Sequestration Budget Cuts Continue: BAH, COLA, Pay Raises, and More on the Chopping Block

The sequestration related budget cuts are forcing the Department of Defense (DoD) to start getting creative on how they look for ways to cut the military budget in the coming fiscal year(s). We recently shared that the DoD has considered halting promotions and PCS moves for the next fiscal year. Personally, I’m not convinced this is a feasible option, as the military will need to promote troops to backfill those who leave through normal separations and through retirement. Halting promotions would create an imbalance in the rank structure, most likely leaving the military with too few people in the middle and upper middle ranks. Halting promotions is also not very feasible due to Status of Forces Agreements (SOFA), training requirements, deployments and other military needs. But it’s very possible the military will start reducing promotions or PCS moves, even if they don’t cut them entirely.

Another recent article is taking this a step further, stating the DoD is looking at cutting additional benefits, including:

  • Reducing Basic Allowance for Housing (BAH) benefits to require US based service members to pay more out of pocket.
  • Reducing Cost of Living Allowances (COLA) for overseas military members.
  • Capping pay raises for military and DoD civilians.
  • Removing the taxpayer subsidy for military commissaries (which would effectively close commissaries in many places).
  • Changing TRICARE benefits for retirees in order to require them to use employer-sponsored health insurance when available.

Of course, other cuts would also need to happen to meet the mandated budget cuts. Some cuts would be sure to include weapons system cuts, Morale Welfare and Recreation (MWR), base activities, and more. But the benefits are w

These Proposals Would Save Money, but Hurt Service Members and Veterans

I think all military members and veterans understand the need to cut waste and make reductions. Our government needs to make massive changes. But passing the buck onto the average military member doesn’t solve waste at the highest levels. Cutting pay and benefits will only serve to put average military members and veterans into a worse financial position.

Perhaps the biggest potential cuts are modifying TRICARE benefits for retirees to require them to use employer-sponsored health care when available. Healthcare is one of the fastest growing expenses for people in the US, and shifting that burden to retirees creates a large burden they must make up.

While I don’t think we will see these changes accepted as written, we may start seeing some of these changes slowly creep into the laws. Commissaries have already gone to reduced hours, and many stateside commissaries are facing tough competition from local grocery chains. Pay raises are already expected to be lower over the next few years. BAH and COLA rates aren’t rising much right now, as the cost of housing dropped in many locations when the real estate bubble burst.

It’s important to remember that many of these changes are simply the Department of Defense playing “what-if” with the numbers. Actually implementing these proposed changes would be more difficult than it appears, as multiple laws would need to be rewritten. I would hate to be the Congressman or woman who sponsored that bill!

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Date published: August 6, 2013.

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Ryan Guina is the founder and editor of this site. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is currently serving in the IL Air National Guard. He also writes about money management, small business, and career topics at Cash Money Life. You can also see his profile on Google.


  1. kenneth smith says

    i sure would like to cut both members pay by $ 50.000.00 a month and let them see what is like for them, or see them out on the streets to.

  2. JW says

    Wouldn’t have much affect as 52% of Congress are millionaires…

    Now you see one reason why they don’t do much work.

  3. John Tobias says

    Just so I understand: The U. S. Government has enough money to pay for the Obama family’s vacations costing upwards to $100 MILLION, and for illegal aliens (oops, I mean “undocumented wayfareres” or whatever the PC term is!)… But, we have to ct benefits for our committed members of our military, right? NOT RIGHT, of course…Unless you’re “drinkin’ the Obama Kool Aid”!

  4. C-Dubya says

    I just find it interesting that not once have I heard the POTUS say that he would take a pay cut or any of the politicians in office either (both Democrats and Republicans). Sure, put the pressure on the military to make cuts. Take away morale boosting functions, take away benefits, close commissaries, weaken our military. Make it so no one would even want to serve. Heck, why don’t they just give us bb guns and slingshots to train with while their at it.
    I remember this quote from an 80’s movie – I believe it was “Wargames” with Matthew Broderick – ” I don’t know how World War 3 will be fought but World War 4 will be with sticks and stones.” Seems that is the direction where America is going right now with all of the cuts…

  5. Douglas S. Marin says

    Everyone can complain all they want but until we all get together and raise our voices as one group they might listen. A thousand voices is but a whisper in the forest but a million voices yells out the injustice like a buzzsaw cutting down a tree after tree. That is what we need to do so let’s do it or quit complaining.

  6. kenneth smith says

    this is right they are trying to cut my pay as i have prostate cancer from agent orange, right now i am getting 100% pay but they want to cut my money down to 10% to $129.00 a month. but i also got kicked out of the army to. i just wonder how far they will go to try not to pay any money we get from our gov?.
    i am 63 yr old. you all need to stand up to fight for your rights to keep your money to. i was in cu-chi vietnam in 1969. with this unit 3rd 13th 25th infy/arty CoD.

  7. William Graniczny says

    I agree with Douglas Marin on 08/06/13—- all of us veterans & active duty need to form an alliance of a million or more to be heard. I am a U.S.ARMY veteran 1967- 71, canines. I hope the military wallet can put something together to unite us.

  8. Andrew Heil says

    This might seem like I am a bit greedy, but the United States needs to stop supporting countries that have their own money. What happens to all the money that is confiscated in federal crimes? Who authorized all these uniform changes, military vehicles being given to foreign countries, and reduce the politicians salary since they helped put us in the position we are in.

  9. Donald May says

    Problem today is none of these clowns in Washington never wore the uniform and do not understand what 20-30 years in military means and younger folks not serving in the military in large numbers any more don’t care. You see all the baloney of people on TV discussing the military and how appreciative they are that men and women are willing to serve and put up with hardship,being crippled or killed but that is all it is,they are just happy others are willing to do this so they do not have to.

  10. Terry says

    It is estimated that there is over $1 billion in fraud on free Lifeline cell phones. An investigative reporter, without lying, was recntly able to get three free phones in one day. The cell providers don’t verify your eligibility, and the federal government is not asking for verification when they recieve your paperwork from the providers. You can cut my benefits after your eliminate fraud like this across the board, and those who never served take a cut form whatever federal benefits they are recieving…

  11. Edward says

    Tell the DoD to protect our benefits, or they won’t have anything to work with. Our government needs to stop coming up with ways to deplete our existence and start overlooking greed! These are privileges, these are what’s owed to us military and veterans. You want to steal someone’s money, spend less on those football, basketball, and baseball players salaries. You can vacation on their money.

  12. says

    Cutting military pay or BAH, halting promotions, or cutting COLA is not going to have a long term effect on solving our financial troubles. We need leadership that protects the young soldier, marine, sailor or airmen, and doesn’t target their already low pay. The real focus here should be on ending the wars, taking the peace dividend, and stop the unnecessary purchase of billion dollar weapon systems that do nothing to bolster American security.

  13. kenneth smith says

    to the people who see this i am talking about the house and senate members not the military, they sent me monday aug 12 a form for life inc i sent it back unfiled out, i will not pay for that.

  14. Edward says

    I feel that what the problem here is, our government, the Congress, Senate, and House, trying to continuously line their pockets, finance their trips, and vacations with our money. They’re trying to dip into Social Security, if they haven’t already, our tax dollars, which I know they are, and now our highly deserved pay, of which we should be paid more than what we are. What we are getting is no where what we should be, and the fact that the money they so called, are saving, by not giving us our BAH, COLA, and promotion increases, will not benefit them to the least, other than change in their pockets. We need to put a stop to these thieves, by ousting them from office, which would resolve all problems.

  15. kenneth smith says

    ok To EdWard now you try to tell us on how to stop them, i am geting real mad at both partys of doing this to us. tell me should we send them a e-mail to cnn or the wikilikes to tell them the full truth about those person of what they are trying to do with our money. or should me blow the top of what they are trying to cover up. like weedbegon, round up, this stuff came from agent orange. so stop useing them.

  16. Helen says

    I am the wife of a retired veteran and I must say all of this is a disgrace to our military men and women. Is this the way to show them how much you appreciate what they do for this country – they put their lives on the line and for what? Money will never replace respect!!

  17. Julie brown says

    hello I’m in Germany and would like to know why we don’t get paid BAH instead of COLA the cost of living is more expensive out here and my pay checks keep shrinking because my cola keeps going more and more down and is getting difficult to support my family. It’s very upsetting when coming from the states and getting BAH and going overseas and getting COLA which is like $200 for 2 kids. Who can I talk to about the COLA situation.?

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