Budget Agreement’s Impact on Military Pensions

U.S. Representative Martha Roby (R-AL) commented on concerns over the recent House–passed budget agreement’s impact on military pensions.

The Bipartisan Budget Act of 2013 would set overall discretionary spending for the Fiscal Year 2014 at $1.012 trillion, returning non-defense spending to Bush-era levels and restoring some, but not all, military funding cut by sequestration. Part of the savings in the budget comes from reducing by one percent the annual automatic cost-of-living increases given to working-age military retirees starting in 2015.

Those who have retired from the service but are between the ages of 40 and 62 will still get an automatic cost of living increase to their pensions, it would just be one percent less. When retirees reach the age of 62, the cost of living adjustment reverts back up to the original rate. 

The agreement in no way affects veterans’ disability benefits, nor does it affect any retiree over the age of 62. 

Of note, Members of Congress don't receive an automatic cost-of-living pay increase. Congress has denied itself any increase, including cost-of-living. Most recently, Congress voted in October 2013 to prohibit a pay adjustment scheduled for next year.

Just one day after Congress passed a landmark budget agreement to control spending for the next two years, U.S. Representative Martha Roby (R-AL) is moving to replace one of the plan’s least popular provisions and ensure that military retirees are not unfairly penalized under the new law.

Rep. Roby is partnering with Rep. Mike Fitzpatrick (R-PA) and other lawmakers to repeal a provision that reduces working-age military pensions beginning in 2015 and replace it with a measure to prevent illegal aliens from receiving fraudulent cash payments from the government in the form of the Refundable Child Tax Credit.

“There are many good things in the budget agreement passed by Congress: setting a sustainable path of controlled federal spending, preventing some of the harmful sequestration cuts to our military, and returning Congress to regular order to end the days of massive temporary spending bills passed at the last minute. I applaud the negotiators for tackling a difficult challenge and producing the first compromise budget in a divided government in 27 years," Rep. Roby said.

“However, the final product was not what I would have drafted, and House members were not given the opportunity to improve the bill through amendments on the floor. One provision that is particularly troublesome is the one percent reduction in the cost of living adjustment for working age military retirees beginning in 2015. Just look at the vast federal government that is rife with waste. Are reductions to military benefits really the best place for Congress to make cuts? I don’t think so, and I that’s why I believe that provision should be removed.”

The legislation introduced today in the House – H.R. 3788 – is a compliment to an amendment offered by Sen. Jeff Sessions (R-AL) during debate on the budget plan in the Senate. It removes the cost-of-living increase reduction and replaces it with a measure closing a tax loophole that allows ineligible, non-citizens to receive fraudulent cash payments in the form of a Refundable Child Tax Credit.

The Joint Committee on Taxation estimates that closing this loophole by simply requiring the recipients of this taxpayer-funded credit to be eligible citizens would save as much as $7 billion, more than enough to offset the $6 billion gleaned from altering military retiree pensions.

“Today I am joining Rep. Mike Fitzpatrick and others in the House to offer a companion bill to Sen. Sessions’ commonsense amendment. I believe that this is a fix the Republican Conference can rally around. I have personally contacted the House leadership this morning to give voice to the concerns of military retirees in my district who feel singled out by the budget agreement. I am strongly encouraging our leaders to use the Christmas week as an opportunity to build support for this or similar legislation so that we can pass it upon our return in January. In my opinion, it should be the first item on the docket for 2014.

"I greatly appreciate Sen. Sessions' leadership in crafting and fighting for this amendment, which was only denied because Majority Leader Harry Reid used procedural tactics to block it.

"We need to make this right. In the coming weeks, we will try to use our position of strength in the House majority to improve upon the budget agreement and better prioritize our budget savings.”


Closing the gaping loophole the Refundable Child Tax Credit is more than justifiable, particularly given the budget situation.  

According to a 2011 report form the Treasury Inspector General, “Millions of people are seeking this tax credit who, we believe, are not entitled to it. We have made recommendations to the IRS as to how they could address this, and they have not taken sufficient action in our view to solve the problem.”

The Treasury Inspector General went on to say that “the payment of Federal funds through this tax benefit appears to provide an additional incentive for aliens to enter, reside, and work in the United States without authorization, which contradicts Federal law and policy to remove such incentives.”

The House passed the Bipartisan Budget Act on December 12, 2013 by a vote of 332 to 94. You can learn more about the Bipartisan Budget Act of 2013 by clicking here.