Military Compensation Savings About 10 Percent of Cuts

Defense Secretary Chuck Hagel’s proposed reductions in military compensation, such as housing allowances, amount to only about 10 percent of cuts being sought over the next five years, the No. 2 U.S. military official said.

“These savings are gradual, measured and fair,” Admiral James Winnefeld, the vice chairman of the Joint Chiefs of Staff, said today at Bloomberg Government’s Defense Transformation conference in Washington.

“The remaining 90 percent of savings come from” spending on weapons buying and readiness and from reductions in force structure, led by trimming the Army’s ranks, Winnefeld said. “So we are taking a lot more risk there.”

The five-year plan that Hagel presented on March 4 is about $130 billion less than projected last year -- even before automatic cuts known as sequestration, the admiral said in an interview. Compensation savings account for about $12 billion over that period, with about $1 billion in 2015, he said.

Hagel outlined a fiscal 2015 budget intended to achieve the $45 billion in savings needed to stay within a $496 billion cap imposed by spending limits revised under a congressional budget deal in December.

Members of Congress indicated they will challenge his efforts to reduce the Army’s ranks by 6 percent to about 490,000 personnel by 2015 from about 522,000 today. Congress also has regularly resisted efforts to cut benefits to military personnel.

Hagel’s proposals to slow compensation costs included the reduced housing allowance and cuts in subsidies for commissaries on military bases. Hagel said his recommendations “favor a smaller and more capable force” that “can defeat more technologically advanced adversaries.”

At the conference today, a former Republican senator emphasized the need to counter a growing challenge from China.

Citing an “astounding rise in Chinese power,” Jim Talent, a fellow at the Heritage Foundation in Washington, said that “we need to be prepared where necessary to contain them.”

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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