From 1980 to 2000—a full career for a generation of servicemembers—Congress and various Republican and Democratic administrations ignored a law that allowed stateside military housing allowances to be set high enough to cover all but 15 percent of members’ average out-of-pocket rental costs.

Lawmakers and Pentagon leaders knew the law assumed only a “15-percent absorption rate,” or out-of-pocket housing expense, for military renters. But they never could find sufficient budget dollars to raise housing allowances high enough to achieve it.

In January 2000, however, then-Secretary of Defense William Cohen did something quite surprising. He announced that not only would DoD raise the Basic Allowance for Housing (BAH) in 2001 enough to reduce the absorption rate from 19 percent to 15 percent, but he also was committing DoD to lowering out-of-pocket rental costs to zero by 2005.

It should be remembered that Cohen, a former Republican senator serving in the cabinet of a Democratic president, Bill Clinton, made this vow to increase BAH 19 months before the Sept. 11, 2001, terrorist attack, when many Americans rediscovered the value of their military. After that tragedy, lawmakers went to great lengths to raise service pay, so Cohen’s goal for BAH never was in doubt even with him retired as defense chief.

On Jan. 1, 2005, Cohen’s goal was achieved. BAH rates saw a fifth and final above-inflation annual adjustment, this one averaging 8 percent for 910,000 BAH recipients. That was enough to keep pace with an average 4.4-percent rise in rental costs nationwide over the past year and also to close a remaining 3.5-percent gap between BAH and median rental expenses. The average rental expense absorption rate, as Cohen envisioned, fell to zero.

Cohen correctly noted five years ago that not only would his BAH initiative make sense as a way to improve service quality of life, but it also would make off-base housing more affordable, which would lower military construction budgets. Higher BAH also would raise the attractiveness of DoD’s housing privatization initiative. Under that program, private developers agree to build housing to replace old base units in return for guaranteed occupancy by servicemembers who forfeit monthly BAH to live there.

So higher BAH makes the deals more attractive to developers.

Tim Fowlkes, director of BAH for DoD, says total BAH payments in 2005 will be $12.3 billion, a 25-percent increase from 2004. An additional 90,000 members will qualify. Some of that growth, Fowlkes says, results from mobilized Reserve and National Guard members. But also, he says, more active duty families are eligible for BAH because of housing privatization. As families move from aging military housing to new or renovated private sector units, BAH forfeited to cover almost all rental costs.

BAH recipients enjoy two types of rate protection. Individual protection, set in law, ensures no servicemember sees a drop in BAH from one year to the next unless he or she changes assignment areas or dependency status or is disciplined with a reduction in pay grade.

Cohen also made a policy decision in 2000 to provide geographic rate protection. This prevents DoD from lowering BAH at military housing areas from one year to the next, even if new rental cost data show rates should fall. Cohen directed the geographic rate protection while DoD closed the gap between BAH and actual rental costs.

In the past year, rents did decline in perhaps a few dozen housing areas. Fowlkes says a decision hasn’t been made yet on whether to end geographic rate protection. If it is lifted, Fowlkes says, he doesn’t expect dramatic decreases in BAH rates for any assignment area.

Cohen’s goal of sharply raising military housing allowances has been achieved. It must be a proud legacy for him, particularly as it benefits a generation of servicemembers engaged in a long and difficult war.

Tom Philpott is a freelance writer and syndicated news columnist. His column, "Military Update," appears in 48 daily newspapers throughout the United States and overseas.