November 30, 2013
Putting Military Pay on the Table
By THE EDITORIAL BOARD
Big-ticket weapons like aircraft carriers and the F-35 fighter jet have to be part of any conversation about cutting Pentagon spending to satisfy the mandatory budget reductions known as the sequester. But compensation for military personnel has to be on the table, too — even though no other defense issue is more politically volatile or emotionally fraught.
After a decade of war, the very idea of cutting benefits to soldiers, sailors and Marines who put their lives on the line seems ungrateful. But America’s involvement in Iraq and Afghanistan is over or winding down, and the Pentagon is obliged to find nearly $1 trillion in savings over 10 years. Tough choices will be required in all parts of the budget. Compensation includes pay, retirement benefits, health care and housing allowances. It consumes about half the military budget, and it is increasing.
In a speech last month, Defense Secretary Chuck Hagel warned that without serious savings in this area, “we risk becoming an unbalanced force, one that is well compensated but poorly trained and equipped, with limited readiness and capability.” Meanwhile, Gen. Ray Odierno, the Army chief of staff, told a hearing: “The cost of a soldier has doubled since 2001; it’s going to almost double again by 2025. We can’t go on like this, so we have to come up with [new] compensation packages.”
The Wall Street Journal reported recently that military commanders have agreed to a plan that would curb the growth of pay and benefits for housing, education and health. But it must still be approved by Mr. Hagel and President Obama. In past years, Congress has approved pay raises and benefit improvements and resisted rollbacks. It is possible that politically savvy Pentagon leaders may be hitting the personnel issue hard right now to force lawmakers to end the sequester or to otherwise soften its blow to the overall military budget. Personnel costs are not the only ones rising. Weapons procurement has risen 88 percent from 2001 to 2012.
But many Washington-based think tanks, spanning all ideologies, are also pushing reform. In June, a group of them — including the conservative American Enterprise Institute and the liberal Center for American Progress — called for a comprehensive review and modernization of the military compensation system, which has been largely unchanged for 40 years.
One problem is that unrestrained compensation costs will edge out funds for training, readiness and weapons. A recent Congressional Budget Office study said that between 2001 and 2012, when private-sector wages were effectively flat, basic military pay rose by 28 percent in inflation-adjusted dollars. The study also said that cash compensation for enlisted personnel, including food and housing allowances, is greater than the wages and salaries of 90 percent of their civilian counterparts. And health care costs are projected to rise from $51 billion in 2013 to $77 billion by 2022.
Where, then, to cut? Reducing the size of the armed forces would have the quickest effect. The budget office suggests giving smaller pay raises; replacing the current retirement system, under which active-duty members qualify for immediate benefits after 20 years of service, with a defined benefit system that partially vests earlier in a service member’s career; and increasing health care enrollment fees, deductibles or co-payments. Military retirees pay only a fraction of what civilians pay for health care premiums, and those with second careers often choose to stay on the government plan. It makes sense that they be asked to assume a greater share. To the extent possible, any changes should affect future recruits rather than current enlistees.
Soldiers must be adequately compensated. But when programs across the government are being slashed, including those affecting the most vulnerable Americans, no budget account can be immune from reductions and reforms. It is a difficult balance to get right.