For months, the Defense Department has carried out affairs under the direction of the Budget Control Act of 2011, aka “the sequester.” This state of affairs has imposed limits on military procurement, deployment, training schedules and overall force readiness.
At this juncture, the pressure of the sequester and finding cost savings threaten another area of critical military spending: compensation and benefits. Having already placed heavy burdens on commanders and forces, this pressure to find savings threatens to pass America’s budgetary woes to individual DOD employees in and out of uniform.
Particular scrutiny of military compensation and benefits has come under the purview of the newly created Military Compensation and Retirement Modernization Commission, created by the fiscal 2013 National Defense Authorization Act. Names of the chairman, the Honorable Alphonso Maldon Jr., and commission members were released in June. The commission is tasked with ensuring, “long-term viability of the All-Volunteer Force . . . [and] to enable the quality of life . . . [while] achieving fiscal sustainability.”
Although the particular mission of this commission seems productive on its own, the fact that it has been directed to look into the “fiscal sustainability” indicates DOD benefits might be on the chopping block should the sequester continue and pressure mount to find more cost savings.
While the costs of military benefits have increased throughout the past 12 years, much of this growth is the result of the introduction of Tricare for Life in 2002-2003. It is only reasonable to assume costs after years of war correspond to the increase of veterans and retirees.
However, the spike in compensation costs in the early 2000s does not indicate an out-of-control benefits system. To the contrary, a report by retired Air Force Col. Mike Hayden, writing for the Military Officers Association of America, looks over the past three decades and shows that compensation has consistently held 30 percent to 33 percent of DOD spending, neither hemorrhaging DOD funds nor stowing them away.
If the military compensation system is not broken, then what can Congress achieve by reforming it? First and foremost, some members of Congress perceive benefits and compensation as an area of the defense budget that can be cut to reduce the financial strain of the sequester.
One particular effort put forth by the president’s fiscal 2014 budget request and echoed by Defense Secretary Chuck Hagel is a proposed cut to DOD pay. This particular measure would implement a 1 percent increase for military personnel to save about $540 million.
While this proposal would cut costs, it comes as a tremendous slight to military personnel whose pay is supposed to be tied to private sector growth, the Bureau of Labor’s Employment Cost Index, which is supposed to be a 1.8 percent increase. In addition, Hagel also recommended in a letter to the Senate Armed Services Committee on July 10 for the inclusion of enrollment fees to Tricare, which he projects could raise $1 billion. Sen. Kirsten Gillibrand, D-N.Y., earlier this year stated, “There are a lot of ways the federal government can cut costs . . . but targeting salaries and benefits for our troops and civilian personnel should not be one of them.”
Despite members of Congress’ determination, the sequester continues to be a lose-lose situation for DOD. On the one hand, the president’s budget recommends the lowest pay increase for servicemembers since 1963, while the alternative budget under the sequester would continue to furlough about 650,000 DOD civilian employees, cut all military promotions, freeze pay raises and cancel retention bonuses. As of July 15, DOD civilian employees are now being furloughed for 11 days, representing a 20 percent cut in pay while in effect.
How then do plans, such as the Military Compensation and Retirement Modernization Commission, hurt future readiness of the Armed Forces? To best understand the answer, one must look back to 1986 when Congress decided to revamp military retirement options under a new system known as REDUX that offered lower initial compensation and greater returns only available to the most financially savvy servicemembers. In response, military retention plummeted.
Given the overwhelmingly negative response to cutting compensation benefits in the past, it is puzzling why Congress would want to attempt such measures now, when the military is already overburdened by the sequester’s hindrance of military readiness.
Asking our servicemembers to bear the financial burden, created by Congress’ inability to reach an agreement on the budget is stretching their willingness to serve too far. Ultimately this commission and Congress must remember discussions on military compensation, exacerbated by the sequester, not only affects thousands of DOD employees and servicemembers but also determines America’s ability to maintain a force capable of securing our nation’s interests for the foreseeable future.
Anthony A. Wallis is the legislative director for the Association of the United States Navy.