CBO Releases Report on Costs of Pay and Benefits in the U.S. Military

November 14, 2012

In its fiscal year 2013 budget request, the Department of Defense (DoD) requested about $150 billion to fund the pay and benefits of current and retired members of the military. That amount is more than one-quarter of DoD’s total base budget request (the request for all funding other than for military operations in Afghanistan and related activities).

Today CBO released a report, Costs of Military Pay and Benefits in the Defense Budget, that describes the elements of military compensation and their costs in the 2013 budget request. The report summarizes key changes in military pay and benefits over the past decade, provides projections of compensation costs over the next decade, and discusses some policy levers that could be used to control those costs.

The report shows that:

  • About 1.4 million active-duty military personnel and about 1.1 million members of the reserves and National Guard receive cash compensation under DoD’s budget, and military health benefits are available to nearly 10 million people: active-duty military personnel and their eligible family members, retired military personnel and their eligible family members, survivors of service members who die while on active duty, and certain members of the reserves and National Guard. Over the past decade, the costs per active-duty service member in DoD’s military personnel account (which funds cash compensation and the accrual payments for retirees’ pensions and some of their future health care) and the total costs for the military health care program have increased consistently, even with an adjustment for inflation in the general economy.
  • If all of the provisions of the Budget Control Act of 2011 are enforced, including sequestration (the automatic cancellation of a portion of budgetary resources), DoD’s funding will be about 11 percent less than the department requested for this year.
  • Several approaches could be taken to curtail spending on military compensation, such as restricting basic pay (as reflected in DoD’s plans submitted to the Congress in April 2012), changing the current retirement system, or increasing health care enrollment fees, deductibles, or copayments.

This report was prepared by Matthew Goldberg of CBO’s National Security Division.