Administration’s 2014 Budget Released—How Will it Support Military Families?

The Administration released its Fiscal Year (FY) 2014 budget request on April 10—65 days late and heavy on proposals many Members of Congress say will be “dead on arrival.” If that’s so, why should military families care about what’s in it the budget or what’s not? The budget request provides an important view of the Administration’s priorities. What does the Department of Defense (DoD) see as the most important items to fund? How does DoD present its rationale for the choices it made?

DoD starts its budget summary with four priorities:

  • Act as good stewards of the public funds 
  • Implement and deepen program alignment to the new defense strategy
  • Create a force that is ready across a spectrum of missions 
  • Keep people central to our plans 

Here’s what we know so far about the 2014 budget request.

Defense Proposals

  • $526.6 billion requested for FY 2014, as compared to the FY 2013 amount of $525.4 billion (pre-sequestration). 
  • 1% pay raise for service members, effective January 1, 2014. This pay raise is less than the current average pay raise of 1.8% for private sector workers. 
  • Increased funding to provide an average 4.2% rate increase for housing allowances and 3.4% for subsistence allowances.
  • $8.5 billion in family support – for DoD schools, commissaries, counseling, child care, and other programs. 
    • Child Care and Youth program funding reduced from $1.3 billion (pre-sequestration) to $1.2 billion
    • Morale, Welfare, and Recreation reduced from $1.4 billion to $1.3 billion
    • Service member and Family Services increased from $1.6 billion to $1.7 billion
    • DoD schools increased from $2.6 billion to $2.8 billion
    • Military spouse employment programs reduced from $0.2 billion to $0.1 billion
    • $7 million for the Defense Suicide Prevention Program and $25 million for sexual response prevention and response
  • A new round of Base Realignment and Closure in 2015 to reduce infrastructure costs.
  • $49.4 billion for military health care. DoD requests—once again—to increase some TRICARE retiree enrollment fees, co-pays, deductibles, and the catastrophic cap, as well as some pharmacy co-pays to achieve savings of $1.4 billion. DoD says its proposals have been updated to address concerns raised by Members of Congress last year. The big difference from the 2013 proposal is that DoD wants to base enrollment fees on a percentage of beneficiaries’ gross military retirement pay, subject to annual minimum and maximum limits rather than using average increases in health care costs. There will be one minimum and maximum set for Flag/General Officers and one for all other ranks. 
  • Maintains funding levels for National Guard and Reserve family and employer support programs.
  • $1.4 billion for military commissaries—no reduction from FY 2013.
  • $2.3 billion for recruiting and retention bonuses.
  • Military Construction
    • DoD school addition at Fort Benning, GA
    • DoD school replacements at Fort Benning and Fort Stewart, GA; Fort Campbell and Fort Knox, KY; Hanscom AFB, MA (operated under contract with local school system); Fort Bragg, NC; MCAS Beaufort, SC; Quantico MCB, VA; Kadena AB, Okinawa; Camp Walker, Korea; RAF Lakenheath, United Kingdom; Kaiserslautern, Ramstein AB,  Wiesbaden, Germany
    • New service member and Family Readiness Center at Cannon AFB, NM
    • New or renovated health care clinics: Fort Knox, KY; Joint Base Andrews, MD; Holloman AFB, NM; Fort Bliss, TX; Joint Base San Antonio, TX; Rhine Ordinance Barracks, Germany
    • No Child Development Center construction requested
  • No proposal yet for operations in Afghanistan war (Overseas Contingency Operations) funding, but DoD is assuming 34,000 troops will remain in Afghanistan through September 2014.

Non-Defense Proposals that Could Affect Military Families

  • 1% pay raise for federal civilian employees, lifting the 3-year pay freeze.
  • A new Preschool for All initiative would provide all low and moderate income four year olds with high quality preschool, while encouraging states to serve additional four year olds from middle class families. The initiative would also promote access to full day kindergarten and high quality early education programs for children under age four. We anticipate many military families could benefit from this initiative, which would be financed by raising the federal tax on cigarettes and other tobacco products.
  • A new tax credit would encourage employers to offer retirement savings plans and expands a tax credit that helps middle class families afford child care.
  • Making permanent the American Opportunity Tax Credit, which provides some families with a tax credit for college expenses.
  • Improvements to the Earned Income Tax Credit and Child Tax Credit.
  • Increasing the minimum wage to $9.00 per hour.
  • Using the so-called “chained measure of inflation” as the standard for cost of living increases for Social Security and other retirement programs, including military retirement. Using this new measure rather than the current Consumer Price Index will probably result in lower annual cost of living increases for retirees.

Sequestration Remains a Threat 

DoD’s 2014 budget request exceeds the spending caps required under the Budget Control Act of 2011. The Administration budget plan would replace sequestration with about $1.8 trillion in spending reductions and tax increases over the coming years, including $200 billion split between defense and nondefense accounts. These changes would meet the deficit reduction limits contained in the Budget Control Act, thus making sequestration unnecessary IF PASSED BY CONGRESS.

In normal years, the President’s budget request should be considered as Congress puts together its budget resolution.  The budget resolution approved by Congress would then be a blueprint for how spending will be allocated and where the government gets its revenues. For several years, Congress has not been able to pass a budget resolution, but this year, the House and Senate have already passed their own versions. These resolutions contain different debt reduction options from those proposed by the Administration, but all attempt to reach the deficit reduction goals included in the Budget Control Act of 2011.

Why is that important? Because legislation enacting a new deficit reduction plan is how we can get rid of the future automatic sequestration cuts that are causing so much disruption this year. That’s the rub—if Congress doesn’t pass legislation including these tax increases and spending reductions, then sequestration will occur in 2014 and DoD will have to find $50 billion in savings out of this budget.

DoD officials are also concerned that the sequestration cuts occurring in 2013 will have a ripple effect on readiness in 2014, implying that the amounts requested for next year will not be sufficient to maintain readiness. In his budget briefing on April 10, Chairman of the Joint Chiefs of Staff General Martin Dempsey noted, “It takes more money to get ready than to stay ready.”

Where Are Our Nation’s Security and Military Families in the Priority List?

As we read the budget documents and listen to the briefings, we want to find evidence of support for our Nation’s defense and for the people who carry the burden for that defense. We were thus alarmed that the Administration’s four-page budget overview contains no reference to national security, service members and their families, or veterans. How can this be?

In their budget briefings, DoD leaders, including the Secretary of Defense, highlighted their concerns about the high cost of military personnel. They pointed out that military pay and benefits make up one-third of the Defense budget. We remind them of their own budget priority: “People are Central.”

What’s Next?

The initiatives and funding levels in the Administration’s budget proposal will now be examined by the various Congressional committees. Several hearings have been scheduled in April where DoD officials will testify before the House and Senate Armed Services Committees, as well as the Defense and Military Construction Appropriations Committees. The National Military Family Association’s Government Relations Director, Kathy Moakler, will testify with representatives of other member organizations of The Military Coalition before the Senate Armed Services Personnel Subcommittee on April 17. She will convey what we believe is most important for military families and our thoughts on the proposals in this budget plan. It’s important to remember that all of the initiatives contained in the proposal must be passed as legislation before taking effect.

For more information on the Administration’s Defense budget proposals, go to: www.budget.mil. We will update our website with more information, so check often.

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