Report Calling for Troop and Retiree Pay Cuts Is Grossly Misleading

Report Calling for Troop and Retiree Pay Cuts Is Grossly Misleading
Courtesy photo via Defense Department

A recently published report from the Center for Strategic and International Studies (CSIS), a nonpartisan think tank, has repackaged old, outdated stats to argue military personnel costs are too high and “unsustainable.” 


The author’s suggestions include cutting annual pay raises, putting more money into skill-targeted bonuses, shifting more health costs to military beneficiaries, and considering further housing allowance reductions, among others. 




The report may have a 2021 date on it, but it’s a bald-faced rehash of statistics from almost a decade ago, comparing personnel cost changes between 2000 and 2012. And its recommendations are the same wrongheaded suggestions MOAA has been fighting for decades by presenting Congress with more relevant figures and highlighting the true costs of service.


The figures used in the CSIS report were grossly misleading in 2012 and are even more so now. 


A Bad Baseline

First, 2000 is hardly a reasonable baseline for any personnel cost comparison, because a compilation of repeated pay and compensation cutbacks had gutted retention and readiness at that point. Congress had capped military pay raises below private sector pay growth for almost two decades, leaving military raises a cumulative 14-plus percent below those of their civilian counterparts.


A 1986 retirement change had cut retired pay value almost 20% for subsequent entrants who served 20 years; those exiting service at the time cited this as a top reason for leaving. Housing allowances had been eroded to the point of having no relationship to housing costs. And military health coverage had been virtually eliminated for retirees, family members, and survivors over age 65.




In 2001 – the year after the baseline used in the report – compound effects of these cutbacks prompted the Joint Chiefs of Staff to urge Congress to upgrade military compensation and benefits, and to restore faith among current and future career servicemembers and families.


Congress responded by restoring general pay comparability through a series of annual pay raise plus-ups, repealing the blanket retirement cutback for post-1986 entrants, upgrading housing allowances to match housing expenses by locality, and authorizing TRICARE as a second payer to Medicare for older beneficiaries, among other needed changes. 


Those actions proved vital to restoring retention and readiness through the next two decades of repeated wartime deployments. 


So, to be clear as to rationale, Congress acted on readiness-based imperatives by increasing pay raises thus increasing personnel budgets over the 2000s – to restore compensation and benefits necessary for our nation’s all-volunteer force.


[RELATED: MOAA In Action: Major Legislative Accomplishments]


The Myth of ‘Unsustainable’ Costs

Second, budget analysts have been calling personnel costs “unsustainable” since the 1970s. Those arguments led Congress to make years of cutbacks in the 1970s, as well as in the 1980s and 1990s, as discussed above. In each case, the cuts proved shortsighted, causing retention and readiness problems that had to be redressed to be able to fight the next war.


But the “unsustainable” argument also crumbles under objective scrutiny. MOAA’s research shows the percentage of the defense budget made up of personnel and health care costs remains stable – 30% to 32%, or lower – and has remained so over many decades. In other words, they’ve been the exact opposite of “unsustainable.” 


MOAA also researched personnel and health care costs reported by the largest, hardware-heavy corporations and found they comprised a larger budget share than the military’s:  

  • UPS: 61%
  • FedEx: 43%
  • Southwest Airlines: 31% of operating revenue (which includes profit, so net budget share is higher)


As for allegations of unsustainably high DoD health care costs, which comprise less than 7% of the defense budget, this appears a major bargain compared with the health care share of the federal budget (23%), the average state budget (22%), household discretionary spending (16%), and U.S. gross domestic product (16%). 


Targeting the Post-War Budget

Finally, every post-war period has seen a rush to cut the defense budget. Unfortunately, personnel and compensation programs affecting those who sacrificed most in the war are a vulnerable target, because that’s where immediate budget savings can be found. 


Although the war in Afghanistan ended just weeks ago, the above trend has been underway for years. Congress recently passed new, significant cuts to military retirement benefits for 2018 and subsequent entrants to fund new benefits for those who leave service short of a career. In addition, Congress enacted new health care fees for younger retirees and significant pharmacy copay hikes for the vast majority of retired beneficiaries. For active duty personnel, Congress imposed a 5% cut in housing allowances. 


[RELATED: Your Guide to Advocacy: Changing Laws, Changing Lives]


MOAA’s Bottom Line   

  • Decades of dire predictions about “unsustainable” or “unaffordable” personnel costs have proven consistently wrong. 

  • The only threats jeopardizing the all-volunteer force have come from budget-driven pay and benefit cuts – moves leaving the military compensation package inadequate to offset the extraordinary demands and sacrifices inherent in a multidecade career in uniform. 

  • In each of those circumstances, Congress found itself compelled to plus-up the personnel budget to redress that imbalance. 

  • If our nation persists in again going down the well-trodden route of successive, incremental cuts to military compensation, none of us should be surprised when crises of the past reemerge as the next war or next crisis only to find our uniformed services unready.


Fighting to preserve these earned benefits remains at the core of MOAA’s mission. Stay up to date with the latest on these efforts – including potential calls to action, which can bring the full weight of our 350,000-strong membership to bear on lawmakers – via MOAA’s Advocacy News page.


Note: Military Pay and Compensation falls under the purview of DoD but applies to all eight uniformed services, which include the Coast Guard, U.S. Public Health Service, and National Oceanic and Atmospheric Administration.


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About the Author

Lt. Gen. Dana T. Atkins, USAF (Ret)
Lt. Gen. Dana T. Atkins, USAF (Ret)

Atkins served as the ninth president of MOAA, leaving office in January 2023.