Increasingly costly benefits for U.S. troops, if left unchecked, would force the military to shed so many war fighters that it would struggle to perform even its simplest missions.
The massive cost of America's all-volunteer military is unsustainable, states a blunt report released by a Washington, D.C.-based think tank Thursday.
"Over the past decade, the cost per person in the active duty force increased by 46 percent," the Center for Strategic and Budgetary Studies concludes.
When those rising personnel bills are placed in context of the entire Defense Department spending picture, analysts arrived at a startling conclusion.
"If personnel costs continue growing at that rate and the overall defense budget remains flat with inflation, military personnel costs will consume the entire defense budget by 2039," CSBA finds.
The military's personnel system and compensation scheme were installed before Washington shifted to an all-volunteer force in the early 1970s. Despite warnings about costs back then, a major overhaul never has been conducted—largely due to political concerns about appearances of disrespecting members of the armed services.
The Pentagon spends about 75 percent of its $500 billion budget on personnel costs.
Unless executive branch officials and lawmakers put aside such fears relatively soon, CSBA study author Todd Harrison says Pentagon leaders will have few options but to cut large numbers of forces to save money.
"You would end up with a military too small for even basic missions," Harrison told a standing room-only audience in downtown Washington on Thursday. "So something's got to give."
Talk of cost-cutting changes to the Pentagon's so-called "people programs" began bubbling around 2008. That's when the first signs appeared that the post-9/11 military spending spree, as former Defense Secretary Robert Gates calls it, was ending.
Another think tank, the Bipartisan Policy Center, issued its own report last month that concludes the Pentagon soon will spend more on health care and other benefits for former military personnel than on troops in uniform today.
But no substantive changes to bring down costs—other than plans to shrink the Army and Marine Corps to around pre-9/11 levels—have been made.
The talk about military personnel reform comes as the Pentagon faces shrinking annual budgets. Some analysts and senior defense officials say if the costs of troops' pay, retirement and healthcare aren't pared soon, the Pentagon will run out of monies to buy combat hardware.
Annual military retirement payments alone are expected to more than double by 2035, growing from $52.2 billion in 2011 to $116.9 billion, according to the influential Defense Business Board, which reports to the defense secretary.
The department's retirement benefits bill is projected to swell after 2014.
And then there's healthcare.
Harrison notes Congress recently had to pass a special $10 billion spending measure to cover unexpected healthcare bills stemming from veterans' Agent Orange-caused medical problems. Agent Orange was a toxic chemical mixture the U.S. military used to defoliate jungle battlefields during the Vietnam War.
While the department's healthcare costs have risen due to the thousands of American troops injured during the Iraq and Afghanistan wars, as they age their care costs will only rise, Harrison says. And that will create an ever bigger bill for the Pentagon.
CSBA suggests the Defense Department use a similar approach to the one that drove its study: Find out which benefits programs current and former troops and their dependents like best and which ones they like least. Then, shift funds to the most-preferred ones.
The idea, as CSBA's study puts it, is making the compensation system "more efficient at delivering value to service members."
For instance, DOD could move funds from lesser-valued programs like TRICARE for Life to ones that troops, veterans and their dependents most value, the think tanks says. TRICARE is the name of the military's healthcare system.
The think tank posted an online survey and got over 2,600 responses from active and retired military personnel and their dependents. Harrison notes the Pentagon could do a jumbo-sized survey.
One notable finding from the CSBA survey is 80 percent of those surveyed "place a high value" on basic salaries. Over 80 percent say they would trade certain retirement policy changes for a 1 percent pay increase right now, according to CSBA's data.
In an example of the kind of opposition facing the prospect of a radical personnel system overhaul, the Veterans of Foreign Wars has denounced CSBA's work.
"Our military men and women have earned these benefits through their honorable wartime service over the last decade, and the VFW is insulted that these same men and women would now be asked to put their heads in a noose by tacitly admitting cuts to their earned benefits are somehow acceptable," VFW Legislative Director Ray Kelley says.
"The VFW does not accept the notion that cuts to personnel programs and benefits are the only viable solution," says Kelly. "We have an obligation to provide for our war-fighters and their loved ones, and the VFW will not let Congress or the Pentagon shirk that obligation."
John T. Bennett covers national security and foreign policy for U.S. News & World Report. You can contact him at email@example.com or follow him on Twitter.
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