THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Wednesday, July 13, 1994 TAG: 9407120343
SECTION: MILITARY NEWS PAGE: A12 EDITION: FINAL
SOURCE: BY TOM PHILPOTT SPECIAL TO THE VIRGINIAN-PILOT
LENGTH: Medium: 72 lines
President Clinton appears ready to scrap his commitment to military pay caps, deciding that it's an unpopular, ineffective way to reduce the federal deficit.
In fact, in what could signal a dramatic reversal, top Clinton officials are weighing the possibility of military catch-up raises starting in January 1996 to trim today's 12.3 percent pay gap with private sector salaries.
Ironically, military leaders who have complained about the pay gap might be forced in the next few months to reject a catch-up option because it will compete head-to-head for scarce dollars with other defense programs.
For the time being, however, catch-up raises are one of the four options under study for the fiscal 1996 budget. The Pentagon will submit that budget to Congress next January.
The four raise strategies under review are:
Support current policy by capping pay raises 1.5 percent below private sector wage growth through fiscal 2001. Under current projections, wage growth is expected to be 3.7 percent next year. If that holds true, the 1996 raise would be capped at 2.2 percent.
Support current law that would keep military raises one-half percent below private sector wage growth to help fund locality pay for federal civilian employees. That would mean a 3.2 percent military raise.
Back a change in law so military raises match private sector wage growth as measured by the government's Employment Cost Index(ECI). This would mean a 3.7 percent hike.
Begin to close the pay gap by setting raises each year at ECI plus two percentage points. This would support a pay raise of 5.7 percent.
Option four is so costly that Pentagon support is doubtful. Each percentage-point increase in military pay adds approximately $500 million annually to the defense budget.
It is quite likely, however, that military people have seen the last of option one, Clinton's series of pay caps.
Three factors appear to be behind the administration's shift on military pay. First, from a political standpoint, the Clinton team realizes its effort to block a pay raise last January, and to impose a pay cap of 1.6 percent next January, only lowered the president's standing with the services and gained nothing for him in deficit reductions. Congress in each case rejected the plan, supporting a 2.2 percent pay raise this year and a 2.6 percent hike for next January.
Second, service leaders have warned that constant talk of pay caps, on top of perceived erosion in other benefits, could cause a sharp decline in force quality, morale and therefore, readiness.
Third, Clinton himself might have experienced an epiphany of sorts. One source said that Clinton - within a week after commemorating the sacrifice of U.S. servicemen in Normandy on D-Day - was disturbed after reading a New York Times story on the rising incidence of food-stamp usage among young service families. The article reportedly moved Clinton to ask the Council of Economic Advisers to review the adequacy of military pay.
Service officials are pleased that pay raises are becoming a key issue for the Pentagon in the 1996 budget. Military pay hasn't received such attention since early in the Reagan administration. But by elevating the pay issue, Defense Secretary William Perry will also determine how serious the services are about closing the pay gap when it means taking hundreds of millions of dollars from other programs.
``How many people, how many destroyers, are they willing to give up?'' said a defense official. He speculated that, when the debate is over, the services will support raises no larger than ECI minus one-half percent, or a percentage point higher than current administration policy. MEMO: Tom Philpott, who has covered military news for 17 years, is a
freelance writer living in Centreville, Va.
by CNB