Military Spending: Will Pay, Benefits Cuts Come First?

This week, Defense Secretary Leon Panetta is set to reveal his plans for cutting the defense budget, and it's becoming even more clear that those plans will involve changes to the Pentagon's pay and benefits structure. In fact, pay and benefits may be the first items to go.

That's because in today's budget environment, nothing is off the table. But it's also because number-crunchers see big savings in the compensation area. "Military benefits and salaries, although politically difficult to cut, are first in the line of sight of many defense budget analysts," the New York Times reports. "Scaling back the Pentagon's health care and retirement systems and capping raises would yield hundreds of billions of dollars in projected savings over the next decade."

The story also notes that "many who are more worried about cuts, including Mr. Panetta, acknowledge that Pentagon personnel costs are unsustainable and that generous retirement benefits may have to be scaled back to save crucial weapons programs."

The Defense Department spends almost a third of its base budget on personnel costs, the Times reports: $107 billion for salaries and allowances, $50 billion for health care and $24 billion in retirement benefits.

One proposed cut would involve increases in fees for working age retirees in the Pentagon's TRICARE health insurance program. Another proposal being considered would cap military salaries, which have steadily increased since the Sept. 11 attacks -- often at a rate higher than requested by the Pentagon.

These proposals are not new: various groups have called for the TRICARE fee hike recently, and analysts have noted that Defense could save billions by capping the pay of service members, as has occurred with civilian federal employees across government.