Congress rejected Pentagon plans to control cost growth
While the Pentagon has proposed ways to bring that cost growth under control, they were rejected by Congress. Harrison said that’s because the proposals were politically too tough to swallow — they were all about cutting benefits, not designing a smarter, more cost effective compensation system.
He cited the example of TRICARE for life, a supplemental Medicare benefit Congress mandated in 2001 for military retirees over age 65. To fund payouts for future retirees, DoD has to set aside an average of $5,500 each year for every member of the uniformed services who is currently serving.
“In our study, we went out and surveyed service members, and even if you only look at the people who are virtually guaranteed to get this benefit, they don’t value it as much as $5,500 in cash,” he said. “So why don’t we just give them cash? You could actually give them less cash, pocket the difference, and they’d still be just as happy. So why are we wasting money on forms of compensation that the people who are getting it don’t value?”
Another big contributor to DoD’s overhead expenses is driven by its inventory of military bases. Last year, it asked for permission to undertake another round of base closures through the BRAC process, but there too, Congress said no. Defense officials have signaled they continue to believe the military services have much more infrastructure than can be justified by current military operations and end strength, and plan to continue to ask lawmakers for permission to shed some of that excess real estate.
Harrison said DoD’s last proposal to close bases was not serious, since it proposed no funding to actually implement the BRAC process, but he said further closures are needed nonetheless.
“By DoD’s own estimates, they had 24 percent excess capacity before the last round of base closures. The 2005 round of BRAC only reduced their infrastructure by 3 percent, so they still have 21 percent excess capacity in their bases and facilities. No business in America would be satisfied with operating for a decade with 21 percent more infrastructure than it needed. The problem here is, of course, purely political,” Harrison said.
Ultimately, he said DoD can’t do much of anything to reduce its structural cost drivers without congressional consent. But he said the department needs to start making realistic proposals to lawmakers about what the size and shape of the military could be if the spending caps do stay in place, rather than simply proposing budgets that ignore them.
“Give Congress the plan. Show them, ‘If we’ve got to take this level of cuts, here’s the smartest way we could do it, and here’s the force that would result from that if you give us the flexibility to make some structural reforms.’ Then present an alternative to them: ‘If you don’t give us the flexibility to reform, here’s the best we can do. It will be a smaller, less capable force.’ They need to show Congress the options and make this a fair debate,” he said.