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Hagel defends proposed pay and benefit changes

Mar. 5, 2014 - 06:00AM   |  
Secretary of Defense Chuck Hagel, center, testifies March 5 before the Senate Armed Services Committee on 'Defense Authorization Request for Fiscal Year 2015 and the Future Years Defense Program' in Washington, D.C. (Jewel Samad / Getty Images)
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Defense Secretary Chuck Hagel on Wednesday downplayed the impact of proposed cuts to military pay and benefits in the fiscal 2015 defense budget request, saying the changes still leave troops with “fair compensation” and produce a stronger overall force.

“Overall, everyone’s benefits will remain substantial, affordable and generous, as they should be,” Hagel told members of the Senate Armed Services Committee. “The president’s budget ... keeps our commitment to our people.”

The sales pitch was designed to win over skeptical lawmakers who have rejected similar compensation cuts in the past — and have voiced opposition to this year’s proposals.

The $496 billion defense budget proposal includes a capped 1 percent pay raise for 2015, a 6 percent cut in average housing allowances, a dramatic revamp of Tricare fees and the gradual elimination of commissary subsidies at most domestic bases, which would drive up store prices.

Outside groups have decried those provisions as unfair to troops and their families, placing too much of a budget burden on personnel instead of equipment. In recent years, lawmakers have largely rejected similar Pentagon calls for benefits trims for both active-duty service members and retirees.

But Hagel and Joint Chiefs Chairman Army Gen. Martin Dempsey insisted that the proposed changes will not hurt recruiting and retention, or break faith with promises made to currently serving troops.

Without the cuts, Hagel said, Congress will have to find billions from other accounts to ensure force readiness isn’t compromised. He called preserving the compensation package at the expense of training and modernization “irresponsible,” and said military planners have spent the last year trying to balance the two.

The Pentagon leaders also defended including the compensation changes in the fiscal 2015 budget proposal rather than waiting for a final report due next February from the congressionally mandated Military Compensation and Retirement Modernization Commission.

Hagel said the budget plan does not broach any retirement payout changes — Congress recently passed, then repealed, reductions in annual cost-of-living adjustments for military retirees — and added that he is waiting on the commission report to offer future changes in that area.

But he said other changes, such as the basic pay cap and Tricare fee overhaul, need to be acted upon now to provide larger savings in future years. Pay and bonuses rose dramatically during the height of the Iraq and Afghanistan wars, and “now is the time to consider fair and responsible adjustments,” he said.

Dempsey said he and the Joint Chiefs all support that approach, adding that waiting on compensation changes carries the risk that “we price ourselves out of the ability to defend the nation.”

The pitch received mixed reviews among senators, several of whom said the budget proposal as written allows too much risk to readiness and national security.

But Hagel said budget caps put in place by Congress earlier this year give his department little flexibility in its funding request, and even less if spending cuts mandated under sequestration are left in place for future years.

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