In spotless aircraft hangars at two different military bases in southeastern Virginia yesterday, Defense Secretary Chuck Hagel stood before several hundred airmen and soldiers, highlighting priorities in the Defense Department’s fiscal year 2015 budget request and taking questions.
The budget request – which Hagel and Army Gen. Martin E. Dempsey, chairman of the Joint Chiefs of Staff, previewed Feb. 24 at the Pentagon – is the first in 13 years that doesn’t reflect a defense enterprise engaged in a foreign war, and in some of those years, two wars.
With the defense budget poised to shrink by more than $75 billion over the next two years, the funding request recommends cuts in military spending in the coming year that include further reductions in troop strength and force structure in every military service.
And the outcome will be even more severe in fiscal 2016 if the severe budget cuts required by the Budget Control Act of 2011, known as sequestration, go forward with no congressional intervention on the department’s behalf.
Questions from the airmen at Langley Air Force Base and soldiers at Fort Eustis ranged from the plight of veterans, the future of the military retirement system and the lifespan of the current force reduction to problems that could arise from a pre-World-War-II-sized Army, and how DOD will be able to keep quality soldiers in such an austere fiscal environment.
As he addressed the service members, Hagel sought to reassure them.
“This can be done if it’s done responsibly – if it’s done the right way. We’ll make the case to Congress,” he said, noting that Congress must be a partner in managing the fiscal threats against the department. “But it will impose more risks to our country [and] our force structure if we’re not given some longer-term relief from sequestration.
“This is about as direct and honest as I can be, and what I’m telling you is what I’m going to tell the Congress,” the secretary continued. “I owe that to you, … to tell you this face to face, so you know what I’m thinking [and] you know what our leaders are thinking.”
At both bases, Hagel began by thanking the airmen, the soldiers and their families on behalf of President Barack Obama for their service and sacrifice. The secretary said he was on his way to a NATO defense ministers meeting in Brussels and stopped at the bases to get a sense from the service members what was on their minds.
“I try to do this as often as I can– get outside Washington and listen to our men and women and try to understand better what’s on your mind, what your concerns are,” Hagel said. “You help all our leaders with what you tell us, and I know your commanders here from the general on down feel the same way.”
Hagel especially wanted to talk about the department’s piece of the president’s fiscal year 2015 budget request, about which he said that he, Dempsey and DOD Comptroller Robert Hale would testify before the Senate and House armed services committees next week.
The secretary said he wanted to explain what the department’s senior leaders were focused on when they put the budget request together.
“You know the realities of sequestration, you know the realities of the fiscal restraints you’re all dealing with — [that] we’re all dealing with. And I suspect they’re not going to get much better over the next few years,” Hagel said.
“So we’ve had to prepare our institution, we’ve had to plan strategically to protect our country as you do every day, and assure the president, assure the Congress, assure the American people, assure your families that they can count on us, that they can count on you, as they do every day,” he added.
Hagel’s top-line points, he said, were people, readiness, capability and capacity.
In preparing the budget request, working on it together month after month, he said, “we focused on the balance of the force … and factored in all of what’s required to defend this country at a time in the world that’s complicated, uncertain and dangerous, and [likely] to stay that way for awhile.”
Despite such uncertainty, he said, some things are known.
“This budget that I will present next week to the Congress is the first budget that’s not a war-footing budget. … This budget will represent a different environment, a different era, a different time,” Hagel said.
That’s not a small point, he added, “because if we’re not budgeting and prioritizing for wars, … that means our priorities have to be realigned and reset as to where we’re going to use our resources and where we’re going to deploy … and position our assets to protect our interests, whether it’s a shift in our president’s posture in the Asia-Pacific or the Middle East or North Africa.”
The world is dangerous everywhere, said Hagel, adding that he and the defense leadership tried to frame the budget’s strategic focus on that basis.
Hagel told the service members he wanted to address the budget’s pay, compensation and retirement issues, because they are on the minds of service members and their families. He began with retirement, saying department leaders decided not to recommend changes on retirement until a retirement commission empaneled by Congress reports back to Congress and the Defense Department.
“We understand the importance of retirement plans,” the secretary said, “but I’ve also agreed that any changes, if there are [change] recommendations, would not apply in retirement to those now serving.”
On the issue of pay, he said, the department will continue to recommend pay increases.
“There will be a slight decrease in those increases, but it’s a cost of growth in a growth-of-increase recommendation,” he said, “so make sure you understand that.”
On compensation and benefits, Hagel said, the Defense Department would not close commissaries.
“What we are doing is recommending that the subsidies on commissaries gradually be phased out, like in our post exchanges. That means you’ll still get significant savings as that process goes forward. Nothing happens tomorrow, nothing happens next year – this is a gradual process,” the secretary explained.
From this recommendation, he said, the department will exclude all overseas commissaries and those that are in remote areas where there are no other discount-store options to save money on groceries.
Moving to the TRICARE health care plan, Hagel said the department is recommending consolidating its three systems into one system that will be more effective and efficient.
“This [will happen over a period of time and won’t affect anything on base in health care,” he said. Nor would it limit preferred provider options or change health care quality, he added.
On health care co-pay increases, Hagel said, the budget request contains no recommended changes for active-duty service members. Family members and working-age retirees already have co-pay amounts, depending on their geographic locations and medical services, he noted.
“For working-age retirees, we recommend a gradual increase for out-of-pocket expenses from around 8 percent today to no more than 11 percent – a gradual increase … that we think is fair,” the secretary added.
Housing allowance subsidies for service members today are 100 percent, he said, and the department recommends over a five-year period to phase in an increase to 5 percent for out-of-pocket expenses, with a 95 percent subsidy.
“Those are the recommendations we’ve made,” Hagel said. “We did this in coordination with all our senior enlisted leaders in each service, all the chiefs, all the secretaries. This was not a unilateral, arbitrary decision. It was a decision we made after a long deliberation.”
The secretary said he and the president would never submit a budget request to Congress and the American people that they didn’t think could protect the country’s security.
“We’re dangerously close to cutting into that now,” he said, adding that Obama will request from Congress an extra $26 billion to shore up DOD readiness bled by recent severe and abrupt budget cuts.
“We can’t get any closer down on [readiness] across the board,” Hagel said, “whether it’s the Air Force or the Army or steaming time in the Navy, so this is a defining time in our defense enterprise [that will determine] how we go forward.”
The secretary added, “But we’re going to protect what we have to protect, and we’re going to protect our people.”