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DoD News Briefing, Subject: Military Pay and Retirement, December 21, 1998 at 4:15 p.m. (EST)

Presenter: Secretary of Defense William S. Cohen
December 21, 1998 4:15 PM EDT

[Also participating in the briefing was General Henry H. Shelton, U. S. Army, Chairman of the Joint Chiefs of Staff]

Secretary Cohen: Good afternoon.

The United States has the best military in the world and our forces demonstrated this during Operation DESERT FOX this past week. Every day U.S. soldiers, sailors, airmen, and Marines along with members of the Coast Guard work together to protect our national interests around the world and our freedom and prosperity here at home.

The key to our strength is the men and women who serve us in uniform. One of my primary responsibilities as Secretary of Defense is to assure that we recruit and train and retain the best people we can possibly find.

Military training is difficult and extensive. It takes five to seven years to train an Air Force flight line maintenance supervisor. It takes 18 years to become a skipper of a destroyer and 28 years to groom an armored division commander. For this reason I've been working with President Clinton, Chairman Shelton, Vice Chairman Ralston and all the Service Chiefs, who are here with us today, and the Senior Enlisted Representatives to make sure that military pay and retirement systems adequately reward the experienced men and women in our military.

I'm pleased to announce a package of significant pay raises and retirement improvements for the nation's men and women in uniform. These are going to be part of President Clinton's fiscal year 2000 budget.

The Department's pay and retirement package has three main parts. First, across the board pay increases for all service members. Beginning January 1st in the year 2000, we will increase pay across the board by 4.4 percent, and by 3.9 percent annually in the fiscal years 2001 through 2005. This increase is the largest in basic military pay in nearly a generation. It is necessary to compensate our servicemembers adequately and fairly.

Second, targeted pay raises and greater reward for performance. In addition to these across the board increases, we are proposing targeted raises for noncommissioned officers and mid-grade commissioned officers. This is going to enable us to do a better job in rewarding performance, compensating people for their skills, their education, their experience, and also to encourage them to continue their military service. These targeted raises are also going to help narrow the wage disparity with the private sector.

We're also reforming the pay table to make raises for promotion bigger than for those for longevity. Taken together, these improvements in the pay table are going to reward performance.

The maximum targeted pay increases are going to range from 1/2 of one percent to 5.5 percent. The targeted raises will come on top of the 4.4 percent that everyone will receive beginning January 1st the year 2000. The targeted increases will take place and take effect on July 1 in the year 2000.

Third, the improvement of the retirement system. The retirement system that applies to servicemembers who entered after 1986 is a major source of dissatisfaction. They receive 40 percent of their basic pay when they retire after 20 years, while members who began their service prior to 1986 receive 50 percent. The change was made in the Cold War era following large pay raises. It was designed to encourage members to stay longer to become eligible for retirement.

Today in this uncertain time of high demand and smaller forces, the retirement change -- popularly known as Redux -- is undermining morale and it's hurting retention. Therefore, we are committed to returning the 20 year retirement to a 50 percent of base pay.

This is a good package. It addresses the real concerns that men and women in uniform have raised with me during my visits to ships and bases this year, and it also responds to market forces. It's going to help reward performance. These significant changes come into a broader context of a continuing effort to achieve adequate military compensation and benefits. That effort includes improved housing allowances, food allowances, cost of living, as well as targeted bonuses and special incentive pay to recruit and retain skilled men and women who protect our country.

We believe this package will be fair and effective. We need to compensate men and women in uniform properly in relation to their peers and in relation to the larger economy. The compensation system must help our services recruit and retain the high quality men and women that our defense requires.

The leadership of the Department of Defense and the military services are deeply committed to providing for the welfare of the men and women who serve this nation so well and for their families, and I intend to work with Congress to win approval of this proposal. The nation requires effort, dedication and sacrifice from our soldiers, sailors, airmen and Marines. They are, in fact, the pride of our nation. They're working harder than ever to take care of us, and we have to act now to take better care of them.

It has been my privilege to work with the Chairman, who is with us today, along with, as I indicated, the Vice Chairman and the Service Chiefs, to work with President Clinton and the Department of OMB to put this package together. We think this is going to make a significant difference in the lives of the people who serve us.

General Shelton: Thank you, Mr. Secretary. And thank you also for your strong and unwavering support of our men and women in uniform.

I'd also like to thank the other members of the Joint Chiefs -- General Ralston, General Reimer, Admiral Johnston, General Ryan, Vice Commandant Terry Dake, and also the Commandant, General Chuck Krulak, and also the Coast Guard Commandant, Admiral Jim Loy, and also their Senior Enlisted Advisors for helping make this very important announcement possible.

All told, the Joint Chiefs and their Senior Enlisted Advisors represent more than 300 years of combined military experience. I think that's one reason that the message we took to the President and to the Congress this past fall carried so much weight. These leaders have lived through the terrible years of the hollow force, and they're determined that they will never stand by and allow our superb military force to sink to that level again.

We are very pleased that the President understood our concerns and made this commitment to sustain the quality of our armed forces and to ensure that the men and women who have chosen to serve this country will receive competitive pay and a retirement package that represents the very special demands of military life.

We appreciate that many members of Congress have expressed strong support for these initiatives, and we plan to work closely with them to ensure that we get the legislation required to fix the Redux retirement system and to implement the pay table reform, both outlined by Secretary Cohen.

Most of you watched closely this past week as we conducted military operations against Saddam Hussein's military forces and his weapons of mass destruction program. Inevitably during these operations attention is focused on the effectiveness of our aircraft, our precision guided munitions and our missiles. Our technology is impressive. But what sets the U.S. military apart and what makes our armed forces the envy of every other nation in the world is the talent, the skill, the dedication -- in short the extraordinary quality of our soldiers, sailors, airmen, Marines, and coast guardsmen.

Indeed, the men and women of our armed forces make their complex and dangerous missions look so effortless that we all risk the chance of taking this excellence for granted. We must not allow that to happen. The future of our military effectiveness is in our outstanding young second- and third-term noncommissioned officers and the superb junior and mid-grade officers who lead them.

Our action today will send a strong signal to our troops. It will tell them that we have heard their concerns about retirement, about pay, and about the pace of operations, and that we are taking decisive action to address their concerns because they deserve no less.

As I've said many times, people are more important than hardware. Our future readiness and our ability to meet America's defense requirements in the 21st century hang in the balance, and we must make the right decisions today.

In an hour I'll leave for Europe to visit our troops in Bosnia. Several other members of the Joint Chiefs will make similar trips during the coming days. Each of us will carry an important message -- a message that our country appreciates the sacrifices of our men and women in uniform, particularly during this very special time of the year. We'll also now be able to tell them of the initiatives that we're taking to ensure that they are appropriately compensated for their dedication and their efforts.

Again, adopting these compensation initiatives now is the right decision if we are to sustain the quality force that will enable us to safeguard our nation's vital interests and meet our global security requirements in the years ahead.

Now Secretary Cohen and I will be happy to take your questions.

Q: Mr. Secretary, you said that you're committed to returning 50 percent retirement, but is that reflected in your budget? Have you set the money aside to pay for that change?

Secretary Cohen: First of all, to make the change from the 40 to 50 percent will require a legislative change. But we have factored that into account. I believe that we'll be successful in changing the law, and we have taken that into account.

Q: That money is in the budget right now? You set aside the $5.2 billion that will pay for that or ...

Secretary Cohen: We're not going to discuss numbers today for a very simple reason. We'd like to give the President an opportunity to present his budget publicly. But that will come in due course, and we'll have a rollout of the budget and we can discuss specific numbers.

Q: This is awfully good news for the people in uniform, but I'd like to go back to some other good news about the four-day operation over Iraq. I understand -- tell me if I'm correct -- that ...

Secretary Cohen: That may be the shortest time we've had to discuss some good news on this subject matter, before we get to the good news on the other, but ...

Q: It's good news there were no Americans killed, no Americans wounded. Were any aircraft even hit? Were any of our forces even hit or nicked in this operation? And how could it could be done in this fashion when there's no casualties?

Secretary Cohen: General Zinni was here to make a presentation earlier, and I believe he indicated we suffered no casualties. To my knowledge there was no wounding of any of our people. No one can really explain what Saddam has done or failed to do, and no one would try to determine what lurks in his mind or in the mission of his armed forces. We'd only be indulging in speculation.

It may be that they're not capable of adequately responding, didn't want to run the risk of having their systems targeted should they turn them on to try to fire upon our aircraft. A number of reasons could be in play, but we're only speculating.

Q: There was a deliberate plan and strategy by the U.S. military to avert damage to equipment or casualties of men, is that correct?

Secretary Cohen: It is always our intent when we carry out any military operation to do so with as little risk to our forces as possible, and with a minimum risk to innocent civilians on the part of the Iraqi people.

Q: The pay table reform and retirement reform as compared with the across the board pay raise. We were told a couple of hours ago by an official that about 70 percent of the dollar impact of this package over the FYDP is the across the board raise rather than the retuning. There are an awful lot of military manpower experts in this city up on the Hill, around here, who think that the across the board component, this 14 percent pay gap, has taken on a life of its own and there's not much behind it. There's not much comparable data. There's a CNA study that purportedly shows the size of retirement moves from the sixth most important reason for leaving to the fifth or something like that.

Was there any consideration given to trying to redefine for the troops the significance of Redux, the people at the 10-12 year point making the stay or go decision?

Secretary Cohen: I think we have been convinced, the Chiefs are convinced and virtually everyone we've talked to, that the retirement issue is an issue of major concern to our young people. We have a large majority of them that are going to be making a decision in the near future in terms of whether they're going to stay in. As General Shelton just pointed out, we have achieved a remarkable degree of success this past week in large part due to the high quality of the men and women who are in our service as well as the equipment which they have to operate. But we believe this is a key ingredient to encouraging them to stay. It's something that is frequently mentioned to me in all of my travels. So the across the board pay plus the restructuring of that pay table has been important to them.

Q: Mr. Secretary, can you tell us anything more about how the targeted raises will work? For example, you mentioned already that people who get promoted would get more than just the annual increase. Would there also be special increases for particular specialty areas that the military is trying to hold onto? How will those kind of determinations be made?

Secretary Cohen: There will continue to be those sorts of incentives and bonuses, but they do not go into the retirement system as such, so they will continue, but these will be in addition to that. How that will be determined, of course, will be left up to one of the officials who briefed you earlier, to make a determination. I indicated it will go from one-half of one percent up to 5.5 percent, depending upon the level of expertise and the level of performance that's been achieved.

Q: Mr. Secretary, is this 3.9 percent each year in the out years, is that conditional? If wage growth in the private sector is 3.9 percent, you'll match it, but if it's 2 percent, wouldn't that be what the raises would be in the out years?

Secretary Cohen: We can only plan and budget according to a five - or six-year assessment. That's what our plans are at this point. Any changes that will be made would have to take into account what the economy is, but that's what our projections are.

Q: Mr. Secretary, how does this fit into our long term readiness goals? In other words, do we have any assurance that these benefits won't be lost again?

Secretary Cohen: I think what we're indicating is that we've been listening to the men and women who have been serving us and continue to do so in an extraordinary fashion. We are sending a very strong signal that we place a premium on their service. We want the best that we can attract. We're working in an environment in which it's very hard to compete against a robust economy such as we have. We want to send a signal to them that we are determined to make sure that we give them as much incentive to come in and to stay in the military as we possibly can.

So each Secretary, each Department head, will have to make a determination in future years, but if we're going to maintain the high quality that we have today, we're going to have to continue to be able to compete effectively with the private sector. And we can't just do it based on pay alone. I think the Chairman and others have mentioned this before. Men and women don't [don] the uniform for pay alone. It's important, but there are other gratifications and rewards that they derive from military service which will continue to be important factors.

We are also trying to deal with the other issues as far as the operational tempo and the personal tempo, the burdens that are placed upon them and their families. That is a management problem that we are dealing with. The Chairman can talk at length about the changes that have been made in trying to reduce training exercises, trying to reduce the paperwork, trying to manage better the deployment schedule so we give people more time home with their families. All of that is part of our effort to retain the best and brightest.

Q: General Shelton, do you worry about the impact of morale in giving a raise in mid year just to certain troops? Say you have a ship at sea and half the troops are going to get a pay raise and half are not during the summer months?

General Shelton: First of all, I think that as Secretary Cohen has explained, every troop would get a raise, it will be across the board. But there are certain areas that are targeted in the pay table reform to make it a system that is based on performance, recognized promotions, and things of this type.

For example, let me give you one concrete [example]. If you look today at our system, if you take one of our great staff sergeants that has eight years of service, you'll find that one of his subordinates who may be a sergeant, an E-5 pay grade, who has 14 years of service, makes as much or more than he does. So we're targeting that, and that's part of the retention concerns we have. We think it will assist us with retention.

Q: Secretary Cohen, if I could ask you a question sort of off the beaten path. A former colleague of yours, Senator George Mitchell, is being considered in a role by the White House to act in effect as a negotiator with the Senate. I'm wondering if you could offer your opinion in terms of his qualities, the qualities that Senator Mitchell might bring to bear in terms of negotiating and working with the Senate in a situation like this one.

Secretary Cohen: That really is off the path for this press conference, but let me say that I worked many years with George Mitchell in the Senate. He's one of the most skilled individuals that I ever had the pleasure of working with. He is a very skilled negotiator. I think that his service in helping to bring about a peace agreement, as such, in Northern Ireland is evidence of his skills. If he in fact is brought on board to bring those talents to bear, I think he'll be very effective. But beyond that, I endorse him. I've written a book with him. And so we have a close friendship. I have not had occasion to talk to him in the last couple of years, but we still remain friends.

Q: Mr. Secretary, in terms of the pay raise and your working on the 50 percent retirement, was this accomplished under the balanced budget agreement, that top line? Or is this additional authority, budget authority, that you got?

Secretary Cohen: I really don't want to talk about top lines or other ways in which this was achieved until we have a chance to roll the budget out. I'm satisfied that we will be able to accomplish the pay reform across the board, the pay raises, the retirement, and the restructuring of the system, and also continue our modernization goals, all within a comprehensive package which we will roll out in the coming weeks.

Q: What is the state of play with the budget negotiations with the White House for DoD? How close are you to the $112 billion that the Chiefs said they need over the FYDP?

Secretary Cohen: Our negotiations have been completed, and I believe that we have achieved a satisfactory solution to the challenge.

Q: General Shelton, you back in December asked for a strong signal on the pay and retirement issue. In your view, is this the strong signal, or would you hope to get another signal next year on top of this? In some ways this looks like a lot less than meets the eye if the retirement program isn't funded, for example. The string of pay raises are less than, don't do much besides the targeted personnel, to close the pay gap. Is this the strong signal you're looking for?

General Shelton: We think this is a move definitely in the right direction. This levels off the decline and the gap, as it's been referred to. Certainly pay table reform gets our system so that it rewards quality, it rewards performance, and I think that's very important. Also the retirement starts to serve then again as an incentive vice as a disincentive for continued service. So we think that that total package is a very good package and a view that's shared by the members of the Joint Chiefs that are here today.

Secretary Cohen: It's also important to point out that the 13 or 14 percent pay differential is not across the board. That those who are first entry level individuals coming in we are quite competitive. Where we find the disparity growing is in those specialties, the people who have 8, 10, 12 years of high training and expertise and that's where there's a growing disparity. That's why we've tried to target these pay increases as such to those specialties.

Q: One more on Iraq, if you will. I know you've talked about this a lot, but we've heard about targeting the security and the control apparatus for weapons of mass destruction, and we've heard about targeting the means of delivering them. But there do not seem to be any targets that were actually weapons of mass destruction, production facilities. That's probably because you don't where they are. Am I correct in thinking that?

Secretary Cohen: That's the reason why UNSCOM was important to be on the ground. We have consistently for the past several years indicated that UNSCOM must be allowed to carry out its mandate. They are the best means we have of determining on the ground whether or not such facilities are being used either for fertilizer production or for poison weapon production. When Saddam Hussein effectively barred them from carrying out their job, we had to take an alternative course of action, and that was to degrade as best we could his capacity to deliver them. So we did not try to specifically target either factories that might be producing petrochemicals for fertilizer or for drugs or other types of non-weaponized use.

So we're hoping that Saddam Hussein will see the wisdom of allowing the inspectors back to do their job because he'll never find relief from those sanctions until such time as he does so.

Press: Thank you very much.

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