Two federal retirement communities for disabled enlisted veterans and some officers face uncertain financial futures unless Congress and the Defense Department take steps to address budget shortfalls, the Government Accountability Office has found.

The Armed Forces Retirement Home, or AFRH, system, which operates senior living facilities in Washington, D.C., and Gulfport, Mississippi, is on a trajectory to deplete its trust fund by 2042 without intervention, according to a report published earlier this month^[1] by the watchdog agency.

The system, founded in 1991 to manage the former U.S. Soldiers' and Airmen's Home in Washington and the U.S. Naval Home in Gulfport, has the capacity to house up to 1,120 residents, but had just 611 as of September 2022.

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A declining funding stream, gaps in residential rates versus cost of care and capital improvements have led to financial struggles, according to the GAO.

"AFRH has not achieved its goals to raise its declining occupancy or to implement its other proposals. Also, AFRH faces further financial risks from costly repairs to deteriorating facilities," GAO analysts wrote. "AFRH may continue to face financial shortfalls that in the future could affect its ability to fulfill its mission."

The homes are financed by residential fees; a 50-cent mandatory payroll deduction from active-duty enlisted service members, warrant officers and limited-duty officers; the fines and forfeitures of personnel charged with disciplinary violations; donations; and interest off the AFRH trust fund.

But the payroll deduction has not kept up with inflation and revenues from fines and forfeitures have dropped, the GAO noted, as the number of courts-martial and disciplinary actions in the services has declined.

Investment interest income also is down as a result of trust fund balances that have declined since 2010 with the opening of a new Gulfport campus following Hurricane Katrina and the complete overhaul of a residential building in D.C., according to the GAO.

"If no actions are taken, the projections show that AFRH trust fund balance is likely to continue to decline -- even if the general fund transfers are provided at the current rate into the future," the report said.

Those responsible for AFRH had sought to stabilize its financial outlook by striking a deal with private companies to redevelop 80 acres of the Washington, D.C., campus for mixed use, with more than 3,000 residential units, retail stores, offices and open space.

The deal was quashed in October, however, as the result of "rising interest rates, inflation, supply chain challenges and a struggling office market in D.C.," according to John RisCassi, AFRH's chief operating officer.

"It was clear that the financial benefit to the Home was now significantly diminished and the terms of the long-term lease were riskier to AFRH," RisCassi said in a press release.

To make ends meet, Congress has provided AFRH with general funds transfers for the past eight years. In making recommendations for the system's future financial solvency, the GAO recommended that Congress continue to support AFRH by transferring $25 million to the system over the next 20 years.

It also recommended that Congress and the Department of Defense:

• Raise the military contribution rate, which has not increased since 1977, from $.50 to $1.00.
• Require Reserve and National Guard^[3] members, who became eligible for AFRH in 2021, to pay the military contribution.
• And increase occupancy levels at both campuses.

The report also recommended that the system be reimbursed by Tricare^[4] and Medicare for health care, since nearly all residents are eligible for medical treatment through the military treatment facilities or the Department of Veterans Affairs^[5].

The system also could benefit from having a functional advisory council, GAO auditors noted. According to the report, AFRH has not had an active council since at least 2015, even though it is required by law to have an advisory board with at least one financial management expert.

In a 13-page response, RisCassi and AFRH Chief Executive Officer Stephen Rippe said they appreciated the GAO's oversight and agreed that bolstering the system's trust fund balance is necessary.

They noted a number of achievements AFRH has made in the past five years, such as increasing the trust fund balance by 62%, raising the operating budget to attract talented staff, and increasing revenues by entering into leases with nearby medical facilities.

They said adjusting the service member contribution for inflation could help bolster income, as would increasing the average fee paid for those in independent living, especially in Washington, where one of the major facilities is about to undergo an extensive renovation.

Rippe and RisCassi also noted that, in discussing the occupancy rates, the GAO did not address the COVID-19 pandemic, which reduced facility admissions, or the pending renovation, which has forced AFRH to reduce capacity and start a waiting list.

"In the coming years, we look forward to resolving the decades-long impasse over pay deductions supporting the Home; instituting new health records systems that will improve health care coordination for our residents and better facilitate reimbursement for covered services performed on site; developing an updated capital investment plan for facilities and equipment; and executing a new strategy to secure a long-term revenue stream from the Home's substantial real estate assets," they wrote.

To be eligible for the AFRH, residents must be at least 60 years or older; have spent more than half their military service as an enlisted member, warrant officer or limited-duty officer; have an honorable discharge, a service-connected disability or military retirement^[6]; and be ambulatory and able to take care of themselves at the time of admission.

Residents pay a fee depending on the level of care and monthly income, beginning at the independent living level, at a cost of nearly 47% of income, for their residences, meals, health care and amenities.

Fees rise with the level of care: Those requiring memory care services pay 70% of their income, according to the GAO.

Related: Veterans Face Extended Delays for Referrals for Specialty Care Outside VA Facilities, Watchdog Finds^[7]

Facing a growing list of attacks against U.S. forces in the Middle East, Chairman of the Joint Chiefs Gen. Charles "C.Q." Brown was pressed at a recent conference on why the American military wasn't responding more aggressively.

Two decades of war in the region, a war that much of the American public is eager to move on from, have made military leaders cautious when talking about battlefields that have claimed thousands of service members' lives.

"We're being very thoughtful about the approach we take, and I do that when I provide my advice on how best to respond but also not to broaden the conflict," Brown said on stage at the Reagan National Defense Forum at the beginning of the month.

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A day later, the list grew, with Iran-backed Houthi rebels launching one of their biggest drone attacks^[2] on commercial ships in the Red Sea, prompting the destroyer USS Carney to shoot down multiple drones.

That same day, U.S. forces in Iraq killed five Iran-linked militants^[3] in a drone strike intended to prevent an imminent attack on American troops.

Since then, U.S. forces have faced dozens more attacks in Iraq and Syria, with the total topping 100 and at least 66 American troops suffering injuries. U.S. warships have also been called upon several more times^[4] to respond to continued Houthi attacks on commercial ships, and American military involvement in protecting commercial shipping is poised to grow with the announcement of a new multinational task force to patrol the Red Sea^[5], an escalation as the year draws to a close.

Despite efforts to avoid a larger war and as the U.S. watches close ally Israel's ground campaign in Gaza continue, the American military by all appearances is, yet again, getting pulled deeper and deeper into the Middle East.

Taken as a whole, events since October demonstrate that, as much as the country has sought to extract itself from the Middle East in recent years, the region is not done with the United States, and 2024 is likely to see U.S. forces still confronting threats and facing the risk of casualties.

"The fact that there are several frozen conflicts in the region that have been unresolved, neither militarily nor politically, certainly creates an enabling environment for various cycles of violence to keep repeating themselves," said Merissa Khurma, director of the Middle East Program at the Wilson Center. "Everyone looks to the West for leadership in resolving these conflicts because that responsibility comes with the power the United States yields, both politically and militarily."

Further, the danger of a broader, conventional Middle East war still looms.

"It's sheer good luck that we have not lost any Americans in this growing number of attacks," said Mona Yacoubian, vice president of the Middle East and North Africa Center at the U.S. Institute of Peace. "This is far from over, and I think, unfortunately, we have not yet seen what the full scope of escalation looks like."

The start of the Biden administration saw a concerted effort to turn the page on America's so-called endless wars in the Middle East and South Asia, and in turn focus more on the Indo-Pacific region and America's strategic adversary of China.

Last year, a new National Defense Strategy named China as the United States' top "pacing challenge" while placing the threats that had consumed U.S. attention in the beginning of the 21st century, including terrorism and the Middle East, on a lower tier.

President Joe Biden withdrew the last remaining U.S. troops from Afghanistan, despite warnings that came to fruition that doing so would lead to the Afghan government's collapse.

And while the administration left untouched about 2,500 troops in Iraq and about 900 troops in Syria to keep any remnants of the ISIS terrorist group at bay, Biden made a high-profile announcement in 2021 that the combat mission in Iraq was over, and officials rarely drew attention to U.S. military activities in Iraq and Syria.

Then Oct. 7 happened.

Hamas terrorists snuck across the border from the Gaza Strip to Israel, slaughtering about 1,200 people and abducting about 250 others in the bloodiest day in Israel's history. Americans were among both the dead and the hostages. The Israeli government responded by launching a war on the Hamas-controlled Gaza Strip that has included a blistering airstrike campaign and ground invasion.

Iranian proxy forces in the region have taken advantage of the chaos by launching a flurry of attacks against U.S. forces in Iraq and Syria and commercial shipping in the Red Sea. Israel and Hezbollah have also regularly been trading fire across the Israel-Lebanon border since Oct. 7.

The United States responded by rushing forces into the region in what officials described as an effort to deter a wider Middle East war. Two aircraft carriers and their associated strike groups steamed into the eastern Mediterranean Sea, and air defenses were bolstered throughout the U.S. Central Command area of responsibility, among other elements of the buildup.

Defense officials have stressed that no assets are being taken from the Indo-Pacific region to help the buildup in the Middle East. They also argue that they remain focused on China despite Gaza, as well as the war in Ukraine before that, consuming the most immediate attention.

"We've not lost any readiness," Gen. Charles Flynn, commanding general of U.S. Army^[6] Pacific, said at the Reagan forum when asked how competing priorities for weapons, particularly for the war in Ukraine, could affect his forces. "There's a lot of ways to weight your effort, and it's not just steel coming off of a production line."

Still, public attention has undeniably shifted recently, as has many U.S. leaders' rhetoric.

The Reagan National Defense Survey, released annually ahead of the conference, found the Middle East jumped as a priority for Americans in the last year. While 11% of respondents said in 2022 that the U.S. military should focus its forces in the Middle East, 31% said so this year. This year's iteration of the poll was taken weeks after the Hamas attack.

By comparison, 25% of respondents this year said the U.S. military should focus on East Asia, including China, compared to 31% last year.

When given free range to decide how to allocate U.S. military resources, poll respondents split forces fairly evenly between the Middle East and Asia. On average, respondents said about 19% of U.S. military resources should be focused on the Middle East and about 18% should be focused on East Asia.

Still, 51% said they believe China is the greatest threat to the United States, with the country retaining its perch atop the list from last year.

"It depends on what the leaders are talking about, that's what Americans are going to focus on," Sen. Joni Ernst, R-Iowa, said on a panel at the Reagan forum about the poll results.

While the annual confab of military officials, lawmakers and defense contractors did not officially include any panels on the Middle East or the war in Israel, talk about the conflict permeated discussions at the Reagan Library.

During his speech at the conference, Defense Secretary Lloyd Austin spoke almost twice as long about Israel and the Middle East as he did about America's supposed priority theater of the Indo-Pacific.

"As we are working to stabilize the region, Iran is raising tensions," Austin said in his speech. "After attacks against U.S. personnel in Iraq and Syria, our forces repeatedly struck facilities in Iraq and eastern Syria used by Iran's IRGC [Islamic Revolutionary Guard Corps] and by militias affiliated with Iran. We will not tolerate attacks on American personnel. These attacks must stop. And until they do, we will do what we need to do to protect our troops -- and to impose costs on those who attack them."

Even with the tit-for-tat between U.S. forces and Iran-backed militias in the region, warnings at the beginning of the war in Israel that it could escalate into an all-out war in the Middle East haven't borne out. But regional experts say the skirmishes in Iraq and Syria, the Houthi attacks in the Red Sea and the violence on the Israel-Lebanon border all still risk spiraling into a more conventional war that would further entangle the United States.

"Nobody wants this to escalate further because they understand how high the risks are for contagion," said the Wilson Center's Khurma, who said she's spoken to regional diplomats who have open channels of communication with Iran. "It is very delicate. The risks remain high."

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WASHINGTON -- Gen. CQ Brown^[1], chairman of the Joint Chiefs of Staff, spoke with his Chinese counterpart on Thursday, in the first of what officials said will be renewed talks between the two nations' senior military leaders, as the Biden administration works to thaw relations with Beijing.

The video call between Brown and Gen. Liu Zhenli is the first senior military communications between the U.S. and China since August 2022, when Beijing suspended all such contacts after former House Speaker Nancy Pelosi's visit to Taiwan^[2]. It comes on the heels of similar conversations between top U.S. and Chinese diplomats, all triggered by the meeting last month between U.S. President Joe Biden and China's President Xi Jinping^[3].

Biden's meeting with Xi, on the sidelines of the Asia-Pacific Economic Cooperation summit in San Francisco, was aimed in part at restoring the military talks amid escalating concerns about frequent unsafe or unprofessional incidents^[4] between the two nations' ships and aircraft in the Pacific region.

Brown and Liu "discussed the importance of working together to responsibly manage competition, avoid miscalculations, and maintain open and direct lines of communication," said Navy^[5] Capt. Jereal Dorsey, Brown's spokesman, in a statement.

The U.S. has consistently viewed military communications with China as critical to avoiding any missteps between their armed forces^[6] and to maintaining a peaceful Indo-Pacific region.

Brown's call is the first Cabinet-level communication with China since Secretary of State Antony Blinken spoke on Dec. 6 with Chinese Foreign Minister Wang Yi.

While few other details about Brown's call were released, a senior U.S. defense official and a senior military official said it was an important first step. These are the kinds of discussions that the U.S. needs to have with China, they said, in order to avoid misunderstandings or miscalculations as the two militaries interact. The two officials spoke to reporters on condition of anonymity to provide information before the call.

They said the U.S. is talking with China at various levels to work out a series of calls and meetings in the coming weeks and months. They include plans to hold the bilateral Defense Policy Coordination Talks early next year and the possible resumption of the China-U.S. Military Maritime Consultative Agreement talks in the spring.

During the call Brown reaffirmed the importance of holding the policy and maritime talks as well as opening the lines of communication with top Pacific commanders from the two countries, Dorsey said in his statement.

In August 2022, Beijing suspended all military contacts with the U.S. when Pelosi became the highest-ranking American lawmaker to visit Taiwan since 1997, when then-Speaker Newt Gingrich traveled there. Her visit sparked a surge^[7] in military maneuvers^[8] by China. Beijing dispatched warships and aircraft across the median line in the Taiwan Strait, claiming the de facto boundary did not exist, fired missiles^[9] over Taiwan itself, and challenged established norms by firing missiles into Japan's exclusive economic zone.

There also has been an increase in what the Pentagon calls risky Chinese aircraft and warship incidents. The Defense Department in October released video footage of some of the more than 180 intercepts^[10] of U.S. warplanes by Chinese aircraft that have occurred in the past two years -- more than the total number over the previous decade. In one of the more recent incidents, a Chinese pilot flew within 10 feet (3 meters) of a U.S. Air Force^[11] B-52^[12], which was conducting routine operations over the South China Sea in international airspace.

While officials touted the Brown-Liu call as an important initial move, the Pentagon has continued to express concerns about China's aggressive military interactions in the Indo-Pacific and has worked to build alliances with other nations in the region.

Earlier this month, Defense Secretary Lloyd Austin met with defense chiefs from Australia and the United Kingdom to forge a new agreement to increase technology cooperation and information sharing, as part of a broader effort to counter China's rapidly growing influence in the Indo-Pacific.

The new technology agreement is the next step in widening military cooperation with Australia that includes plans to help equip Sydney with a fleet of eight nuclear-powered submarines. And the defense leaders pointed to efforts by China to restrict freedom of navigation in the Indo-Pacific as a reason to bolster their cooperation.

Also, earlier this week, Adm. John Aquilino, head of U.S. Indo-Pacific Command, expressed concerns about the increased joint military actions by China and Russia in the region. Speaking in Tokyo, he said it is far beyond a "marriage of convenience" between Beijing and Moscow, and he urged China to stop escalating maritime confrontations with its neighbors.

China's defense ministry, meanwhile, has criticized the U.S. for interfering in both Taiwan and the South China Sea, charging that American arms sales to Taiwan are making the situation more dangerous.