Wednesday, May 12, 2010

Military will go Greek first ...

You heard it all last week. Indications & Warnings.
Every witness before a recent Senate subcommittee hearing on military compensation – all experts on service pay and benefits – called directly or indirectly for Congress to end its 12-year run annual military pay raises that exceed private-sector wage growth.

No witness suggested that future raises each January shouldn't match annual wage gains for private sector workers as measured by the government Employment Cost Index, or ECI.

But with personnel costs soaring to sustain a quality all-volunteer force in its ninth year of war, lawmakers like Sen. James Webb, D-Va., chairman of the Senate armed services personnel subcommittee, are seeking ways to make military compensation more efficient.

A common theme at this hearing was the need for more targeted payments, such as bonuses and incentive payments, versus continuing a string of beefier across-the-board raises, which were deemed inefficient and a catalyst for driving up basic pay and retirement costs.
...
Webb and colleagues heard from three outside pay analysts and a Defense policymaker suggesting Congress not continue to push for across-the-board raises in excess of private sector wage growth because it only aggravates the challenge of soaring personnel costs.

...
... comparing military and civilian compensation is always a challenge given the unique factors of service life and difficulty of comparing benefits like health care or deferred compensation like retirement.

But GAO agreed with the 10th Quadrennial Review of Military Compensation that the Department of Defense should begin to weigh the value of retirement and health care compensation in making pay comparisons with other Americans.

Farrell said defining and comparing military compensation more broadly could help recruiting and retention. When this yardstick is used, military compensation today exceeds compensation packages for 80 percent of peers in the U.S. work force.
That is just the opening. This is part of a larger problem in our guv'munt.
Salaries than private-sector workers in more than eight out of 10 occupations, a USA TODAY analysis of federal data finds.
Accountants, nurses, chemists, surveyors, cooks, clerks and janitors are among the wide range of jobs that get paid more on average in the federal government than in the private sector.

Overall, federal workers earned an average salary of $67,691 in 2008 for occupations that exist both in government and the private sector, according to Bureau of Labor Statistics data. The average pay for the same mix of jobs in the private sector was $60,046 in 2008, the most recent data available.
How long will the taxpayer be content having those who work for them being paid more than they are? Probably a while longer.

There is an old phrase that there is a lot of ruin in a nation - especially the larger ones. Where once we could giggle at the debt levels of Greece and Italy ... but no longer. In the last year, we have seen our nation put on a path to reach their levels of national debt within half a decade. When you reach over 100% GDP in national debt, there is little you can do.

When you need to cut - you have to cut programs or people; the Greeks plan to do this,
Civil servants will lose up to two months in wages, with salaries and pensions being frozen during the three-year programme.
I have faith that our self-correcting system will stop us from going the way of Portugal, Italy, Ireland, Greece, and Spain .... but I do know this; personnel policies will have to change.

As the public sector workers have a very strong lobby, they will not be the first to feel the cut - the military will. It is easier to sell sacrifice to us.

If we are smart, we will get ahead of the curve like SECDEF Gates has asked us to do - cut bloat. That is easy if you have the right leadership willing to make the right decisions. Earlier this week, we put out some options here at the last link. You will step on some toes - but that is OK.

If we don't do it our way - others will do it another. Instead of cutting non value-added programs and priorities - everyone will get a shave. Less pay, fewer benefits. We'll be back to the '70s just in time for the "Terrible '20s" shipbuilding trainwreck. Bad combo - but one that can be mitigated with the right leadership now.

For those who were at the Milblog Conference and saw the complete dodge that the panel executed in response to my question on military personnel cost options - let me summarize them again.

If hard decisions are not made to cut numbers - the only way to address costs is to benchmark what other like militaries do. The only comparable systems out there for the USA is Western Europe. Their big differences? Retirement pay, tax status, income stream.

Sure, you can retire after 20 years - but depending on the nation, you won't see a pension until your mid-50s to 60s. Deployed in a combat zone? Congrats - but you aren't getting any tax free money. And then there is the wonderful French conversation,
"Did you hear that Andre's daughter got married last week? She married and Air Force officer. Poor thing, they will never have enough money."
Overall compensation will be less. That is unless we can cut overall numbers. We can do that. Again, look at the Admiral to ship ratio. A rough metric - but one useful in starting a conversation.

The budget pressures will not get easier. So many obligations have been made that will be hard to undo. Those of other Presidents and Congresses - from Social Security to Prescription Drug programs - are unfunded and are coming due soon. In the last 18 months, we have exploded out debt to the point that we are just a few short years from no longer being able to painlessly service that debt - and the Boomers have only started to retire now.

Two choices - uncomfortable fixes soon - or exceptionally painful fixes later. Either way - sooner or later economics and the harsh lesson of the ledger will stop the gravey train.

The military will go first - and then the guv'munt workers.

Like my father often told me, "Son, no one owes you a living - and if you rely on others for your dime, you will wind up desperate and poor."

Heck, even the Uber-Boomer
Tom Friedman sees it coming,
DEATH NOTICE: The Tooth Fairy died last night of complications related to obesity. Born Jan. 1, 1946, the Tooth Fairy is survived by 400 million children living largely in North America and Western Europe, known collectively as “The Baby Boomers.” “We’ll certainly miss the Tooth Fairy,” one of them said following her death, which coincided with the 2010 British elections and rioting in Greece. The Tooth Fairy had only one surviving sibling who will now look after her offspring alone: Mr. Bond Market of Wall Street and the City of London.

Sitting in America, it’s hard to grasp the importance of the British elections and the Greek riots. Nothing to do with us, right? Well, I’d pay attention to the drama playing out here. It may be coming to a theater near you.

The meta-story behind the British election, the Greek meltdown and our own Tea Party is this: Our parents were “The Greatest Generation,” and they earned that title by making enormous sacrifices and investments to build us a world of abundance. My generation, “The Baby Boomers,” turned out to be what the writer Kurt Andersen called “The Grasshopper Generation.” We’ve eaten through all that abundance like hungry locusts.
Snort. Looks like he has been reading Salamander.

46 comments:

Butch said...

<span>Why is DOD - which executes a Constitutionally mandated function of the Federal government - the first & only target of cost cutters?  People are paid too much, programs are too expensive, etc.</span>
<span></span>
<span>Take a look at the non-Constitutionally mandated entitlement programs first, then get back to me.</span>

Byron said...

Because the Dhimocrats know that most of military won't vote for them?

Seriously, stand by for heavy rolls, close all hatches and gun covers, because the real screaming from Congress will start when they agree, "yes, lets do away with this, but not that, because the pee-pul in my district will vote my sorry ass out of office finally".

Outlaw13 said...

I might be able to stomach not getting a raise if the oxygen thieves on the hill start with themselves, their raises and substantial retirement package/heath care plan after duping the electorate into sending them to Washington.

CoRev said...

Just one correction.  Social Security is fully funded for the next decade and 1/2.  Medicare is partially funded, and medicaid is unfunded, annually funds come from the general revenue stream of the big and state Govts.

Yeah, I know you have been brain washed to beleive SS is going bankrupt, but the facts are it is fully funded and only this year has expenditures exceeded revenues, which means they will cash in some small portion of the s;ecial treasuries making up the SS Trust Fund.  Even those treasuries are made up of the interest paid to the trust fund treasuries representing the SS excess borrowed by the general fund.  All of this was cooked into the original bill in 1937.  It is no big surprise, and it is what is supposed to happen.  Your SS benefit is not gone.

Those SS trust fund treauries that are converted will not add to the national debt.  They will change hands from Govt to private sector, but are already calculated as part of the the current debt.  The worst impact is it takes some flexibility by adding competition to the Fed Govt's abilty to borrow even more.  Treasury interest rates may rise slightly.

CoRev said...

<span>ust one correction.  Social Security is fully funded for the next decade and 1/2.  Medicare is partially funded, and medicaid is unfunded, medicaid funds come from the annual general revenue stream of the big Govt and state Govts.  
 
Yeah, I know you have been brain washed to believe SS is going bankrupt, but the facts are it is fully funded and only this year has expenditures exceeded revenues, which means they will cash in some small portion of the special treasuries making up the SS Trust Fund.  Even a large portion of those treasuries are made up of the interest paid to the trust fund.  Those treasuries represent the SS excess borrowed by the general fund.  That actually is the "Lock Box" and represents the safest investment possible for those excess funds.  All of this was cooked into the original bill in 1937.  It is no big surprise, and it is what is supposed to happen.  Your SS benefit is not gone.  
 
Those SS trust fund treauries that are converted will not add to the national debt.  They will change hands from Govt to private sector, but are already calculated as part of the the current debt.  The worst impact is it takes some flexibility by adding competition to the Fed Govt's abilty to borrow even more.  Treasury interest rates may rise slightly.</span>

Mary Alpha said...

I agree with Outlaw on this one. Let our legislators stop giving themselves raises and perks FIRST!

Kristen said...

<span>"I have faith that our self-correcting system will stop us from going the way of Portugal, Italy, Ireland, Greece, and Spain .... but I do know this; personnel policies will have to change."</span>
<span></span>
<span>I'm the eternal optimist and I tend to agree with you, but it's getting harder to believe in the future here in California.  The state and the individual cities are broke but they won't admit it and change the ruinous personnel policies.  This week, our glorious legislature voted to make being homeless a civil right.  Uh, ok.  That'll fix everything.</span>
<span></span>
<span>I'm praying that the tidal wave that is coming across the country in November will reach all the way to these shores, but even a professional optimist like me is getting a bit panic-stricken.</span>

orn said...

Obama's politics is simple -- rob Peter to pay Paul. And survey reports indicate that Paul supports this policy. Obama also likes to throw in some nice racial and ethnic animosity into the stew, just to make sure Paul doesn't feel any sympathy for Peter.

Ah, democracy -- 3 foxes and a chicken voting on what to have for dinner.

Byron said...

Kristen, abandon California for the other shore...Florida. Specifially Jacksonville, the home of Tim Tebow ;)

DeltaBravo said...

<span>"If hard decisions are not made to cut numbers - the only way to address costs is to benchmark what other like militaries do."</span>
<span></span>
<span>You mean... like... cut back because the USA is going to defend you when push comes to shove?  I'm with that!  Ummm... wait... no.... </span>
<span></span>
<span>Clinton balanced the budget by cutting back the military.  Remember how that ended when we had to go to war with the military he left us, not the one we wanted?</span>

UltimaRatioRegis said...

<span>In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: "If you don't work you die."</span>

<span>And that after this is accomplished, and the brave new world begins
When all men are paid for existing and no man must pay for his sins,
As surely as Water will wet us, as surely as Fire will bum,
The Gods of the Copybook Headings with terror and slaughter return!</span>

R.K.

UltimaRatioRegis said...

Excellent observation, DB.  The difference today is that cutting danmed near the entire military budget will only make minor headway into our current debt. 

MR T's Haircut said...

"Military will go Greek"...  Phib, you talking about DADT again??

Byron said...

I'm glad I wasn't the first one to point that out :-P

UltimaRatioRegis said...

You know.... I almost made the joke. 

ewok40k said...

paying for military more than next 10 military budgets in the world is wrong, no matter how you call it

ShawnP said...

It's a fine line.......you will be able to do a real time tracking of people leaving the military if you lower compensation. The jobs the military does is nothing like the civillian. Believe me ask a UAW worker to work all day long then stand a mid-watch followed by another full work day. Then stand back for flamefest...........Always angers me when these pencil pushin geeks try to compare civillian and military jobs. Yes I get nice compensation in retirement and yes the medical is good. I always ask those that complain which holidays, anniversaries, childs birth and other important dates they would like to give up. After all for 20 years I gave up 55% of my Xmas's due to deployments or duty and that's just a start of the days given up for my country.

Kristen said...

Byron, if my husband stays on active we'll wind up living somewhere else.  But I was born and raised in southern California, and I really love it here.  If only a high wind would come along that blew all the Democrats out to sea....

Re:  Tim Tebow.  I'm a big fan.  He's got a lot of moral courage.

ShawnP said...

Phib's a cutting edge guy these days you know.

Byron said...

Well, (massive snark) he does read Jane Austin....

Byron said...

He's got a pretty good rock to stand on, Kristin. Great parents helped too.

UltimaRatioRegis said...

ewok,

That depends on the true value of the currencies involved.  And the mission(s) it is expected to perform.  Our service members should not be eating turnip soup in cold barracks rooms.  Liek labor costs in this country, costs of service members' salaries and benefits make that "ten times" number illusory. 

Tell you what.  Next time there is a tsunami or major earthquake, or a fight for survival of Europe, the US could stand aside and see what happens without us.  My guess is that we would have somewhere less than optimal performance from all those nations to whom the US has provided the security blanket all these years to get to that factor of ten.

Skippy-san said...

I would just point out that you cannot make personnel cuts in a vacuum-they have to be matched to the reduced missions that you expect the force the to do. Phrase it another way-on average on any given day 50%+ of the Navy is deployed. Missions either have to be scaled back or the military is going to have to find additonal sources of revenue. You cannot keep two wars going in the Middle East, a forward deployed force in Asia, a war on drugs in South America and the rest of the varied and sundry commitments -and make wholesale personnel cuts. Otherwise you are just saving money on the backs of our Sailors-we've already tried that, it did not work so well. ( Cue picture of Abraham Lincoln on deployment for 11 months in 2002-2003).

I'd submit that while we cut flag staffs and reign in personnel costs-we need to rack and stack our commitments and decide which ones don't make the cut. At some point a retrenchment of some sort may in fact be in order-and in fact in some areas we may in fact find that less may in fact be better.

Here is my fear-say we do get a 50% flag cut. If there is not a corresponding reduction of the level that some decisions need to be made at-the people who are remaining will be working twice as hard to get the same work done. Sailors get screwed otherwise.

DeltaBravo said...

Oddly, how many hundreds of former military are flooded in Tennessee... where's the international aid?  hahaha.  Won't hold my breath.  The thing about military salaries... for the most part that gets plowed right back into the economy in the form of rents, purchases, income taxes, etc.  So that money isn't really static.  Think it doesn't make a difference...?  Listen to the squawking when BRAC tries to get rid of a base. 

As for Greece... they won't make the cuts.  As soon as the loan WE helped fund runs out, they'll be back in the streets throwing rocks and molotov cocktails.   Until they get their socialist government off their backs they will be among the EU basket cases.

cdrsalamander said...

Skippy,
You know as well as I do that for many of the missions we are signed  up for - it is all hope and paper abilities.  That is a conversation we also need to have .... but we need a cypher door to do it.

MR T's Haircut said...

URR, I have little restraint.. it is a virtue of mine...

UltimaRatioRegis said...

"Thoughts purely expressed". 

Bless his heart.....

Salty Gator said...

Is it Diversity Thursday yet?

Mike M. said...

As Civil Service Scum, I'll add that a Reagan-like hiring freeze would not come amiss.

And a wholesale purge of paperwork, futile metrics, useless data calls, and so forth would be MOST welcome.  Powerpoint has crippled us, database feeding will finish us.

Salty Gator said...

Yup.  QDR was supposed to do that.  I walked out of that effort with a T shirt that said "I played in QDR and all the Fleet and Congress got was this lousy Maritime Strategy and No 30 Year Shipbuilding Plan."

Salty Gator said...

How do you separate the Greek general officers from the Greek cadets?

Salty Gator said...

True, but we in the military and the military community need to stop being used as a tool for politicians of both parties to show how "strong on defense" they are by simply competing to boost salaries. Nobody joins the military to get rich.  If you want to fight and get rich, join Blackwater.

Anon said...

Easy, Butch.  Which part of the Constitution requires a Department of Defense?  Pretty sure that Congress can raise and support armies, and provide and maintain a navy, and that every appropriation for the army must be re-authorized every 2 years.  Doesn't sound like a ringing endorsement for DOD being a constitutionally required function. 

Hell, I'd imagine that disolving DOD and all the armed services tomorrow would be legal...

MR T's Haircut said...

(note bene: "Bless his/her heart" = short bus )

Skippy-san said...

Yea, but three big missions we are signed up for can go away tomorrow. Iraq, Afghanistan, and War on Drugs. Those alone would save a boat load of money. And those are not paper  missions-but involved real time away from home and sacrifice.

Skippy-san said...

But this year at least, Congress is not getting a raise. The military is. Granted Congress makes a lot more money so they can afford it.

The missing link is personnel costs still pale in comparison to weapon systems aquisition costs. If we were buying a cheaper frigate instead of LCS pay raises could be funded no sweat.

Skippy-san said...

Friedman is one to talk-how much money did he make last year praising Indians? ( and not native americans). His house is how big?

UltimaRatioRegis said...

Anon,

Then we can have more money for entitlement spending!  Why, we could fund health care!  Or, um, a third of it. 

"No More War!"  And there wouldn't be, either.  Of course, we would be subjugated and live as slaves, but then, what is liberty and personal freedom compared to PEACE?

FCC said...

I think one of the smartest ways that Congress could "pad" a lower-than-years-before military pay raise would be to match TSP (y'know, like the congresscritters themselves get).  I could get behind a retroactive match, too, if it's not asking too much. 

I'd gladly take a 1.2% raise next year if they threw in the TSP match.

ewok40k said...

The last two times it took US being endangered itself to intervene in "fight for survival in Europe", namely Zimmerman telegram and Pearl Harbor...
And last time Poland was conquered, by Russians, they were allies to the US :)

Wharf Rat said...

Listen - Rush has been saying it for years, the liberals blame our military for every problem in the world, when in fact it's our military that fixes those problems.

Same thing on economic policy - the liberals all think it's endless money, rather than understand there's a limit.

If the liberals can cut our military, then the liberals can further control us. (that's a little black helicopter-thinking coming out)

Grumpy Old Ham said...

Seconded...well, except for the Gator-loving part.  ;)

I think you'd find central Florida to be fairly similar to SoCal, except with a few more bugs and a little more humidity, but fewer earthquakes.  At least that's how I felt about it when I lived there.

ActusRhesus said...

Ewok, elaborate please.

UltimaRatioRegis said...

Oh horsecrap, Ewok.  We could have fought only against the Japanese and left Europe to its own devices, and played the "arsenal of democracy" for the UK and the Free French.  But we didn't.  We expended more than a third of a million American lives in ten months, and lent tens of billions in 1940s dollars to allies who had no hope of paying it back. 

The pouring forth of US men and materiel in 1917-18 was the deciding factor in the defeat of the Central Powers, again at proportionately near equal cost to the other allies.  (Seven months of combat, 140,000 killed.)  Without it, the Germans are in Paris by April 15th.  From that came Poland.  Those loans to allies haven't been paid, either.

And it isn't America's fault that Poland lies where it does, between two war machines, and is such good cavalry/tank country. 

Those who criticize the size and cost of America's military should do an honest assessment of what the 20th century would have looked like without it.

Byron said...

Ewok, it would have taken the US about two years to defeat Japan, had we not decided from day one to make Europe the #1 front and focus of our war making machine. The Pacific war got the leftovers, Ewok. It wasn't until early 1944 that serious amounts of men and material started to show up in the Pacific. By that time, we'd finished Africa, took Sicily and were kicking the Germans out of Italy.

Anonymous said...

Fact is that all govt functions need to be cut -- including the military. This country is flat broke.

I suspect that if some of the military "goes Greek" over this, they will be put down like rabid dogs so fast it would make your head spin. It is not a laughing matter.