Discretionary Spending

Function 050 - National Defense

Cap Increases in Basic Pay for Military Service Members

CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.

Billions of dollars 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2015-2019 2015-2024
Change in Spending                        
  Budget authority 0 -0.4 -0.9 -1.4 -2.0 -2.5 -3.2 -3.9 -4.6 -5.3 -4.6 -24.1
  Outlays 0 -0.3 -0.8 -1.4 -1.9 -2.5 -3.2 -3.8 -4.5 -5.3 -4.5 -23.8

Note: This option would take effect in January 2016. Estimates are relative to CBO’s August 2014 baseline projections. About 30 percent of the savings would be reductions in intragovernmental payments and thus would not reduce the deficit.

Starting in January 2016, this option would cap basic pay, which accounts for about 70 percent of cash compensation for active duty military personnel, to increases of 0.5 percentage points below the percentage increase in the employment cost index (ECI). Use of the ECI is the default for military pay raises under current law.