January 6th, 2012
04:45 PM ET

O'Hanlon: Time to adjust military compensation

Michael E. O'HanlonEditor's Note: Michael O’Hanlon was in Afghanistan earlier this month and is the author of the new ebook, The Wounded Giant: America’s Armed Forces in an Age of Austerity. You can read more from him on the Global Public Square.

By Michael O'Hanlon – Special to CNN

President Obama and Secretary Leon Panetta’s new defense guidelines suggest that the United States will make some reductions in military compensation in upcoming defense budgets. Can we, as a nation, do this responsibly?

We are a democracy at war asking young men and women who to risk their lives to defend us. To be sure, the wars are controversial, but few would deny that the United States has a special debt to its troops. As one retired four-star general once remarked to me, “Never have we as a nation asked so much of so few for so long.” With so many soldiers and Marines in particular having done multiple combat tours over the last decade in Iraq and Afghanistan, it would be not only a mistake, but a moral blight on the rest of us not to take care of them. How can one even begin to talk about curbing their compensation packages and other benefits?

We have the best military in history - and that is not an American birthright, as we know from other periods in our history, like the immediate post-Vietnam days of the so-called hollow force. Rather, it is largely because of the unbelievable quality of our men and women in uniform. We must make military service appealing enough that such individuals continue to join, and remain in the force.

The American military is good largely because it is a learning organization with excellent people who seek to learn. It does not always get it right at first. We went into Iraq without a serious plan for stabilizing the place once Saddam Hussein was gone; that was largely the fault of Secretary of Defense Donald Rumsfeld, as he discouraged attention to such planning.

Nevertheless, the military rebounded. The military has a tradition, going back to Vietnam, of carrying out “after action reviews” in which everyone is expected to be self-critical. It does this in wartime extremely well. But this is only possible because resources are adequate to train troops and because the military’s educational and compensation systems are good enough to attract many of our best and brightest into national service.

For these reasons, change to the military’s compensation structure must be pursued cautiously and compassionately. However, we should not be daunted. The Department of Defense is not an efficient employer. Many of its programs have become more expensive than necessary. Many programs are inefficient or anachronistic, having been designed decades ago when the challenges of maintaining an excellent military were much different.

So while the well-being of our troops is paramount, that is not the same as saying that every approach currently used to take care of them must be treated as if it were itself a personification of our best and bravest. We need to protect our people, but not every one of their current programs or compensation packages.

Several principles are key to guiding future personnel policies. First, our deployed troops and wounded warriors as well as their families must be helped generously; we are doing better and better in this task but still not well enough. Second, we need to incentivize young, technically skilled, and highly motivated people to join and stay in the military. Third, while we cannot and should not ever make military service a lucrative career path per se, we need to be sure that we compensate volunteers risking their lives for their nation reasonably well.

The good news is that we tend to do these things. The idea that there is a military-civilian pay gap favoring the private sector has become a myth over the years. Private-sector wages, especially for middle-class and blue-collar jobs, have stagnated in recent decades in the United States while military compensation has continued to improve. Moreover, military jobs carry additional benefits above and beyond wages that further favor those in uniform. Statistically, for individuals of a given age and educational background, the American armed forces actually pay substantially better today than does the private sector - at least for most military specialties and pay grades.

With these principles in mind, we should increase military compensation more selectively in the future. General pay increases could be held to the rate of inflation, with bonuses of various types used to address specific shortfalls in the force structure. This would keep the faith with an extremely impressive all-volunteer military at a time when it would be losing certain other benefits, as discussed below. The Congressional Budget Office puts the annual savings of this at about $1.5 billion.

We could also consolidate or even eliminate the military exchanges and similar amenities within the Department of Defense. These kinds of on-base stores are popular with many military families. But they have unequal benefits, depending on where one is stationed. They are expensive for the military to run. At a minimum, consolidating them should be within reach, as each service runs its own with considerable inefficiencies. CBO estimates that up to $1 billion a year can be saved while still offering many bargains to military families.

We should also increase cost sharing within the military health care program. The TRICARE system provides an extremely good deal for military families. While this has been understandable to a degree, it has arguably gone too far. It far exceeds the generosity of plans in the civilian economy and incentivizes excessive use of health care due to the low costs. Nevertheless, some retirees argue that they were promised free health care for life when they joined the military.

Well, if they were, it was in many cases a type of health care radically different –and radically cheaper, perhaps by 75 percent or more depending on their age - from what is available today. No one would begrudge wounded warriors the best of care. The issue here, rather, is the cost-sharing system of copayments and enrollment fees for the typical military family, including retiree families. Reforms that retained a generous military health care system but at levels more similar to those in the civilian economy could save $6 billion a year.

Finally, we should again change military retirement, as was done in the 1980s (but the changes were later reversed, regrettably). The military retirement system is arguably too generous at twenty years of service and not generous enough for those leaving the armed forces sooner. This is despite the fact that second careers after the military have become much more common, and military pay relative to private sector pay much better than before. Providing a modest benefit, like matching payments for a 401(k) in the private sector to the latter group while reducing payments to the former would improve fairness. Higher amounts could be contributed by the government for those who have served in dangerous zones.

This new retirement system would also save money. The Perry-Hadley independent panel that assessed the Pentagon’s 2010 Quadrennial Defense Review made this general argument. A recent Defense Business Board study suggests savings that could approach $10 billion a year over the next twenty years. Even if a modified version of the plan only half as ambitious was instituted and savings accumulated gradually, it is likely that $2 billion to $3 billion a year could be saved over the next decade.

There is lots of room for savings based on efficiencies and fairness - without violating our most sacrosanct commitments and vows to our deployed troops, survivor families, and wounded warriors. I hope to see these principles reflected in the more detailed defense plans the Obama administration will unveil next month.

The views expressed in this article are solely those of Michael O'Hanlon.

Post by:
Topics: Military

soundoff (18 Responses)
  1. Nate

    Thank you for your input, but as a person who has personally seen what military service does to families, I will respectfully disagree with your article.

    You neglect to take into consideration many factors nearly unique to military service. Very few, if any, civilian jobs force their primary income earner to move to different states (sometimes different countries) every 2 to 4 years. This makes it almost impossible, and in the case of overseas duty, illegal, for a spouse to have a professional career, creating a single-earner family. In a world where most people agree that it takes two parents working to have an acceptable middle-class existence, just how do you propose to keep people in the military for 20 years if they and their families have de facto prohibition from earning a large percentage of their potential income?

    Additionally, in my 17 years in the military, the military has never, not even once, given me orders which allow me to be at home to assist my wife and children with the arduous task of moving an entire household. This task has fallen 100% to my wife. I submit that military compensation, including retirement, should be considered to be compensation for the entire family, not just the individual who served. There are many expensive "programs" that are, on the surface, designed to assist with these issues, but counseling does not get people hired. If there were truly effective programs where military spouses were legally required primary hiring sources for government civilian positions, I could see your position being tenable, but in its current state, all I see is that you are advocating the consignment of military families to one-income (or lower second income) families with lower spousal job satisfaction for an entire career.

    January 6, 2012 at 11:24 pm | Reply
    • j. von hettlingen

      I suppose the gap of privileges in the U.S. between the top brass and the lower cadre is not as extreme as in other – military-ruled – countries!
      It's a good idea to hire somebody with managerial skills to supervise the spendings, that they are wisely budgeted.

      January 7, 2012 at 5:04 am | Reply
  2. Michelle

    While I agree with the previous comment, I also have what I consider an important point: When my husband, who is a nuclear reactor operator, re-enlisted, he did so with the expectation of a particular wage and retirement. If indeed this changes, he should have the option to be immediately discharged from the military and absolved of his commitment. Furthermore, I can attest to the fact that wages for Senior Reactor Operators at nuclear power plants throughout the nation are far greater than Navy wages. In fact, one years pay equals three years Navy pay. We chose to remain in the Navy for the benefits, though the overwhelming majority of nukes do not.

    My last point is this: what civilian job forces you to spend 18 months away from your family, across the globe, without a truly significant salary? What job puts your life in harm's way, mandates where and when you move, and does not provide benefits in relocation and housing costs?

    Sure, some changes are warranted. But promises made should be promises kept. And, should that not be the case, members should have an immediate option to leave.

    Why not discuss spending that is unnecessary prior to cutting military benefits? For example, why does a tiny base in Saratoga Springs, NY, which houses only administrative functions and military stores need such a significant security upgrade? Why do we need to continuously sell our technology to others – forcing us to create more? Why do we fail to make investments in our nation's children to give many of them an option other than the military? Or provide skills training for veterans so they can earn a living when they leave the service?

    There's much we can do and certainly everything is on the table. Just consider the promises made. My husband made you a promise – that he would give up seeing his child's birth, her first steps, and fail to be by his mother's side at her death so that you may be safe. Keep our government's promise to care for those that serve. Changes should be addressed to new members, or at least not hinder or diminish the benefits to current members unless an immediate discharge is available along with relocation costs.

    January 7, 2012 at 12:12 am | Reply


    January 7, 2012 at 10:28 am | Reply
  4. the shiia and iran doing the killing in iraq it was proven

    جيفري فيلتمان نائب وزيرة الخارجية الأمريكية يؤكد اَن قادة العراق السياسيين قادرون على تدارك الازمة الراهنة في البلاد من دون اية مساعدة خارجية
    نبيل العربي يحذر من القضاء على فرص تحقيق مصالحة حقيقية في العراق ويندد بتفجيرات الخميس الدامية
    رئيس اقليم كردستان العراق يشدد على ان الاكراد لن يشاركوا في اي حكومة قائمة على اساس تهميش المكونات العراقية الاخرى
    البارزاني يحذر من انه في حال إستمرت المشاكل السياسية ولم يجد الائتلاف الحاكم برئاسة المالكي حلولا سريعة فإن الاكراد سيقيّمون كل الاحتمالات

    وكلاء المرجع الديني محمد صادق الصدر في النجف يحذرون من مغبة دخول عصائب أهل الحق في العملية السياسية ويتهموها بممارسة القتل حتى اليوم

    وكلاء المرجع الديني محمد صادق الصدر في النجف يحذرون من مغبة دخول عصائب أهل الحق في العملية السياسية ويتهموها بممارسة القتل حتى اليوم
    دبي-الشرقية 7 يناير: حذر عددٌ من وكلاءِ المَرجع الديني مُحمد محمد صادق الصدر في النجف من مغبةِ دخول ِ عصائب أهل الحق في العمليةِ السياسيةمشيرين إلى أن العصائبَ ارتكبت جرائمَ ومازالت تقتل وتُشرد وتُساوم وتَبتز.وقال عددٌ من وكلاء وطلبةِ السيد محمد الصدر في بيان ان الحديثَ عن المقاومة ومواجهةِ القوات المحتلة بعيدٌ كلَ البعد عن عصائبِ أهل الحق وأفعالِها وان العراقيين لن يَنسوْا ما فعلته العصائب من جرائمَ ومازالت تفعل من قتل ٍ وتشريدٍ ومساومة ووصفوهم بأنهم حية ٌ مَلمسُها ناعمٌ وسُمُها قاتل.. واتهم البيان العصائبَ بقتل ِ عددٍ من منتسبي الأجهزة الأمنية في النجف والديوانية بحجةِ حُرمةِ الانتماء فضلا على تنفيذِ 5337 عملية ً استهدفوا فيها الأبرياءَ بضمنِها اغتيالُ النائب عن الكتلة الصدرية صالح العكيلي.

    January 8, 2012 at 2:33 am | Reply
  5. Brian Kostic

    I have read all the comments that are in English and have to agree on allot of the arguments made. The Military does not target the RICH in it's recruitment. I fell into a group, back in the mid 80's, where I had no education. I also fell into the group of "Join the Military or go to Jail". There will always be Military minded Americans out there. Yes we need more educated people for more delicate positions. As with me and those that I have seen in My 23 years of Service is I would take a less fortunate person who joined then one who was from a well to do family. As with me they are more loyal and dedicated. The Military has giving these people Pride, Self Respect, Dignity and a compensation package better then they would have ever dreamed of. I agree a promise made should be a promise kept, or giving the option for an Honorable Discharge from the Service.
    I have seen to much waste and abuse over the years in our Military and agree on some level that changes need to be made. I can see that a Force Reduction should be made.
    President Obama is correct in something I believe he said, " As Americans we "ALL" need to pitch in and make sacrifices". Well when is the Bills being made or the Laws created and Enforced to where these elected individuals are going to start sacrificing "THEIR" contracts or benefit packages? MR. President when is it the time that I am going to see the "ALL" come into play? I have a small suggestion to get a band-aid on our Countries deficit. Let our Elected Officials and their Staff surrender just one month of "THEIR" pay or benefits. Are these folks not there "FOR THE PEOPLE BY THE PEOPLE"? Where is their "SELFLESS SERVICE", and not their "SELFISH SERVICE"? Why are "THE PEOPLE" always the ones to make the sacrifices for their Country?
    After 23 years of Service and my tour of duty in Iraq I was discharged and live, for now, on my disability/ compensation checks. I would like to thank our President for the 3.6% COLA increase in my Social Security check this year. Also in advance for the increase to next years as he must make a decision for next years before Election day this year. BUT!!!!!! Like he , and he was the first in history to do so, HE will not give us one again until the next Election year like he has not giving us one the past two years. Or like every other President has done. Once they are Elected our COLA falls like from 3.5+% down to 1 or 1 1/2 %. Yet "THEIR" living expenses/ benefits continue to stay at a flat rate increase.
    Remember this my fellow Americans on Election day. Vote for the ones that have the motto, and live by their word of " WE ARE ALL" going to have to make sacrifices.

    January 8, 2012 at 8:08 am | Reply
  6. Nick

    We should assume that the retirement system will be modified. When that happens, there will definitely be a huge "sucking" sound coming largely from the "middle managers". The middle managers, mid level non commissioned officers (E-5 E-7) and commissioned officers (O-2 O-4), will be significant. As a previously contributor noted, the military way of life does not usually support a two income family. In addition to the instability associated with frequent moves one must also factor the routine deployments away from families which range from 7 months to 15 months. And these deployments are generally to locations where the US is not generally appreciated. Those who join the military are good, patriotic citizens and as a group they don't generally join for the money or benefits. That said, practicality can not be overruled. When choosing to serve at the detriment of a family or leaving in favor of more stability the choice is clear. Many middle managers will have no choice but to leave. Make no mistake, the military is a young "mans" game and the loss of these middle managers will have an overwhelming negative affect on the Department of Defense. Simply put, the military is capable of great things because of the well developed middle management core and not because of the brilliance of the Generals or Admirals. Lose the middle managers and the Generals and Admirals won't have the mechanism to execute their "brilliance". Many nations don't possess a middle management core and this automatically relegates them to second world status. Without an effective middle management core, the US military will essentially be a hollow force...and that cannot happen. It takes many years to develop the middle management core so if we remove the incentive to remain in uniform we lose the brain trust necessary to operate a first world military.

    January 8, 2012 at 8:59 am | Reply
  7. Jake

    More opinions – based on what? Why make the rank and file pay the price for the budget crisis when they defense industry is untouched to continue war profiteering, inefficiency, and corruption? The savings from reforms to retirement are $87 billion. Cutting back on two weapons programs would save that much.

    * Replace F-35 Joint Strike Fighter with F-16s and F/A-18s: Upgraded F-16 and F/A-18 fighter jets are sufficient to meet foreseeable threats. Savings $48 billion.
    * Cancel the Air Force's “Next Generation” long-range stealth bomber: Savings $38 billion.

    While we're at it, reduce Navy ship buying by canceling the purchases of 5 amphibious ships (amphibious landings have not been used for 60 years), retire 6 Ticonderoga-class cruisers, buy 1 instead of 2 Virginia-class submarines per year and buy 12 instead of 55 littoral combat ships. Now we've fixed the Tricare issue too!

    January 8, 2012 at 10:18 am | Reply
  8. raiderredleg

    As active duty service member I would caution with any large scale "tinkering" with the current all volunteer force and its pay/benefits. It has been HUGELY successful since the Vietnam War and will continue to meet the demands of our country as long as we hold to our sacred promise to take care of them when they do take their uniform off for the last time.

    Especially if the main reasoning is that the government needs to save money...The defense budget is only a small part of the problem...We need to tackle ALL governement spending and take a hard look at what Simpson-Bowles recommended.

    I would ask that everyone consider the plight of the young American that signs up as an infantryman...Twenty years may not sound long, but in that twenty years look at the physical toll and the numerous moves and time deployed away from families. That infantryman in the current system right now can retire at 20 year (an "old" 38 to 42 depending when they enlist) and don't have near the pay and benefits that people like Mr. O'Hanlon think they do. Rarely do they just "retire" in fact most have to find a second career almost immediately.

    January 8, 2012 at 1:04 pm | Reply
  9. ;;;;;USA must attack Iran now

    USA, UK, FRANCE, GERMANY THE NATO must attack Iran now before it is too late.
    USA must help mojahedi khalq opposition group who are stationed in Iraq,. help the Iranian Kurds up north more than 7 million Kurds in Iran, help Arabestan Sunni region in Iran with more than 9 million Sunni who are repressed by those evil Iranians, help the Assyrian christens in Iran, the Iranians Turks blossh, and many other repressed minorities , Isolate Iran, freeze their assets, also embargo china and Russia \if the deal with them, destroy their electronic by viruses, don't allow them to come to USA AND CANADA , ATTACK THE TERRORISTS HEZBOLLAH AND SYRIAN BASHAR AL KALAB THE EVIL HANDS OF Iran IN THE REGION. Iran is a paper tiger as soon as the tomohak start flying and get red of their command and control their navy peace and the radars then the sky is control by USA make it 24 hours non stop hit until the surrender attack them, from turkey, Afghanistan the gulf, the red sea the Arabian sea and the Arabian gulf. If Obama attack Iran he will win the election too.Help Iraqi Sunni to counter attack the Iranians group in Iraq, the world will be in peace with our those majoos thugs and the dark evil empire of Iran must demise.

    January 8, 2012 at 3:02 pm | Reply
  10. dc

    Having served in the military for 10 years, I agree that the author is not taking into account the "quality of life" sacrifices that our soldiers and their families make. 12-month deployments with limited contact , moving every 2-4 years (3 posts in the same year for me once), 2-4 week training exercises several times per year, and all of the challenges with spousal employment mentioned by others, just to name a few. During my first tour, I spent 18 of 35 months away from home, and that was BEFORE the days of Iraq and Afghanistan. I finally left the Army a few years ago because I felt like I was abandoning my family and I just didn't want to be the 20-yr vet whose kids grew up without him. By private-sector standards, the military retirement benefit is very generous, but it is compensation for 20 years of intense sacrifices that private-sector employers do not ask 0f their employees. The post about losing mid-level officers and NCOs is spot-on. Retirement benefits are a huge retention incentive and should not be pared back.

    January 9, 2012 at 11:53 am | Reply
  11. derrick

    As a Veteran of the IRAQ confilict I would suggest that you start with the top of Congress cutting down their expenditures first. Then if we need to go and cut more money out of the government then go to the elected officials to trim down their staffs? Along with the organizations that are funded by the government and created by the government such as solyndra and other EAP? etc.. Why is it that they cut down those of us who have served and done more for this nation than the average citizen. No we pay again for serving ??? makes no sense to be tinkering around with vets unless you are trying to have no contingency plan on if invaded who do we call.. ???? I know the civilians will step it Up they are disciplined enough to accomodate. O that is malitia isn't it? They won the war against the british but we don't have those people anymore and mostly I have to say the generation that i trained will be the last known warriors in the military as the rest can't pass a common PT exam.

    January 9, 2012 at 11:58 am | Reply
  12. Sielingfan

    I'll keep this brief.... if it's cool to talk about limiting the benefits of military folks, can we assume that similar revisions can and should be made to bring Medicare and Social Security in line with reality? Because we could bump this handful-of-billions into REAL savings, if we asked our civilians - who don't go to WAR - to shoulder some of the economic burden.

    January 9, 2012 at 1:19 pm | Reply
  13. Elloitt

    If my 20 year retirement goes, I go with it and i wont be the only one. 20+ years of service is rough on a family; being away literally more than half of those years. I wonder why these law-makers, our "leaders," want to cut our benefits, but not even consider cutting theirs.... Compare our Service to their "service".

    January 9, 2012 at 10:32 pm | Reply
  14. Bill

    The military is the only job I know where the employee hands his employer a blank check payable for up to and including their life. I reject the premise of most of this "opinion" and find it very difficult to logically follow the conclusion based on the premises offered. DoD has wasteful programs -> lets axe the cost of the people. Does not necessarily follow. Eliminate waste, consolidate some of these "political pork" bases let attrition reduce force numbers, get rid of stupid "political pork" weapons programs, reduce our footprint in Europe and even Asia. We have two oceans protecting us so unless they can swim or carry out what would have to be the most stealthy amphibious landing in history, they are not a major threat. Germany can take care if itself as can all of western Europe of if they cant they need to be put on notice that as far as US is concerned we will hold up NATO but only come to help and not keep large standing forces picking there noses in US bases. If you want to reduce manpower how about eliminating the Chefs for the Generals mess and let them eat what the junior officers and enlisted do. How many small jets do we have for flying these big shots around ? Unless you have the war record of George S. Patton you can take a business class seat. grrrrr.

    I have never served but grew up in a military town. It is a difficult life even for REMFs with a BS index that is ridiculous. Dont get me started on lets take a smart kid (18-24) train them to kill, use them as police and then dump them back into civilian life. Just what job skills does a MOS 11B have that directly crosses over into civilian life other than to go work for whatever Blackwater has morphed into this week? Leadership can be taught in the Boy/Girl Scouts.

    As a taxpayer I would much rather these defenders of our way of life be compensated MORE and anyone who is in a direct enemy facing position being shot at gets their pay tripled on top of any other combat bonuses.

    God bless and hold close to his heart all that have given the ultimate sacrifice so the the rest of us can chat on cell phones while we drive to the fast food joint when ever and where ever we wish.

    January 10, 2012 at 9:32 am | Reply
  15. PatriotVet76

    Mr. O'Hanlon: GOOD START! Adjustments in military-retirement compensation are a start. But, you need adjust a lot more. The USA MUST also adjust the rank structure in the military. The current pay and responsibility differences among officers, warrant officers, and enlisted personnel are seriously antiquated for many jobs in the 21st Century. The current rank and responsibility structures are primarily based on tradition, not operational needs.

    For example: Do you need a college degree, and an officer's commission, to pilot an unmanned air vehicle in the Air Force? If the Army has helicopter pilots with the rank of warrant officer, why can't the other services? Shouldn't Nuclear Reactor Operators, in the Navy, be warrant officers, at the minimum? There are many more examples of discrepancies in rank, privileges, and responsibility.

    Hence, if you're going to restructure the military retirement system, don't stop there! You need to take a hard look at the entire military rank, pay, responsibility, and compensation systems!

    January 23, 2012 at 5:33 pm | Reply

Post a comment


CNN welcomes a lively and courteous discussion as long as you follow the Rules of Conduct set forth in our Terms of Service. Comments are not pre-screened before they post. You agree that anything you post may be used, along with your name and profile picture, in accordance with our Privacy Policy and the license you have granted pursuant to our Terms of Service.