Rising compensation costs were a major driver of growth in the defense budget from 2000 to 2014, according to a new report by the Congressional Budget Office (CBO).
Budget authority — the obligations a federal agency can incur in a fiscal year — for the defense base budget increased 31 percent in inflation-adjusted terms over the last 14 years. In 2014 dollars, that budget grew from $385 billion in 2000 to $502 billion in the fiscal year that ended in September.
Nearly half the growth came from compensation for military personnel, including basic pay, retirement benefits and health care. Compensation for civilian employees also increased.
Spending on defense health programs almost doubled between 2000 and 2014. A key factor: retirees switching to military insurance because of its low premiums and out-of-pocket expenses.
The Pentagon has repeatedly sought to curb compensation costs. Like his predecessors, outgoing Secretary of Defense Chuck Hagel has sought smaller pay increases and changes so that working-age retirees would pay more of their health costs.
Unfortunately, Congress has repeatedly rejected these proposals. To prevent compensation costs from crowding out other defense priorities, lawmakers should work with military leaders to make reasonable changes to pay and health care benefits.
Growth in the Military Budget From 2000 to 2014 (CBO)
Trends in Military Compensation (Bipartisan Policy Center)
CBO Raises Concerns About Defense Spending Plan (Concord Coalition)