Congress Watch: Debt Ceiling Hike and Military COLAs

(Joe Jansen has a decade and a half of experience working as a staff member on Capitol Hill.  He has worked in almost every legislative capacity in both the House and Senate. Joe will be a frequent contributor to TPA’s blog.  Joe’s views do not necessarily reflect those of TPA.)Last week, both the House and Senate passed a “clean bill” to increase the debt limit.  The fact that the debt ceiling was raised with no corresponding spending cuts was not shocking.  What happened afterward, however, should have been.

Late last year, House and Senate negotiators reached agreement on a two-year budget compromise.  The deal generally ended the sequester resulting from the last debt-ceiling increase.  Over the next two years, spending will increase by around $60 billion.  This increase was offset by extending a specific Medicare sequester item nine or ten years down the road, an increase in airline fees, and a change to military retirement benefits – the last of which saved approximately $7 billion beginning at the end of 2015.

Under current law, retired military veterans receive pension payments immediately upon their retirement.  Each year, this payment increases (a cost of living adjustment or “COLA”) by the same percentage as the rate of inflation.  For working age veterans, the budget agreement changed the rate by which the cost of living increase grew to the rate of inflation minus 1 percentage point.  Once retirees hit 62 years old, the rate of increase would return to the rate of inflation.

There were two main arguments against the budget agreement.  The first was that Congress was already scrapping the sequester in order to increase spending – spending “paid for” through higher fees and “cuts” ten years down the road.  The fact that veterans’ pension benefits were being reduced was the second.

There are many different reasons why this COLA reduction was, and is, a bad idea.  Not the least of these is the fact that the United States promised these benefits to military men and women willing to risk their lives for our freedom.  Breaking faith with them because Congress has a spending problem is just plain wrong.  Repealing this provision of the budget agreement was the right thing to do.  The fault comes in the execution.

Each year, the United States is spending just south of $4 trillion.  Comparatively, $7 billion is a drop in the bucket, loose change lying around in a forgotten pants pocket.  But rather than take the time (there was plenty of it given the fact that the budget provision did not even begin until late 2015) to find a way to pay for it, Congress decided to “pay for it” by extending the Medicare sequester for another year.  According to Senator Tom Coburn (R-Okla.), the Government Accountability Office (GAO) has identified some $250 billion in waste, fraud, duplication and mismanagement.  Isn’t that a better source of immediate funding?

In arguing against the budget agreement last year, Senator Coburn said, “we have all sorts of budget gimmicks in it that are not real, in the hopes that somebody will grow a backbone in nine and ten years from now and actually keep their word to the American public – and we are demonstrating right now we can’t even keep our word from two years ago – why would we be proud to vote for that?”  Actual spending reductions included in the budget agreement lasted less than two months.  Our military retirees and the American taxpayers deserved better.