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The Bottom Line - Pay Commission: MOAA is Right on Personnel Costs

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July 10, 2014

By Col. Mike Hayden USAF (Ret)

In the recent Army Times article “Curbs on pay and benefits finally taking hold,” retiring DoD Comptroller Robert Hale (who left the Pentagon at the end of June) acknowledged military personnel costs are coming down and claimed, “We are making some progress.” 

Now hold on a minute.

For years — and as recently as this spring — DoD and service leaders have insisted military personnel pay and benefits costs are “exploding out of control,” that “by 2025 … 98 cents of every dollar will be going to pay and benefits,” and the time will soon come when “all we’ll be doing is paying our people.”     

A few short months later, DoD leaders (whose proposals to whack pay and benefits have been mostly rejected by Congress) are saying costs are falling — and it’s due to their plan?

Here’s the truth.  MOAA’s analysis of the Pentagon’s own budget data showed:

  • personnel costs have held steady at about 30 percent of the defense budget for more than 30 years, and
  • despite Congress’ rejection of draconian pay and benefits cuts year after year, personnel cost growth was already in decline.

The July 3 release of the Military Compensation and Retirement Modernization Commission’s (MCRMC’s) interim report removed any doubt about who’s been stating the facts and who’s been blowing smoke.

  • The MCRMC validated MOAA's analysis that military personnel costs have remained steady at about 30 percent of the defense budget — not 40, 50, or 70 percent as various DoD and service officials have stated to the media, the public, and Congress.
  • The MCRMC agreed with MOAA that DoD leaders' claims of "significant cost growth since 2000" ignores that compensation levels in 2000 are a dubious standard because both DoD leaders and Congress at the time deemed those levels too low to sustain the career force.

chart for bottom line 07-11-2014Cost growth from 2000 through 2010 was necessary to fix the retention problems of the late 1990s caused by years of cuts to pay and benefits. 

Congress initiated pay raises that exceeded private sector pay, eliminated out-of-pocket housing costs, and provided health care to retirees forced out of the military health care system. 

Cost growth since 2011 hasn’t just leveled off; it has actually declined.

Now that a presidential commission independently has validated MOAA’s analysis, DoD claims military pay and benefits are unsustainable and “eating us alive” are no longer credible. 

DoD’s repeated draconian proposals to cut pay, health care, and other benefits have been shown to be inappropriate and unnecessary.   

Congress’ adoption of far more modest alternative savings options MOAA suggested is what has worked — and costs are declining just as MOAA predicted.

So what now?  Even as they acknowledge the reality of personnel cost decline, DoD leaders continue to press Congress for massive benefits cuts — including huge TRICARE fee hikes, the elimination of TRICARE Prime, years of capped pay raises and housing allowance cuts, and cuts to the commissary benefit. 

The House has again rejected these disproportional cuts, but the Senate Armed Services Committee reluctantly agreed to some of them after drinking the Pentagon’s “exploding personnel costs” Kool-Aid.

The bottom line: The MCRMC’s interim report, which validates MOAA’s analysis, should dispel the myth that military people and families are the problem and put Congress’ cost-saving focus where it belongs — back on the Pentagon’s well-documented procurement and mismanagement fiascos. 

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  • (Note: health is misspelled in your chart). I appreciate the MOAA analysis to help keep people honest. I would go even further and show personnel and health costs per person and look at the trend over time. If these are total personnel costs, doesn't it make sense that the increased active duty personnel needed to serve in Iraq and Afghanistan have driven up the figures the most? It would make more sense to spread these costs across the number of people to see if costs per person are truly going up or down over time. As a retiree, I can tell you that all I see are constant attacks on retired pay COLA, huge proposed increases in TRICARE costs, etc.

  • Thank you for the great work. Unfortunately, we're the choir. It's now up to us to go out and tell everyone we know and write real letters (as opposed to quickie emails and texts) to our elected representatives. We also need to communicate with news editors and any others who can influence people. It's time to stop balancing the ever expanding federal budget on the backs of military personnel, retirees and vets. Let the welfare queens take a hit for once.

  • Congratulations to MOAA who would not roll over and play dead as did our senior military leaders.

  • Marshall Hall is correct: Most of the senior military leaders and civilian leaders in the top of DoD have no integrity. They parrot whatever an administration tells them to say or do. At least half of Congress wants to cut military pay and benefits. Only rarely has a senior general retired because of a disagreement with a president or congress. They don't want to take a chance on congress forcing them to retire at the two-star or three-star level.

  • Thanks for MOAA! Now let's use the same intensity to examine the procurement inflation and waste in DOD.

  • Thank you MOAA!! Hopefully this important information will get to the appropriate Senate and House Committee's and leadership. Keep up the good work!!

  • We are extremely fortunate to have an organization like MOAA. Many Thanks!

  • Good ole' MOAA! Thanks and keep up the good work.

  • SWEET! Good on Ya', Team MOAA! "Attaboys/girls" for all involved! Now let's see how it plays in the 'Roundhouse'... Hard to talk to rocks!

  • Good work MOAA . any chance all our active and retires get an increase in pay when all the work is complete. I know it will help every one

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