'We broke the glass,' says one person familiar with the budget talks. GOP's math, memory budget lapses

For a party that prides itself on fiscal austerity, Republicans in the Senate seem to be having a few math — and memory — lapses when it comes to the budget agreement sent to the White House this week.

Prominent members of the Appropriations Committee, for example, lined up Thursday to vote “no” on the grounds that the new $491.8 billion cap for non-defense spending in 2014 is too high. But in fiscal 2008, when President George W. Bush was in the White House, the same Republicans voted for bills that added up to much more when measured in real dollars adjusted for inflation.


Most of the action that year was concentrated in a large year-end omnibus bill in December 2007 and a spring supplemental in June 2008. The final fiscal 2008 total for non-defense appropriations reached $493.7 billion, according to historical tables compiled by the Office of Management and Budget.

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When adjusted for inflation that translates into about $534 billion in current dollars or $42 billion more than the 2014 caps set under the budget deal. But Senate records show that no more than 14 Senate Republicans ever voted against passage of the two major bills.

The second big math and memory puzzle is the uproar over a proposed adjustment in military pensions that passed the House easily as part of the budget deal but is fast becoming campaign fodder in the Senate.

The change won’t take effect until the end of 2015 — leaving two years for the Armed Services Committees to weigh in and make changes. And the panels already admit they must address pension and personnel costs given the retrenchment facing the Pentagon’s long-term budget.

“We broke the glass,” said one person familiar with the budget talks. “It’s for others to step in now.”

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Indeed, despite repeated calls for some reforms, the current retirement system has not been substantially changed since the nation moved to an all-volunteer force in the 1970’s.

Back then the promise of retirement after 20 years at 50 percent of pay was intended to take into account much lower pay scales in a military where draftees provided low-cost manpower. But given the pay increases since the draft ended, the same 50 percent promise has greatly inflated the liability facing taxpayers.

Consider for example the case of the E-7 sergeant so often cited by Sen. Lindsey Graham (R-S.C.), who is up for re-election at home and has jumped into the pension debate with both feet.

Current base pay for an E-7 is about $4,281 a month this year. But in 1969, during the draft, the same sergeant would have been getting just $552 a month. And even in 1980, during the early years of the volunteer force, military pay lagged at about $1203 a month for the same rank.

It has grown dramatically since however. When measured in real, inflation-adjusted dollars, pay for the same E-7 approaching retirement is up about 25 percent since 1980. This directly impacts pension costs in turn — even before factoring in longer life expectancy for retirees.

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The budget agreement, albeit awkwardly, attempts to put on the brakes by proposing to cut 1 percent from the annual cost-of-living increases that apply to the same pensions. The cut would only apply to retirees up to their 62 nd birthday. That date was chosen as a rough proxy for “working age.” But the authors admit — and Secretary of Defense Chuck Hagel has called for — changes are needed to correct the inadvertent impact on those with disabilities.

The bigger debate for Congress is over those healthy enough to work: how much they should be asked to sacrifice in the form of a COLA cut — a reduction made to defuse sequestration and offset still deeper cuts from defense spending.

As a member of Armed Services, Graham was among those most opposed to sequestration because of the impact on military readiness. But now that he has a budget deal to offset those cuts, he has attacked the COLA reduction vigorously — saying his E-7 sergeant will lose three years of retirement in the space of 20 years.

That suggests a 15 percent cut and has had the desired political effect. But the senator appears to be cutting a few corners to get there.

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Asked to explain his calculations, Graham’s office provided a set of tables for a 40-year-old person retiring at $23,000 a year. This is actually less than what a typical E-7 would retire at today. When asked to explain. Graham’s office said finally that the tables had come from the Senate Budget Committee.

In any case, the tables assume annual inflation of 2 percent minus the 1 percent COLA cut — yielding a potential loss of $71,957 over 23 years. Graham then compresses that to be 20, not 23 years, and lays claim to three years of lost retirement.

“So that almost $72,000 number requires the master sergeant to give up 3 years of retirement.” Graham told the Senate. “Because $24,000 to $25,000 a year is what they make for a 20-year period, and the cost of the COLA reduction is almost $72,000, so basically you have taken 3 years of their retirement away to do a budget deal.”

“That’s almost three years of retirement pay given back,” he told reporters. “In that 20-year period you’re really losing three years.”

But if it were 20 years, not 23, the same budget tables indicate the lost pension amount would be $52,400 not $72,000. That’s closer to a 9 percentage reduction — not 15 percent. And that percentage will fall even more when the full lifetime pension benefits are counted beyond a retiree’s 62 nd birthday.

Estimates by Republicans on the House Budget Committee show that an E-7, who enlisted at 18 and retires at 38, will get $1.626 million in lifetime retirement pay instead of $1.734 million. That’s a 6 percent reduction.