It was based partly on a study done by the Rand corporation. One of the authors of the study said our current system, created in the 50's, is based on the assumption that we would need a large number of middle grade officers to handle the large influx of reservists and draftees in the event of another really big war.
In a perfect world, this would be a good solution to some of the pay problem that the military has to deal with, like 46driver mentioned. If they actually try and push this through, it will take a long time, 5 to 10 years at least, and it would have to go through Congress. As we have all seen, Congress likes to do its own thing, which can be good or bad but fully their right. When a proposal was floated last year to extend the terms of appointment for 4 star types to 40 years was presented to Congress, they shot it down really quick. The reason they shot it down is the same reason they might shoot this down, it smacks of a elite military class and runs counter to some long held traditions in the military. While we already have debates on the military civilian divide, it would get worse with something like this. If you have a high ranking guy in a position that long they become more indespenible and powerful. One of the great things about our military now is that almost every position can be quickly and competently filled by someone else. Another advantage to the current system is that the high ranking military officers like the theater commanders and the JCS are in their positions for a fixed amount of time, usually 4 years, and are not dependent on political patronage to keep their jobs. Even when a 4 star and a DOD secretary don't get along doesn't mean they will get fired, like GEN Shinseki. This is actually a good thing for the military, it keeps our flag officers out of politics and it has worked for a very long time.
If this rproposal ever does go forward, I think it will take a long time before we see it in the military, and I hope we never do.
