What’s In Store For Defense Spending?

May 19, 2017

President Donald Trump is expected to unveil his 2018 budget next week. The administration will request $603 billion in defense spending. 

That amount would be an increase over the Obama administration's proposed budget but short of the $640 billion House and Senate Armed Service Committee members want to see.

While details on the budget are scarce, history gives us an idea of what the proposal might entail.

In a worst-case scenario, we could see another round of military pay caps, commissary funding cuts, and higher TRICARE fees.

These fee increases and benefits cuts would be especially problematic in 2018, as the services begin enrolling new entrants into the Blended Retirement System.

But the new administration said throughout the campaign trail national defense would be a priority. So what would a best-case scenario look like?

Full military pay raise: For the first time in four years, Congress passed in FY 2017 a full military pay raise for servicemembers. This helped slow the military-civilian pay gap. According to MOAA's estimates, the military pay gap currently stands at 2.6 percent. 

At the very least, the administration should provide a pay raise matching that of private sector wage growth, currently projected at 2.4 percent. In a best-case scenario, the administration would provide a pay raise plus an additional 0.5% to help narrow the wage gap.

No new health care fees: Previous administrations on both sides of the aisle often turned to health care fees as a way to save money. Proposals included means-tested enrollment fees (an uncommon practice in the private sector and something no other federal employee faces), new enrollment fees for TRICARE For Life, and steep increases in pharmacy copays.

MOAA believes health care costs to military families should only increase by the commensurate increase in COLA. 

Eliminating the “widow's tax:” In a March memo to the House Budget Committee, lawmakers on the House Armed Services Committee asked for help to get funding to eliminate the widow's tax. Under current law, eligible survivors are penalized with a dollar-for-dollar offset of DoD's Survivor Benefit Plan from the VA's Dependency and Indemnity Compensation. 

Unable to completely fund a full repeal, Congress was able to provide some relief for military survivors, passing what's known as the Special Survivor Indemnity Allowance. Absent congressional action, funding for the $310 allowance will expire in May 2018.

Last month MOAA flew in members from across the country to Storm the Hill on this issue. MOAA members visited nearly every congressional office urging lawmakers to end financial penalties for military survivors.

At a minimum, Congress needs to extend and increase the allowance.

How likely are these scenarios to play out? 

At this point, it's uncertain. Delayed guidance from the administration means Congress is woefully behind in its appropriations process. And congressional appropriators don't appear to support the Armed Services Committees proposals either. Here's what one Politico reporter posted on Twitter:

Tweet for Update May

 

By this time last year, the House Appropriations Committee had passed five of the spending bills out of committee and was preparing to debate its first spending bill of 2017.

Congress is scheduled to be in session for only 11 weeks between now and Oct. 1 - an incredibly short amount of time to fully consider and debate a defense budget. 

In an effort to give lawmakers breathing room to handle other priorities - raising the debt limit, reforming the tax code, working on a major infrastructure plan - there may be reluctance to introduce controversial proposals to defense programs.

What that means is we may get a Band-Aid bill that stays the course somewhere between what the hawks and doves want.

MOAA will have additional information on the defense budget next week.

 

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