Military Pension Cuts Could Kill Budget Deal in Senate

After winning approval in the House, the Ryan-Murray budget deal now moves to the Senate. Democrats will need support from at least five GOP Senators to pass the deal. While Senate Majority Leader Harry Reid (D-NV) can normally count on a handful of GOP moderates, as of Friday, no Republican in the Senate has voiced support for the budget deal. The deal may fall apart over one of its smaller line-items; a 1% cut in cost of living adjustments for veterans' pensions.

Sen. Lindsey Graham, a usually reliable vote for any "bi-partisan" compromise, has already announced his opposition to the deal, because of the veterans' issue. Sen. Bob Corker, who also often joins Democrats, has also said he will oppose the deal.

Under the Ryan-Murray deal, active-duty personnel and retired veterans younger than 62 would be forced into a new pension plan. Traditional veterans received a yearly cost-of-living adjustment on their pension equal to inflation. Under Ryan-Murray, however, veterans will now receive inflation, minus 1%. In other words, their yearly pension payment will be below the increase in the cost of living. When a veteran reaches the age of 62, the cost-of-living adjustment would again be equal to inflation. 

Federal employees will not experience a cut to their pensions. 

Savings from the cut in military pensions are being used to partially cover the costs of the spending increases in the Ryan-Murray deal. The cuts are not being used to reduce the deficit or pay down some of the debt. Veterans pensions are being cut to finance higher government spending. 

Paul Ryan has said the pension cut will save $7 billion over 10 years. With the government expected to spend around $40 trillion over the next decade, the cost savings are minuscule. The symbolism, however, is enormous. 


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