Proposed Defense Budget Attacks Housing, Medical Problems

In addition, the 2001 budget hits the $60 billion procurement mark DoD has been trying to reach since 1995.

The Clinton administration is asking Congress for a $291.1 billion defense purse. This is a $13.5 billion increase over the actual fiscal 2000 defense authorization. The 2001 budget continues the administration's planned $112 billion increase through fiscal 2005.

The budget breakdown for the services is $70.6 billion for the Army, $91.7 billion for the Navy and Marine Corps, $85.3 billion for the Air Force and $43.5 billion for defensewide spending.

In fiscal 2000, DoD concentrated on two of four quality of life "pillars" -- pay and retirement. In the 2001 budget request, the department will address the other two -- housing and medical care.

"On housing, we have a major initiative [Defense Secretary William S. Cohen] announced last month to put $3 billion into additional housing allowances with the intent of driving … out- of-pocket expenses … to zero by the end of [fiscal 2005]," a senior defense official said.

He said the Basic Allowance for Housing currently covers only about 81 percent of service members' housing costs if they live off base. DoD seeks to cut this 19 percent out-of-pocket expense to 15 percent in fiscal 2001 and to zero by 2005. The official said giving military families larger tax-free allowances might make living off-base more attractive.

The housing allowance increase also would encourage efforts to privatize family quarters, the official said. "Private developers use the housing allowance as a measure of their cost flow," he said. "By increasing the housing allowance, we are increasing their prospective cash flow from these privatization projects and making them more attractive for them to come in and join with us in this partnership."

Without housing privatization, DoD would only have enough money to renovate or build 6,000 to 9,000 housing units per year. With an inventory of 200,000 inadequate units, "we will never get there" if DoD uses only traditional construction financing methods. Using the privatization authority, DoD believes it can renovate or build 20,000 units or more per year.

The housing privatization authority runs out in fiscal 2001, and DoD is asking Congress to extend it.

The senior official called DoD medical care "a story in progress." DoD wants the budget boosted to address two medical access issues for service members. The first is for service members stationed in remote areas. DoD would provide TRICARE Prime for the families of those service members. "The active duty member had that benefit, but their families didn't," said the official. "They will now."

DoD added money to TRICARE Prime to eliminate co-pays for service members using civilian facilities. "It's an equity issue," the defense official said. Service members treated at a military facility have no co-pays, while those treated in a civilian facility currently do.

DoD also added money to support the pharmacy benefit and a custodial care benefit.

"It doesn't end there," said the official. "We still have two [medical] issues out there." The first is DoD has not identified and paid all contractor claims for increased costs.

The second concerns what is adequate health care coverage for over-65 retirees. "This group in particular is being pressed because the benefits they had from their military service in the past has been space-available in military treatment facilities. They're being squeezed out of that as our medical structure is downsized and as the retiree population has increased."

The official said Defense Secretary William S. Cohen and Army Gen. Henry Shelton, chairman of the Joint Chiefs of Staff, are reviewing a number of the proposals now. "There are two things you need to know in the end," he said. "One, there's a very big issue involved here, the question of equity and keeping faith with retirees. Second, there's a very big bill with any proposal."

He said the bill for these proposals could be anywhere from $3 billion to $5 billion per year.

Procurement in fiscal 2001 is proposed for $60.3 billion. The services' shares break down at $10.4 billion for the Army, $26.6 billion for the Navy and Marines, $21 billion for the Air Force; and $2.3 billion for defensewide procurement.

Big-ticket items in the Army procurement request include the Bradley fighting vehicle and M-1 Abrams tank upgrades. The Army and Navy will buy 25 more UH-60 helicopters for $500 million. The official said the service will spend $7 billion through fiscal 2005 on the new lighter vision for the Army.

The Air Force will spend $3.1 billion for 12 more C-17 airlifters and $4 billion for 10 F-22 air superiority fighters. The Air Force has also programmed $600 million for the Joint Strike Fighter program.

The Navy will finish procuring the last Nimitz-class aircraft carrier and has programmed money for three DDG-51 destroyers and an LPD-17 assault ship.

The Marine Corps would put down $138 million for advanced amphibious assault vehicles and $1.9 billion for 20 V-22 Osprey tilt-rotor aircraft.

National Missile Defense would receive $1.9 billion under the request, while theater missile defense would receive around $1.7 billion in fiscal 2001.

The budget calls for two new rounds of base closures and realignments in fiscal 2003 and 2005. Defense officials maintain the department will save $3 billion annually once the new BRAC rounds are completed.

Operations and maintenance accounts are set at $109.3 billion in fiscal 2001. It maintains tank miles, flying hours and steaming days per quarter at about fiscal 2000 levels.

Research and development is set at $37.8 billion for fiscal 2001. Army share is $5.3 billion; the Navy, $8.5 billion; the Air Force, $13.7 billion; and defensewide, $10.2 billion.

The fiscal 2001 military construction budget is set for $8 billion and would fund over 300 major construction projects at more than 225 locations worldwide.