Guns vs. Benefits

Expanded health care, increased survivors' payments and other perks might crowd weapons out of the Defense budget.

In September 1998, the Joint Chiefs of Staff went to Capitol Hill and demanded their share of the nation's peace dividend. Congress agreed and since has awarded billions of dollars in pay raises and new benefits to service members and military retirees. Now, the Defense Department complains it got more than it asked for and is beseeching lawmakers to stop adding benefits, particularly for retirees.

Pentagon budgeters estimate the cost of pay increases and expanded benefits added since 2002 will total about $100 billion by 2009 and could reach $125 billion if proposed benefits are added. The fiscal 2005 Defense budget is $401.7 billion, and Pentagon planners worry that soaring benefits might threaten billions of dollars earmarked for weapon systems, research and development, and military operating costs.

"This is a very big issue because it shrinks the discretionary budget. We feel our hands are being tied by Congress," says Amy Lee, a Pentagon analyst of personnel and readiness programs. Her boss, Defense personnel chief David S. C. Chu, offered an even more blunt assessment when he was interviewed for a Jan. 25 Wall Street Journal article.

He said lawmakers' largesse has become "hurtful" and warned that benefit costs were "taking away from the nation's ability to defend itself." He has suggested slowing benefits growth and using cash instead of permanent benefits as a recruiting incentive.

Cindy Williams, a principal research scientist in the Security Studies Program at the Massachusetts Institute of Technology, says lawmakers' eagerness to support the military and retired military personnel who are their constituents has played a key role in adding billions of dollars for benefits. For example, allowing all military personnel who retire after 20 years of service to receive 50 percent of their basic pay added $1 billion annually. Expanding TRICARE, a Defense-

managed health care program, to include military retirees over age 65 added $4 billion a year. Allowing veterans with moderate to severe disabilities to collect both full military pensions and disability benefits costs an additional $500 million each year. Increased payments to the over-62 survivors of deceased military retirees carry a $200 million annual price tag.

Williams says it's probably not politically possible to roll back the expansion of military benefits, but the Pentagon might have other options. Defense could offer buyouts to retirees who opt out of TRICARE and could encourage uniformed personnel to leave the services before they become eligible for retirement pay.

Steven Kosiak, director of budget studies at the nonpartisan Center for Strategic and Budgetary Assessments in Washington, says that during the past 20 years Defense has spent about 35 percent of its annual budget on military pay and benefits (including $139 billion in fiscal year 2005). Though the benefits portion has remained relatively steady, the per-person cost has increased as the number of military personnel has fallen nearly by half since the end of the Cold War.

In recent years, military benefits spending has come close to equaling the roughly 37 percent of the Defense budget that annually goes toward weapons. The remainder goes to operating costs, such as civilian salaries and training. "If funding for military pay and benefits were to continue to grow as rapidly in the future, it seems likely that such funding would crowd out increases currently projected for other weapons programs," Kosiak says.

Nevertheless, lawmakers are considering opening TRICARE to more reservists and increasing benefits for the families of military personnel killed in combat, which could add another $7 billion in costs in 2006. Few legislators seem willing to challenge powerful military and veterans lobbying groups, especially during wartime.

Steven Strobridge, director of government relations for the 370,000-member Military Officers Association, recently accused the Pentagon of being "penny-wise and pound-foolish" in attempting to slow benefits growth. He says better pay and benefits are key to military retention and readiness. Pentagon personnel analyst Lee acknowledges that Defense faces a tough battle to rein in benefits spending. "The Congress and DoD are not quite seeing things in the same way," she says.