Paul Ryan Budget Deal Cuts Military Pensions to Pay for Spending Increases

The budget deal that House Budget Committee chairman Rep. Paul Ryan (R-WI) made with Senate Budget Committee chairwoman Sen. Patty Murray (D-WA) cuts military pensions to pay for immediate spending increases, CNN Money’s Jennifer Liberto reports. The bill raises spending by $63 billion over the next couple of years.

“The deal cuts pension cost of living raises by 1 percentage point for military retirees who aren't disabled and not yet 62 years old,” Liberto wrote last week.

Cost of living hikes are automatic raises intended to keep up with inflation. The problem is, most military retirees are a lot younger than private sector retirees. They enlist in their 20's and retire in their 40's. Very few stay on till they are 62--those who may be lucky enough to escape major injuries at war, or rose to higher echelons in the military system.

Liberto went on to note that the cuts to military pensions are far more significant because of how early military members retire. “When compounded, the 1 percentage point cut could result in much more than a 20% reduction in retiree pensions over 20 years,” Liberto wrote. “The average cut in pension payouts, including compounding interest, for a retiring Army Sergeant first class, would be about $3,700 each year, according to the Military Officers Association of America. Over 20 years, the total losses could balloon to more than $80,000.”

Liberto's piece reports that the Military Coalition, an organization with 27 different pro-military groups, wrote to congressional leaders and President Barack Obama with a “strong objection” and “grave concern” over the budget deal, largely because of this pension debacle:

The Military Coalition (TMC), a consortium of uniformed services and veterans associations representing more than 5.5 million current and former servicemembers and their families and survivors, appreciates the Bipartisan Budget Act of 2013 which helps to ease the harmful effects of sequestration on the defense budget; however, we wish to express our grave concern and strong objection to the proposal within the Act that specifically seeks to penalize current and future military members who have served our nation for over twenty years,” the Military Coalition wrote. “The 1 percent annual reduction to uniformed service retired pay Cost of Living Adjustment (COLA) will have a devastating financial impact for those who retire at the 20 year point by reducing retired pay by nearly 20 percent at age 62. While portrayed as a minor change, a 20 percent reduction in retired pay and survivor benefit values is a massive cut in military career benefits and an egregious breach of faith.

Groups that comprise the Military Coalition include: Air Force Sergeants Association; Air Force Women Officers Associated; AMVETS (American Veterans); AMSUS, the Society of Federal Health Professionals; Association of the United States Navy; Chief Warrant Officer and Warrant Officer Association, U.S. Coast Guard; Commissioned Officers Association of the U.S. Public Health Service, Inc.; Enlisted Association of the National Guard of the United States; Fleet Reserve Association; Gold Star Wives; Iraq & Afghanistan Veterans of America; Jewish War Veterans of the United States of America; Marine Corps League; Marine Corps Reserve Association; Military Officers Association of America; Military Order of the Purple Heart; National Association for Uniformed Services; National Guard Association of the United States; National Military Family Association; Naval Enlisted Reserve Association; Society of Medical Consultants to the Armed Forces; The Military Chaplains Association of the United States of America; The Retired Enlisted Association; United States Army Warrant Officers Association; United States Coast Guard Chief Petty Officers Association; Veterans of Foreign Wars of the United States; and Vietnam Veterans of America.

These concerns over military pensions could prove problematic in getting the budget deal passed in the Senate. While the House passed it 332-94 Thursday evening with 169 Republicans voting for it--largely based on Ryan’s selling of it to the conference--these pension issues had not fully come to light by the time of the vote. In the Senate, GOP leaders--from Minority Leader Mitch McConnell to Minority Whip John Cornyn to GOP Conference Chairman John Thune--have each expressed disappointment with the deal and signaled they will vote against it.

Sen. Jeff Sessions (R-AL), the ranking member of the Senate Budget Committee, called on Republicans to attempt to block the budget deal from getting to a final passage vote in the Senate. Senate Majority Whip Sen. Dick Durbin (D-IL) has indicated that the Senate Democrats may not be unified, saying on Sunday that leadership will need eight Republicans to cross the line to vote for cloture.

Assuming all the Democrats vote for cloture, that would mean that all but four Senate Republicans would need to hold the line and vote against cloture. These military pension concerns could help unify conservatives with moderates like Sens. Kelly Ayotte (R-NH), Lindsey Graham (R-SC), and Bob Corker (R-TN)--each of whom has expressed concerns about this matter. The provisions in the plan that make it easier for Senate Majority Leader Harry Reid to pass a tax increase out of the Senate might also blow up GOP support of the deal.


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