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 Feb. 24 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.

Sequestration Opponents

Representatives Adam Smith, a Washington Democrat, and Randy Forbes, a Virginia Republican -- two senior members of the House Armed Services Committee -- today called for the reversal of the automatic budget reductions. Those cuts are scheduled take full effect again in 2016.

Forbes, the chairman of the House Armed Services Seapower subcommittee, said at today’s conference that the defense budget needs to be increased to thwart national security threats, from the Middle East to Venezuela.

“We need a bigger budget,” he said.

Forbes acknowledged the political difficulty in the Republican-led House of preventing even further reductions in the defense budget. He said defense supporters need to make the case for national security and defense technology to small-government Republicans who want to cut the federal budget.

Smith, the top Democrat on the Armed Services committee, said readiness and preparation for future wars will remain constrained without some changes to increasingly costly military benefits.

‘Hollow Force’

“That is what leads to a hollow force,” Smith said.

Hagel’s proposals to slow compensation costs included the reduced housing allowance and cuts in subsidies for commissaries on military bases. He 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, “we need to be prepared where necessary to contain them.”

Advice to Industry

Asked what the defense industry can do to support the Pentagon during a time of shrinking budgets, Winnefeld said, “Keep the innovations coming.”

“We are going to protect” research and development money “as best we can,” Winnefeld said. “We’ve always tried to do that. It’s going to come down a little bit but disproportionately less than compared to some of the other areas -- so keep the good ideas coming.”

The Pentagon’s proposed addition of $1 billion to bankroll an Air Force program to develop new aircraft engine technology is an example, said Winnefeld. “It does two things for us,” the admiral said, “getting us a more powerful engine” and protecting the engine industrial base.

United Technologies Corp.’s Pratt and Whitney unit, General Electric Co. and Rolls Royce Holdings Plc are the primary U.S. makers of military engines.

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