WEBVTT

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- DFAS is responsible for
accounting, investing,

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payment of benefits, and reporting

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of the Military Retirement Fund.

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Established by Public Law 98-94,

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currently Chapter 74 of Title 10,

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United States Code
starting October 1, 1984,

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and we don't have time to
read except for this part.

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The Secretary of the Treasury
shall invest such portion

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of the Fund as is not in the judgment

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of the Secretary of
Defense required to meet

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current withdrawals.

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Such investments shall be
in public debt securities

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with maturities suitable
to the needs of the Fund,

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as determined by the Secretary of Defense,

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and bearing interest at rates determined

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by the Secretary of the Treasury,

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taking into consideration
current market yields

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on outstanding marketable obligations

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of the United States of
comparable maturities.

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If this section is amended
and the text in red is added,

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which will offer up to 25
percent in equity security

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so companies based in the United States,

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of which five percent may be invested

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in equity securities of
Department of Defense

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suppliers and vendors to hedge against

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unexpected future expenses.

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Doing so will save the
Department of Defense

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more than nine billion dollars per year

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indefinitely at a zero cost to implement,

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and be into an active
policy shift necessary

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to get the United States
back on a sustainable,

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long-term financial path.

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According to the Department of Treasury

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in the 2018 Financial Report

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of the United States Government,

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the U.S. collected 3.4 trillion in taxes

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and had net cost of 4.5 trillion

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for a negative 1.2 trillion bottom line.

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This path is unsustainable and
long-term fiscal projections

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indicate that the
government's debt to GDP ratio

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will rise from 78 percent in 2018

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to 530 percent over the next 75 years,

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and longer if current
policy is kept in place.

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If you went through the
military retirement fund

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audited reports for 2007 to 2018

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and pulled the numbers
for the total investments

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in the fund, the total
interest on investments earned,

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military service
contributions to the fund,

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treasury department payments to the fund,

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you would know the total revenue available

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to pay outlays or benefits to retirees.

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And you could also pull those numbers.

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If you put all those numbers in a table,

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it would look like this and you could see

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that the fund's assets grew
from 218 billion in 2007

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to 813 billion in 2018,

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a 595 billion dollar increase.

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The fund clicked at
179 billion in interest

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on assets of that time for
an average effective yield

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of 3.3 percent per year.

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The Department of Defense
made contributions

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of 228 billion over that time.

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The treasury made unfunded
liability normal cost payments

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of 831 billion.

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So the fund had a total
of 1.2 trillion dollars

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of net revenue.

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It paid out 634 billion to retirees,

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and we'll skip the actuarial gross costs

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and focus on net surplus,

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which will assume revenues are received

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and outlays are paid.

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And the net surplus can be contributed

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to a companion trust that
allows for investment

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in the TSP large US company C fund,

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the small US company S fund,

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and a Black Rock Aerospace
and Defense Fund.

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Here's the total weighted average

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of the companion fund, and the investments

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can still be invested
in the current strategy

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with the same historic yields.

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To really test the validity of this idea,

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I'll run it through
the worst-case scenario

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of starting it in 2008
during the financial crisis.

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The net surplus from 2008

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is divided in half, 17.4
billion goes into both

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the current strategy and
the proposed strategy.

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After that, one quarter
of the annual surplus

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is deposited into each strategy.

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The end result, a net benefit
of 105 billion dollars

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after 11 years, or about
9.5 billion per year.