US Military Crippled by Rising Personnel Costs

[Armand2REP]

Senior DoD Leaders Warn of Rising Personnel Costs
By JOHN T. BENNETT
Published: 8 May 2010 09:07

A handful of warnings about the ballooning costs of U.S. military pay, benefits and health care has become a clarion call by the Pentagon's senior leaders: Get personnel spending under control before it cannibalizes operations and acquisition funds.

"Health-care costs are eating the Defense Department alive," U.S. Defense Secretary Robert Gates said during a May 8 speech at the Eisenhower Library in Abilene, Kans.

By Pentagon estimates, the U.S. military will spend $244 billion on personnel costs in 2010, more than one-third of the $636 billion appropriated for the year. Defense analysts think the actual number could top $300 billion.

In his speech, Gates said health-care costs alone had risen from $19 billion a decade ago to $50 billion today. He noted that attempts to reduce the federal bill, including "modest increases in premiums and co-pays" for Tricare, the decade-old military health-care system, had been defeated by a "furious response from Congress and veterans groups."

Gates also noted that Congress routinely adds around half a percent to the White House's request for an annual pay raise for military personnel. Now, the Pentagon is working hard to persuade lawmakers to cut back.

A month before Gates' Kansas speech, Gen. Norton Schwartz, the Air Force chief of staff, invoked personnel costs as he urged lawmakers to resist padding the 1.4 percent military pay hike proposed in the Obama administration's 2011 budget request.

"We certainly are grateful for their generosity," Schwartz testified April 6. "However, it comes from someplace; it requires a trade. And that is why each of us has said in our own way that for now, 1.4 [percent] is enough."

The House Armed Services Committee appears ready to endorse a 1.9 percent increase; it is unclear where senators stand on the issue.

In a later interview, Schwartz said, "We're going to have to again look at ourselves and the proportion of dollars that we invest in personnel, and personnel programs and family programs."

He said defense officials must examine "where we might be able to sort of reduce the growth in our personnel costs. I think any strategic leader has to look at that."

He said the services would likely cut benefits to troops and veterans.

"I think that is in the cards," he said.

Analysts said military compensation reform likely will be a tough sell on Capitol Hill for the remainder of this year, with midterm congressional elections coming up in November. Health Care Another primary driver is military health care. No adjustments to health care programs have been made in "half a decade," which must change lest they "continue to eat our lunch," said Gen. James Conway, commandant of the Marine Corps. "Hard choices are going to be necessary."

Navy Adm. Gary Roughead, chief of naval operations, said May 3 that the cost of health care "looms large" and could "cut into procurement."

Adm. Thad Allen, commandant of the Coast Guard, also spoke about health care May 3 at the Navy League conference. He noted he is headed for retirement soon and recently filled out his Tricare Prime paperwork.

For Allen and his wife, one year under that plan will cost "only $469," he said. "At some [point], we're going to have to come to grips with that."

One option to start correcting the problem might be increasing Tricare premiums, Korb said.

"Now, that won't be easy, but Gates might be the one guy with the credibility to pitch it," he said.

Earlier this year, a report by the Washington-based Center for Strategic and Budgetary Assessments said personnel-related bills will keep growing "Health care costs comprise $47 billion of the budget request and are projected to continue to increase by 5 percent to 7 percent annually," the August report said. "Outside of the DoD budget, the cost of veterans' benefits [which includes additional health care expenses] is rising at an even higher rate. The [Obama] administration is requesting $110 billion in funding for veterans, a real increase of 12 percent from FY 2009."

The money will likely come out of weapons development and purchases, the report said.

"If allowed to continue, personnel-related costs will begin to crowd out other parts of the budget, specifically procurement and [research, development, test and evaluation], and will hamper the department's ability to properly equip the force," it said.

A November report prepared by Jim Arkedis of the Washington-based Progressive Policy Institute (PPI) put projected 2010 costs at $59.7 billion: defense health program ($28 billion); military health care ($21 billion); and retiree health benefits ($10.7 billion).

Missed Opportunities? Defense officials say the military is looking hard at the problem. Marine Lt. Gen. John Paxton, director of operations (J-3) for the Joint Staff, said March 26 that Pentagon officials are beginning to take a "hard look" at skyrocketing personnel costs and how to deal with them.

But some analysts say the Pentagon missed an opportunity this year.

"My question is: Why didn't they do this with the [fiscal 2011 defense] budget" the Pentagon sent Congress in February, asked Larry Korb, a former Pentagon official who is an analyst at the Center for American Progress in Washington. Korb dubbed the ticking personnel cost bomb "a failure of leadership at all levels, and for a number of years."

Mackenzie Eaglen, a former Republican Senate defense aide and now a Heritage Foundation analyst, noted that Many problems that plague the nation's health care system "are already eating at the Pentagon's program."

"The real cost of the health care legislation on DoD is that the larger debate did not spark a serious conversation in Congress about how to sustain DoD's exploding and unaffordable health care and retirement bills," she said.

Still other observers note that some lawmakers and analysts expected the 2010 Quadrennial Defense Review to take on the issue and map out a plan for trimming personnel costs, it did not.

Arkedis of the PPI said the recent wars have helped push costs skyward.

"You can't nit-pick the problem away through selective cuts to benefit programs because, first, there's a core constituency of hard-working military members, families and retirees who depend on them," he said. "And second, frankly, it wouldn't solve enough of the problem anyway. The key cost drivers are large-scale military deployments abroad."

To Arkedis, "The moral of the story is that if you want to control personnel costs, you have to be really careful about which wars you fight - they better be the right ones."

During a May 6 breakfast with reporters, Gen. Peter Casey, the Army chief of staff, acknowledged that bigger and bigger personnel costs are a looming issue.

"People ask me all the time, 'Is the Army big enough? How big should the Army be?'" Casey said. "And my response to them is, it needs to be big enough to meet the demands, but it shouldn't be so big that the personnel costs absorb our ability to adequately train and equip and support the Army. And so, that's my challenge, in finding the right balance."

So far, the Army - and its personnel costs - are still growing.

Casey said the Army is "moving" to bring on 15,000 additional soldiers and next month will make a recommendation to Gates on whether to pursue 7,000 beyond that.

http://www.defensenews.com/story.php?i=4617597&c=AME&s=TOP

 

[AirforcePilot]

The top brass wonders why a good majority of us leave the military. A 1.9% raise is an insult to us. It's hard to make the military a career because the pay and benefits are terrible. Maybe it's time for the Pentagon to cut back on many useless programs and take care of the troops. They want us to fight wars but treat us like crap....=sad

 

[duhastmish]

The top brass wonders why a good majority of us leave the military. A 1.9% raise is an insult to us. It's hard to make the military a career because the pay and benefits are terrible. Maybe it's time for the Pentagon to cut back on many useless programs and take care of the troops. They want us to fight wars but treat us like crap....=sad

sir, thats the story of soldier's life,

but i totally agree with you, there are so many programs going on for next generation, which are important for sure, but nowhere as important as soldiers.

American people take great pride in their troops and profession of soldier, government must do something , so that same respect and importance for this profession remains.

i didn't like that coming out of a soldier . there is so much to it .. . .

They want us to fight wars but treat us like crap....Click here to enlarge

cheers.

 

[Armand2REP]

The top brass wonders why a good majority of us leave the military. A 1.9% raise is an insult to us. It's hard to make the military a career because the pay and benefits are terrible. Maybe it's time for the Pentagon to cut back on many useless programs and take care of the troops. They want us to fight wars but treat us like crap....=sad

I agree completely. Problem is your Congress wants it all and the cake too. French MoD had to make the difficult choice of cutting personnel so the budget could be increased to meet pay, pensions, and equipment needs. The sky-rocketing cost of procurement has hurt all countries, especially the US. Now the DoD has the problem of sky-rocketing health care costs. This is not a problem we really have in France and should have been dealt with in US healthcare reform. The only way to provide quality pay and benefits on the current budget is to cut personnel. For every person you cut you can increase the pay and benefits of 50 people. Unless the US is going to cut down on foreign basing, there is no way they can afford the number of personnel they have.

 

[Singh]

Excerpts from the Speech delivered by Secy Gates at Kansas on 8th May

The attacks of September 11th, 2001, opened a gusher of defense spending that nearly doubled the base budget over the last decade, not counting supplemental appropriations for the wars in Iraq and Afghanistan. Which brings us to the situation we face and the choices we have today – as a defense department and as a country. Given America's difficult economic circumstances and parlous fiscal condition, military spending on things large and small can and should expect closer, harsher scrutiny. The gusher has been turned off, and will stay off for a good period of time.

To be sure, changing the way we operate and achieving substantial savings will mean overcoming steep institutional and political challenges – many lying outside the five walls of the Pentagon. For example, in this year's budget submission the Department has asked to end funding for an unnecessary alternative engine for the new Joint Strike Fighter and for more C-17 cargo planes. Study on top of study has shown that an extra fighter engine achieves marginal potential savings but heavy upfront costs – nearly $3 billion worth. Multiple studies also show that the military has ample air-lift capacity to meet all current and feasible future needs. The leadership of the Air Force is clear: they do not need and cannot afford more C-17s. Correspondingly, the Air Force, Marine Corps, and Navy do not want the second F-35 engine. Yet, as we speak, a battle is underway to keep the Congress from putting both of these programs back in the budget – at an unnecessary potential cost to the taxpayers of billions of dollars over the next few years. I have strongly recommended a presidential veto if either program is included in next year's defense budget legislation.

Consider another example. Leaving aside the sacred obligation we have to America's wounded warriors, health-care costs are eating the Defense Department alive, rising from $19 billion a decade ago to roughly $50 billion – roughly the entire foreign affairs and assistance budget of the State Department. The premiums for TRICARE, the military health insurance program, have not risen since the program was founded more than a decade ago. Many working age military retirees – who are earning full-time salaries on top of their full military pensions – are opting for TRICARE even though they could get health coverage through their employer, with the taxpayer picking up most of the tab. In recent years the Department has attempted modest increases in premiums and co-pays to help bring costs under control, but has been met with a furious response from the Congress and veterans groups. The proposals routinely die an ignominious death on Capitol Hill.


The resistance to dealing with TRICARE stems from an admirable sentiment: to take good care of our troops, their families, and veterans – especially those who have sacrificed and suffered on the battlefield. This same sentiment motivates the congress routinely to add an extra half percent to the pay raise that the Department requests each year. Furthermore, the all-volunteer force, which has been a brilliant success in terms of performance, is a group that is older, more likely to have spouses and children, and thus far costlier to recruit, retain, house, and care for than the Eisenhower-era military that relied on the draft of young single men to fill out its ranks.

For the better part of two years I have focused on the Pentagon's major weapons programs – to make sure we are buying the right things in the right quantities. Last year, the Department made more than 30 tough choices in this area, cancelling or curtailing major weapons systems that were either performing poorly or excess to real world needs – about $330 billion dollars worth as measured over the life of the terminated programs. We also began to overhaul the Pentagon's processes for acquisitions and contracting.

Earlier this week at the Navy League, I observed that fiscal realities will preclude the Navy from reaching its goal of 313 ships if each ship is over budget and costs billions of dollars. Without exercising real diligence, if nature takes its course, major weapons programs will devolve into pursuing the limits of what technology will bear without regard to cost or what a real world enemy can do – a process that over the past two decades has led to $20 million howitzers, $2 billion bombers, and 3 to 6 billion dollar destroyers. And when costs soar, the number of ships and planes the military can buy drops accordingly. For example, the Navy wanted 32 of the next generation destroyer – the DDG-1000; because of skyrocketing costs, we will build three. The Air Force wanted 132 B-2 bombers; at $2 billion each, we built 20. This is unsustainable.


Consider the Department's spending on operations and maintenance, a broad category that encompasses about $200 billion worth of the day-to-day activities of the military – from flight training to mowing the grass. Over the last decade, spending in this area – not counting expenses directly related to the wars – has about doubled, with large increases in administrative and infrastructure support. At the same time, the department's spending on contract services – excluding the Iraq and Afghanistan theaters – has grown by some $23 billion. The one area of real decline in overhead was in the area where we actually needed it: full-time contracting professionals, whose numbers plunged from 26,000 to about 9,000. We ended up with contractors supervising other contractors – with predictable results.

Another category ripe for scrutiny should be overhead – all the activity and bureaucracy that supports the military mission. According to an estimate by the Defense Business Board, overhead, broadly defined, makes up roughly 40 percent of the Department's budget.

Almost a decade ago, Secretary Rumsfeld lamented that there were 17 levels of staff between him and a line officer. The Defense Business Board recently estimated that in some cases the gap between me and an action officer may be as high as 30 layers.

Two decades after the end of the Cold War led to steep cuts in U.S. forces in Europe, our military still has more than 40 generals, admirals, or civilian equivalents based on the continent. Yet we scold our allies over the bloat in NATO headquarters.

Consider that a request for a dog-handling team in Afghanistan – or for any other unit – has to go through no fewer than five four-star headquarters in order to be processed, validated, and eventually dealt with.

A telling example of how difficult it is to make even modest adjustments. The Department commissioned a study a few years ago to assess the flag-officer requirements of the services. The study identified 37 positions – out of more than 1,300 active and reserve billets – that could be reasonably converted to a lower rank. None were downgraded.

Going forward, some questions to be considered should be:

* How many of our headquarters and secretariats are primarily in the business of reporting to or supervising other headquarters and secretariats, as opposed to overseeing activity related to real-world needs and missions?
* How many executive or flag-officer billets could be converted to a lower grade, with a cascading effect downward – where two-star deputies become one-star deputies, assistant secretaries become deputy assistant secretaries – to create a flatter, more effective, and less costly organization?
* How many commands or organizations are conducting repetitive or overlapping functions – whether in logistics, intelligence, policy, or anything else – and could be combined or eliminated altogether?


In considering these questions, we have to be mindful of the iron law of bureaucracies – that the definition of essential work expands proportionally with the seniority of the person in charge and the quantity of time and staff available – with 50-page power point briefings being one result.

Finally, this Department's approach to requirements must change. Before making claims of requirements not being met or alleged "gaps" – in ships, tactical fighters, personnel, or anything else – we need to evaluate the criteria upon which requirements are based and the wider real world context. For example, should we really be up in arms over a temporary projected shortfall of about 100 Navy and Marine strike fighters relative to the number of carrier wings, when America's military possesses more than 3,200 tactical combat aircraft of all kinds? Does the number of warships we have and are building really put America at risk when the U.S. battle fleet is larger than the next 13 navies combined, 11 of which belong to allies and partners? Is it a dire threat that by 2020 the United States will have only 20 times more advanced stealth fighters than China?


http://www.defense.gov/speeches/speech.aspx?speechid=1467

 

[Armand2REP]

Never could understand the need for a second JSF engine. Only reason to keep is to satisfy the Brits, it is a JV with Rolls Royce. 5 years behind the P&W and not proven. Trying to appease the UK is not the option here. We all know they are going to cut F-35 orders, simple fact is they are broke.