The Congressional Budget Office (CBO) has identified a series of options policymakers can take to address the continuing high level of federal budget deficits and the growing federal debt. CBO issues such deficit reductions options annually.

In “Options for Reducing the Deficit: 2015 to 2024” CBO describes 79 options to reduce the deficit including spending cuts to mandatory and discretionary programs and revenue increases.  Included in the report are 10 options affecting the Defense of Defense (DoD) budget that range from caps on pay raises and pensions and cost controls on military health care to specific program cuts and cancelations.

Regarding military compensation, a CBO option would cap increases in military basic pay at .5 percent below the increase in the Employment Cost Index (ECI), saving $24 billion from 2016 to 2024. Current law requires military pay increases to be set at the projected full increase in the ECI, unless adjusted by the president or the Congress. 

CBO also proposes a cap on federal civilian pay raises.  Current law sets annual civilian pay raises at .5 percent below the increase in the ECI, unless adjusted by the president or the Congress.  The CBO option would reduce the pay raise called for under law by .5 percent, saving $54 billion for the entire government. 

Another CBO option would replace 80,000 military personnel performing so-called “commercial jobs with 53,000 civilian employees. This option, according to CBO, would allow DoD to cut military end-strength by 80,000 and could save $21 billion from 2016 to 2024.

CBO options would also affect military and civilian retired pay. One option would eliminate concurrent receipt of retirement pay and disability compensation for disabled veterans. Currently, military retirees who have disabilities as a result of combat and those retirees who have a VA disability rating of 50 percent or more receive full retirement pay and disability compensation (concurrent retirement and disability pay), without a dollar-for-dollar adjustment to retirement pay for their disability pay. The CBO proposal would end this concurrent receipt saving $112 billion from 2016-2024.

CBO also proposes consideration of cuts to military and federal civilian pensions. Currently military annual retired pay is based on the average of the servicemember’s basic pay over the 36 months of their career with the highest pay. Civilian retired pay is based on the average individual’s pay over the three consecutive years with their highest earnings. The CBO option proposes that military retired pay be based on a 60-month average and civilian retired pay on a five-year average. This option would apply to personnel who retired in 2016 and after and would save $2.5 billion in military retired pay and $3.1 billion in civilian retired pay from 2016-2024.

CBO options affecting military health care programs include both cost controls and benefit limitations. One option would increase enrollment fees, copayments, and deductibles for working age military retirees using TRICARE, saving $20 billion from 2016-2024. Under the second option, working age military retirees and their families would not be eligible for TRICARE Prime, but would allow them to enroll in TRICARE Standard (fee for service plan) or Extra (preferred provider network) at a premium that is 28 percent of the average cost. This option would save $76 billion over the 2016-2024 period.

Four CBO options affect specific DoD programs: F-35 Joint Strike Fighter; Ford Class aircraft carriers; ballistic missile submarines; and the New Long-Range Bomber.

One CBO option would cancel the F-35 Joint Strike Fighter and buy the most advanced versions of the F-16 for the Air Force and the F/A-18 for the Navy and Marine Corps, saving $41 billion from 2016-2024. Another option would end the Ford Class aircraft carrier construction program with the completion of the U.S.S. John F. Kennedy, authorized in 2013, saving $20 billion.

CBO also proposes an option cutting the number of submarines in the SSBN force to eight in 2021 by retiring one Ohio-class submarine a year during 2016-2021, saving $21 billion from 2016-2024. The beginning of the Ohio class replacement program would be delayed until 2021. And, a CBO option to defer development of the New Long-Range Bomber until 2015 or later would save $34 billion over the period.