(CNSNews.com) - As promised in his Fiscal Year 2014 budget, President Obama has just informed Congress that he will cap next year's pay raise for U.S. military personnel at 1 percent, instead of the 1.8 percent raise set by the formula Congress established.
The announcement came on Friday afternoon, at the start of the long Labor Day weekend, in a letter to Congress.
"I am strongly committed to supporting our uniformed service members, who have made such great contributions to our Nation over the past decade of war," President Obama wrote to congressional leaders. "As our country continues to recover from serious economic conditions affecting the general welfare, however, we must maintain efforts to keep our Nation on a sustainable fiscal course. This effort requires tough choices, especially in light of budget constraints faced by Federal agencies."
Obama said he has decided to "exercise my authority under section 1009(e) of title 37, United States Code, to set the 2014 monthly basic pay increase at 1.0 percent" for members of the military.
"This decision is consistent with my fiscal year 2014 Budget and will not materially affect the Federal Government's ability to attract and retain well-qualified members for the uniformed services," Obama wrote.
Federal law says military pay raises must be based on the Employment Cost Index, which is a quarterly measure of changes in labor costs compiled by the Bureau of Labor Statistics. Congress came up with the formula to tie annual military raises to private sector pay growth.
And based on that statutory formula, military personnel should be getting a 1.8 percent pay raise beginning in January 2014.
However, the law also says if the president considers the pay adjustment inappropriate -- because of national emergency or serious economic conditions -- he may inform Congress of an alternative pay adjustment, along with his reasons for such a change.
And that's exactly what President Obama did on Friday.
The Military Officers Association of America (MOAA) recently stressed the importance of making military pay raises comparable to those of the average American.
"Over the past 12 years, Congress worked hard to fix the 13.5-percent pay gap (and resulting retention problems) caused by repeatedly capping military raises below private-sector pay growth in the 1980s and ’90s," Col. Mike Hayden, USAF (Ret.), MOAA's director of government relations, wrote in an article posted on MOAA's webpage.
"History has shown that once Congress starts accepting proposals to cap military pay below private-sector growth, pay caps continue until they have weakened retention and readiness."
Hayden explained in detail why the extra 0.8 percent in pay is a "big deal" for troops, calculating that it could cost an officer with 10 years of service and a pay grade of O-4 an additional $52 a month in FY 2014, or -- given compound interest and inflation -- $624 in the first year, or $8,000 over the remaining years of his or her career.
By age 85, the one-year cap could cost the servicemember an additional $20,000 in retirement pay -- for a grand total loss of about $28,000, Hayden calculated.
Although the House of Representatives passed a bill in July authorizing a 1.8 percent pay raise for military personnel, the Senate, in its defense authorization bill, has set the raise at the 1 percent recommended by President Obama.
As the Military Times noted, Congress could override the president's recommendation, but then it would have to find $580 million in 2014 to make up the difference between the 1 percent and 1.8 percent pay raises.
Military pay went up 1.7 percent in 2013, 1.6 percent in 2012, and 1.4 percent in 2011, respectively. But the pay hikes were much higher in previous years, as part of the effort to help military pay in the all-volunteer force catch up with that in the private sector.