Discretionary Spending

Function 050 - National Defense

Reduce the Basic Allowance for Housing to 80 Percent of Average Housing Costs

CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.

Billions of Dollars 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021–
Change in Discretionary Spending  
  Budget authority 0 -0.1 -0.2 -0.6 -1.0 -1.5 -2.0 -2.6 -3.2 -3.8 -1.9 -15.0
  Outlays 0 -0.1 -0.2 -0.6 -1.0 -1.5 -2.0 -2.6 -3.1 -3.7 -1.9 -14.8
Change in Mandatory Outlays 0 * -0.1 -0.1 -0.3 -0.4 -0.5 -0.8 -0.7 -1.0 -0.4 -3.8

This option would take effect in January 2022.
* = between −$50 million and zero.

The Department of Defense provides assistance to eligible personnel and their families to ensure they have access to affordable and quality housing. If government-owned military housing is not available (which is typically the case because it is very limited), service members are provided a Basic Allowance for Housing (BAH) to offset most of their costs for rent and utilities. Although initially BAH was set to cover about 80 percent of the costs for rent and utilities, it now covers 95 percent of average costs.

This option would return BAH to its original level by reducing it by 1.7 percentage points each January for nine years. (To minimize disruptions for service members currently in private housing, BAH would not change until they moved.) As a result, by 2030, BAH would once again cover 80 percent of rental and utility costs. Because the housing benefit that the Department of Veterans Affairs (VA) provides as part of the Post-9/11 GI Bill is tied to BAH rates, this option would also reduce mandatory VA spending.