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The Honolulu Advertiser
Posted on: Monday, January 20, 2003

MILITARY UPDATE
President Bush calls for average 4.1% pay increase in '04

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, 50, enlisted in the U.S. Coast Guard in 1973 and served as an information officer from 1974-77.

By Tom Philpott

Rejecting a plan by his Office of Management and Budget to cap the 2004 military pay raise at 2 percent, President Bush instead will propose a "targeted" increase that would boost pay an average of 4.1 percent, higher than wage growth in the private sector.

If approved by Congress, next January's military raise will be capped at 2 percent only for new recruits. For all other service members, the pay increase will range from 3.2 percent to more than 6 percent. The biggest raises would go to senior enlisted. Most officers would receive a 3.7 percent increase, which would still be a half percentage point above private sector wage growth as measured by the government's Employment Cost Index.

Administration sources said Bush made the decision personally, resolving a disagreement between OMB Director Mitchell Daniels and senior defense officials. The outcome was even better for service members than expected. Defense officials had hoped to be allowed to have an overall military raise of 3.7 percent next January. Bush agreed to that, plus another 0.4 percent, to address more quickly a perceived pay gap between career enlisted and civilian peers.

Bush's specific targeting scheme will be delivered to Congress as part of his 2004 budget proposal in early February. The largest raises would be aimed at grades E-5 through E-9.

Bush's decision eases concern at the Pentagon of a raise cap plan being unveiled by this administration as forces build in the Persian Gulf for possible war with Iraq. OMB had told defense officials in early December to expect to cap military raises next year at 2 percent, almost cutting in half a 3.7 percent planned increase as called for under a 1999 law to close a military pay gap.

Daniels not only wanted a pay-raise cap next year, but proposed disconnecting future military raises from private sector wage growth and tying them instead to the annual inflation rate. OMB predicted the switch would save billions of dollars over the next decade.

But the logic and timing, as tens of thousands of service members deploy, stunned defense leaders who turned to Bush for relief. He rejected the OMB proposal, sources said, more than a week before visiting soldiers at Fort Hood, Texas, on Jan. 3.

Though Bush didn't announce his 2004 raise decision to soldiers there, he did say that he understood the "sacrifices of military families" and noted the 2003 defense bill he signed in early December supports "the largest increase in defense spending in a generation."

If Congress agrees with Bush's pay raise plan for next January, it would be the fourth consecutive targeted raise, including a special raise in July 2001, aimed at least in part at making mid- and senior-grade enlisted pay more competitive. The increase overall in 2004 would be 4.1 percent, but actual raises would vary by pay grade and, to some extent, time in service.

E-1s would see the smallest increase, 2 percent. Other junior enlisted would get 3.2 percent, enough to stay even with private sector wage growth. Grades E-5 through E-9 would see the biggest increases, up to 6.25 percent. All officers except the most junior would get 3.7 percent, matching the ECI-plus-a-half-percent formula. Officers in the rank of O-1 would get a 3.2 percent increase.

Charles S. Abell, principal deputy undersecretary for personnel and readiness, acknowledged at a Pentagon news conference Dec. 23 differences within the administration over 2004 pay raises. Defense officials, he said, continued to support military raises set a half percentage point above changes in the ECI, with special targeting to career enlisted members.

Abell also hinted a compromise was in the works, saying pay for "our most junior enlisted and our most junior officers is significantly better than pay of (civilian) counterparts, based on age and experience and education levels on the outside."

He based his comments, it later was learned, on findings of a Pentagon study group, the 9th Quadrennial Review of Military Compensation. In a report released last March, the QRMC said junior enlisted compensation compares favorably with their civilian counterparts. The report recommends extra pay increases for mid-grade and senior enlisted to recognize gains in their education levels over the past decade. The QRMC recommended only a modest pay increase for junior enlisted.

Some administration officials expect Congress to change the Bush proposal slightly, if only to ensure that junior enlisted grades receive the full 3.7 percent increase supported by law.

Questions, comments and suggestions are welcome. Write to Military Update, P.O. Box 231111, Centreville, VA 20120-1111, or send e-mail to: milupdate@aol.com.