The congressionally mandated Military Compensation and Retirement Modernization Commission will release its findings on February 1st, and it is expected to recommend changes in military pay and retirement benefits. Outgoing Secretary of Defense Chuck Hagel has already told service members to be prepared for changes, and the new chairmen of the House and Senate Armed Services Committee, Mac Thornberry and John McCain, have said they will support changes as long as they are only applied to personnel joining the military in the future, not those serving today.
But will the rest of congress go along with any proposed changes?
Nearly everyone recognizes that changes need to be made in military compensation. Military personnel costs have grown as a portion of the Pentagon’s base budget by forty-six percent since the beginning of the century. It’s hard to fund force modernization when compensation costs continue to eat up larger and larger chunks of the budget.
Despite widespread recognition of the problem, Congress has been unwilling to make changes because military advocacy and veteran groups have staunchly resisted any proposed reforms. In 2013, when Representative Paul Ryan and Senator Patty Murray included a provision cutting cost-of-living adjustments to military retirees under the age of 62 to one percent below the consumer price index in their deal to raise limits on federal spending, veterans groups were apoplectic. And in 2014, after the Department of Defense again requested changes in the military’s health care system (TRICARE), Congress rejected most of the proposals and instead opted to reduce the housing allowance for service members from one hundred percent to ninety-nine percent.
Congressional reluctance to break faith with those who serve is understandable. But it also cannot ignore the problem either. Nor can it ignore its role in bringing it about. Congressionally mandated measures such as pay raises tied to the Employment Cost Index (ECI) – plus one half a percent – were meant to rectify a “pay gap” between military personnel and similar private sector workers. While such a goal was laudable, the Congressional Budget Office (CBO) has noted several problems with measuring the gap between military and civilian pay. According to a 2007 CBO report:
As a basis for evaluating pay, however, the gap between military and civilian pay raises has some significant limitation. First, the broad sample of civilian workers included in the survey that is used to produce the ECI is older than military personnel, on average, and more likely to have a college degree. Since 1980, the pay of college-educated workers has risen faster that of high school graduates in the civilian sector. Also, the pay of older civilian workers has generally grown faster than that of younger workers.
Other problems included comparing military and civilian pay at different periods of time, and a focus on “basic pay” while ignoring housing, food allowances, and tax incentives. CBO concluded, “With housing and food allowances and those tax advantages added to basic pay, increases in military compensation outpaced increases in the ECI beginning in 2000, and the pay gap became a pay surplus in 2002.” Increases in retirement benefits, such as Tricare-for-Life, also push personnel costs ever higher.
As Stephen Daggett, a defense policy analyst for the Congressional Research Service, testified several years ago, rising personnel costs are one of the main reasons the defense budget consistently seems tight even during flush times such as the previous decade. Reforming military compensation will likely remain controversial even after the modernization commission releases its recommendations. It will also remain necessary.