Korb: Military benefits must be cut
January 11th, 2012
11:03 AM ET

Korb: Military benefits must be cut

Editor's Note: Lawrence J. Korb is a Senior Fellow at the Center for American Progress and was Assistant Secretary of Defense from 1981 to 1985.

By Lawrence J. Korb - Special to CNN

As the President and Congress decide how to implement the reductions in projected levels of defense spending necessitated by the Budget Control Act and possibly sequestration, the pay and benefits of military personnel and military retirees – which now total about $250 billion a year – can and should be on the table.  These benefits must be cut because if we do not, there will not be enough money for modernization and readiness.

Opponents will argue that if we make any reductions in his area we will be breaking faith with those who have served and are serving.  But close analysis reveals that these claims cannot be substantiated.  This can be demonstrated by examining the three components of personnel costs, namely, pay and benefits for active duty people; military retirement pay; and health care for military retirees. 

Compensation for an individual in the military, is supposed to reflect the average salaries of civilian workers with comparable educational backgrounds.  The standard for this is called the ECI or Employment Cost Index.  Total military personnel costs are now about $150 billion.

In the early years of the All Volunteer Force (AVF), when the military was adjusting to the end of the draft and doing away with the hidden tax of conscription, compensation fell behind the ECI.  However, according to the Pentagon’s own analysis, it has more than caught up.

Every four years, the Department of Defense convenes a Quadrennial Review of Military Compensation (QRMC) which is charged with ensuring that the pay of military people is comparable to the salaries of civilian workers with comparable educational backgrounds.

The 10th QRMC, which completed its work in 2008, found that in 2006 the average enlisted member earned $5,400 more than his or her civilian counterpart, but $10,600 more when selected benefits like free health care, retirement, and tax advantages are included in the comparison.  If anything, the gap has grown wider in the past five years.  The QRMC recommended that Congress and the Administration use pay and benefits in determining annual pay raises.

How to cut $1 trillion from the Pentagon.

Not only have these bodies not done this, but they have continually increased the raise stipulated by the ECI by just using base pay.  As a result the average military member earns about $15,000 more than his or her civilian counterpart.  Implementing the QRMC proposal would reduce annual personnel costs by about $6 billion a year.

The situation for retired pay and benefits, which now total $47 billion, is similarly skewed.  Up until 1986, individuals who served for 20 years were able to retire and receive 50 percent of their base pay indexed for inflation for the rest of their lives.  For those joining on or after August 1, 1986, the benefit was reduced to 40 percent.

But in 2000, for no strategic reason, the military leaders persuaded the Congress to repeal the law and return to 50 percent.  Not only did this change raise retirement costs by 25 percent, it gave more people the incentive to leave at 20 years.  About 76 percent of the men and women who complete 20 years now choose to retire.

Why Pentagon cuts are easier than you think.

Reducing the benefit back to 40 percent for those who joined after August 1986 would save another $5 billion a year.  In addition, we need to completely overhaul the retirement system for new recruits.  As the Defense Business Board has noted, the current system is not only too expensive and counterproductive but unfair.  Right now if an individual does not serve 20 years, he or she gets nothing.  The Department of Defense should implement a 401K plan that does not begin paying benefits until the person reaches 60.  This would save at least $10 billion a year.

In 2012, the Pentagon will spend about $53 billion for the Tricare military medical insurance program – primarily for retirees and their dependents – a 300 percent increase in the past decade.  If nothing is done, the costs will rise to about $65 billion by 2015.

Health care costs began exploding because of two decisions that our military leaders pressured their civilian masters to make during President Bill Clinton's administration.

In 1995, they pushed the administration and Congress to create a health insurance program called Tricare. At that time, the enrollment fee for a retiree and his family was set at $460 a year and $230 a year for an individual retiree. Although these enrollment fees were supposed to rise annually to reflect the nationwide increase in health-care costs, the military leaders resisted efforts to do so, and when their civilian leaders attempted to raise the fees, they did not speak out in support of the increases.

As a result, the fees will remain at $460 and $230 a year through the end of FY 2012. (In fiscal 2013, they will go up $5 a month). Had the fees been adjusted to reflect nationwide increases over the past 15 years, they would be at least $2,000 a year.

Time to adjust military compensation.

The failure to raise the fee has had two huge impacts on the Pentagon's budget. First, its share of the medical costs for retirees has increased exponentially. Second, fewer and fewer working-age retirees took the health-care plans at their place of employment, further increasing the cost to the Pentagon.

The military leaders then convinced their civilian masters to allow retirees and their dependents to remain on Tricare even when they reached 65 and became eligible for Medicare. Until this program, Tricare for Life, was enacted in 2001, military retirees relied exclusively on Medicare after age 65.

Tricare for Life, which pays most expenses not covered by Medicare, has no enrollment fee or co-pays and has accounted for half of health-care cost increases since in its enactment.

Gradually increasing Tricare enrollment fees for military retirees, limiting double coverage for working age retirees, and charging an enrollment fee, deductibles, and co-pay for Tricare for Life will reduce costs by about $15 billion a year.

While bringing personnel costs under control is necessary to bring the defense budget under control, it should be noted that these changes would not impact any wounded veterans.  Their care and compensation is provided by the Department of Veterans Affairs, which has a separate budget.

The views expressed in this article are solely those of Lawrence J. Korb.

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Topics: Budget • Economy • Military

soundoff (37 Responses)
  1. joe anon 1

    the military and civilian benefits that are needed to be cut are to israel.

    January 11, 2012 at 12:57 pm | Reply
  2. Onesmallvoice

    In the past 60 years, our military spending has gone way overboard. Today, we spend more on our military than the next 16 economically powerful nations combined and that's ridiculous to say the least! Yet this idiot Mitt Romney wants to throw away more of our hard earned tax money on this stupidity, saying that $783B a year is not enough. It's this stupidity that's bringing our economy down more than anything else!!!

    January 11, 2012 at 1:14 pm | Reply
    • Marine5484

      How true that is, Onesmallvoice! The MIC has become dominant in Washington D.C. and will continue to drain the national economy!

      January 11, 2012 at 7:13 pm | Reply
  3. Jake Butcher

    I live in an area with a lot of Air Force active and retired families, federal civilian employees, along with a large contingent of military contractors. The military-industrial complex is alive and well here and it has a culture of its own. It is very evident to me that this group has many financial advantages over the non-military in this area- higher salaries and living allowances, low cost health care, a heavily discounted grocery store, etc, etc.

    What about addressing the issue of 20 or 30 year retirees going through the revolving door into the military contractor world? This often positions them for large salaries because they have inside influence. Why don't we consider a "pension offset" for those who retire from the federal government (military & civilian), similar to the social security earnings offset. These "double-dippers" would be less likely to take jobs from other individuals who are really in need of work in this economy?

    January 11, 2012 at 1:25 pm | Reply
    • Keith

      You right . Once someone retires from the Military allot of them go for the military contracts. Now they get both retirement and another government pay check. These people are stopping the Active Military Personnel from doing their job so the contractor have a job. Also some people retire and get a Post Office slot because of time in service. Not right fraud waste and abuse.

      January 11, 2012 at 9:55 pm | Reply
    • Edward P

      Why would we do that for people like myself, that has been overseas on several different occasions in protection of rights that we have as American citizens. We are not equal to our civilian counterparts who have never had to leave families or put their lives on the line for this nation that we call home. So if you see military personnel living a little (not by much) than their civilian counterparts think about what they have been through or will be asked to go through so you can continue to live your life as normal.

      April 9, 2013 at 1:07 pm | Reply
  4. VC

    The US military has long had an instant draw of retirment after 20 years of service. The recent talks of potentially not providing retirment for those who have honorably served their country is a subject that is the cause of alot of concern for the military. Personnel who serve their country and fight the wars should be guaranteed their retirement. I do not agree with Jake that military retirees instantly gain jobs as contractors. Some do but many don't. For those who do, they usually possess vast knowledge and are subject matter experts in the job they had been performing for a number of years. This cuts down on training costs and usually the need to pay to get the person to get a clearance. Also, the communities that have military installations nearby for the most part provide jobs for the commnunitynot just for the military. 95% percent of the time communities that are near a military installation enjoy a more economicallly viable area. The installation is a major the source of revenue for the community as Soldiers buy goods and services. Let the installation leave and see how robust your economy will be.

    January 11, 2012 at 2:26 pm | Reply
    • Army Ranger

      Not to mention that the wear and tear on a persons body and mentality is so great for military members that only a small number of soldiers, sailors, airmen, and marines have the physical ability to make it through 20 years of the difficult training and fighting wars to retire. Any member of the military that has the ability to make 20 (+) years deserves the best in healthcare and retirement. An ordinary job at 40 years of service is about as equavilent as 20 years in the military for the most part in regards to the overall toll on a persons health.

      January 11, 2012 at 8:44 pm | Reply
    • Servicemember

      The MIC in Newport, RI is the 3rd largest employer in the state with over 10000 civilian jobs.

      January 15, 2012 at 3:59 pm | Reply
  5. GOPisGreedOverPeople

    The GOP solution: Turn all the Old, Sick, Poor, Non-white, Non-christian, Unemployed, and Gay people into slaves. Whip them until they are Young, Healthy, Rich, White, Christian, Employed, and Straight. Or until they are dead. Then turn them into Soylent Green to feed the military.

    January 11, 2012 at 4:37 pm | Reply
    • Marine5484

      Thank you, GOPisGreedOverPeople. I completely agree.

      January 11, 2012 at 7:11 pm | Reply
    • USWarrior

      You are dangerously ignorant and need to know what you are talking about before you publish a scathing remark. Your remarks prove that you are more prejudiced than the group you are attempting to criticise. If you were to study the GOP platform you would see that GOP ideals and policies ensure equal rights, fairness and equal opportunity for all. Especially equal opportunity. That is what the USA has more of than any other country on Earth, and is why we have what we have. Trust me, I've lived in more countries than cities you have probably visited. The USA has the most opportunity for unlimited personal success and individual achievement than anywhere. Fair compition propels creativity, ingenuity, entreprenuership, technological advances. Socialism stifles these. Why? Because why work at something if you don't have to? Why do wealthy Americans resent paying welfare to unwealthy Americans? Because 90% of wealthy Americans earned their wealth from the bottom up through good personal decisions and hard work. Wealth wasn't just given to them. 90% of unwealthy Americans are in that condition because of poor choices in personal education and development or through bad habits. Every American regardless of social category or location has the opportunity to get an education and a marketable skill because free educational programs and scholarships abound. All it takes is the will to do the work of searching, applying and moving to the source. These opportunities exist because of GOP ideals of a free market and an unfettered business climate. Don't believe me? Then compare the successes of socialist countries to that of the USA. But the point of the article we are supposed to be commenting on is the level of compensation and benefits for the Armed Forces. Mr Korb is a "Senior Fellow" so he must have been around for awhile, but perhaps he has not study the history of the American Military. If he were to look into it he would find that the reason we have the most effective military in the world is because it is true that you get what you pay for. Prior to Ronald Regan's administration our miltary was uneffective. Have you heard of Jimmy Cater's attempt to rescue American Embassy hostages in Iran in 1979? Compare the results of that operation with the operation to get Osama Bin Laden and you'll see what our investments in the military have produced. Military pay and benefits are not exorbitant. But if they look good to you, please join us.

      January 12, 2012 at 10:42 am | Reply
  6. Mr. Williams

    I'm currently in the Military. I've been in the Military since January of 2003. I've been deployed to Iraq 3 times. I wake up everyday at 0430, conduct PT at 0630, and show up at 0900 to work until 1700(5pm). In order to stay in the service I must be able to do a minimum of 37 push-ups,45 sit-up in two minutes per exercise. I also have to complete a 2 mile run in 17:45. That is the minimum. If I plan to get promoted I need to run 2 miles in 13 min. I'm 32 years old. I have 12 years until I'm eligible for retirement. If I make it twenty years, through war, why shouldn't I be compensated. I've sacrificed my youth and personal dignity in service of our nations freedom. I'm not trying to get your sympathy, but rather your empathy. All the above is only a small illustration as to why we get retirement after twenty years of service. And in closing; do you trust your 401k? Would you deploy to foreign countries and kill or die in the belief that your 401k is waiting for you at 60? You get rid of retirement;you get rid of an all volunteer service. No one will stay in the service for a 401k. You'll see.

    January 11, 2012 at 5:20 pm | Reply
    • John

      Mr. Williams,
      Spare us your strenuous schedule and fitness claims. Anyone who works with the military or lives with them knows this is categorically false. For the vast majority of any branch, the military is a job. Everyone loves to demonize the private sector, maybe you should be thanking them for paying your salary.

      January 11, 2012 at 6:29 pm | Reply
      • Goodguy1

        The Military service brings far more personal sacrifice than the civilian sector. You can tell a corporate supervisor to go Fu&% themselves and walk out and transfer your 401K to a new job. You do that in the military and you are in Ft. Leavenworth. You are on call 24 hours a day and must have a pack ready and a weapon ready to check out in one days notice. You are deployed for a years time without seeing your family. You get to see things quite different than the occasional spat at the coffee machine or water cooler....limbs blown off, death etc. The military earns what they get. SEMPER FI !

        January 11, 2012 at 6:55 pm |
      • Hen

        John, you are grossly uninformed, much like 99% of the general public that has never served. True, military service is a job/career in many aspects, but it differs from the size of the unit, branch, or specialty and location. Sure there are many who at certain times work 9 to 5 hours, but the majority of service members have spent a larger portion of thier careers in units training, staying fit and deploying for the last ten years at the least. No one goes straight into a office job on day one. How many times have you had to be separated from your family, sometimes put in harms way, and see people you know die around you? That is one of the many sacrifices that ALL service members KNOW is a constant possibility the entire time they are in uniform. Civilians have so much to say, but know so little. Educate yourself on what, when, where your military does and don't lump everyone in the same category. You may appear to be a litte smarter, but I'm not counting on it.

        January 11, 2012 at 8:10 pm |
      • Brian

        Oh, how tired I am of hearing people say that I should thank them for paying my salary. It should also be said that MY tax dollars pay for my salary as well. But let's talk about a service member's pay. The average lower enlisted with a family (who make up the majority of the military) have such a low amount of pay that they qualify for food stamps and WIC (government assistance). Also, I saw that someone posted something about "heavily discounted grocery stores." Let it be known that the "heavy discount" comes from the lack of sales tax (not that big of a discount). But what people don't know is that most commissaries will raise the price of the food and items in the store because of the lack of tax. Not to mention the complete lack of selection of items and brands. Go to a PX or a commissary, and you will see the same options that you would find at a Super Target. Now, John. Let me ask you a question about the supposed false claims about the physical stress being a service member puts on your body. If it was as easy as you would believe, why would I have arthritic knees and shoulder by the time I was 26? It must be from that 9 to 5 schedule that I had on a regular basis. It couldn't have possibly been from the 15 to 20 miles I ran every week, or the 100 push ups I would do a day, or the three 25 mile road marches through the mountains every year that I would have to do just to keep my self in good enough shape for combat. Not only that, but you are expected to work through the extreme pain. Oh, and let's talk about combat. Do you remember that day that it was 130 degrees out, and someone looked at you and said "here, take this little bottle of water. This is the only thing you will get to eat or drink for the next 24 to 48 hours. I sure hope that village full of people who want you dead will be willing to share their food with you." Oh, never happened to you? Well it happens to service members. And I can't even tell you what it does to a person's head to take another human's life (or several), or watch a vehicle full of your closest friends go up in flames in front of you, or have both of those happen to you in the same day. LT Col Dave has a really good point. What is meant by "civilian counterpart?" What civilian counter part for the job that I just described? They want to cut military benefits? Maybe they should evaluate the pay for civilian contractors. Why should the guy who sucks human waste through a tube into a truck from a toilet get paid 3 times the amount of a soldier (just because it's in a combat zone}?

        January 11, 2012 at 11:52 pm |
      • Shan

        John,
        No one is "demonizing the private sector." Are you or have you ever fought for your country? Put your family in the position to lose you because you wanted to go and be patriotic and help make America a great country?

        I am a military spouse and the sacrifices that military families, including wives and children is more than any civilian working a 9 – 5 job will ever comprehend.

        If you have never served then you don't understand the stresses and strenous life that comes with being a military family, and you should probably keep your mouth shut. I know you probably don't like it when people who don't know anything about your job try to come in and tell you how to do it or what you should get for doing it.

        Have respect for people in uniform, they deserve it!!!!

        January 12, 2012 at 12:27 pm |
      • Servicemember

        I would suspect John is a liberal of some kind and like most of them feels compelled to want to take money from somewhere to give more to those on welfare, all without touching his own pocket. I can telly you he has never served and probably doesnt know anyone who did honorably. As for his precious private sector, I was in the private sector from 18-28 enlisting at 28. after 16 years I may not make it to 20 after an spinal injury, if I dont, i dont get that retirement check whe wants to take, I end up some reduced disability check that wont some any near to doing anything, and I wont be able to to do what I have dont for the past 24 years any more. What is your solution to my sudden transistion back tot he private sector in that case? it happens every day to someone who has dedicated with little or no complaining about the "strenous schedule and fitness claims". tell ya what John, send me address, maybe I can get you a MTV with SAPI plates and 8 M-4 loaded magazines and you wear that 90% of the time for the next 12 months and see how your scedule and fitness work out.

        January 15, 2012 at 4:12 pm |
      • SFC Retired Williamson

        @John, you don't have a clue, spare us you idiotness!!! When I first joined we were doing PT @4:30 in the morn till 5:30, then personal hygeine and they gave us an hour for that and then chow and be at work by 0800 untill 1700, no overtime in the Military!! 24/7 when you're deployed in a combat zone, go sign up and try it, oh, to scared then stfu!!

        February 16, 2012 at 12:06 am |
    • gerald

      when you enter the military,just like any job in the private sector you know what is expected of you when you enlist/get hired if you don`t like it find something else as for the 401 debate less military means less wars

      January 12, 2012 at 8:35 am | Reply
      • Servicemember

        I suggest you go back to politcal science 101 if you think less military less war. if your content with living in medicracy them move to one of those countries that rely on a world leaders to proctect the shipping lanes and ensure commerce is happening

        January 15, 2012 at 3:56 pm |
  7. j. von hettlingen

    To do military service is not like taking a nine-to-five job in civilian life. When the work is done one goes home. A serviceman devotes a certain amount of his life to the army. Hence it's fair that he is provided for. As there aren't enough money around. cuts are necessary. Diplomacy is a cheaper alternative than a military action.

    January 11, 2012 at 6:02 pm | Reply
  8. Hen

    John, you are grossly uninformed, much like 99% of the general public that has never served. True, military service is a job/career in many aspects, but it differs from the size of the unit, branch, or specialty and location. Sure there are many who at certain times work 9 to 5 hours, but the majority of service members have spent a larger portion of thier careers in units training, staying fit and deploying for the last ten years at the least. No one goes straight into a office job on day one. How many times have you had to be separated from your family, sometimes put in harms way, and see people you know die around you? That is one of the many sacrifices that ALL service members KNOW is a constant possibility the entire time they are in uniform. Civilians have so much to say, but know so little. Educate yourself on what, when, where your military does and don't lump everyone in the same category. You may appear to be a litte smarter, but I not counting on it.

    January 11, 2012 at 8:06 pm | Reply
  9. Helen

    Instead of looking at cutting benefits for the military folks that have laid their lives on the line countless times, perhaps we should look at cutting benefits that the members of congress get for the rest of their lives no matter how much time they spend there. They sure don't do anything to earn it!

    January 11, 2012 at 8:49 pm | Reply
  10. LtCol Dave (ret)

    Explain, exactly, what is meant by "civilian counterpart", Mr. Korb? Also, I'm reminded of a famous Darth Vader quote: "I have altered the deal, pray I do not alter it further".

    January 11, 2012 at 8:53 pm | Reply
  11. Beefburger

    In the civilian world you work a 40 hour week, the rest of the time you are at home doing whatever you like. In the military, you are body-and-soul property of the DoD. 24/7/365. 20 years of service is actually 60 years to a civilian counterpart.

    You want to take away those hard earned benefits from those who have sacrificed so much for our country? You should be run out to some 3rd World hellhole to live!

    You people are absolutely disgusting and deplorable! You do not deserve the protection afforded to the citizenry of the world's finest republic! A republic that has been paid for with much BLOOD, sweat, and tears.

    This is not the disgusting case of Greece needing austerity measures because they give benefits for the handicap of being a PEDOPHILE. These retirement benefits are for those who have been the umbrella for the Free World.

    January 11, 2012 at 9:35 pm | Reply
  12. I Have Hot Legs

    I say nail congress and have them pay 100% of their medical care.

    January 12, 2012 at 12:26 am | Reply
  13. Shan

    Really??? Seriously???? There is no way a civilian job can be compared to a military job. "Every four years, the Department of Defense convenes a Quadrennial Review of Military Compensation (QRMC) which is charged with ensuring that the pay of military people is comparable to the salaries of civilian workers with comparable educational backgrounds."

    Do those civilian couterparts go away from their families for months at a time and live in extreme weather conditions while getting shot at, while having bombs blow up infront of or underneath them?? Do the those same civilian counterparts miss the births of their children because they are protecting the freedom of Americans? Do they see their friends and coworkers die, get blown up, or lose limbs? How about having the stress of moving all over the world with their families in tow every two to three years?

    We give our military health benefits for life because the problems they can develop years later from jobs they do while in the military. Military families CAN NOT be compared to civilian families.

    If we want to cut anything, why don't we look at Congressional Pensions. They don't have to serve as much time as a military member AND they rake in WAY more benefits than any military member. Why????? For helping the government lie to the people and steal from our country???

    THIS GOVERNMENT IS BECOMING QUITE A SOCIALIST GOVERNMENT!!!!

    America needs to get back to its roots and get someone in office who cares about the country, the people, and values that America was founded on and stop being such hipocritical, lying, selfish thieves!!!!!!!

    January 12, 2012 at 12:01 pm | Reply
  14. Army Retiree

    Cut much in pay and benefits and get ready for either another draft or a much less effective system of security of national values.

    January 12, 2012 at 11:02 pm | Reply
  15. Military Analyst

    The real issue here is that wages in the civilian sector have been steadily declining. Male college grads earn 12% less than in 1969, non-high school grads earn 66% less. There is an apparent "gap" in salaries because the civilian sector has not kept pace with military pay. Most annual pay raises for the military over the past 10 years have been between 1 and 3 percent. That is not outrageous. Should we really be faulting the military by cutting pay/benefits for a problem in the public sector. If you really want to cut the "military industrial complex" that has nothing to do with benefits and everything to do with acquisition.

    January 13, 2012 at 4:02 am | Reply
  16. Thomas

    Agreed- the average college graduate is earning less now than even 11 years ago. You don't bridge the gap by reducing the benefits earned for serving one's country. The big difference between a college grad going into corporate America and a high school graduate going into the military is the risks associated with the job; an office worker is less likely to be shot or maimed while working than a soldier on patrol in Afghanistan. Thus, the compensation for such risky work should be taken into account- even a pencil pusher in the military has a greater risk of being killed because of the probable likelihood that the person will be deployed to Afghanistan. Another difference is that a soldier has no choice when they are deployed to a warzone, while civilians found in warzones are there by choice to help the local peoples.
    So, a person in the military is more likely to be killed while doing their job than a civilian- if not injured, so the level of pay and benefits afforded that person, no matter how mundane the job is, is reflective to the amount of risk associated with the job.

    February 3, 2012 at 1:16 am | Reply
  17. family medical insurance

    I’m amazed, I must say. Rarely do I come across a blog that’s equally educative and interesting, and let me tell you, you've hit the nail on the head. The issue is something too few folks are speaking intelligently about. I am very happy that I came across this during my search for something regarding this.

    March 5, 2012 at 10:15 am | Reply
  18. Jack Mohan

    The Hana Initiative sounds like a far better alternative to all of this anyway.

    March 18, 2012 at 11:36 pm | Reply
  19. Elijah

    For those that "serve" in the military, congratulations; however, the military is a chosen profession. Why complain about a job you chose? You were not forced into signing up. You entered voluntary military service and self-imposed the hardships on yourself and your family. In our country it is great that we can pay someone else to die on our behalf, just like we can pay someone else to pick up our trash.

    July 31, 2012 at 8:18 pm | Reply

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