branch
initiatives House and Senate leader perspectives Administration
perspective