The Pentagon’s FY 2013 budget proposal contains provisions that will hit both active-duty and retired personnel in their wallets – for years to come.
When it was finally passed on Dec. 23 of last year, the Department of Defense’s (DoD’s) fiscal year 2012 budget contained a provision that had never appeared in a military appropriation, despite the repeated attempts of previous administrations: a modest increase in the enrollment fee for TRICARE Prime, the military’s HMO-style health insurance plan for retired people under 65.
The ongoing budget discussions and documents from both the White House and Pentagon made it clear that the fee increase would be the first of several provisions aimed at bringing the military’s personnel costs – especially health care costs, which the Pentagon now estimates at about $50 billion a year – down to a more manageable level. The military’s personnel costs continue to increase at three times the rate of inflation, and to consume a greater percentage of the overall defense budget every year.
The Pentagon has been aware of the problem of personnel costs for years, but the wars in Iraq and Afghanistan, naturally, have made many Americans and their elected legislators reluctant to trim benefits for those who serve. For the past 10 years, military personnel have enjoyed an expansion of benefits unrivaled in the history of the nation’s military – salary, health care benefits, pensions, and special pay rates have all risen steadily in the post-9/11 era.
Several factors have lent the effort to control military personnel costs a fresh urgency. The nation’s lingering economic crisis, which reduced tax revenues and helped balloon the national debt, ratcheted up a political showdown in Congress last summer that produced two important outcomes, one of which has had a direct effect on ensuing budget proposals – and one of which the Pentagon is choosing to ignore for now.
The Budget Control Act, passed on Aug. 2, 2011, introduced several complex mechanisms for reducing future deficits. One of the simpler measures was to place caps on future spending: The law mandates $487 billion in cuts to defense spending over the next decade.
The law also aimed to cut future budgets further through the work of a newly created Congressional Joint Select Committee on Deficit Reduction – the “Super Committee” – charged with agreeing on additional targeted spending cuts that would prevent self-imposed sequestration, or automatic across-the-board cuts, from being triggered.
The Super Committee’s notorious November failure to agree on targeted cuts has triggered an automatic provision that almost nobody wanted: an additional $1.2 trillion in unspecified government cuts over the next 10 years.
Defense budget and policy analysts – along with everyone who currently serves or has ever served in the military – anxiously awaited the Pentagon’s budget proposal for FY 2013, the first fiscal year requiring these mandatory budget cuts. When the Pentagon released its proposal on Feb. 13, it outlined a five-year plan that, predictably, made many people unhappy.
End Strength and Basic Pay
Defense Secretary Leon Panetta, in remarks delivered upon the budget overview’s release, made it clear that the five-year plan was devised with an eye on the bottom line, with a long-term aim at deficit reduction. Many of the provisions outlined for 2013 and beyond will directly affect active-duty, Reserve, and retired personnel, including:
•Reductions in military end strength. Through 2017, the Pentagon proposes to trim the Army (active, Reserve, and National Guard) by 6.8 percent; the Navy by 3.9 percent; the Marine Corps by 8.3 percent; and the Air Force by 2.3 percent. This isn’t surprising, given the redeployment of troops in Iraq and Afghanistan; it’s a peacetime reduction on par with the post-Korea and post-Vietnam reductions.