This option is easier because it does not change the existing structure of pay and entitlements.
BAS: Provide BAS to all members, and require all members to pay for meals at the dining facility.
BAH: Eliminate “with” and “without” dependent rates. Have one rate at each installation. Provide BAH to all members and privatize the dorms.
COLA: Eliminate the “full” and “partial” rates for this entitlement. Have one rate for each location.
FSA: As described on the Entitlements page, members without dependents are also capable of experiencing increased expenses during extended TDYs and deployments. Change the name of this entitlement to be more inclusive, such as “Extended Temporary Duty (eTDY) Allowance” and make all service members eligible for the entitlement using the same criteria (i.e. number of days TDY). It could either be a universal amount, or it could vary depending on market factors (similar to COLA).
This option is better because it eliminates the welfare approach to entitlements.
First, let me explain what I mean by “welfare approach to entitlements”. BAS and BAH are not “earned income”. (If they were, they would be taxed.) These entitlements are provided because we “need” them. In other words, Congress is aware that our base pay is not adequate to afford the basic necessities of life, so they provide additional money because we “need” food and shelter to survive. Providing income based on what people “need” instead of what they “earn” is called welfare. Welfare is appropriate in certain circumstances, but military members are physically and mentally capable, and should not require welfare to survive.
Under the legacy retirement system, it was a fiscal necessity to have BAS and BAH as tax-free entitlements. If they were part of base pay, it would make retirement paychecks significantly larger, which would create an enduring burden on the nation’s budget. The new Blended Retirement System (BRS), however, could be modified to accommodate the solution below. (Since the BRS is based on percentages of base pay, it may be necessary to adjust the percentages used for the government's automatic and matching contributions.)
BAS: The solution for BAS is built into the solution for BAH, below.
BAH: First, identify the CONUS military installation with the cheapest local cost of living, then accomplish the following steps for each pay grade.
Step 1. Determine the “with dependent” BAH for the installation identified above.
Step 2. Determine BAS (officer or enlisted).
Step 3. Add the amounts from step 1 and step 2.
Step 4. Calculate the federal tax on the amount in step 3.
Step 5. Add the amounts from step 3 and step 4.
Step 6. Add the amount from step 5 to base pay.
Note: In effect, BAS and BAH just became earned income. The intent of steps 4 and 5 is to offset the increase in taxes so no one has a net decrease to their monthly bottom line.
Step 7. For all other installations (CONUS and OCONUS), utilize COLA to ensure members of equal rank have a commensurate standard of living regardless of where they are stationed.
Step 8. Privatize the dorms.
COLA: Same as Solution 1.
FSA: Same as Solution 1.