Congress began formal discussions about repealing the cuts to military retirees’ pensions that were passed in December as part of the Bipartisan Budget Agreement (BBA)–and, for now, repealing the Cost of Living Adjustment decrease would not involve making cuts elsewhere in the Defense Department budget.
When the BBA was passed, it included some sequestration relief for DoD and civilian agencies in exchange for a variety of future savings, including $12 billion in savings from a COLA cut of 1 percent for both military and non-DoD retirees.
If the language currently under consideration passes, the COLA cuts for military retirees would be repealed with no strings attached–no savings required from anywhere in the budget. Essentially, the military will have gained sequestration relief without contributing to the required future savings in any way.
Sen. Jeff Sessions (R-Ala.), who sits on both the Senate Armed Services and Senate Budget committees, pitched a plan Monday to pay for the COLA cut repeal by closing a tax loophole related to illegal immigrants. That idea did not appear poised to stick, but even if it did, it would not affect military spending.
At the time, many lawmakers were concerned about the cuts to military retirees but also realized the importance of Congress passing a budget plan and softening the impact of sequestration on the entire military. The cuts themselves were designed to limit who they would target–they would only apply to retirees under age 62 and therefore still likely working another job–and the cuts would be offset by a one-time adjustment when the recipient turned 62 years old. Further, the cuts would not go into effect until the end of 2015. House Budget Committee Chairman Paul Ryan (R-Wis.) wrote in an op-ed in December that the timing was chosen because “it gives Congress ample time to consider alternatives.”
Rep. Mac Thornberry (R-Texas), the vice chairman of the House Armed Services Committee, said the day after the budget agreement was unveiled that the COLA cuts “wouldn’t be my first choice” but that because it was only a 1-percent cut affecting only working-age retirees, “it’s the least painful way possible.”
On Monday, as the Senate formally took up debate on a bill to repeal the cuts and House Republicans considered tying the COLA cut repeal to raising the debt limit, Thornberry reiterated the difficulty of the decision.
“I never supported the change to the COLA in this bill–it would be better to look at all pay and benefit issues together after the commission reports–but the importance of preventing further cuts under sequestration caused me to vote for the overall bill.” He added that, after hearing from the Military Compensation and Retirement Modernization Commission whose work is currently underway, he hoped Congress would take a broad look at compensation reform and make changes prospectively so as to avoid taking back promised benefits from service members.
HASC Ranking Member Adam Smith (D-Wash.), on the other hand, said last week he did not support efforts to repeal the cuts, highlighting the delicate nature of balancing the federal budget.
“I think it is a mistake to roll back that change,” he told defense reporters on Feb. 6. “I understand a 1-percent cut in the COLA is not unsubstantial, it is a decrease in what the increase in retirement is going to be. But I wish we could go to those people and say, what are our alternatives? What are our choices? And really–the alternative if we don’t do something on personnel, if we don’t do something on some of these more expensive programs, if we don’t start acquiring our equipment in a more cost-effective manner–what you have is the hollow force that everyone says they don’t want but they make a series of decisions that puts us in the position where that’s what we have.”
Though the COLA cut repeal would not directly cause cuts elsewhere in the DoD budget, the additional COLA costs would continue indefinitely, whereas the sequestration relief was only for fiscal years 2014 and 2015.
The Senate was scheduled to vote to close debate on the bill Monday evening, and a vote on the bill itself could come later in the week. Senate Majority Leader Harry Reid (D-Nev.) said on the floor there was “no reason to delay” repealing the COLA cuts.
Talks of repealing the cuts in the House are just talks at this point, with no legislation submitted yet as a standalone bill or to tie the repeal to the debt limit increase.