Pentagon & Congress

2016 pay and benefits forecast is cloudy

Lawmakers have been debating next year's defense budget plans for months already, but the return of Congress to Capitol Hill this week marks the start of serious talks about next year's defense authorization bill and how it might affect military personnel policies.

The House Armed Services Committee is expected to mark up its first draft of the annual legislation April 29, following a week of debates among subcommittee members. Proposals for policy changes and equipment plans will start being released later this week.

The moves are only the first stage of a long legislative process for the measure, which along with the appropriations process will set defense spending limits and priorities for fiscal 2016.

It also will signal whether any of the lofty military budget goals pushed by the White House and Pentagon — ending sequestration, reining in personnel costs, sidelining the A-10 — might actually happen.

Here's a look at some of the military personnel items to watch for:

Compensation reform

House lawmakers aren't expected to include any major initiatives from the Military Compensation and Retirement Modernization Commission's recent report to Congress in their early drafts of the defense authorization bill.

Since February, the House committee has been discussing those proposals, which include replacing the current military retirement system with a 401(k)-style plan, an overhaul of the military health system and more.

But many lawmakers are still unsure how those changes will be received, and seem content to continue debate on the ideas for now.

Rep. Joe Heck, R-Nev., chair of the armed services' committee's personnel panel, said in a statement he is "concerned that Congress not rush that process without fully vetting both the recommendations and their second- and third-order effects."

That could change by the time the authorization bill winds through the full House and Senate, which likely won't happen until sometime this fall.

Pay raises

Pentagon planners asked for a 1.3 percent military pay hike next year, above the 1 percent pay raise troops saw the last two Januarys but still about 1 percentage point below the expected rise in average private-sector wages, the gauge against which military pay raises have been measured for many years.

Despite Pentagon pleas that holding down the raise will save billions that can be redirected to modernization and training accounts, House Armed Services Committee members have been reluctant to go along with the lower raises in recent years, at least in their initial authorization bill drafts.

A 1 percentage-point bump in the pay raise would translate into several hundred dollars more over the course of a year for most troops, money that outside advocates argue makes a significant financial difference for lower-paid enlisted members.

But House efforts to plus-up military pay have run into opposition in Senate negotiations in each of the last two years, with House members eventually agreeing to go with the lower Pentagon figures in the end.

If the initial House committee draft of the authorization bill agrees to the Pentagon's call for a smaller raise, that likely would all but end any real consideration of bigger paychecks for the troops next year.

Housing allowances

Last year, defense budget officials pitched plans to trim Basic Allowance for Housing rates by 5 percent over five years as another personnel cost-savings measure, leaving troops to pay a larger share of their monthly rent out of their own pockets. Lawmakers approved the idea in concept but authorized only a one-year, 1 percent reduction.

The issue will be up for consideration again in the new authorization bill drafts. Like the pay raise issue, House lawmakers last year initially opposed the idea, then dropped that challenge in negotiations with the Senate.

Opponents have argued that the move — along with the pay raise and proposed pharmacy co-pay increases — amounts to significant lost income for military families. Pentagon leaders have countered with arguments that growing personnel costs must be checked before they overrun other defense priorities.

Lawmakers have begun to slowly embrace defense leaders' arguments, and a lack of opposition to the ideas this year could signal even steeper benefits trims in years to come.

The war budget

White House officials have asked for a $51 billion overseas contingency fund next year, but also for a $561 billion base defense budget that would go above mandatory sequestration spending caps outlined in the 2011 Budget Control Act.

Last month, House Republicans offered their own budget guideline, setting aside about $7 billion extra in total defense spending for fiscal 2016 while almost doubling the size of the contingency fund, which is not subject to the sequestration caps.

If the House authorization bill draft follows that plan, lawmakers will have to issue guidance for how the Defense Department could use that allegedly "temporary" war funding for a host of core military program costs.

Conservatives on the House Armed Services Committee have expressed reservations about the plan, noting that the workaround does nothing to resolve the military spending caps in years to come.

But Rep. Max Thornberry, R-Texas, chairman of the House Armed Services Committee, offered his support for the bigger war budget after the House approved the idea, and has said he will work with Pentagon officials to ensure that the plan gives them the flexibility and funding they need.

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