The Bipartisan Budget Act of 2013: Some Good, Some Bad, and Some Ugly

On December 10, Senate Budget Committee chairman Patty Murray (D-WA) and House Budget Committee chairman Paul Ryan (R-1st/WI) announced that they had reached a bipartisan budget agreement. The legislation, the Bipartisan Budget Act of 2013, was passed by the House of Representatives on December 12 and approved by the Senate on December 18. The agreement funds the government through Fiscal Year 2015 and removes the threat of another government shutdown.

While the agreement provides partial relief from the automatic spending cuts mandated by sequestration; we are not fooled by the wolf in sheep’s clothing. Under the legislation, the Department of Defense (DoD) will receive $520.5 billion in FY 2014. Although this is less than the Administration requested in its budget, it is nearly $2 billion more than DoD would have received under the spending caps mandated by the sequester. Non-defense programs will also receive additional funding. Over the next two years, the legislation will replace a total of $62 billion in funds that were to have been cut under the terms of the Budget Control Act of 2011, which required sequestration.

The so called “deal” isn’t free. In order to pay for the increased spending, the bill included significant cuts that will affect military families. Starting in December 2015, military retirees younger than age 62 – including medically retired wounded warriors --  will see reduced cost of living (COLA) adjustments to their pensions. Currently military retirees’ pensions are adjusted annually to reflect the cost of living increase. Under the legislation, pensions for working age retirees would be increased by one percentage point less than the COLA. Once the service member reached the age of 62, his or her pension would be increased annually by the full COLA. This change is projected to save $6.2 billion over ten years. Our Association strongly opposes this proposal. The agreement also affects federal civilian employees. Under the bill, federal civilian workers hired after January 1, 2014 will have to contribute an additional 1.3 percent to their retirement accounts. Yet, civilian federal workers will not have their future earnings slashed like military retirees.

The House of Representatives voted to approve the bill on December 12 and then recessed for the holidays. For that reason, there was no opportunity for the Senate to amend the bill to remove the cuts to military retirement, since any change to the legislation would have to be approved by the House. However, several Senators have said they are committed to removing the retiree COLA provision from the budget agreement. Senators Jeanne Shaheen (D-NH), Kelly Ayotte (R-NH), and Roger Wicker (R-MS) have each introduced legislation that would restore the COLA cuts. In addition, Senate Armed Services Committee Chairman Carl Levin (D-MI) has said that his committee will review the changes to military retirement benefits when the Senate returns from its holiday break.

We encourage military families to follow this issue closely and let their Senators and Congressmen know how they feel about the budget agreement. Visit our website for updated information.

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