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DoD Adviser: Pay, Retirement Systems Outdated, Too Costly

Sep. 9, 2010 - 06:00AM   |  
By JOHN T. BENNETT   |   Comments
Arnold Punaro
Arnold Punaro (SGT. JIM GREENHILL / ARMY)

The U.S. military must overhaul and reduce the cost of paying its people, funding their retirements and underwriting their health care, a top Pentagon adviser said.

Arnold Punaro said Defense Department budgeteers are already taking aim at weapons programs and operations and maintenance accounts. But it was regarding the military's skyrocketing personnel costs that the retired Marine Corps general and former senior SAIC executive sounded the loudest alarm during a Sept. 8 presentation at the Center for Strategic and International Studies, a Washington think tank.

Punaro, a Defense Business Board senior fellow, led a DBB task force that in July recommended that Defense Secretary Robert Gates close U.S. Joint Forces Command. Weeks later, Gates proposed doing just that.

Punaro called the military's pension setup a "pre-volunteer-force retirement system."

"We know that it is not sustainable to pay people for 60 years to serve for 20," the former Marine Corps Reserve director said.

He said the Pentagon spends $46 billion a year on retiree pay, not including health care.

Among other problems, the current pay and pension system encourages people to leave the service after 20 years, when many reach their highest level of proficiency, Punaro said.

Many go on to take high-paying defense sector jobs while collecting a DoD pension and enjoying discounted military retiree health plans, he said.

Punaro called that arrangement "outdated," saying it is the kind of "middle-class entitlement program ... not food stamps" that is threatening not just the U.S. defense budget but America's fiscal outlook.

Never one to pull punches, Punaro criticized sitting military leaders for acknowledging but doing nothing about the need for changes to the pay/compensation, retirement and health care systems.

He also pinged military advocacy groups, saying those organizations' primary objective has become ensuring the executive and legislative branches make no changes to the military's pay and benefits policies.

People are getting more expensive. Punaro estimates "35 percent of all DoD spending" goes toward personnel; he told the forum the Pentagon says it's closer to "50 percent."

Internal and external budget pressures likely will bring changes to the Pentagon's force structure, John Hamre, CSIS president and CEO, said during the event.

"We are at a tipping point," he said.

History shows that when the defense budget is a target for cuts "that we tend to break the force," said Hamre, deputy defense secretary during the Clinton administration.

Pentagon leaders are pushing toward a goal of freeing up $100 billion over five years and shifting those monies to hardware programs.

But is that enough? More and more experts say no.

Harlan Ullman, a senior adviser at the Atlantic Council and a distinguished senior fellow at National Defense University, said he projects that DoD is "over-programmed or under-budgeted by one-third."

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