Obama: Growth of Military Pay and Benefits Cannot Be Sustained

President Obama proposed less generous increases to several aspects of military compensation in his fiscal 2015 budget, saying service members’ pay and benefits have grown at an unsustainable rate in the last decade.

Obama proposed a 1 percent raise in basic pay, the same amount service members received in 2014, but significantly less than in previous years.  He also called for a smaller increase in fiscal 2015 for the basic housing allowance – 1.5 percent – and a 3.4 percent increase to the basic subsistence allowance. In his last budget, Obama pitched a 4.2 percent housing subsidy increase -- and service members ultimately received an average bump of 5 percent from Congress -- while the subsistence increase for 2014 was the same rate as this year’s proposal.

“All of these changes have been recommended by the uniformed military leadership and are necessary to slow the growth in compensation and benefit costs in a responsible way and preserve funding needed for investments in platforms and readiness,” the White House wrote in the budget.

Effective 2016, the budget also would adopt a “consolidated health plan.” The plan would implement annual enrollment fees for the TRICARE for Life program for Medicare eligible retirees, phased in over a four-year period. Current TRICARE for Life participants would be grandfathered in and not subject to the fees. The recommendation also includes a proposed increase to pharmacy prescription co-payments for all active-duty families and retirees to “incentivize usage of mail order and generic drugs.”

The TRICARE changes would save the Pentagon about $4 billion over 10 years. The compensation reforms are a part of a larger effort by Obama and Defense Secretary Chuck Hagel to reduce the overall size and fiscal footprint of the military in the post-war era.

Also included in the budget was $5 million for the Military Compensation and Retirement Modernization Commission, which will produce a more macro evaluation of military pay and benefits. The panel will issue its findings and recommendations in early 2015.