Defense-cut projections seen as risk to recruitment

Looming defense budget cuts not only threaten new weapons, ships and planes, but also endanger the all-volunteer force itself.

The Pentagon has been able to attract high-quality recruits by offering a buffet of financial goodies: free college education, lifetime pension checks after 20 years of service, and access to low-cost health care for retirees.

But analysts warn that projected defense cuts of $1 trillion over 10 years would force the Pentagon to curtail such inducements, which would weaken its ability to attract sufficient high-quality personnel for the 2.2-million-strong active and reserve force.

On the table: higher health care premiums and a shift of the military’s guaranteed pension benefits to an investment-based 401(k)-type of retirement savings plan.

John Raughter, spokesman for the 2.4-million-member American Legion, said the nation’s largest veterans group is increasingly concerned about how deep reductions will affect recruitment.

“It is a major concern to us,” Mr. Raughter said. “When you start tinkering with Tricare [the military’s health care system] and the military retirement systems, it’s basically a slap in the face. The system is basically saying your service tomorrow is not as valuable as our service was yesterday.

“If you start making the military retirement plan like the 401(k), which people can get in the private sector, well, it goes to follow that more people will choose the private sector,” he said. “It puts the all-volunteer force into serious jeopardy. It’s removing incentives to join when we probably need more people.”

One of the starkest scenarios is contained in a Republican staff memo to House Armed Services Committee Chairman Rep. Howard P. “Buck” McKeon of California.

If a special congressional supercommittee cannot agree on an anti-deficit plan, the Pentagon would face budget cuts of $1 trillion or more. The staff report says benefits that attract new personnel would be lost.

“Cuts of this magnitude require a fundamental cultural shift in the commitment to [Department of Defense] school systems, military commissaries and exchanges, and other morale, welfare and recreation programs, significantly reducing support of military families and retirees,” the memo states under the heading of “Breaking Faith With the Military.”

“Family readiness will be degraded. There will be a shift away from military involvement in local communities. As well, these cuts will reduce investment in the Defense Health Program, including in-house care, private-sector care, education and health-related information technology. Wounded-warrior care and support will be dramatically reduced.”

The pool from which the military recruits is already getting smaller. In 1973, the year the draft ended and the all-volunteer force arose, 90 percent of males, ages 17 through 24, qualified based on mental, physical and moral standards. Today, just 35 percent qualify.

The committee report also says automatic cuts would force America’s land forces - the Army and Marine Corps - to chop 200,000 troops, meaning troops who had planned to stay and retire would be let go.

“If we cut again and break trust with this force that stayed with us for 10 years, and then we run into something else, as we’ve talked about - we don’t get to pick and choose - I don’t know if we can grow that force back again,” retired Gen. Richard Cody, former Army vice chief of staff, said to Mr. McKeon’s committee this month. “So it’s a big problem for us.”

He added: “I worry about losing the all-volunteer force as we get into these fights about budgets and about entitlements versus defense and things like that … . I can’t remember a more professional, patriotic and dedicated force, as well as their families. And so I’d put that as job one. We’ve got to retain this all-volunteer force.”

No budget-cutting idea is unnerving the military community more than a recommendation to scrap the current pension system for new inductees and replace it with a 401(k)-type retirement savings plan.

The nonbinding recommendation by the Defense Business Board, a federal advisory panel, states that the current system costs the U.S. government more than $100 billion annually and will grow to $1 trillion by 2076.

“It’s unfair, unaffordable and inflexible,” says the board, which argues that just 13 percent of troops serve 20 years to earn a pension, but a 401(k) plan would reward a larger percentage who are discharged earlier.

To adopt the change, Congress would be discarding a benefit that is thought to be a big inducement to well-educated inductees, who earn lifetime pension checks for 20 years of service and still are young enough to begin a second career.

“We don’t know how to do 401(k)s,” Gen. Cody said. “We don’t know how to do any type of that management. We live checkbook to checkbook. I’ve seen the figures on it.

“Be very, very careful with this retirement program,” he said. “I’ve seen numbers that say only 13 percent of the people actually benefit from it. Yeah, those are the people that lead. Those are the people we invested in.”

Other inducements are on the block.

Some in Congress want the Pentagon to look at a 25 percent cut in the half-billion-dollar tuition-aid program.

And Tricare, the civilian arm of the military health care system used by active troops and retirees, is eyeing premium increases. Tricare costs have ballooned from $19 billion 10 years ago to $53 billion today.

Retired Army Col. Douglas A. Macgregor, a noted author and speaker on military transformation, said the Army needs to shift to more technically savvy soldiers for whom a 401(k) might be attractive.

“The old industrial-age model for the Army, which is really what we’ve got with the so-called all-volunteer force, is no longer the right one,” he said. “What we really need is a new human-capital strategy for the Army.

“We’ve never made the leap to a truly standing professional Army. We need to do that now. We’re now dealing with a technology-rich military establishment, and that includes the United States Army. … That means you’ve got to attract skilled, intelligent people who can master the technologies.”

He added: “You’re going to have to look at different ways for these people to acquire wealth … . I’m not a believer in the giant federal government that takes care of everyone. The nanny state. I don’t think that’s the model for the future.

“I think if we’re recruiting smarter, better, more intelligent people in the future, they will also want to have more influence on the funds they set aside for themselves when they either leave the service or move to a different profession of the same kind. Is the 401(k) the right model? I frankly don’t know. But I’m certainly supportive of alternatives to the industrial-age model, which is overly expensive and unsustainable.”