February 6th, 2013
10:16 AM ET

FIRST ON CNN: Panetta to recommend pay cut for military

By Barbara Starr

Just days before he leaves office, Defense Secretary Leon Panetta is recommending military pay be limited, effectively decreasing troop salaries next year.

Panetta will recommend to Congress that military salaries be limited to a 1% increase in 2014. The Pentagon has calculated that the Labor Department's 2014 Employment Cost Index is expected to be above 1% but wants to still cut back on pay because of "budget uncertainties," a department official told CNN. In 2013, a 1.7% increase was approved, based on the index, which has been the basis for military pay for the last several years.

Three Pentagon officials have confirmed details of the plan to CNN. The Joint Chiefs of Staff have also agreed to Panetta's proposed pay plan. Final approval for the pay would come from Congress in the form of the 2014 budget.

The recommendation is tied to the Defense Department's 2014 budget recommendation, which was expected to be sent to Congress this month, one of the officials said. But the officials acknowledge it is going to be seen as an effort to push Congress to stop the automatic budget cuts that could go into effect if no deal is reached on spending reductions.

ALSO:  Panetta warns spending cuts will degrade military readiness

The decision comes as the secretary is stepping up the rhetoric about dire cuts at the Pentagon if sequestration goes into effect. President Obama in 2012 walled off military pay from cuts, so if this current pay plan goes into effect, it's widely seen as "cutting our pay," one military officer familiar with the plan told CNN. "It's a smart move, it puts it in Congress' hands," he said.

Panetta, in one of his last official speeches as secretary of defense, told an audience at Georgetown University on Wednesday that the Pentagon faced "the most serious readiness crisis in over a decade."

The defense secretary outlined a series of possible cuts should the Pentagon be forced to find half a trillion dollars more in savings. He warned that 800,000 civilian workers could furloughed for 22 days and that the Army would need to cut back on training and maintenance, putting two-thirds of combat teams at "reduced readiness levels." Pacific naval operations could be cut by as much a third, and Air Force flying hours and weapons maintenance could be cut.

CNN has also learned that this week, the Navy is expected to announce it does not have the money to pay for refueling and maintenance of the aircraft carrier Abraham Lincoln. That will essentially mean the Navy is short a carrier and overseas deployments will be cut.
"No good options exist," Panetta said.

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