Ideas. Action. Results.

Military Costs Increased by 42 Percent Over the Past Decade

Friday, July 18, 2014

Washington, D.C. – The Bipartisan Policy Center (BPC) and the American Enterprise Institute (AEI) released a chartbook today detailing the growth in spending on military personnel since 2001. The new explanatory resource shows that per capita personnel costs paid by the Department of Defense – including pay and health, retirement and other benefits – increased by 42 percent between 2001 and 2012 after accounting for inflation.

The data suggests that unless modernization of compensation and benefits happens soon, the only way to meet the spending caps set in the Budget Control Act of 2011 will be to continue to shrink the armed forces or cut other essential portions of the defense budget. The costs of inaction will harm future service members and their families by depriving them of the world’s best training, equipment and leadership.

Specific takeaways:

  • Compensation per active duty service member grew from $88,000 to $125,000 between 2001 and 2012 (in 2012 dollars).
  • About 40 percent of service member compensation is in the form of non-cash and deferred benefits, including retirement, healthcare, education, subsidized shopping and more.
  • Aggregate retirement and healthcare costs grew particularly quickly – by 107 and 74 percent respectively – between 2001 and 2012. Pay and pay-like compensation made up most of the dollar amount of the increase.
  • Additional pay-like compensation that is often received in cash, like housing and subsistence allowances, transportation benefits and incentive and hazard pay grew twice as fast as basic pay from 2001 to 2012.
  • In total, approximately one-third of the defense budget has funded personnel since 1980, but there were only about 1.4 active duty service members in 2012 compared to 2 million in 1980.
  • Pension costs show up elsewhere in the federal budget. For example, the majority of military pension costs are now paid outside of the budget of the Department of Defense.

View the chartbook here.

Media Availability: To speak with someone from BPC, please contact at [email protected]. Requests for AEI should be directed to AEI Media Service [http://][email protected]] (202) 862-5829.

Steve Bell, Senior Director of Economic Policy at BPC is available to answer questions about the chartbook. Bell served on the staff of U.S. Senator Pete V. Domenici (R-NM) from 1974 to 1986 and then again from 1996 to 2009 and has previously published work on defense budget issues.
[Bio] [Twitter: @SteveBellDC]

Mackenzie Eaglen, Resident Fellow at the Marilyn Ware Center for Security Studies at AEI is available to answer questions about the chartbook. Eaglen has worked on defense issues in the U.S. Congress, both House and Senate, and at the Pentagon in the Office of the Secretary of Defense and on the Joint Staff. She specializes in defense strategy, budget, military readiness and the defense industrial base.
[Bio] [Twitter: @MEaglen]

[View and share the chartbook here]