Meanwhile, the debate about the future of TRICARE and the military’s growing medical costs continues.

 

A “Rebalanced” Approach

At the Center for Strategic and Budgetary Assessments (CSBA), Senior Fellow for Defense Budget Studies Todd Harrison has been arguing for several years that the Pentagon’s unsustainable personnel costs, by consuming an ever-increasing share of the defense budget, are crowding out other important parts of the budget such as readiness, research and development, and procurement – an imbalance that is all the more obvious and painful in recent budgets.

“We have a problem,” Harrison said, “because personnel costs are growing at a rate where eventually they will take over the entire defense budget if we don’t do something about it. What we do about it? My point [is] not that we should just go in and look for things to cut … let’s take the money we’re spending and get better value out of it, by putting it towards things that the troops value.”

In the spring, a few weeks after the 2013 budget was released, Harrison launched an online survey of currently active-duty service members, asking them to weigh in with their preferences for how the Pentagon might handle pay and benefits in future budgets.

About 2,655 people took the survey, but Harrison limited his analysis to those who were on active duty – more than 1,300 respondents. “This is not a random sample,” he warned. “You can’t take these results and draw conclusions from them and go out and make changes. This is just a proof of concept: If you look at the active-duty service members we surveyed, they were more heavily weighted towards senior officers and older personnel than the actual military is. We did not get enough junior enlisted people in particular. So for that reason we never aggregate all the results. We keep the results divided or segmented by rank, years of service, things like that.”

The results were reported in July 2012, in a compendium titled, “Rebalancing Military Compensation: An Evidence-Based Approach.” They indicated, in general, that service members place a higher value on basic pay than on deferred benefits such as health insurance or retirement pay, particularly early in their careers. More than 80 percent of servicemen and women in each age group, for example, would prefer a 1 percent increase in basic pay in exchange for raising the retirement collection age to 50.

It’s probably not surprising that younger service members value the present over the future, and at least one organization – the Military Officers Association of America (MOAA), one of the nation’s most influential advocates for retired and active-duty service personnel – publicly questioned the exclusion of retirees’ responses from the findings in a July 13 statement, “Pay Study: Garbage In, Garbage Out.” MOAA’s objections were wholesale, from the phrasing of the questions to the narrowing of the sample. The study, MOAA claimed, “offered a series of forced choices that effectively challenged participants to choose between something that benefited them or cut someone else.”

In its reported findings, CSBA does not advocate any specific actions. “Our only recommendation, really, is that DoD use this type of methodology to inform its future decisions,” said Harrison. “That’s all.” More thorough findings could help the military devise an evidence-based approach to making tough budget decisions about compensation and benefits.

In some ways, CSBA and MOAA appear to be talking past each other: In limiting its findings to the responses of active-duty service members, CSBA defined the value of military compensation and benefits in terms of attracting and retaining people to military service. It’s fair to ask, as MOAA pointedly does, whether cutting retirement benefits could reduce people’s incentive to stay in the military – but Harrison argues that the people to ask about that are the active-duty military members, not retirees. “If you’re making compensation systems, you have to focus on the preferences of people currently in the military,” he said. “With any changes you make, obviously you have to keep in mind fairness and what you’ve already promised people. To suddenly reduce retirement pay for people who retired 20 years ago – that’s not fair, obviously. But you may want to change the retirement system for new people joining the military.”

 

Reducing Inefficiencies

Since the release of the budget in 2013, military advocacy organizations such as MOAA have questioned the validity of comparing civilian and military retirement, and particularly of adjustments that require higher-ranking retirees to pay more – a “means-testing” approach that, they argue, punishes those who serve longer by requiring them to pay more. Such an approach could also, they argue, provide a disincentive to staying in the military longer – though supporters of the adjustments compare this to the idea that progressive taxation motivates people to stop earning more: As in the private sector, they point out, military promotions come with pay raises that more than outweigh the disadvantages of moving up.