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Raises, BAH are likely targets of 2015 defense budget

Feb. 3, 2014 - 06:00AM   |  
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The Pentagon’s 2015 budget is likely to contain such belt-tightening proposals as reducing active-duty pay raises and housing allowances and instituting fees for Tricare for Life, officials told a Senate panel Thursday.

Saying the Defense Department must slow compensation growth or risk fighting strength, acting Deputy Defense Secretary Christine Fox and Joint Chiefs Vice Chairman Adm. James Winnefeld told senators to expect “fine-tune adjustments” on compensation in the administration’s fiscal 2015 budget proposal, expected March 4.

The plan likely will include capping military pay raises at 1 percent, as previously published in long-term defense proposals, and making changes to housing — costs of which have grown per service member by 60 percent since 2000.

It also is guaranteed to include a request to institute enrollment fees for Tricare for Life, the health program for retirees 65 and older that acts as a Medicare wrap-around.

“We have proposed changes to Tricare for Life fees ... that’s inside the defense budget,” Fox told Senate Armed Services Committee members during a hearing on military retirement pay increases.

The pair argued that military compensation, which was increased in the late 1990s when it was found to be woefully below the average American worker’s pay — “understandably,” they said — is now higher than where it should be and needs to be “placed on a more sustainable trajectory.”

“What we increasingly hear [troops] saying is lacking, particularly following sequestration, isn’t their level of pay but their quality of service,” Fox said. “Our men and women are the first to say that they’re well-compensated but the department doesn’t have money to maintain their equipment or supply them with the latest technology, or send them to get the training they need.”

The Military Compensation and Retirement Modernization Commission is reviewing pay and benefits and is set to make strategic recommendations to the Defense Department and Congress in early 2015.

Winnefeld and Fox said the Pentagon budget will not propose any changes to retirement, in deference to the commission’s work, but said that on compensation matters, the department “had all the information we need to make fine-tune adjustments.”

“The changes to compensation fall into two buckets: There’s changes to pay and copays and things of the existing benefit programs and pay; and then there’s retirement. Frankly, we monitor [the former] very, very closely every year” but retirement “has to be thought of in a very different way and that’s why we really wanted the commission to help us think through.” Fox said.

DoD has sought to raise retirees’ Tricare fees since at least 2007. The fiscal 2014 budget proposed fees for future enrollees in Tricare for Life as well as fee increases or new fees for other Tricare programs based on retirement pay.

Congress this year allowed the administration’s proposed 1 percent pay cap for 2014, and Pentagon officials have been discussing the basic allowance for housing, possibly considering linking the allowance to the cost of living in certain areas instead of average rental housing costs, according to sources.

The goal is to create a budget that keeps overall defense costs from increasing at rates equal to or above inflation rates so “extra dollars are available for other programs,” said Mike Hayden, government relations director for the Military Officers Association of America.

Unfortunately, he said, active-duty military and retirees will feel the pinch.

“Service members will have less purchasing power with their paychecks and housing allowances. All of this is going to directly impact their pocketbooks,” Hayden said.

Winnefeld and Fox described the pending proposals as “good stewardship of the taxpayer dollar.”

“We’re not cutting compensation. We just need to slow the growth,” Fox said.

“Contrary to what some are reporting, none of these proposals would reduce the take-home pay of anyone in uniform,” Winnefeld said.

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