President Trump’s Call for Budget Cuts May Affect Military Pay, TRICARE

President Trump’s Call for Budget Cuts May Affect Military Pay, TRICARE

The Defense Department was not excluded when President Trump said he wants to see a 5 percent budget cuts across federal departments. (Photo by Pete Marovich/Getty Images)

About the Author

Col. Mike Barron, USA (Ret), is the Director of Currently Serving and Retired Affairs for MOAA's Government Relations department.

Barron retired from the Army in 2010 after a 30-year career as an airborne-ranger infantry officer and military strategist. During his professional military career, he served in leadership positions at all levels, from tactical through strategic.  He is a decorated combat veteran of operations Desert Storm and Iraqi Freedom. Barron's last active duty assignment was as special assistant to the secretary of the Army.

After retiring from active duty, he was an executive with the Boeing Co., working in its Washington, D.C., government operations office, first as director of Government Affairs and then as director of International Operations and Policy.

He joined MOAA's Government Relations Department in April 2013 and specializes in defense policy, active duty compensation, and retirement issues.

Read full biography here.

President Trump's recent call for a 5 percent cut across every federal department includes the Defense Department, Defense News confirmed in an Oct. 27 report.

What does all of this mean for servicemembers and retirees?  Potential reductions could mean:

  • A military pay raise for fiscal year 2020 that is below the Employment Cost Index
  • Another possible push to reduce the calculation for Basic Allowance for Housing (especially with regard to dual military couples)
  • And increases in TRICARE fees for beneficiaries. 

Defense News reports the new topline defense budget will be $700 billion, not the $733 billion that the Pentagon had been planning for most of the past year.  The new topline number is down from the $716 billion approved in the FY2019 defense budget.

Deputy Defense Secretary Pat Shanahan on Oct. 26 indicated that this will not be a one year blip, but rather part of a flattening of budgets. At the Military Reporters and Editors News Conference, Shanahan said, “When you look at the $700 billion, it's not just for one year drop down, [or] a phase, it's a drop and then held constant over the future years defense program, a five year projection included in every budget.”

Congress will have the final word in the outcome of the FY2020 defense budget, once the administration's proposal hits the Hill early in the New Year, and after the upcoming 2018 midterm elections. As a new Congress will be seated, no outcome is certain.

Also requiring congressional action in FY2020 are the reductions that would come with a return of the mandated sequestration cuts required under the 2011 Budget Control Act.  Without further legislative action by Congress, these reductions will also directly impact the FY2020 defense budget.

All of this portends that after two years of sustained growth in the defense budget, there will now be proposed reductions and cutbacks to defense spending and programs.  This means that reductions will have to be found and those cuts can often start with pay and benefits.

Earlier this month, MOAA reported the Employment Cost Index could be driving another big pay increase in 2020, but the prospect of cuts means the actual raise could come in below ECI next year.

[Related: This Key Indicator Points to the Largest Military Pay Raise in 10 Years]

MOAA needs members to keep up with developments and stay engaged as the administration's FY2020 budget takes shape and the proposal goes to the new 116th Congress sometime in early February.

Look for future updates coming in the MOAA newsletter and be ready to take action when asked.  It will take a concerted advocacy effort by all MOAA members and MOAA's coalition partners in order to stave off the potential cuts to hard earned pay and benefit programs as the FY2020 defense budget takes shape over the coming months.