Ten Things to Know About Military Compensation

On Friday, Lawrence Korb, Alex Rothman, and Max Hoffman of the Center for American Progress wrote "The Top 10 Things to Know About Military Compensation," which provides context for compensation within the defense budget and how reforms can be done in minimally harmful ways.

The ten things are:

  1. Defense personnel costs have doubled since 2001 and now cost about $180 billion per year, or roughly one-third of the defense budget.
  2. Personnel costs would consume the entire defense budget by FY 2039 if they continued at their current rate (and the defense budget did not increase more than projected).
  3. Pay reforms in the Pentagon's request for FY 2013 would save $16.5 billion over five years without hitting active service member pay.
  4. Because of the 20 year vesting period for military retirement benefits, four out of five veterans do not receive those benefits.
  5. The least likely to receive benefits are those who have borne the brunt of the fighting in the wars in Iraq and Afghanistan.
  6. Transitioning to a 401(k)-type system for pensions will allow retirement benefits to go to a far larger percentage of veterans while containing costs.
  7. Much of the cost increase in TRICARE can be attributed to military retirees.
  8. The Pentagon has proposed responsible increases in health care fees paid by military retirees, which will save $13 billion by FY 2017.
  9. The Pentagon can save up to $15 billion per year with additional reforms to reduce overutilization of services and limit double coverage among working age retirees.
  10. None of the Pentagon's health care recommendations would affect active duty service members or low-income or disabled veterans, all of whom would still receive free health care.

The takeaway from these facts is that while we must honor (and generously compensate) the sacrifices of our troops, we can also make targeted changes to compensation that improve the system and have as little harmful impact as possible. Personnel costs--and, of course, other parts of the defense budget where there are areas ripe for savings-- should be on the table.

Click here to read the Moment of Truth Project's paper on federal retirement programs, including military retirement.