The Pentagon will also try again to reform the Tricare health care system and kill the A-10 attack aircraft despite nearly universal opposition from veterans service organizations, Work said at a Council on Foreign Relations forum.
"This whole idea of compensation is absolutely critical. Compensation (reform) is a really big deal" in DoD's efforts to maintain readiness, fight wars in Afghanistan and the Mideast and rebalance forces to the Pacific while working under the budgetary restrictions of the Congressional sequester process, Work said.
Matters will come to a head in February when DoD presents its next budget and the Military Compensation and Retirement Modernization Commission presents its long-awaited reform recommendations, Work said.
Work said he expected that Congress will still be working under a continuing resolution on DoD's budget in February. "This is truly the last chance for us to make any moves in this space" on pay, pensions and other cost-cutting measures, said Work, a retired Marine colonel and former Navy undersecretary.
Without the proposed cuts, the Pentagon will be left with a $70 billion hole in its budget, Work said, but Congress has opposed "what we consider to be reasonable approaches. It's been no, no, no, no, no, no, no" to nearly every suggestion. "This is la-la land," Work said.
The Military Officers Association of America and other veterans groups were bracing for the upcoming fight with DoD on pay and benefits. "I don't expect that the Department is going to ease off on any of these next year," said retired Col. Mike Hayden, MOAA's director of government relations.
Hayden said that DoD was "looking at any way to try to offset readiness costs by shifting them onto servicemembers and their families and retirees."
Over the Labor Day weekend, President Obama sent notice to Congress limiting pay increases for the military and federal civilian workers to one percent. The House has passed a bill for a military pay increase of 1.8 percent while the Senate has yet to act on an amendment offered by Sen. Marco Rubio, R-Tex.,for a similar 1.8 percent military pay raise.
Work made the comments on pay and benefits in response to questions at the CFR forum. His main topic was the Obama administration's push to rebalance forces to the Asia-Pacific region, with 60 percent of military assets and personnel focused on Asia and 40 percent elsewhere.
Work said that Asian allies constantly point to the turmoil in the Mideast and Russian aggression in eastern Europe to ask him about the Pacific pivot: "Is this rebalance really real?"
However, the U.S. had the resources to "stay committed to Europe and the Mideast" while carrying out the rebalance, Work said, but budget constraints could mean that "we might not be able to go as fast as we like."
To underline the administration's commitment to the rebalance, Work said that the F-35 Joint Strike Fighters, when they come on line, would go first to the Pacific along with the new P-8 Poseidon surveillance aircraft. Work said that there also were plans to have the new Zumwalt class destroyer go first to the Pacific – "we hope."
-- Richard Sisk can be reached at email@example.com