Military Update
Targeted raises in January follow July pay hikes

By Tom Philpott

Military Update focuses on issues affecting pay, benefits and lifestyle of active and retired servicepeople. Its author, Tom Philpott, is a Virginia-based syndicated columnist and freelance writer. He has covered military issues for almost 25 years, including six years as editor of Navy Times. For 17 years he worked as a writer and senior editor for Army Times Publishing Co. Philpott, 49, enlisted in the U.S. Coast Guard in 1973 and served as an information officer from 1974-77.

All enlisted members would see basic pay rise by at least 6 percent in January. All officers would get at least a 5 percent raise. But tens of thousands of enlisted service members and officers are in line for even bigger raises under a "targeted" military pay plan announced Wednesday by the Bush administration.

Defense officials declined to release a chart showing exact percentage raises planned based on pay grade and years in service. Those figures still aren't final. But E-9s, it was learned, would see an average increase of 9.5 percent; E-8s an average of 9 percent; E-7s an average of 8.5 percent, and E-6s and E-5s an average of 7.5 percent.

Some pay grades — E-5 and E-6 — will see wider disparities in raises across the individual grades once charts are released, sources said. And the most senior enlisted grade — E-9 with more than 26 years — would get a 10-percent raise. Some warrant officers — W-1 and W-2, with relatively few years in service — would see the highest raise, 11 percent.

The targeted pay scheme is the result of months of internal debate between defense officials and the services over how best to implement President Bush's campaign promise to add $1 billion to military pay during his first year in office. After becoming president, Bush learned that he actually had to add $1.4 billion to basic pay in 2002 to keep his pledge. That's because the 2002 budget President Clinton left behind already was $400 million short of what was needed to raise pay under a formula Congress adopted a couple years ago.

Behind the targeting decision is recognition that pay of career enlisted members, given educational gains and responsibilities, should not be compared to pay of high school graduates but to civilians with some college experience.

"The bottom line of what drives it is retention," said a senior defense official. By the time enlisted members advance to E-8 or E-9, he said, many have college degrees and are looking at salaries elsewhere.

The Bush proposal would raise basic pay, overall, by 6.8 percent. Congress appears ready to approve that, or to add to it.

• Yesterday, mid-grade enlisted members received their second raise of 2001. Members in pay Grade E-5, with eight or more years of service, saw basic pay rise 1.6 percent to 1.8 percent, depending on length of service. E-6s with eight or more years got a raise of 2.2 percent to 2.5 percent. E-7s with eight to 24 years saw basic pay climb 2 percent to 2.6 percent.

• The 2002 defense budget is the first to reflect full cost of TRICARE-for-Life and TRICARE Senior Pharmacy programs, which Congress passed last year to restore lost medical benefits to service elderly. To some Pentagon officials and even some seasoned defense beat reporters, the rise in medical costs in a single year made for some eye-popping budget numbers, from $12.1 billion in 2001 to $17.9 billion in 2002. The $5.8 billion difference reflects a 48 percent rise in medical costs in a single year. Some of that will be softened in 2003 by a shift to "accrual accounting" for elderly health care. For now, medical care costs drive a third of the total $18.4 billion increase in defense spending planned by the administration.

The new TRICARE programs — what service elderly prefer to describe as long overdue steps toward keeping the promise of lifetime health care — will add $4 billion in medical spending for 2002. The other $1.8 billion is the effect of using more realistic health care inflation estimates, such as 15-percent growth in pharmacy costs and 12-percent growth in TRICARE support contracts, than were used during the Clinton administration.

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