Why People Cost

Congress’ zeal to reward the troops with hefty pay and benefits increases over the past 10 years has to be curbed, or personnel costs will wipe out the whole defense budget. So said Todd Harrison, senior defense fellow with the Center for Budgetary and Strategic Assessments. Speaking at AFA’s Mitchell Institute for Airpower Studies in Arlington, Va., Harrison said personnel costs went up 4.2 percent annually over that span, and if defense budget toplines stayed flat from here on out, “by 2039, personnel costs will consume the whole of the budget.” He said he doesn’t expect that to happen, but he praised DOD’s efforts to rein in costs both by cutting people and compensation, since the current numbers are unsustainable. Reducing personnel “really does have a huge effect” due to the compounding effect, and because of retiree costs, said Harrison. Retirees, at about two million, now outnumber active duty forces, at 1.4 million, he noted. DOD has to put 33 cents in trust for every dollar of basic pay, so it can keep pension promises, he said. Though “no one likes to talk about this” there is budgetary “competition between retirees and active duty forces,” asserted Harrison in his Feb. 17 address.