The 2018 Defense Budget has been released by President Trump. However, what you see discussed in news headlines and blog posts is related to the President’s proposed budget until this request has been approved and signed into law. Regardless of the fate of the current Defense Budget Request, these proposed changes are important since they reflect the fiscal goals and intent of the current administration toward military spending.
According to the U.S. Department of Defense (DoD), the President has requested $639.1 billion, $574.5 billion “in the base budget” and $64.6 billion “in the Overseas Contingency Operations (OCO) budget.” This defense budget request is $52 billion above the defense budget cap in the Budget and Control Act (BCA) of 2011, according to a press release by the DoD.
Pay Raises, Manning Levels
At the time of this writing, the defense budget includes the following:
- 2.1% pay increase for military members. This is less than the 2.4% under the formula in current law
- 1.9% pay raise for civilian employees
- 2.9% average increase in Basic Allowance for Housing Rates with 96% coverage of housing costs
- 3.4% increase in Basic Allowance for Subsistence
- Sustainment of FY 2017 National Defense Authorization Act increased manning levels
- Modification of the military’s retirement system, “to allow enlisted members beyond 26 years to receive government contributions under the Thrift Savings Plan” according to
Defense.Gov
Housing Allowances, Healthcare, Retirement
Under the section “Military Compensation Proposals-Going Forward”, there is no individual dollar-for-dollar comparison of 2017/2018 BAH, BAS, hazardous duty pay, or other compensation. However, specific mentions of TRICARE and military retirement plans included the following:
- Streamlining of the current TRICARE system, with a proposed Military Treatment Facility “in-network” and “out-of-network” cost sharing
- “Modestly higher” deductibles and co-pays
- Increased pharmacy co-pays and fees for working-age retirees and families
- “Proposed legislative changes” that would permit enlisted members serving more than 26 years to continue receiving Thrift Savings Plan matching contributions
- Slight decrease in child care funding
A New Military Retirement System
The 2018 Defense Budget request includes a proposal for new “blended military retirement” which includes “a defined retirement pay system” that employs a 2.0% multiplier rather than 2.5%. The new retirement plan would also include a 1% government contribution to military Thrift Savings Plan (TSP) accounts, and matching government contributions to military TSP that are identical to the system used by civilian federal employees. There is also a proposed bonus paid to military members between year eight and year 12 of military service.
The new blended military retirement system would affect those who join the military after 1 January 2018, and currently serving military members who have less than 12 years of military service and choose to opt-in to the new plan.
Base Realignment And Closure
According to the 2018 Defense Budget Request Overview book published by Defense.gov, the Defense Department has approximately “20 percent more infrastructure capacity than required for its operations” and a request for a new Base Realignment and Closure round is part of the 2018 request.
At the time of this writing, that round is requested for the year 2021, but as BRAC has potentially major effects on assignments, family housing, and related issues, this is a topic to watch.
Defense Budget Approval Timeline:
May 23, 2017 – DoD Releases Fiscal Year 2018 Budget Proposal
Summer 2017 – Congressional committees submit “views and estimates” of spending and revenues.
Summer/Fall 2017 – House & Senate Armed Appropriations Committees work on the FY2017 defense bill.
Summer/Fall 2017 – House of Representatives and Senate pass their versions of the defense bill and negotiat differences.
November/December 2016 – The House of Representatives and Senate pass the final version of the defense bill.
December 2017 – President Trump signs the defense bill into law.
Compare to the 2017 Defense Budget that went into effect on January 1, 2017. For more detailed information on the 2018 Defense Budget proposal, visit the Defense Budget Overview document.
If the budget is enacted the changes would go into effect on January 1, 2018.