DOD’s Guns Versus Butter Debate

[unhappycamper]

DOD’s Guns Versus Butter Debate
By Greg Grant Tuesday, June 1st, 2010 5:12 pm
Posted in Policy

The Center for Strategic and Budgetary Assessment’s Todd Harrison has a new paper out warning that DOD is fast approaching a difficult choice: either fund the people or the weapons they operate, it will soon reach the point where it can’t do both.

Harrison has been warning anybody who will listen about the labor cost challenges at DOD for some time now. Last fall, he wrote a piece warning that DOD potentially faces a GM sized fixed labor cost problem, necessitating a massive increase in federal dollars, a “bailout” in essence.

His latest paper lays out what he calls DOD’s internal “guns versus butter” debate. The butter includes pay and benefit increases that have what economists call “stickiness”: they are almost impossible to rollback. The increase in pay and benefits that congress allots DOD each year will crowd out investment in research and new weapons.

First a sense of the scale of the problem: with some 2,250,000 people on the payroll, DOD is the single biggest employer in the U.S., public or private sector. In fact, DOD has more people on its payroll than Wal-Mart (1.1 million) and the Post Office (600,000) combined. The size of the payroll means any changes, even seemingly minor year-to-year increases in pay or benefits, have an outsized effect on the defense budget because of the compounding and cumulative effects of pay hikes.

Since 2000, the cost to pay and care for one active-duty serviceman has increased 73 percent in real terms: from $73,300 to $126,800 today.



unhappycamper comment: Interesting, as I had posted a thread yesterday on the same subject.

Of course the military is talking about the 'soldier pay and benefits' vs. 'research and development of new weapons'. My thread was talking about all the civilian things (butter) vs. all the military things (guns).