This chartbook from the Bipartisan Policy Center and the American Enterprise Institute (AEI) examines how spending on the all-volunteer force has changed over time. With near-sequestration levels of defense spending likely for the foreseeable future, policymakers face tough budgetary and strategic choices regarding military personnel compensation, force structure, and readiness. We intend for this project to help decision makers and the public better understand the context underpinning this debate.
Throughout this chartbook, compensation is used as an umbrella term to include cash compensation such as basic pay, in-kind benefits such as health care, and deferred benefits such as retirement pay. All figures are in 2012 dollars and do not include Overseas Contingency Operations (OCO) or personnel funded with OCO, unless otherwise noted. Pay and pay-like compensation includes both basic pay for service members and additional types of compensation that often appear in service members’ paychecks, including incentive or hazard pay, housing and subsistence allowances, transportation benefits, and some education benefits not funded by the Department of Defense Education Activity. This category also includes some administrative costs.
Health care spending includes Tricare costs for both active duty service members and working-age (under 65) retirees. These figures do not include the cost of care provided by the Veterans Health Administration. Retirement costs include contributions to the Military Retirement Fund and the Medicare-Eligible Retiree Health Care Fund and represent current accruals for benefits to be paid during the retirement of current service members.