When many progressives hear that sequestration is forcing cuts to the defense budget, we cheer. After all, who doesn't want to see the Department of Defense better manage their money and do away with wasteful spending? It's a worthy goal of a department that has yet to finish
a true audit of all it spends.
But one thing is becoming increasingly clear. In President Obama's proposed 2015 budget, expenditures at the Department of Defense actually increase while overall compensation to service members will decrease, even while the "Opportunity, Growth, and Security Initiative" attempts to relieve some of the harmful effects of sequestration.
In this piece, I want to address only a single cut to military families, the Basic Allowance for Housing (BAH), though four harmful cuts have been proposed. For those of you unfamiliar with military jargon, I promise to explain this in a readable and approachable way! And the truth is, we need civilian eyes on this... without your help, it will be very hard for such a small community to convince Congress on our own. If you truly support our sailors, soldiers, airmen and Marines (and their families), irregardless of your stance on the wars, then we need your voice more than ever.
When the Department of Defense says they are going to cut our housing allowance, it is like a civilian employer saying they are going to cut your salary. Because of the way military service members receive compensation, many civilians believe that the housing allowance is an extra, a bonus. But when we compare the difference between military and civilian pay, we take into account the allowances like housing. For all intents and purposes, the Basic Allowance for Housing is a part of a service member's salary and it's been a long hard fight to bring it to it's current level:
The current BAH program that pays for 100 percent of rental housing expenses — based on local market data — dates to 2005 and is a high-water mark for housing allowance fluctuations that date back decades.
In the 1980s, the payment known as Basic Allowance for Quarters, or BAQ, was intended to cover about 65 percent of total average rental costs. In the 1990s, the out-of-pocket threshold drifted upward to about 80 percent.
And at the turn of the millennium, amid concerns about retention and lagging military compensation, Congress passed a law creating the modern BAH system. Over the next five years, average payments rose, in theory, to cover 100 percent of average rental housing costs for all troops in all locations.
http://www.navytimes.com/... ; emphasis by the author.
The current proposal to save the government money is to shift 5% of the rental costs back to the military member. It's interesting that just as the military compensation package is approaching equity with civilian pay (
2.9% gap) that the government decides they are paying too much. It's like we're stepping back in time. We've watched our government
play this game before:
...a pay gap steadily grew during the Reagan administration because of pay caps that followed huge military raises of 11.7 percent in 1981 and 14.3 percent in 1982.
By the late 1990s, the gap had grown to 13.5 percent, leading Congress to approve 11 straight years of military raises that were at least half a percentage point higher than the average annual ECI [Employment Cost Index] increase.
It's a typical politician's game. Cutting a 'benefit' that sounds like it's an 'extra' should play well to the majority of civilians that are paying attention. After all, how many civilians have their housing paid for, right?
And then only cutting 5% should sound ever so reasonable. I mean, 5% is a pittance:
Secretary of Defense Chuck Hagel, in comments made over the summer, raised the possibility of "changing how the basic allowance for housing is calculated, so that individuals are asked to pay a little more of their own housing costs."
http://online.wsj.com/...
If we were only talking about the Admirals and the Generals, I might understand where this kind of talk could convince many civilians that the cut is a reasonable one. But we're not. We're talking about our junior enlisted troops as well:
For example, BAH for junior enlisted troops can amount to 30 percent to 50 percent of total monthly pay, compared to officers whose housing allowance may make up about 15 percent to 30 percent of their pay.
http://www.navytimes.com/...
So that brings us back to that 5% cut in BAH. What would that mean for a family living near DailyKos headquarters? A married E-4 (Corporal, Petty Officer Third Class, Airman First Class or a Lance Corporal) having served about 3 years and living in Oakland would lose $126.25 a month or $1,521 a year. That same family has a 30% likelihood that the spouse is unemployed. Of the spouses that are employed, there is a 90% likelihood that they are under-employed. Both circumstances increase the chances that these families qualify for food stamps. We're talking about families that have to choose very carefully where every dollar goes.
The savings made by cutting this family's BAH won't go towards balancing the federal budget. They don't even go towards paying for the last two wars (still on the credit card, thank you very much). No, those savings made by shifting costs to this E4's family will go towards increased defense spending. Seriously. Rather than making sure corporations don't escape paying taxes or that defense contractors who have made billions of dollars off of two wars didn't cheat the government, we would rather just nickel and dime military families to death.
This is a bad idea, not just according to military families but to Todd Harrison, a budget expert with the Center for Strategic and Budgetary Assessments:
“Cutting cash compensation is what is going to hurt the most — that is what’s going to make troops the least happy,” Harrison said. “Cash compensation, to include basic pay and allowances, would be the last thing I’d cut, because it’s giving [DoD and taxpayers] the best value for every dollar spent.”
Obviously, the Department of Defense isn't paying attention. And it gets worse. When overhauling BAH was discussed earlier last year, the Navy Times reported a potential wrinkle to the plan:
A big potential stumbling block for overhauling BAH is the possible impact on privatized housing. Since the 1990s, DoD has signed contracts to turn over thousands of on-base housing units to private companies that promise to remodel, repair and maintain those homes in exchange for receiving a steady stream of service members’ BAH payments.
Those companies depend on BAH payments as their primary source of revenue, and any substantial reduction could result in fewer renovations, fewer amenities or longer wait times for maintenance.
In some areas where BAH rates have fallen in recent years due to plummeting housing prices, those companies have reduced some services, claiming that making their own debt payments would be impossible otherwise.
http://www.navytimes.com/...
Many military families live on military bases and today that housing is managed by private contractors. This was done to save the government money. Contracts where signed that allowed a company to receive 100% of a service member's BAH in exchange for rent:
What is the income stream for these projects based on?
A project’s income stream is based on the Basic Allowance for Housing (BAH). For more information on BAH click here. [dead link to BAH info]
How does DoD develop BAH?
The purpose of the Basic Allowance for Housing (BAH) program is to provide fair housing allowances to service members. There are several types of BAH to satisfy various housing situations that occur among military members. In general, the amount of BAH a service member receives depends on location, pay grade, and whether he/she has dependents. BAH allowances are based on the market price of rental housing within a reasonable commuting distance. Under most circumstances, a service member will receive BAH for the location where they are assigned.
Deputy Under Secretary of Defense, Installations and Environment, Business Developer FAQ
So what happens when the government decides to drop BAH to 5% below the going rate? Who pays the difference? It looks like these companies will suffer the losses and possibly pass them on to military families:
Operators of housing on military facilities also are worried. They tie the rents they charge to the housing allowance, so any BAH reductions would weigh on income, said John Picerne, chief executive of Corvias Military Living, a developer that operates 20,000 Army units and 5,000 Air Force units. He said Corvias could be forced to cut services to cover debt payments on money it borrowed to build the military housing.
Because of the contracts Corvias signed with the government, raising rents to cover the difference is prohibited, Mr. Picerne said. Therefore, maintaining current services, ranging from lawn care to emergency maintenance, "would be tremendously difficult for us to handle," he said.
http://online.wsj.com/...
And guess what? They're going to lose more than 5% as the Department of Defense has decided to remove the cost of rental insurance in their estimations. That means many of these BAH allowances will drop even more. Companies that last year were struggling to make their debt payments will be struggling even more. It may not be the equivalent of the housing crisis, but having privatized contractors go bankrupt while managing military housing doesn't sound like a great use of defense dollars.
And these companies believed that their contracts, many of them as long as 50 years, would not be changed by Congress:
FAQ #24: Is there a danger of Congress putting a halt to the initiative or modifying it in some significant way?
The MHPI legislative authorities have been made permanent, so DoD does not foresee any major Congressional modifications or setbacks.
Deputy Under Secretary of Defense, Installations and Environment, Business Developer FAQ
It's just another case of our government not keeping their promises. In some ways it's refreshing to know that they'll screw over a private contractor as readily as a military service member and family.
So you may be wondering what it is that you can do. Getting Congress to agree on a budget is overwhelming at the best of times. But we do have a window of opportunity. Currently, both the House Armed Services Committee (HSAC) and the Senate Armed Services Committee (SASC) are taking testimony to help them make strategic budgetary decisions.
On Wednesday, April 30th the HSAC will meet to mark up legislation which authorizes funding for the Department of Defense. We need you to call or write Representatives on the HSAC before April 30th and let them know that any cuts to military benefits should be off the table. If your representative doesn't sit on the HSAC, then please contact Buck McKeon (Chairman), Mac Thornberry (Vice Chariman) and Adam Smith (Ranking Member).
On Tuesday, May 6, the SASC will hold a hearing of DoD proposals relating to military compensation. Before that date, Senators on the SASC need to hear from you. If your Senator does not sit on the SASC, then at the very least, please contact Senators Carl Levin (Chairman) and James Inhofe (Ranking Member). Let them know that retention and recruitment are directly influenced by the way we treat our current military service members and their families. Cutting benefits will only serve to hurt the Armed Forces in the long run.
It's more than time that Congress found the money to pay for the military it wants and if it can't do that, then they can change the mission of our Armed Services to reflect these lean times. The days of doing more with less are long gone.
12:23 PM PT: If you would like to see a great sample letter to send to your representatives, check out http://usmclife.com/... - it also includes contact info for both the SASC and the HASC.
http://usmclife.com/...