Escalating Military Pay Under Scrutiny

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Mounting deficits and escalating costs have some budget hawks posing a provocative question: Are we paying our servicemembers too much?

Military compensation has outpaced inflation rates and private-sector wages by more than 25 percent the past decade, according to the Congressional Budget Office, and some contend it's time to rein in those costs as the nation heads toward the so-called fiscal cliff.

The military faces big cuts whether or not Congress comes to some agreement to avert the automatic spending reductions that are scheduled to take place on Jan. 1, and compensation will surely be on the table. If they fail to reach a deal, the defense budget could face $500 billion in reductions the next 10 years

Military cash compensation jumped 52 percent overall compared to 24 percent for the private sector workforce between 2002 to 2010, the CBO report said.

The CBO report suggests the Defense Department could control the cost of cash compensation by capping military raises, and by relying more on bonuses and special pay to recruit and retain servicemembers.

Military compensation reductions aren't popular with lawmakers in Congress. U.S. Rep. Steve Austria, R-Beavercreek, said he's open to talking about changes to future enlistees' compensation, but not on those now in uniform.

"I believe the government needs to honor its commitment and provide those benefits that were mutually agreed (to) to those in our military," Austria said.

The CBO offered options to reduce the rate of basic pay raises, including asking servicemembers and military retirees to pay more for health care, and to contribute more toward retirement savings, among other suggestions.

Military advocates say many servicemembers have sacrificed with multiple deployments to war zones in Iraq and Afghanistan, spend lengthy time away from their families and are entitled to more compensation for the risks they face to protect the nation.

"It's a burden and I think we need to do everything we can to support them," said Dennis DeMolet, a disabled Vietnam veteran and Huber Heights resident who was in the Marine Corps.

He doesn't want to see servicemembers lose out on pay gains or be forced to pay more for benefits. Some military families, who often are uprooted to move to new assignments, "don't make enough money to put more money into the system," he said.

The cost of manpower

The Pentagon has proposed spending $149 billion on military compensation, or 28 percent of a $526 billion baseline budget this fiscal year, excluding the costs of the war in Afghanistan, the CBO report said. Of that amount, more than $90 billion pays for basic pay, food and housing allowances, bonuses and special pays.

The defense budget sets aside another $16 billion toward future pension benefits for current servicemembers.

Roughly $40 billion pays the health benefits of 1.4 million active-duty servicemembers, part of a total of 10 million people who are eligible for low-cost health care, such as military retirees and eligible family members, according to the CBO.

Active-duty servicemembers earn base pay, and are entitled to additional money to compensate for housing and food expenses.

For example, an Army corporal would earn regular military compensation of $50,860 after four to six years of service. That total includes $27,200 in basic pay; a nationwide average housing allowance of $14,280, although the actual amount paid varies depending on where the soldier lives; and tax-free allowances or benefits that amount to $4,660. A higher-ranking Army captain who is married would earn $92,200 after about six years on active duty, according to the CBO.

A comparison to civilian wages shows a person in the private sector with some college education or a high school diploma on average earns less than $30,000 a year, a Department of Defense review shows. A civilian with a master's degree or higher earns on average a little more than $60,000.

The military appropriation for each active-duty servicemember has reached just over $100,000, CBO reported.

Servicemembers can retire after 20 years of service and qualify for a pension. A health care insurance program called Tricare covers both current active-duty and some retired and reserve servicemembers' health care costs at no cost or at rates typically less than private insurance.

Thomas Istvan, an Air Force retiree who spent time in Vietnam and has two sons in the military, said he could support lower pay raises of 2 percent or slightly less for active-duty servicemembers.

"As odd as it sounds, I think that would be fine," the Huber Heights resident said. "I think the military right now is being paid a fairly good wage."

His advice for his sons: "If they want a pay increase, I tell them both to work harder, get promoted."

Istvan, however, doesn't support asking retirees to pay more for health care.

"I'm definitely against that," he said. "If you've given Uncle Sam at least 20 years, he ought to give you free medical care or give it to you at a low cost."

'Retention crashed'

The military will have to share in sacrifices with the nation in a budget crunch, but pay restrictions are counterproductive, according to Steve Strobridge, the director of the government relations at the Military Officers Association of America in Alexandria, Va. When military pay was restricted periodically between the 1970s and the 1990s, "retention crashed," he said.

The bump in pay and compensation the past decade was meant to raise servicemembers' compensation because it often lagged behind their civilian counterparts, he said, and personnel costs today are no greater a percentage of the budget than they have been historically -- about a third of spending.

Benefits, such as health care and retirement pay, are incentives needed to encourage military members to pursue a career most Americans are not willing to sacrifice for one term of enlistment, let alone two decades or longer, said Strobridge, a retired Air Force colonel and former Defense Department director of officer and enlisted personnel management.

"If anything, the hardships of military service are worse now," he said. "People tend to forget what it takes to serve a career."

MOAA has suggested a list of possible cost-cutting options, such as a unified medical command to reduce health care costs in the Army, Navy and Air Force about half a billion dollars a year. The non-profit organization has urged more members to use mail order prescription drug refills, among other places where the Pentagon could save money, he said.

The Defense Department should survey servicemembers to find out what pay and benefits they value or don't value to determine where to cut, said Todd Harrison, senior fellow for defense budget studies at the Center for Strategic and Budgetary Assessments in Washington, D.C.

"The reality is we're in a constrained budget environment," he said. "We always have been. We're just starting to realize it again. So we have to make some hard decisions. There are choices we have to make that aren't easy choices."

If compensation costs keep growing while the defense budget declines, eventually the military will have to make trade-offs on what to fund among personnel, training and equipment, he said.

"That's not an easy answer and whatever you choose is going to be painful in some way," he said.

Congress tends to be "quite reluctant to cut or appear to be reducing military compensation," said Asch, who authored a RAND report on military compensation this year with two of her colleagues. "If anything, over the last decade they have been quite generous in expanding compensation."

U.S. Sen. Rob Portman, R-Ohio, told the Dayton Daily News he hadn't reviewed the CBO report, but has supported a bill that would set up a Defense Department commission to review military compensation and modernization plans by next September.

U.S. Sen. Sherrod Brown, D-Ohio, supports cuts to the defense budget, although "he doesn't think they should come from our service members' paychecks or jeopardize our national security," spokeswoman Lauren Kulik said in an email.

Tom Crosson, a spokesman for U.S. Rep. Mike Turner, R-Dayton, said the congressman's office was reviewing the CBO report and he wasn't able to comment.

"However, I can tell you that Congressman Turner joined the House in voting to avert this fiscal cliff earlier this year, and that bill did not contain any provisions which would restrict pay hikes for the military or make any changes to their health care or retirement programs," the spokesman said in an email.

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