You will be redirected to the page you want to view in  seconds.

CBO: Pentagon personnel costs will spiral

Jul. 12, 2012 - 01:19PM   |  
By RICK MAZE   |   Comments

The Defense Department’s average costs to maintain a service member on active duty has jumped 50 percent since 2001, to $158,000 per year, with even faster growth predicted in the future, according to a Congressional Budget Office report that looks at long-range implications of the pending 2013 defense budget.

Personnel costs have been climbing at a rate of about $4,000 per person per year since 2001, according to the report released Wednesday by the nonpartisan budget office but are expected to rise by an average of $4,700 a year over the next several years, despite Defense Department efforts to hold down costs.

By 2017, CBO forecasts costs will be $170,000 per person, and by 2030, $215,000 per person.

These expenses are greater than DoD has budgeted for. Moreover, the congressional report predicts some of DoD’s proposed offsetting cost-savings initiatives won’t happen and that per-person costs will rise as the force shrinks.

One prediction in the report is that a Pentagon plan to cap military pay raises beginning in 2015 will not happen. CBO “assumes” pay and benefits expenses will rise from $201 billion in 2013 to $211 billion in 2017 because the services no longer will be able to tuck away those costs in the wartime contingency budget and because pay raises will end up being “higher than DoD proposes.”

For example, the Pentagon proposes basic pay increases of 0.5 percent in 2015, 1 percent in 2016 and 1.5 percent in 2017 — all lower than the projected growth in average private-sector wages of 3.3 percent in 2015 and 3.5 percent in 2016 and 2017.

CBO expects Congress will provide military raises that match the private sector.

By 2030, CBO expects the cost of pay and benefits to rise to $258 billion, in part because of average pay increases of 1.5 percent a year, according to the forecast.

Similarly, CBO assumes that Congress will prevent the Defense Department from raising fees for Tricare health coverage for military retirees and their families. This is one reason the report projects 6 percent growth per year in health care costs while the Pentagon’s five-year budget projects increases of 2.6 percent per year.

CBO estimates the $47 billion military health care budget for 2013 will jump to $65 billion by 2017 and to $95 billion by 2030.

More In Pay & Benefits

More Headlines