Senate military housing allowance proposal is 'misguided,' expert says

A leading defense analyst is calling the Senate’s plan to reform military housing allowances a potential disaster for troops’ finances.

The proposal, included in the Senate draft of the fiscal 2017 defense authorization act, would require the Defense Department to reimburse only troops’ exact rent and utilities costs, instead of issuing stipends that estimate cost of living in different areas.

The move could pull hundreds of dollars a month out of some families’ military payouts, although Senate planners argue those troops are receiving more than their share of housing costs.

But Todd Harrison, director of defense budget analysis at the Center for Strategic and International Studies, in an editorial in Politico this week called the housing plan “perhaps the most misguided proposal with the greatest potential for unintended consequences” in the annual budget bill.

“What the Senate proposal fails to recognize is that the housing allowance, despite its name, is not really about housing at all,” he wrote. “Congress has used the housing allowance to increase cash compensation for the military, and it’s a smart way to do that because it doesn’t incur additional liability for retirement pensions.”

In an interview with Military Times, Harrison said he doesn’t think the proposal has a likely path to becoming law. House lawmakers have shown little interest in the housing overhaul, and congressional negotiators have numerous other reform issues to tackle before serious consideration of the housing plan.
“I think the Senate is serious about doing something, but I don’t think they have thought this through,” he said. “I think they just don’t like the idea of married couples getting two [housing allowances], and they’re trying to find a solution.”

Under the Senate plan, married military couples would essentially receive only one housing payout for the cost of their rent or mortgage, instead of two separate payouts. Troops who room with other service members would also see their stipends cut to only the cost of housing, eliminating the practice of pocketing any leftover savings.

Harrison acknowledged that the proposed change sounds “perfectly reasonable on the surface” but in practice would discourage troops from rooming together, encourage families to spend more on mortgage costs, and potentially destabilize housing markets around military bases.
“If Congress wants to control costs, it should focus on cutting the forms of compensation that are less valued by service members and leave cash compensation alone,” he wrote. “There are tremendous savings that could be achieved by tweaking benefits many service members don’t even know they have.”

He lists the Medicare Eligible Retiree Healthcare benefit, a pricey and little known one, as a reform that would be better suited for legislative action.

Congressional staffers are working through differences between the House and Senate passed versions of the authorization bill while lawmakers are at home for recess this summer. Leaders are hopeful a compromise bill can be finalized later this fall.