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Why pressure is mounting to kill your next raise

Feb. 3, 2011 - 10:40AM   |   Last Updated: Feb. 3, 2011 - 10:40AM  |  

The modest 1.6 percent military pay raise expected in 2012 could be threatened by a key lawmaker's ploy to keep federal civilians from having their pay frozen for a second year.

Rep. Steny Hoyer of Maryland, the second-ranking Democrat in the House of Representatives, commissioned a pay comparability analysis designed to underscore the unfairness of a two-year pay freeze enacted for federal workers last year. Hoyer's district is close to Washington, D.C., and is home to many federal workers.

But the results of the analysis by the nonpartisan Congressional Budget Office, released Jan. 20, could end up backfiring on troops.

Instead of helping federal civilians get a raise in 2012, some military and veterans groups are worried the report from the CBO could fuel efforts to kill the 1.6 percent military raise that would take effect next Jan. 1 to keep pace with average private-sector wage growth.

At issue is the bottom line of the analysis: Cash compensation for military personnel basic pay, housing and food allowances, and the tax advantage of those tax-free allowances "exceeds the salaries of most federal civilians of comparable education and work experience."

For enlisted members with 10 years of service, median annual cash compensation the point at which half earn more and half earn less is $64,000, while the figure for comparable federal civilians is $48,000, according to the CBO analysis sent to House and Senate leaders and key committee chairmen involved in defense and budget issues.

For military officers with 10 years of service, median annual cash compensation is about $103,000, while it's about $70,000 for comparable civilians.

The analysis noted that the gap is even bigger if military noncash benefits and deferred compensation are included.

Calls for a military pay freeze

Military and veterans groups dispute some of the details in the analysis, but they are concerned that lawmakers talking of cutting $100 billion or more in federal spending this year might see the report as justification to freeze military pay or reduce the size of the raise to less than the 1.6 percent needed to keep pace with average private-sector increases.

A 1.6 percent raise would cost about $1 billion in the first year, but that costs would grow as the value of the raise factors into military retirement pay over time.

They may have reason for concern. In late November, when Obama proposed a pay freeze for federal civilians but not service members as a budget-cutting move, Hoyer made it very clear he thinks that is the wrong approach.

Hoyer, one of the strongest advocates for federal worker pay and benefits in Congress, said Nov. 29 that "significantly more savings" could be realized if the "sacrifice [is] shared between federal civilian and military personnel."

He said the only exemptions from a pay freeze should be for military and civilian workers in combat zones.

Those comments came just two weeks after a presidential commission created to study ways to cut the federal budget deficit issued initial recommendations that included a call for a three-year freeze on military basic pay, housing and food allowances.

Hoyer's office declined to comment on the specifics of the new CBO analysis, or where he might go with that information from here. Maureen Breach, a spokeswoman for Hoyer, said Jan. 26 that the report "is part of an ongoing effort by Congressman Hoyer to assemble information on the state of federal and military pay. The congressman has always been and remains dedicated to our military and deeply appreciative of their sacrifice."

Troops are well-paid

In the CBO analysis, enlisted troops were compared with civilians with high school diplomas and some college credits, while officers were stacked up against federal workers with college degrees. In that scenario, typical enlisted members and officers are compensated better than three-fourths of their federal civilian counterparts.

The report cautioned that such direct comparisons are difficult because the military pay package is complex. For example, the CBO analysis did not include danger pay, which typically runs $150 to $225 a month for some deployed troops. It also did not consider retention bonuses, which have reached up to $90,000 for some service members and total some $6 billion across the entire force.

The analysis also did not try to quantify the noncash benefits that troops receive. Previous CBO studies suggest that the total of all noncash benefits health care, recreation facilities, commissaries and exchanges, child care and more would roughly double the real value of military pay.

Representatives of military advocacy groups take issue with aspects of the CBO analysis.

Steve Strobridge, government relations director for the Military Officers Association of America, said several of the CBO's assumptions make military pay seem larger than it is.

For example, there is an assumption that the value of living in the barracks and eating free in on-base dining halls is worth $15,000 a year, he said.

Also, in its analysis of pay for military officers and comparable federal civilians, CBO excluded feds with advanced college degrees but included officers with such degrees, he said.

"I don't think this is a fair comparison, but I'm concerned about the underlying message that takes military service for granted," Strobridge said.

He said he would like to think that Congress and the Obama administration would protect military pay and benefits from cuts, but he is not confident.

"I would feel better if I heard someone come out and say, ‘We are not going to do this,' but I have not heard that," he said, noting that while the Obama administration clearly exempted the military from a 2011 federal pay freeze, it has not said what it plans to do with the 2012 raise.

"The idea we might freeze military pay when we have been at war for 10 years with no end in sight is incongruous," Strobridge said, but added: "There is such a rush to cut the budget that I don't know what to think."

Christina Roof, legislative director of the veterans service organization AMVETS, said the CBO analysis "could be a threat to the 2012 raise if people don't read it all the way through and don't understand the limitations."

"Pay in the military is good right now, but that doesn't mean we ought to be eliminating or reducing raises," said retired Army Maj. Gen. William Matz Jr., president of the National Association for Uniformed Services. "We need to be very concerned that this report leads people to think freezing military pay is a good idea."

Budget-cutting fervor

Discussion about the size of the military raise comes at a time when Congress is clearly intent on trying to cut spending.

House Republicans approved a nonbinding resolution Jan. 25 that would roll back federal spending to 2008 levels. Their plan exempts the defense budget from what amounts to about $100 billion in cuts in the 2011 budget.

The same day, Rep. Pete Stark, D-Calif., unveiled his own budget-cutting plan that puts the Pentagon in the mix, although he would specifically exclude military pay accounts. He said his plan would trim about $182 billion in spending.

Congressional aides, speaking on the condition of anonymity, said they think it is unlikely Congress would vote specifically to deny troops a raise.

But they said they could see the military somehow being folded into a broader proposal that might, for example, cut pay for lawmakers by up to 10 percent, reduce congressional staff and possibly order furloughs for federal workers.

The debt commission report late last year is one of several studies in recent years that have mentioned reducing or freezing military pay as one way among many to reduce spending.

Larry Korb, a former manpower chief at the Pentagon and now a senior fellow at the Center for American Progress think tank, said a "rational argument" could be made that military pay is above where it needs to be.

"But it's political dynamite," he said. "I don't think anyone will touch it."

Politics aside, however, a military pay freeze likely would not harm the Defense Department, said Todd Harrison of the Center for Strategic and Budgetary Assessments, who has analyzed various proposals to cut defense spending.

"Given the fact that military and DoD civilian pay raises have exceeded raises in the private sector each year for much of the past decade, and recruiting and retention are robust due to high unemployment in the private sector, a temporary freeze in non-combat compensation would not likely have an adverse effect on the military," Harrison said in a November report.

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