Budget day: Pay and benefits stall as readiness spending climbs

An aerial view of the Pentagon.


By JON HARPER | STARS AND STRIPES Published: March 4, 2014

WASHINGTON — The Department of Defense released its short and long-term spending requests Tuesday, reaffirming that future defense budgets will prioritize technology and readiness over pay and benefits for servicemembers and their families.

“In developing the (fiscal) 2015 budget, the Department is seeking to rebalance the Joint Force. It will be reduced in size but will become more modern and more ready to confront a broad range of future defense challenges,” the budget document says.

Military pay and benefits have increased 83 percent since 2001, and now constitute 35 percent of the defense budget, according to the Pentagon.

“If this area does not take a reduction when the defense budget decreases, these costs can quickly eat into the training and equipping portions of the budget (readiness and modernization efforts),” budget authors wrote.

To slow the growth in personnel costs and save $11.9 billion over the next five years, the DOD wants to do the following:

  • Limit pay raises. The DOD is requesting the following pay increases for active-duty servicemembers: 1 percent in FY 2015, 2016, and 2017; 1.5 percent in FY 2018; and 1.8 percent in FY 2019.

  • Freeze general officer and flag officer pay in 2015.

  • Slow basic allowance for housing growth. Over the coming years, the DOD would reduce the average BAH housing rental and utilities subsidy from 100 percent to 95 percent. The renters insurance subsidy would also be eliminated. The actual percentage change will vary by area.

  • Reduce commissary subsidies. Over a three-year period, the subsidies would decrease from $1.4 billion annually to $400 million. Overseas commissaries and those in remote locations will continue receiving direct subsidies. The commissary cut will be accomplished not by cutting any commissaries, but by reducing the amount of savings relative to civilian markets that servicemembers enjoy. Those savings will go from about 30 percent to 10 percent.

  • Manage Tricare costs. Proposed changes to Tricare include increased cost-sharing and pharmaceutical co-pays for active-duty families and retirees and their families and a new enrollment fee for Tricare-for-Life beneficiaries. (It grandfathers those already Medicare-eligible at enactment.) There would be no change for active-duty servicemembers.

  • Reduce funding for military family support programs. The DOD is requesting $1.1 billion less for such programs than was enacted in FY 2014.

  • Reduce the size of the civilian workforce. The DOD estimates that the number of Full-Time Equivalents will decrease 1 percent, from 755,000 to 749,000, between FY 2014 and FY 2015. The DOD is requesting a 1 percent pay raise for civilians in FY 2015.

  • Reduce the size of the overall force. The Army and Air Force will bear the brunt of these cuts. The Army will go from the current active-duty end-strength of 520,000 soldiers down to 440,000 to 450,000 by 2017. The Army National Guard would drop by 20,000 troops and the Reserves would drop by 10,000 troops. The Air Force total end strength would fall from 503,000 airmen to 479,000 by 2019.

The Air Force Reserve would decrease to 67,000 in 2015 from the current 70,000. The Air National Guard would remain unchanged at 105,000.

Navy active-duty end strength would remain virtually unchanged by 2019, and the Navy Reserve would drop from 59,100 sailors to 57,300 in 2015.

The Marine Corps would drop from 195,800 to 182,700 Marines by the end of 2015.

The Pentagon will wait until the Military Compensation and Retirement Modernization Commission finishes its review before recommending further changes to the military retirement system, which senior defense officials say are needed to save money.

The proposed topline spending level for fiscal 2015 — $495.6 billion — is virtually unchanged from the previous two years. It’s about $35 billion, or 7 percent, less than fiscal 2012, when the base budget peaked and sequestration had not gone into effect. When projected war spending is taken into account, this year’s budget request is $116 billion, or 17 percent, less than fiscal 2010, when force levels in Afghanistan reached their peak following President Barack Obama’s troop surge.

The services are requesting the following funding levels for FY 2015:

  • Army: $120.5 billion, $4.6 billion less than the $125.1 billion enacted by Congress last year.

  • Air Force: $109.3 billion, down from the $114.1 proposed in 2014, but higher than the $108.8 billion actually enacted last year.

  • Navy and Marines: $148 billion, down from $150 billion last year.

Over the next five years, the Defense Department is asking for $2.8 trillion. That is $113 billion less than last year’s Future Years Defense Program.

Veterans groups and politicians have criticized the administration for the pay and benefits moves, which House Armed Services Committee Chairman Buck McKeon, R-Calif., last week said are an attempt to “solve our financial problems on the backs of our military — and that can’t be done.”

But some analysts aren’t worried that America’s military capabilities will be significantly degraded by the cuts.

There’s no need to panic over a falling defense budget, said Lawrence Korb, a senior fellow at the Center for American Progress, a left-leaning Washington think tank.

“The budget in real terms is at 2007 levels, and higher in real terms than it was during the entire Cold War,” he said.

Korb, a former assistant secretary of defense for manpower, reserve affairs, installation and logistics during the Reagan administration, said the Pentagon is making the right choice prioritizing advanced capabilities over numbers of troops. Moves to limit pay and benefits increases, including shifting some health care costs to users, have long been needed to bring some balance to the defense budget, he said.

“I think slowing the growth of base pay, slowing the growth of housing allowances and basically bringing them back to accepted standards is wise,” he said. “But of course everybody will look at that as a cut.”

As always, whether Congress has the political will to enact such changes is an open question, he said.

Stars and Stripes reporter Chris Carroll contributed to this report.

Twitter: @JHarperStripes

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