U.S. taxpayers pay each member of the nation’s all-volunteer military a package of salary and benefits equal to about $99,000 per year. About $42,500 of this is direct pay. Approximately $38,000 of the remaining $56,500 consists of health care and pension benefits that a person in the military will not get until completing at least 20 years of service. Studies of choices that officers and enlisted personnel have made when allowed to choose between lump-sum and annual payments have revealed that officers discount future benefits at an annual rate of 10 to 19 percent. Enlisted personnel have discount rates between 35 to 50 percent per year. From a taxpayer’s point of view, using market interest rates to discount the value of a dollar paid to a soldier 20 years from now, the present value of that dollar of deferred benefits is 36 cents. By contrast, a soldier discounting at an annual rate of 35 percent perceives the value to be less than a fifth of a cent. This helps explain why, even as U.S. taxpayers accumulate an unfunded pension liability near $600 billion, many of the nation’s military personnel perceive themselves as seriously underpaid.

From today’s perspective, why might taxpayers view the current military pay package as a bargain?