Senators Look to Block Budget Deal's Cut to Military Retirement

Senators blocked a proposal to restore $6 billion in cuts to military retirees as part of the budget deal, but the issue will be back when the Senate reconvenes at the start of 2014.

The recently passed deal decreases the annual cost-of-living adjustment for working-age military retirees by 1 percent over 10 years. But the cut doesn't begin taking effect until December 2015, and a handful of senators and outside groups are hoping that's enough time to stop it.

Senate Armed Services Committee Chairman Carl Levin, D-Mich., moved early to undercut the provision. He said before the budget agreement was passed that panel members would review any changes next year. A specific timeline for such a review has yet to be announced, and Levin only offered that the review would happen before the cuts start.

Other senators, though, aren't waiting on the Armed Services Committee's review. Jeanne Shaheen, D-N.H., is proposing the $6 billion in cuts be swapped with closing a tax loophole for offshore corporations. Closing tax loopholes is a popular position among some Democrats, and Shaheen estimates it will bring in $6.6 billion. But changes to the tax code, while supported in theory by members of both parties, have failed to gain serious traction in the Senate.

But Shaheen is willing to be flexible and said she is "open to other solutions," but noted the continuation of the exemption is "unfair."

Sens. Mark Pryor, D-Ark., and Kay Hagan, D-N.C., are taking a different approach. The duo wants to repeal Section 304 of the budget agreement, which contains the $6 billion in cuts. "Singling them out is not just unfair but also wrong…. They deserve us to work to fix this provision," Pryor said in a statement.

Though Republicans have yet to introduce legislation, a handful—including Sens. James Inhofe of Oklahoma, John McCain of Arizona, and Kelly Ayotte of New Hampshire—have committed to working to restore the funding once the Senate returns next year.

And Ryan Taylor, the communications director for Sen. Roger Wicker, noted that the Mississippi Republican will "continue to keep the fight on" to restore the approximately $6 billion in funding, adding that he is willing to work with colleagues on both sides of the aisle to find a solution.

Wicker was at the forefront of a group of Republican senators that tried to attach an amendment to the budget agreement but was ultimately unsuccessful. Accepting the change would have effectively killed any chance of getting a budget passed this year with the House out of town until January.

It's not the first time policymakers have voiced alarm over potentially scaling back on a defense-related issue. Ayotte momentarily held up Deborah Lee James's nomination to be the next Air Force secretary over concerns about the potential retirement of the Air Force's A-10 aircraft fleet. And House and Senate Armed Services Committee members earlier this year rejected the Defense Department's request to reduce the the number of bases.

Although outside groups proved unsuccessful at getting the provision removed from the budget agreement, they plan to continue to reach out to members of Congress.

"We will be working with the leadership of the SASC and HASC and others," said Mike Barron, who is with the Military Officers Association of America. "A great number of senators and House members expressed a strong commitment ... to getting it removed from law when they return. We expect them to honor that commitment."

And Deidre Parke Holleman, the executive director for the Retired Enlisted Association's Washington office, said members would continue to meet with members of Congress as well as work with other military groups to raise awareness about the cuts, which she called "unfair and unwise."

But the push to restore the cuts pits the senators and outside groups against the Defense Department. Secretary Chuck Hagel and Joint Chiefs of Staff Chairman Martin Dempsey have backed both the budget agreement and scaling back personnel costs, and they will work with Levin next year to review the cuts and other pay and pension issues.

At a press conference earlier this month, Hagel warned that the Pentagon "can no longer put off military compensation reform."

The Military Compensation and Retirement Modernization Commission, which has a report due in May, is expected to recommend ways the Pentagon can modernize its fiscal systems. Both Hagel and Dempsey declined to say where the department will recommend appropriators cut from their budget next year, or if that could include compensation.

By the Military Coalition's estimation, the current cuts will reduce retired pay by nearly 20 percent at age 62 for members who retire after 20 years.

But the military leaders also suggested that more changes could be coming. Yearly compensation for active-duty service per member grew 57 percent—adjusted for inflation—between 2001 and 2012, according to a study released earlier this year by the Center for Strategic and Budgetary Assessments.