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11-16-12

CBO Report: Cut Military Pay and Benefits

Congress returned to Capitol Hill this week for a post-election, lame duck session and lawmakers are working to find alternatives to the mandated $1.2 trillion in budget cuts (sequestration) scheduled to take effect on January 1, 2013. Related to this, the Congressional Budget Office (CBO) released a “Costs of Military Pay and Benefits in the Defense Budget” report that suggests reducing military pay and benefits may be key to cutting total Defense spending.   Since DoD has had no difficulty in recruiting and retaining service members in recent years, the report contends the cuts would have no negative impact and, if problems develop, CBO suggests increasing enlistment and re-enlistment bonuses, which would provide additional long-term savings since such bonuses are excluded from retirement pay calculations.

The Administration’s long-term plan to reduce annual active duty pay raises beginning in FY 2015 is also cited in the publication and, consistent with DoD’s budget request for 2013, CBO also recommends shifting more health care costs to military retirees and their families. 

The report further suggests budget savings by replacing the current military retirement benefit with a pre-tax Thrift Savings Plan to, in effect, “civilianize” benefits for future retirees.  

The full report is available at www.cbo.gov, along with another recent deficit-reduction report entitled “Choices for Deficit Reduction.”  There are significant threats to compensation, health care and benefit programs and FRA is closely tracking budget negotiations, Senate work on the FY 2013 Defense Authorization bill and other legislative issues and will alert our membership as action on Capitol Hill warrants.

The FRA Action Center provides pre-written messages on these and other important legislative issues that can be edited by the sender.  The substantial increase in Action Center usage this session of Congress has been tremendously helpful to the FRA Legislative Team working Capitol Hill on your behalf. FRA will continue to monitor budget negotiations and will alert the membership of any pending legislative threats.