Many Democrats in the United States Congress enthusiastically support the looming cuts to the U.S. defense budget. They note the enormous costs of protracted wars in Iraq and Afghanistan as well as the imprudence of lavishly funding an American military already unmatched the world over. For many sound reasons, they view the reduction of the defense budget in broad strokes as positive. But details of present defense budget cuts contain specific proposals that ought to give them – and many Americans – pause.

Folded into the current military spending cuts is a neoliberal agenda to privatize and outsource the retirement and health care benefits of military personnel and their families. Americans may consider these proposals of minimal concern, and of interest only to military personnel, veterans, and their families. But their implications reach far wider: they are part of a comprehensive neoliberal plan to privatize virtually all government social welfare programs and entitlements.

Promulgated by free-market advocates at the Heritage Foundation, corporate interests on the Defense Department’s Defense Business Board, and the private Business Executives for National Security, current military health and retirement proposals seek to replace existing government programs with privately-held, market-based healthcare and pension programs. They closely mirror free-market proposals for Social Security, pension privatization, and health care privatization in the civilian sector.

Instead of using the current government-contracted HMO/PPO model, called TriCare, military personnel and their families would receive health care vouchers allowing them to either purchase whatever health care plan they chose from an array of private sector providers. Instead of earning defined retirement benefits – pensions – soldiers, sailors, airmen and marines would each pay into privately held 401K programs – or simply take a lump sum of cash. In a win-win for corporate advocates, cuts to what they call the “excessive” and “burdensome” human side of the military will simultaneously fund greater spending on expensive weapons and communications systems. And under the pretext of providing “choice” to military personnel, the programs decrease total benefits and increase private sector access to government funds and the money of military personnel.

A brief history of neoliberalism in the military

Americans have largely missed this story of military neoliberalism. When they discuss military outsourcing and privatization, they think of military service providers in American wars – the “mercenaries” of Blackwater (now Xi) and DynCorp’s on battlefields in Iraq and Afghanistan. But privatized pension and health care proposals have a longer, deeper, and ultimately more powerful history.

For decades, the far bigger and costlier story of neoliberalism in the military has lain not on battlefields, but on military posts and bases across the world, where the banal military support sector – everything from housing, installation management, and recreation to generating pay checks, performing maintenance, and writing reports – has been and continues to be sold off to the private sector.

Military contracting for services grew steadily from the late 1980s onward, outstripping military contracting for products (weapons, materiel) – traditionally the bulk of military contracts – in the late 1990s. By the time the first stories of “contractors on the battlefields” broke in 2002, the military was nearly ten years into the process of outsourcing and privatizing everything from its hotels and recreation centers, to its housing and maintenance, to its health care. 

The transfer of these military services from the public realm to the private had its origins in free market policy circles, beginning with economist Milton Friedman, who helped found the all-volunteer force in 1973. At the time, free-marketers advocated ceasing all military-provided, government-run support for soldiers (and their families), from health care to housing to the Post Exchange, with some going so far as to call the Army’s supports “socialist.”

Instead, they proposed that soldiers use their salaries to “purchase” any support they wished “in the market.” The military scoffed at the notion of fulfilling soldiers’ needs through the private sector. At that time, support services were deemed central to the success of the volunteer force – to its recruitment, retention, and its readiness. American society did not provide (and still does not provide) generous social benefits to all citizens in the manner of many European nations, so the military argued successfully that military provision of these services would cement soldier and family loyalty to the new institution.

In the 1970s and 1980s, the Pentagon and the services constructed a formidable architecture of support covering everything from health to housing, childcare to counseling. It was nearly all managed by government personnel for the benefit of military personnel, protected from the rising tide of conservative campaigns to cut social spending.

While Friedman and his acolytes failed to transfer military services to the private sector in the 1970s and the 1980s, free market advocates in the 1990s succeeded. Members of the Defense Science Board and the Business Executives for National Security – the same groups proposing current privatization of military pensions – used the occasion of the post Cold War drawdown and the slumping economy to introduce corporate boardroom practices such as cutting overheads, increasing efficiencies, and improving “quality” as budgetary coping mechanisms for a sharply reduced spending regime.

Vice President Al Gore’s “Reinvention of Government” pushed these further, introducing widespread outsourcing practices throughout federal agencies. President Clinton then appointed Wall Street financiers like Joshua Gotbaum from investment firm Lazard Frères to lead a special outsourcing office in the Pentagon. Together, the policies of the Clinton era resulted in a historically unprecedented transfer of military support services from the public to the private sector. 

The contracting out of the Pentagon’s support coincided with neoliberal efforts to combat “dependency” in the military. Policies forcing recipients of public assistance programs to achieve “independence” – largely through mandating employment requirements – had been gaining ground in conservative and neoliberal policy debates in the late 1980s and early 1990s. They also took hold in the military, where in the early 1990s the military retrenched its support for soldiers and their families. As the Army pulled back on spending for support services and contracted out services, for example, it also instituted programs to teach soldiers and their spouses “self-sufficiency.”

At the same time, the Army reframed its generous benefits and social services as efforts not to provide “support” and “quality of life”, but endeavors to “promote readiness and self-reliance.” The Army went so far as to change its motto from “The Army Takes Care of Its Own,” to “The Army Takes Care of its Own so that They Can Learn to Take Care of Themselves.” Soldiers and their families faced demands not to “depend” on the military, even when the military deployed personnel for military action. 

The impact of military neoliberalism on America

Current proposals to reform military pensions and health care draw on this history of creeping neoliberalism in the military while demonstrating the ubiquity and power of the neoliberal agenda – even within an institution as influential as the American military. Since 1980, national polling data has reported the growing trust Americans have in the military as an institution. It has stood above all other government institutions and functions as a source of perceived legitimacy, a measure of its generalized cultural and social power within the United States.

For many years, this power protected the military and its benefits from the fate of civilian social welfare programs – outsourced, privatized, cut back and made stingier – as military leaders made the case that military benefits deserved special protection. But in recent years, neoliberalism has dissolved some of those boundaries. 

With free-market advocates now aiming at their pensions and pocketbooks, the military community may reconsider the studied distance it has for years maintained from civilian government workers and civilians in general. Military advocacy organizations and the active duty brass have followed a cautious, narrow path toward recognition and support in Congress, eschewing alignment with unionization and opposing either comparisons or close connections to other federal workers. But now that military personnel are facing free-market gambits to reduce and alter their benefits, they cannot deny their shared fate alongside civilian workers.

Civilians, too, may pay more attention to the fate of seemingly arcane military compensation, since the conversion of military benefits to free-market models will not bode well for most Americans. After all, if even vaunted soldiers, sailors, airmen and marines – the “heroes” who “fight for our freedoms” in the words of American presidents – can have their benefits outsourced and privatized, what will become of the social programs protecting civilians? A wide swath of civilian policies protecting economic security, health and well-being have come under new assault by free market conservatives in the past two years – collective bargaining rights, public pensions, health care, social security, to name a few. How will the elderly or poor children resist the privatization of the programs they rely on if military personnel cannot? 

Time is of the essence for Democrats to resist the free market reforms proposed in current defense cuts. Once the military adopts neoliberal practices, Americans can expect them to achieve even greater recognition and influence. In the past thirty years, American culture has drawn increasingly from militarized models for everything from entertainment, to private security, to juvenile justice. The same will likely be true in government programs for social and economic security: the more neoliberal the military’s social support system becomes, the more neoliberal our civilian system becomes, too.