Editor'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.