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DoD budget seeks cuts in BAH, commissary, Tricare benefits

Feb. 24, 2014 - 06:00AM   |  
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The Pentagon on Monday proposed the deepest and most far-reaching cuts to military compensation in the 40-year history of the all-volunteer force, explaining that such cuts are necessary in order to pay for more modern gear and high-tech weaponry.

Some highlights of the Defense Department’s budget proposal for fiscal 2015 include the first-ever rollback in Basic Allowance for Housing; a military pay raise that would match last year’s 1 percent hike, the lowest in the volunteer era; massive cuts to commissary subsidies; and potentially increased health care fees for both active-duty families and retirees.

Together, the proposals signal an end to a decade-plus wartime era of rising pay and benefits for troops. Even after the proposed cuts, military compensation would remain comparatively more generous than it was in the 1980s and ’90s. But the Pentagon has never before sought to pare back existing benefits in the all-volunteer era.

Moreover, personnel costs would be slashed further by significant reductions to the size of the force, including the smallest Army since the before the Second World War.

Defense Secretary Chuck Hagel said the changes are part of an overarching decision to protect big-ticket programs and research projects by saving money on people.

“We chose to slow the growth of military compensation costs in ways that will preserve the quality of the all-volunteer force, but also free up critical funds needed for sustaining training, readiness, and modernization,” Hagel said Monday at a briefing with reporters.

“We chose further reductions in troop strength and force structure in every military service — active and reserve — in order to sustain our readiness and technological superiority, and to protect critical capabilities like special operations forces and cyber resources,” Hagel said.

Hagel also said this is “the first budget to fully reflect the transition DoD is making after 13 years of war.”

On housing allowances, Hagel said the Pentagon will “slow the growth” until BAH covers only about 95 percent of estimated rental costs, with troops paying the other 5 percent out of pocket. In addition, the monthly BAH check provided to about 1 million service members will be cut further by eliminating the stipend for renters insurance that for years has been a key component in calculating BAH.

Next year’s pay raise for troops would be 1 percent, the same as this year. Those are the lowest pay raises since the end of the draft in 1973 and fall below estimated growth in average private-sector wages in recent years.

The Defense Department aims to slash $1 billion from the $1.4 billion commissary subsidy. Pentagon officials insist that no commissaries will be closed but acknowledge that prices will likely rise on many items as local facilities absorb the reduced subsidies.

Changes are also coming to Tricare. “We will ask retirees and some active-duty family members to pay a little more in their deductibles and co-pays,” Hagel said. Officials have not provided specific details.

Many of the proposed changes to compensation will require approval from Congress. In the past lawmakers, have been reluctant to reduce troops’ pay and benefits. But Pentagon officials believe that may change as combat tours end and reducing compensation is presented as the only viable alternative to vastly diminished readiness.

“I think there is a growing recognition that there is a direct tradeoff,” said one senior defense official.

Hagel said the Pentagon is seeking a base budget of about $496 billion, roughly the same amount the military is allowed to spend this year.

Hagel reiterated the Pentagon’s call for Congress to set up a new Base Realignment and Closure Commission to help make politically difficult decisions about shuttering domestic installations and eliminating jobs.

He also raised the specter of big reductions to the military footprint in Europe by noting that “BRAC authority is not needed” to close facilities there, which means DoD could make those closure decisions unilaterally.

Underpinning many of the budget decisions is the firm belief that “after Iraq and Afghanistan, we are no longer sizing the military to conduct long and large stability operations,” Hagel said.

The size of the special operations force would grow slightly to 69,700, up from today’s 66,000, Hagel said. Yet the rest of the force would shrink.

The Army would take the biggest hit. Today’s Army of about 530,000 soldiers was already slated to drop down to 490,000 during the next several years. But Hagel announced that the new target level will be an active-duty end strength of 440,000 to 450,000 soldiers. Also, the Army will terminate its Ground Combat Vehicle program to save money.

The Air Force will eliminate its entire fleet of A-10 Warthogs, a aircraft popular with ground troops because it flew thousands of close-air-support missions over Iraq and Afghanistan during the past 13 years. The savings would help pay for dozens of new F-35 Lightning II Joint Strike Fighters.

The Air Force would also retire its entire fleet of U-2 spy planes. The Pentagon plans to fulfill that mission in the future with unmanned Global Hawks. The Air Force will press ahead with plans to build and buy a new tanker and a new bomber, Hagel said.

For now, the Navy can keep its fleet of 11 aircraft carriers. But Hagel threatened to cut that to 10 if Congress does not raise current budget caps in 2016. Specifically, he said the carrier George Washington would have to be retired before its currently scheduled nuclear refueling.

The big impact on the Navy’s surface fleet will be on cruisers. Half of the Navy’s cruiser fleet — 11 ships — will be “laid up,” meaning they will be taken out of normal deployment rotations and essentially left unmanned.

Among the most controversial provisions of the Navy budget is the decision to scale back the long-term Littoral Combat Ship program from 52 vessels to 32. Amid concerns that the LCS is too vulnerable to attack, Hagel directed the Navy to consider building a new ship “consistent with the capabilities of a frigate.”

The Marine Corps was spared any troop reductions for now and will retain its end strength of 182,000 Marines. However, Hagel said that if Congress does not lift sequestration spending caps on the defense budget before next year, the Corps’ end strength likely would have to be cut to 175,000.

The budget proposal is unlikely to end the internal battle simmering between the Army’s active and reserve components. The bad news for the Army National Guard is Hagel’s order to turn over its Apache helicopters to the active force.

The good news is that the Army reserve components will get to keep more soldiers. The force reductions for the reserve components amount to a 5 percent cut, compared to the 13 percent drop for the Army’s active force.

Hagel’s preview of the 2015 budget comes one week before the full details of the plan are sent to Congress, where the proposal’s many controversial decisions are likely to hit resistance.

But as one senior military official said Monday: “It’s hard to cut this much money out of anything and expect people to cheer about it.”

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