Supercharging Military Pay Raises Because of Inflation Being Weighed in Congress

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A soldier deposits funds into a safe in a finance office, Nov. 4, 2013, at Bagram Air Field, Parwan province, Afghanistan. (U.S. Army/Sgt. Sinthia Rosario)
A soldier deposits funds into a safe in a finance office, Nov. 4, 2013, at Bagram Air Field, Parwan province, Afghanistan. (U.S. Army/Sgt. Sinthia Rosario)

With spiking prices on gas, groceries and other goods squeezing people across the country, lawmakers are debating whether to boost what would already be the biggest military pay raise in two decades.

A House subcommittee this week fired an opening salvo in the upcoming congressional debate over the pay raise, proposing troops get a 4.6% bump in pay next year in its draft portion of the annual defense policy bill.

That rate matches what the Biden administration proposed in its fiscal year 2023 budget request and would be the biggest raise since 2003.

Related: Senate Panel Adds Billions to Defense Budget But The Extra Money Wouldn’t Go to Troop Pay Raises

But with inflation hovering as high as 8.3%, lawmakers are signaling they expect to wrangle over an even bigger raise when the full House Armed Services Committee meets to consider the National Defense Authorization Act, or NDAA, later this month.

Even the leader of the subcommittee that endorsed the 4.6% raise conceded that "may not be enough."

"Inflation is at over 7%," Rep. Jackie Speier, D-Calif., who chairs the House Armed Services Committee's personnel subcommittee, told reporters after her panel approved its portion of the NDAA on Wednesday. "And particularly for the enlisted service members, I think that we need to take a second look at whether or not their pay ratio is bumped up."

Pressed by Military.com if she anticipates boosting the raise during the full committee meeting, Speier said she's "certainly contemplating it."

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The Senate Armed Services Committee, too, is expected to debate the issue when it considers its version of the NDAA next week, with the Democratic chairman of the panel suggesting 4.6% is not high enough for service members to cope with rising bills.

"Right now, the inflation rate's about 6.6%, so they won't see the same benefit they usually do, which is an increase of at least 2 or 3% in real terms," committee Chairman Jack Reed, D-R.I., told Military.com. "So we're looking at that very closely."

Reed also highlighted that the administration's proposal came when "inflation was at a much lower level."

Under federal law, the annual raise in basic pay for service members is generally tied to growth in private-sector wages, though the president can propose to go higher or lower than what's called the Employment Cost Index. A raise based on the index also takes effect Jan. 1, regardless of whether the president or Congress acts, though lawmakers have the power to approve a raise higher or lower than the index or the president's proposal.

The 4.6% proposed by President Joe Biden and the personnel subcommittee matches what troops are entitled to under the Employment Cost Index.

But lawmakers and analysts have recently been raising concerns about using the index to calculate the raise: It looks backward, meaning it does not take into account the record inflation being seen now or that could continue into next year.

"When we're talking about raises, it should be influenced by a historic look back and even look ahead on inflation," Sen. Thom Tillis, R-N.C., the ranking member of the Senate Armed Services Committee's personnel subcommittee, told Military.com. "We haven't really done that before, but we'll look at that going into the next NDAA cycle."

The most recent update to the Consumer Price Index, a key inflation indicator, showed prices rose 8.3% in April, compared to 2021.

The Congressional Budget Office, meanwhile, recently projected a 6.1% increase in the Consumer Price Index this year and a 3.1% increase in 2023.

Tillis expressed some skepticism that the Senate Armed Services Committee would ultimately approve a raise higher than 4.6% since the money would likely need to be taken from elsewhere in the defense budget, though Republicans have also been pushing to increase the defense budget beyond the $813 billion Biden requested. Still, Tillis stressed, the proposed raise is "certainly not keeping up right now" with inflation.

While the House Armed Services Committee's personnel subcommittee endorsed a 4.6% raise, it also called for a series of studies and reports into how to "modernize" service members' compensation.

One study would look at whether the basic pay tables need to be updated to compete with the current job market and whether to use a measurement other than the Employment Cost Index to calculate annual raises. Other studies would focus on benefits such as the Basic Allowance for Housing, including one to look at the "efficiency and accuracy" of the current way to calculate the housing allowance.

Staffers for the subcommittee this week also raised the possibility of action by the full committee to go beyond the 4.6% raise. By comparison, this year’s raise was 2.7%.

"Certainly, it's within the realm of the possible," a staffer told reporters on condition of anonymity under terms set by the committee. "I do know that there is congressional interest in this area. You saw that when we did the budget hearing, you saw the concern with inflation. So would a member bring a potential amendment? It's certainly within the possible."

The debate over whether to do more to help troops cope with inflation also comes at a time when the military services have been sounding the alarm about difficulty recruiting and retaining service members amid a competitive job market.

The services are offering all-time high bonuses to get recruits in the door, but lawmakers say pay and benefits need to be updated to attract and keep people in the military.

House Armed Services Committee ranking member Rep. Mike Rogers, R-Ala., who last year said he wanted to "significantly" increase pay and benefits when this year's NDAA is debated, said he has not yet seen any specific proposals to go above a 4.6% basic pay raise during the full committee's NDAA debate.

But he added that he's asked his staff to draft a "comprehensive proposal" to update pay and benefits, something he envisions being a multiyear effort.

"When you got 8% inflation, 4.6% is not enough, but the problem is bigger than that," Rogers told Military.com. "It's not just compensation. It's the whole benefits package for enlisted personnel has to be made a lot more attractive. We want to attract and keep the kind of people we need to serve."

-- Rebecca Kheel can be reached at rebecca.kheel@military.com. Follow her on Twitter @reporterkheel.

Related: Inflation Driving Congressional Fight to Hike Defense Budget

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