Under sequestration, military personnel accounts are completely exempt from cuts, and according to Todd Harrison, the senior defense budget fellow at the Center for Strategic and Budgetary Assessments, that's where DoD faces the biggest budget heartburn, at least over the long-term.
While O&M spending in DoD has been rising in recent years, it's nothing like the cost growth in the military services' personnel budget. Over the last 10 years, the cost of providing pay and benefits to uniformed service members has outstripped inflation by an average of 4.2 percent each year, Harrison said.
"If we continued allowing our personnel costs to grow at that same rate, by the year 2039, those costs would consume the entire defense budget," he said. "That obviously won't happen, so you've only got a couple other options. One is you reduce your end-strength. If you hold the military personnel share of the budget at 34 percent, where it is now, you have to reduce your end strength by another 82,000 beyond what the military already has planned. The other option is you can reduce the rate of growth in your costs. You only have to reduce the rate of growth to 1.9 percent, and all the reforms that were in the last budget request would have reduced the rate much lower than this. So this can be done."