In a separate program, the Office of Personnel Management, has been trying to reduce the number of civil-service employees throughout the entire federal government through a process sometimes called A-76, or competitive sourcing. Basically, if a study finds that if a given function is not an inherently governmental function, and it can be done more efficiently (read: more cheaply) by a contractor, then that civil-service position is eliminated and the function is performed by the lowest-bidding contractor.
The cost to train a new recruit and maintain the benefits package through their lifetime is astronomical. While I would love to see us better paid, given the hours we put in now with all the deployments, in peace time, given the education of most of the young recruits (not all), they are compensated quite well, especially with the non-taxable benefits (medical, dental, housing, education, etc). A few years back, DW went to work for a contractor on base and made pretty good money for the job. Salary was comparable to say an E6's base pay, but there were no benefits. The govt definately saved money there.
Bottom line on why they are cutting jobs in the military is that with technology, we can do more with less. Utilizing COTS (commercial off the shelf) equipment saves tons in parts alone, and reduces the manpower and training required to repair equipment. I have systems with $100k milspec computers (dinasaurs) that are being replaced with COTS laptops for 700.00, that perform hundreds of times better and if it breaks, I can buy another anywhere and reload it. I can train someone to reload a computer a lot cheaper than I can train one to troubleshoot and repair one, and it takes less people to do it.
Last ship had "smartship" installed. They replaced all the aniquated engineering control systems with PC's, and while the initial cost was very great, the manpower reduction would probably pay for it in a couple of years.
Problem with all this now is that with reduced numbers and assets, the folks now are spending more time gone in "the field" or "at sea", since there are less folks to rotate through. Personally, I spend 75 - 80 pct of my time gone, and while I understand why, it doesn't make it anymore fun.