Despite last-minute deal, more political drama likely on the way
By Tom Curry, NBC News national affairs writer
After weeks of uncertainty, bluffing and posturing in Washington D.C., the Senate voted in the early hours of Tuesday morning to
avoid the "fiscal cliff" of tax increases and spending cuts. However,
the fiscal bargaining is far from over and more budget drama is likely
on the way.
Drew Angerer / Getty Images
The Capitol dome illuminates at dusk on Capitol Hill on Dec. 31, 2012 in Washington, DC.
The
deal brokered by Vice President Joe Biden and Senate Republican Leader
Sen. Mitch McConnell of Kentucky would raise income taxes on single
earners with annual incomes above $400,000 and married couples with
incomes above $450,000.
The measure will now be turned over to the House, which needs to give
its backing and will hold a session on Tuesday starting at noon.
House
Speaker John Boehner -- the top Republican in Congress -- said the
House would consider the Senate deal. But he left open the possibility
of the House amending the Senate bill, which would spark another round
of legislating.
"The House will honor its commitment to consider
the Senate agreement if it is passed. Decisions about whether the House
will seek to accept or promptly amend the measure will not be made until
House members ... have been able to review the legislation," Boehner
and other House Republican leaders said in a statement.
Next big fight
Although
the Senate agreed at the last minute to avert broader tax increases,
the very idea of a “deadline” has lost some of its meaning since each
budget deal seems to be merely a prelude to another fixed date when some
critically important action must be taken – next up: Congress will have
to decide what to do about the "sequester" spending cuts which will
come up again in February, as well as decide in March on whether to
increase the federal borrowing limit.
In
a frantic rush of negotiations on New Year's Eve, the Senate moved the
nation away from the fiscal cliff, voting on a compromise package that
increases tax rates on those making above $400,000 a year. NBC's Kelly
O'Donnell reports and NBC political director Chuck Todd offers analysis.
Congress
is also set to embark on fundamental tax reform legislation in the New
Year – as Obama himself seemed to acknowledge Monday when he said he’s
intent on “doing some more work to reform our tax code so that wealthy
individuals, the biggest corporations can’t take advantage of loopholes
and deductions… that aren’t available to most Americans. So there’s
still more work to be done in the tax code to make it fair….”
The
indecision over taxes, spending, and borrowing has become chronic, in
part a reflection of the fact that neither party controls both the
executive and legislative branches. Ever since the Republicans won the
House in 2010, the intermittent rounds of bargaining between GOP
congressional leaders and Obama have run aground over the fundamentals:
the future cost of the entitlement programs -- especially Medicare --
and who should bear the burden of paying for their growth.
The two sides’ clashing definitions of “fairness” make it hard for them to decide who should be paying a bigger tax bill.
And
while tax revenues have been increasing – they’re up 10 percent in the
first two months of fiscal year 2013 even under the current tax law --
the increase, even if it is sustained, won’t be enough to pay for future
benefits that have been promised.
On the spending side, the
growth in entitlement spending is largely driven by the demographics of
an aging population. The ratio of tax-paying workers to retired
beneficiaries was 3.3 workers for every beneficiary during Bill
Clinton’s presidency, but it has been steadily sinking and will drop to
2-to-1 by 2030.
As
2013 nears, Congress runs out of time to negotiate a deal to avoid
going over the so-called fiscal cliff. NBC's Kelly O'Donnell reports.
The
gap between what members of Congress profess to want to do (reduce
future budget deficits and borrowing) and what they are actually willing
to do is growing ever wider and more glaring, since spending curbs
would fall on people who feel they have earned certain Medicare and
Social Security benefits.
Failure to reach agreement on these basics is what led to the fiscal cliff that Congress and Obama face.
Domestic spending in the cross-hairs
As
part of an accord with GOP leaders last year to raise the government’s
borrowing limit, Obama signed the Budget Control Act. The law requires
about $100 billion in spending reductions in 2013, out of a total of
roughly $3.5 trillion in spending.
While an approximately 3
percent cut in spending might not seem drastic, the Budget Control Act
exempts most entitlement spending from the cuts, so the reductions would
be concentrated on military outlays and domestic discretionary spending
programs ranging from air traffic control to immigration enforcement.
NBC's
Chuck Todd explains that a fiscal cliff deal has been difficult to
reach because President Obama and Speaker Boehner don't want to appear
to be caving to the other.
The
law would make reductions – unless Congress delays or rescinds them –
of about 10 percent in discretionary appropriations for defense programs
and about 8 percent in non-defense programs in 2013.
If members of Congress seriously want deficit reduction, the Budget
Control Act is certainly one way to get it: the Congressional Budget
Office estimates that spending would actually go down. Federal spending
would be a smaller share of national income in 2022 under the Budget
Control Act (22.3 percent of gross domestic product) than they were in
FY2012 (22.9 percent). And the budget deficit would fall from 7 percent
of GDP in fiscal year 2012 to less than 1 percent of GDP by 2017.
Despite
the impressive deficit reduction that would be achieved by going over
the fiscal cliff, the members of Congress who have sought to avoid the
fiscal cliff think the economy is too weak to tolerate the tighter
fiscal policy that many of them voted for in 2011. Undoing the tax
increases and spending cuts would boost economic growth by about 2¼
percent by the end of 2013, according to the Congressional Budget
Office.
With many of the details of the agreement or a more
far-reaching accord still up in the air, there are some benchmarks to
judge the deal that may emerge:
Does it last only one year or more than one year?
Would it significantly reduce future budget deficits?
Would it reduce federal debt, measured as a percentage of the nation’s income?
Are its spending provisions enforceable and credible – or are they
hazy promises that may not be carried out by future Congresses, by
Obama, and by the next president?
If the primary goal is deficit and debt reduction, is the agreement better or worse than the Budget Control Act?
Is it likely to spur economic growth and will it do anything to address the chronic problem of the 23 million unemployed?
GOP seeks path forward in House for fiscal deal tonight
Capitol
Hill is full throttle ahead after missing the midnight deadline to
avoid going over the so-called fiscal cliff. NBC's Kelly O'Donnell
reports.
By Michael O'Brien, NBC News
Updated 8:15 p.m. — After hours of
delay, the House was moving late Tuesday toward giving its approval to
the bipartisan, Senate-passed legislation to handle the most severe
consequences of the "fiscal cliff" that onset this morning.
The
House was preparing to allow an up-or-down vote as soon as tonight on
the new proposal, which passed the Senate 89-8 in a 1:53 a.m. vote. The
proposal would allow taxes to rise on individual income over $400,000
and household income over $450,000, while staving off a series of
automatic spending cuts — known as the "sequester" — for two months.
Though conservatives had spent the better part of New Year's Day
threatening to torpedo the legislation, GOP leaders acknowledged that
they likely couldn't gather enough votes to amend the Senate bill and
send it back to the upper chamber. The House Rules Committee met late
Tuesday to set the parameters for a debate in the House that could
result in a vote on the Senate legislation as early as this evening.
The
rejiggered strategy came amid complaints from House conservatives that
the Senate-passed bill doesn't include enough cuts to spending.
"The
lack of spending cuts in the Senate bill was a universal concern
amongst members in today’s meeting," said Brendan Buck, a spokesman for
House Speaker John Boehner, R-Ohio. "Conversations with members will
continue throughout the afternoon on the path forward.”
If
Congress doesn't come to an agreement soon, they may have to start from
scratch after the new Congress is sworn in later this week. NBC's Chuck
Todd has more.
The starkest signal of the trouble this plan
would have in the House came when House Majority Leader Eric Cantor,
R-Va., told fellow Republicans in a closed-door meeting that he could
not support the deal.
As of late afternoon Tuesday, the lower
chamber was considering amending the legislation late Tuesday — a
proposition considered a dealbreaker to Senate Democrats. Senate
Majority Leader Harry Reid, D-Nev., adjourned the chamber until
Wednesday at noon.
"I would be shocked if this bill didn't go back
to the Senate," said Alabama Rep. Spencer Bachus, R. "I think we're
there on more revenue, but, you know, there is more revenue but no
spending cuts."
But Senate Democrats said that the legislation was
essentially a take-it-or-leave-it proposition. If the House were to
change the fiscal deal, Democrats in the Senate said they would not
consider it.
"There is no time left to ping-pong proposals. The
speaker was kept appraised throughout the negotiations," a Senate
Democratic aide told NBC News. "If House Republicans mess with this
agreement that got 88 votes in the Senate, they will be solely
responsible for the largest tax hike in American history."
House Minority Leader Nancy Pelosi, D-Calif., meanwhile called for a "straight up-or-down vote" on the Senate proposal.
If
there's no conclusion of the deal, the process to address the fiscal
cliff would then restart on Jan. 3, the first day of the new Congress,
and 60 full hours past the deadline at which the fiscal cliff first took
effect.
The standoff over the fiscal cliff, itself the byproduct
of past disagreements and impasses, was symptomatic of the 112th
Congress, which had been defined by intractability fueled by sharp,
ideological flanks in both parties.
As the nation prepared for
the beginning of the 113th Congress on Thursday, little was poised to
change. Though Democrats made slight gains in November's election,
Republicans maintain control of the House; Democrats keep their grip on
the Senate.
Republicans' threat to torpedo the Senate deal was
additionally reminiscent of other battles from throughout the two years.
While Senate Minority Leader Mitch McConnell, R-Ky., managed to reach
an accord with Vice President Joe Biden and the Obama administration,
the Tea Party-infused House judged it insufficiently conservative. All
but seven Senate Republicans backed the proposal, and Biden had to spend
two hours late on New Year's Eve convincing Democrats of the plan's
merits, as it is.
But a familiar divide within the GOP pitting the
establishment-minded dealmakers against the more ideologically directed
and recently elected conservatives re-emerged on Tuesday. This divide
almost resulted in a government shutdown and a default on the national
debt in 2011. It again threatened Tuesday to allow the painful,
across-the-board tax hikes and spending cuts to play out just as the
U.S. economic recovery showed signs of accelerating.
NBC's Chuck Todd, Mike Viquiera and Frank Thorp contributed reporting.
Fiscal deal in flux as GOP seeks path forward in House
NBC's
Domenico Montanaro reports that there are still some hard sells to be
made to the party's bases to avert the fiscal cliff, particularly
conservative Republicans who are unhappy because they feel there are not
enough spending cuts.
By Michael O'Brien, NBC News
The fate of legislation to remedy the fiscal cliff was
in doubt late Tuesday after House Republicans balked at approving
bipartisan, Senate-passed legislation to handle its most severe
consequences.
Conservatives in the House voiced their disapproval
of a new proposal, which passed the Senate 89-8 in a 1:53 a.m. vote,
that would allow taxes to rise on individual income over $400,000 and
household income over $450,000, while staving off a series of automatic
spending cuts — known as the "sequester" — for two months. Republicans
were left late Tuesday to consider whether they had the votes to amend
the legislation — considered a dealbreaker to Democrats in the Senate
— or bring up the Senate bill for an up-or-down vote. The maneuver could
allow the GOP to register its frustration with the deal while avoiding
political fallout.
Rep.
Steven LaTourette, R-Ohio, explains why some House Republicans,
including Majority Leader Eric Cantor, are not in favor of a
Senate-backed fiscal bill.
The rejiggered strategy came amid complaints from House conservatives
that the Senate-passed bill doesn't include enough cuts to spending.
"The
lack of spending cuts in the Senate bill was a universal concern
amongst members in today’s meeting," said Brendan Buck, a spokesman for
House Speaker John Boehner, R-Ohio. "Conversations with members will
continue throughout the afternoon on the path forward.”
The
starkest signal of the trouble this plan would have in the House came
when House Majority Leader Eric Cantor, R-Va., told fellow Republicans
in a closed-door meeting that he could not support the deal.
As
of late afternoon Tuesday, the lower chamber was considering amending
the legislation late Tuesday — a proposition considered a dealbreaker to
Senate Democrats. Senate Majority Leader Harry Reid, D-Nev., adjourned
the chamber until Wednesday at noon.
"I would be shocked if this
bill didn't go back to the Senate," said Alabama Rep. Spencer Bachus, R.
"I think we're there on more revenue, but, you know, there is more
revenue but no spending cuts."
But Senate Democrats said that the
legislation was essentially a take-it-or-leave-it proposition. If the
House were to change the fiscal deal, Democrats in the Senate said they
would not consider it.
NBC's
Luke Russert explains why House Speaker John Boehner's Tuesday meeting
with House Republicans is critical to the Senate-approved fiscal deal.
"There
is no time left to ping-pong proposals. The speaker was kept appraised
throughout the negotiations," a Senate Democratic aide told NBC News.
"If House Republicans mess with this agreement that got 88 votes in the
Senate, they will be solely responsible for the largest tax hike in
American history."
House Minority Leader Nancy Pelosi, D-Calif., meanwhile called for a "straight up-or-down vote" on the Senate proposal.
The
process to address the fiscal cliff would then restart on Jan. 3, the
first day of the new Congress, and 60 full hours past the deadline at
which the fiscal cliff first took effect.
The standoff over the
fiscal cliff, itself the byproduct of past disagreements and impasses,
was symptomatic of the 112th Congress, which had been defined by
intractability fueled by sharp, ideological flanks in both parties.
As
the nation prepared for the beginning of the 113th Congress on
Thursday, little was poised to change. Though Democrats made slight
gains in November's election, Republicans maintain control of the House;
Democrats keep their grip on the Senate.
Republicans' threat to
torpedo the Senate deal was additionally reminiscent of other battles
from throughout the two years. While Senate Minority Leader Mitch
McConnell, R-Ky., managed to reach an accord with Vice President Joe
Biden and the Obama administration, the Tea Party-infused House judged
it insufficiently conservative. All but seven Senate Republicans backed
the proposal, and Biden had to spend two hours late on New Year's Eve
convincing Democrats of the plan's merits, as it is.
But a
familiar divide within the GOP pitting the establishment-minded
dealmakers against the more ideologically directed and recently elected
conservatives re-emerged on Tuesday. This divide almost resulted in a
government shutdown and a default on the. national debt in 2011. It
again threatened Tuesday to allow the painful, across-the-board tax
hikes and spending cuts to play out just as the U.S. economic recovery
showed signs of accelerating.
NBC's Chuck Todd, Mike Viquiera and Frank Thorp contributed reporting.
Unified Security Budget Task Force Recommends Spending Reforms to Strengthen National Security, Reduce the Deficit
Thursday, 01 November 2012 14:26
Press Release
Analysis
Narrows Funding Gap Between Offense and Prevention to Strengthen Security, Reduce Deficit, Create Jobs
Washington, D.C. --(ENEWSPF)--November 1, 2012. As sequestration is
being intensely debated in Congress, the Unified Security Task Force
yesterday released “Rebalancing Our National Security: The Benefits of Implementing a Unified Security Budget,”
recommending military spending shifts to shed wasteful programs and to
balance offense and prevention with the aim of strengthening security
and reaching the achievable target of $1 trillion in cuts over 10 years.
Within the decade, this plan would achieve a 20 percent increase in the
international affairs budget—concentrated in the core missions of
diplomacy and development—and focus on investments in climate
stabilization, while allowing for $200 billion for deficit reduction and
$240 billion for domestic nation-building.123
“As we wind down two wars, we can responsibly begin to reduce a
military budget that has grown larger during the post-9/11 period than
at any time since World War II,” said Miriam Pemberton,
co-author of the report and research fellow at the Institute for Policy
Studies. “At the same time, we can shift resources to strengthen our
engagement with the rest of the world. This report lays out a blueprint
for doing so.”
“The report critiques the funding imbalance between the military
(Defense Department) and nonmilitary (State Department and Department of
Homeland Security) components of the American security apparatus. And
it injects some sanity and real numbers into the political debate over
how to best protect U.S. national security,” said Lawrence J. Korb,
report co-author, Senior Fellow at the Center for American Progress,
and former assistant secretary of defense under President Ronald Reagan.
“We need to protect the underfunded nonmilitary programs that help our
nation defend itself and prevent global crises from escalating into
military confrontations, which are often costly in both American lives
and dollars. The military can become leaner and stronger, but
politicians need to consider the broad array of security tools at their
disposal.
This report further recommends that the largest addition to the
prevention budget be in the area of climate security and requests that
the federal budget process include a climate change mission area.
Federal expenditures on climate should be accounted for, as was a duty
of the Office of Management and Budget before the requirement was
recently suspended by Congress, and presented in a unified way in the
federal budget. Because of the U.S. military’s real and growing concern
over climate change as a threat multiplier—a phenomenon with the ability
to exacerbate and accelerate instability and conflict—this unified
security budget proposes to add $20 billion a year in investments to
stabilize the climate through domestic and global efforts.
A full listing of members of the Unified Security Task Force—with
expertise in defense spending through the Department of Homeland
Security, offense spending through the Department of Defense, and
prevention spending through nonmilitary foreign engagement programs in
the Department of State and the U.S. Agency for International
Development—can be found in the report here.
###
The Unified Security Budget Task Force has reported annually since
2004 on the imbalance in security spending, which is tilted to heavily
toward military expenditures. Institute for Policy Studies is a
community of public scholars and organizers linking peace, justice, and
the environment in the United States and globally. We work with social
movements to promote true democracy and challenge concentrated wealth,
corporate influence, and military power.
Source: http://www.americanprogress.org
The
time is right to scrimp on military pay raises, says a new report that
appears to agree with a Pentagon proposal to cap basic pay hikes
starting in 2015.
The report, commissioned by the Defense
Department, was conducted by the Rand Corp., a think tank that has done
considerable research for the military on ways to hold down personnel
costs.
The report offers three reasons to justify military raises that are smaller than annual private-sector wage growth:
• A tight civilian job market has improved military recruiting and also has made midcareer troops less likely to leave.
•
The end of combat operations in Iraq and the winding down of the
mission in Afghanistan will dampen the political fallout of smaller
raises.
• Service members are well-compensated after a decade of
robust increases in pay and benefits. Since 2000, basic pay has risen by
45 percent, compared with increases of 33 percent in private-sector
wages and 31 percent in the cost of consumer goods and services.
When
tax-free housing and food allowances are factored in, the report says,
enlisted members are better paid than 80 percent or more of civilians,
compared with less than 60 percent in 2000.
BREAKING DOWN THE NUMBERS
• What you stand to lose
The charts below show how basic pay would change for some troops —
and how much cumulative pay they would lose — under three Rand Corp.
pay-cap proposals if they took effect next year. The proposals are
compared to pay raises that would continue to match the Economic Cost
Index, a measure of private-sector pay growth. The calculations are
based on the Pentagon’s proposed 1.7 percent military pay raise for
2013, which would match the actual increase in the ECI, and the
Congressional Budget Office’s nominal estimates of 3.3 percent annual
ECI growth from 2014 through 2016. E-4 with 3 years of service
Assumes promotion to E-5 in 2013 and to E-6 in 2015, plus time-in-service raises in 2013 and 2015
2012
2013
2014
2015
2016
ECI
25,887.60
30,358.80
31,359.60
37,591.20
38,833.20
Option 1
25,887.60
30,211.20
31,208.40
37,404.00
38,638.80
Option 2
25,887.60
30,211.20
31,057.20
37,044.00
38,080.80
Option 3
25,887.60
29,851.20
30,837.60
36,961.20
38,181.60
E-6 with 8 years of service
Assumes time-in-service raises in 2014 and 2016
2012
2013
2014
2015
2016
ECI
37,717.20
38,358.00
40,888.80
42,238.80
46,234.80
Option 1
37,717.20
38,170.80
40,687.20
42,030.00
46,008.00
Option 2
37,717.20
38,170.80
40,489.20
41,623.20
45,345.60
Option 3
37,717.20
37,717.20
40,204.80
41,533.20
45,460.80
E-8 with 18 years of service
Assumes time-in-service raises in 2014 and 2016
2012
2013
2014
2015
2016
ECI
55,699.20
56,646.00
60,091.20
62,074.80
66,996.00
Option 1
55,699.20
56,368.80
59,799.60
61,772.40
66,664.80
Option 2
55,699.20
56,368.80
59,508.00
61,174.80
65,703.60
Option 3
55,699.20
55,699.20
59,086.80
61,038.00
65,876.40
O-2 with 2 years of service
Assumes promotion to O-3 in 2015, plus time-in-service raises in 2013, 2014 and 2016
2012
2013
2014
2015
2016
ECI
44,535.60
52,164.00
55,702.80
65,516.40
70,920.00
Option 1
44,535.60
51,908.40
55,432.80
65,196.00
70,570.80
Option 2
44,535.60
51,908.40
55,162.80
64,566.00
69,552.00
Option 3
44,535.60
51,292.80
54,774.00
64,422.00
69,735.60
O-4 with 10 years of service
Assumes time-in-service raises in 2014 and 2016
2012
2013
2014
ECI
77,022.00
78,332.40
84,949.20
87,753.60
93,636.00
Option 1
77,022.00
77,947.20
84,531.60
87,321.60
93,175.20
Option 2
77,022.00
77,947.20
84,124.80
86,479.20
91,828.80
Option 3
77,022.00
77,022.00
83,527.20
86,284.80
92,073.60
O-6 with 20 years of service
Assumes time-in-service raises in 2014 and 2016
2012
2013
2014
ECI
112,446
114,357.60
121,240,.80
125,240.40
132,732
Option 1
112,446
113,796
120,646.80
124,628.40
132,080.40
Option 2
112,446
113,796
120,060
123,422.40
130,172.40
Option 3
112,446
112,446
119,214
123,148.80
130,510.80
Sources: Rand Corp., Congressional Budget Office, Military Times calculations
“Military
pay buys a lot more than it used to,” the report says. “Overall,
conditions are currently favorable for DoD to … slow the growth in
military pay, enabling savings in military personnel costs while
achieving force management goals.”
This is hardly the first report
to attack military pay and benefits — but this one supports an active
Defense Department initiative.
The five-year defense budget plan
unveiled by the Pentagon in January proposes 2013 and 2014 raises that
would continue to match average annual increases in private-sector wage
growth. The request for 2013 is 1.7 percent; the size of the 2014 raise
will depend on private-sector wage growth next year.
The
nonpartisan Congressional Budget Office estimates that growth will be
3.3 percent, but the actual amount won’t be known until fall.
However,
defense officials have said that beginning in 2015, they would begin
proposing smaller pay raises that presumably would be less than the
average annual increase in private-sector wages.
Defense officials have never laid out in public testimony the details of their proposed raises for 2015 and beyond.
Documents
released by the Pentagon in February in conjunction with the fiscal
2013 budget proposal said only that raises beyond fiscal 2014 “will be
lower.”
The documents also said the lower raises are being delayed for two years to give troops time “to accommodate these changes.”
In
February testimony on the defense plan, a senior Pentagon personnel
official, JoAnn Rooney, told the House Armed Services Committee that
“slowing future growth of military compensation” was a key part of DoD’s
effort to cope with postwar force cuts and tighter budgets.
Defense
officials “understand [that] current fiscal pressures demand change and
that the costs of military compensation are significant,” Rooney said.
“Some cost savings will be achieved through proposing more limited pay
raises.”
Pay-cap options
Congress has not yet reacted to
the Pentagon pay study because lawmakers do not need to directly address
something that will not happen for at least two years, according to
congressional aides who work on personnel issues. However, the CBO is
skeptical that lawmakers would approve the capping of military pay.
The Rand report lays out three options for capping military pay raises, and how much money each would save:
• A one-time pay freeze that would save about $1.2 billion the first year and $17.7 billion over 10 years.
•
A one-time pay cap that would hold the military raise to half a
percentage point less than average private-sector wage growth, which
would save $360 million in the first year and $5.2 billion over 10
years.
• Four years of military raises capped at half a percentage
point less than private-sector raises, which would save $360 million
the first year and $17.5 billion over 10 years.
The report does
not specifically recommend any of the options but notes that a four-year
pay-raise cap could be hard to maintain because recruiting and
retention might worsen, the economy might improve, or new strains on the
force could emerge. Any of these factors could erode support for
maintaining limits on military raises, the report says.
While the
report emphasizes how military raises have well outpaced private-sector
wage growth since 2000, it never points out that military pay was far
behind civilian pay at that point.
From 2000 to 2011, Congress
approved annual military pay raises that outpaced private-sector wage
growth precisely because military pay had badly lagged in the 1990s — a
big factor in a recruiting and retention crisis that took hold after the
post-Cold War drawdown that decade.
In fact, 1998 and 1999 saw
the peak of the so-called “pay gap,” a comparative measure of annual
military and private-sector pay growth since 1982, the last time rough
parity was thought to exist.
With the pay gap at 13.5 percent and
troops voting with their feet, Congress embarked on its 11-year campaign
to make military pay competitive again.
A lesson not learned?
The
considerable effort required to make that happen over more than a
decade will be for naught if military pay is again allowed to lag behind
civilian wages, advocates say.
“It seems like this is a lesson we
never learn,” said retired Col. Steve Strobridge, government relations
director for the Military Officers Association of America and a former
compensation director for the Air Force.
“What will happen, most
likely, is what has happened in the past,” he said. “We will cap people
and short their pay … and keep doing it until the pain starts to show
with reduced recruiting and reduced retention, and then you reverse
course.
“We turn the tap on, we turn the tap off, and in the
process leave a military compensation system that lacks basic
principles, like paying people a fair wage,” he said. “What message are
you trying to send when you say to people in the military that they
don’t deserve the same pay as the average American?”
“Capping
basic pay is about the worst thing the military could do,” said Todd
Harrison, a defense analyst with the nonpartisan Center for Strategic
and Budgetary Assessments.
“Basic pay is one of the most
cost-effective forms of military compensation. DoD should reduce other,
less valued forms of compensation before [it considers] touching basic
pay,” said Harrison, who in July released a study based on surveys of
current and former service members about what trade-offs they would make
in their pay and benefits.
A long-term struggle
Since the
dawn of the all-volunteer force after the Vietnam War, the Pentagon has
struggled with how to set military pay rates. Defense officials want to
spend enough to be competitive with the private sector and fair to the
troops while being prudent stewards of taxpayer dollars.
The
general view has been that military pay should be “comparable” to what
service members would earn if they were not in uniform, according to the
Military Compensation Background Papers, a DoD history of pay and
benefits.
In the early 1970s, military pay was kept roughly equal
to the pay of federal civilian workers with similar years of service,
but that didn’t work well because federal pay was not keeping pace with
private-sector salaries.
By 1981, military wages were considered
to be far behind what service members could earn in the private sector,
leading to two huge catch-up raises: 11.7 percent in fiscal 1981 in the
last Carter administration budget and 14.3 percent in fiscal 1982 in the
first Reagan administration budget.
But military pay quickly began to lag behind the private sector again, leading to the peak 13.5 percent pay gap in 1999.
The
next year saw Congress approve a new pay formula that required annual
military raises to be half a percentage point above average
private-sector wage growth as measured by the Labor Department’s
Employment Cost Index, or ECI.
Initially imposed for just five
years — over DoD objections — the “ECI-plus-½” formula was used by
Congress for 11 years, cutting the pay gap to 2.4 percent by 2010, where
it remains.
However, DoD strongly argues that any pay gap disappeared long ago if military housing and food allowances are factored in.
Those
allowances, which with basic pay form what DoD calls “Regular Military
Compensation,” saw major increases over the past decade as a result of
changes in the way they are calculated and paid.
In fact, the 2008
Quadrennial Review of Military Compensation argued that, using the RMC
yardstick, service members were paid better than their civilian
counterparts. The QRMC said cash compensation for enlisted members was,
on average, $5,400 more than for comparable civilians. Officers did even
better, with average cash compensation $6,000 more than civilians with
similar experience and education.
Lawrence Korb of the Center for
American Progress, the Pentagon’s top personnel official from 1981 to
1985, said he agrees with the Rand report’s conclusion that military
raises have been overly generous in recent years, but he said he is not
sure a long-term cap on military raises is the answer.
Korb said he supports keeping military raises at the same level as annual private-sector wage growth.
“We got ourselves in a lot of trouble in the ’70s, when we capped raises,” he said. “We do not need to do that again.”
Think tank recommends big benefits cuts
By Rick Maze - Staff writer
Posted : Thursday Nov 1, 2012 11:36:21 EDT
A
new report by a liberal-leaning think tank recommends a dramatic
overhaul of military pay, retirement and health care benefits as part of
a $1 trillion cut in defense spending over 10 years.
The Center
for American Progress calls for
capping pay raises,
eliminating military
health benefits for many retirees who are covered by an
employer-provided plan, and
reducing the value of military retired pay
as well as making retirees wait until age 60 to start receiving it.
Recommendations
are included in a report, Rebalancing Our National Security (below),released
Oct. 31 by the progressive think tank and advocacy group. The report
opposes across-the-board cuts in defense spending that could occur
beginning in January under sequestration but still calls for major
reductions in defense spending.
Capping pay raises, the report
says, could save $16.5 billion over the next five years.
Reducing
retiree health care benefits, through a combination of restricting care
and raising fees, could save $15 billion a year.
Reforming military
retired pay could save, in the short term, up to $13 billion a year, and
over time could save up to $70 billion a year off the current plan.
In
addition to cutting compensation and benefits, the report also
recommends cutting the number of active-duty troops permanently based in
Europe and Asia, saving $10 billion a year. It recommends withdrawing
33,000 troops from Europe and about 17,000 from Asia.
In calling
for less spending on military pay raises, the report basically endorses a
plan proposed, but not yet executed, by the Defense Department. Under
the Pentagon plan,pay raises beginning in 2015 would be capped at less than the average
increase in private sector pay,a move that responds to a belief that
military members are being paid more than civilians with comparable jobs
and experience.This happened because Congress, over Pentagon
objections, has regularly provided the military with raises that were
slightly larger than the average private-sector raise to eliminate what
had been perceived as a pay gap. The end result, says the report, is
that the average service member is receiving $5,400 more in annual
compensation than a comparable civilian.
The Defense Department
plan calls for a 0.5 percent raise in 2015, a 1 percent raise in 2016
and a 1.5 percent raise in 2017 to bring pay levels back in line, which
the CAP report endorses.
“To its credit, the Department of Defense
has attempted to tackle this problem in its FY 2013 budget request,
outlining a plan that would gradually bring military pay back in line
with the Employment Cost Index without cutting any service member’s
pay,” the report says. “Congress should demonstrate political courage
and allow the Department of Defense to execute this long-term plan.”
Similarly,
the report endorses many of the Defense Department’s proposals for
cutting health care costs by raising fees, mostly on retirees and their
families. But the report goes a step further: “To truly restore the
Tricare program to stable financial footing, the Defense Department
should enact measures to reduce the overutilization of medical services
and limit double coverage of working-age military retirees,” the report
says.
One idea would be to modify Tricare for Life benefits for
Medicare-eligible retirees so that the program would not cover the first
$500 of costs per year and would cover only 50 percent of the next
$5,000.
Another idea would be to mandate that working-age retirees
could only have Tricare benefits if they or their spouses do not have
access to employer-provided health benefits. The report suggests this
would be an income-based restriction but does not say what the cutoff
should be.
The report also recommends modifying military
retirement benefits.
For anyone currently in the military with fewer
than 10 years of service, benefits could be cut:
Instead of receiving 50
percent of basic pay after 20 years of service, with immediate
benefits, the report says the benefits would be 40 percent of base pay
with payments not beginning until age 60.
For people not yet in the
military, there would be no fixed retired pay in the future, only a
pre-tax retirement savings plan based on contributions from the service
member
'Fiscal Cliff' Agreement Passes in the Senate, House Expected to Act Next
Washington, DC Monday, December 31, 2012
The Senate
passed HR 8, the Tax Relief Extension Act, by a vote of 89 to 8. The
so-called "fiscal cliff" agreement had been negotiated earlier in the
day between Senate Minority Leader Mitch McConnell (R-KY) and Vice
President Joe Biden.
The House is in for legislative business at
noon ET and is expected to take action on the Senate agreement some time
during the day.
The Senate returns at 2pm ET this afternoon.
Last
night, House Democratic Leader Nancy Pelosi (D-CA) issued a statement
on the agreement, noting that she would present it to the House
Democratic Caucus once a final agreement was reached and passed in the
Senate.
House Speaker John Boehner (R-OH) and other members of the
Republican leadership team also issued a statement tonight on the
Senate agreement.
“The House will honor its commitment to consider
the Senate agreement if it is passed. Decisions about whether the
House will seek to accept or promptly amend the measure will not be made
until House members -- and the American people -- have been able to
review the legislation.”
Alex Pratt
Major Garrett
David Corn
Christian Democrats
Grover Norquist
Nancy Pelosi
House News
Rosa DeLauro
The White House
Daily Kos
TheNewDeal
Luke Russert
Senate News
