Senate Armed Services Committee member Kelly Ayotte (R-N.H.) pitched a plan Wednesday to overturn cuts to military retirees’ pensions without dipping into any other accounts in the defense budget.
Ayotte filed her plan on Tuesday to undo the cuts in the Bipartisan Budget Agreement passed in December that reduces sequestration by creating savings elsewhere, including trimming cost-of-living adjustments in pensions by subtracting a percentage point from the inflation rate allowance. Though that figure may seem small, senators opposed to the cuts have cited a Senate Budget Committee analysis estimating that a sergeant first class who retires at age 40 could lose $72,000 from his pension under this lower COLA rate.
The budget agreement passed the House without much fanfare, but the COLA issue was a sticking point for several senators. SASC Chairman Carl Levin (D-Mich.) said on Dec. 18, prior to the vote, that he would support the budget agreement but noted the COLA reduction “is a troubling provision because it singles out a group of veterans, and therefore I have decided the Senate Armed Services Committee will review the retirement benefit changes next year, before they take effect in 2015.”
Trying to undo the COLA reduction in the armed services committee would have limited lawmakers to finding alternate spending reductions within the defense budget. But Ayotte’s plan, which she is offering as an amendment to a bill to extend unemployment insurance, taps into money that could be saved by preventing tax fraud. Her plan is to require tax filers to have a social security number to be eligible for the Additional Child Tax Credit. Ayotte told reporters Wednesday that her measure would save about $20 billion over the next 10 years by preventing people who are not authorized to work in the United States from claiming benefits on children that in many cases either do not exist or who live in other countries.
With the $20 billion in savings, Ayotte would eliminate the COLA reduction at a cost of about $6.3 billion over the next decade, extend unemployment insurance for three months at a price tag of about $6.4 billion, and reduce the nation’s debt with the remaining money.
The amendment’s chances of getting a floor vote are unclear at this point. On Wednesday afternoon, Senate Majority Leader Harry Reid (D-Nev.) said he was still waiting for a serious proposal from Republicans to pay for the unemployment insurance extension, and he did not consider “going after children” a viable option.
Ayotte said after her press conference Wednesday that addressing the COLA reduction now via her amendment did not lessen SASC’s resolve to tackle military pay and benefits reform. Last year, Congress set up a Military Compensation and Retirement Modernization Commission, which Ayotte said would report back later this year.
“That commission’s still going to go forward, and that commission is going to make recommendations to overall pay, compensation, retirement reforms and looking at them comprehensively,” she said. “So I will certainly be reviewing that carefully and respect that commission.”
The Pentagon has been pushing for pay and compensation reform in its past few budget requests, noting that personnel costs are increasing rapidly and squeezing acquisition, operations and maintenance, and research and development efforts.