Big or small, spending-cut efforts hit roadblocks

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Associated Press

Posted on March 3, 2014 at 5:01 AM

Updated Tuesday, Mar 4 at 1:00 PM

WASHINGTON (AP) — The budget gurus in Congress have failed for years to find a grand bargain to reduce the government's long-term debt, so this year they decided to go small. Just 1 percentage point would be shaved from the annual cost-of-living increase in military pensions for veterans under age 62.

That strategy failed, too. Congress promptly caved in to pressure from the powerful veterans lobby and voted last month to restore the bigger pension increases it had cut just two months earlier. It didn't matter that the Pentagon itself called the reduction fair and necessary.

Advocates of deficit reduction are discouraged. They say they fear Congress' reversal on military pensions will lead to unraveling other recent spending cuts.

"It's tough to overstate how devastating that was," said Sen. Jeff Flake, R-Ariz., one of just three senators who voted to keep the pension reduction in place. "It's back to the drawing board, because that was a big blow."

Vague bromides and promises about deficits and spending are easy for politicians. Real spending cuts aren't. Despite all the national talk of needing to tackle deficit spending, the military pensions debacle illustrates how Americans and their elected officials continue to resist — often fiercely — cuts to almost any specific program, big or small.

"They picked one thing, and it stuck out like a sore thumb," said Bob Bixby of the bipartisan Concord Coalition, which advocates lower deficits.

The military pension vote signals the end of spending discipline efforts for a time, said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, and may make it easier to reverse other cuts.

Indeed, little-noticed but telling events over the past few weeks show lawmakers and the White House are backsliding on spending cuts. President Barack Obama reversed course on a deeply contentious proposal that would curb cost-of-living increases in Social Security. Republicans criticized Obama for backing down but then blasted the administration as it announced it was implementing a new round of Medicare cuts that Congress included in the health care overhaul four years ago.

Congress also is in the process of significantly weakening changes aimed at reforming the much-criticized federal flood insurance program made less than two years ago. And defense hawks are squealing over cuts in Pentagon spending required under a 2011 budget deal that has hit the military hard.

"I fear we'll spend the next month unraveling every itty-bitty bit of progress we've made," MacGuineas said.

Congress agreed in December to make a 1 percentage point reduction in annual cost-of-living adjustments for military retirees under age 62. Many retire with full benefits after 20 years, and some take new civilian jobs while in their 40s and 50s, or even late 30s.

"This modest and reasonable reform would reduce lifetime retirement pay by about 6 percent_from $1.7 million to $1.6 million_for an Army sergeant first class retiring at age 38," retired Marine Gen. James L. Jones and three other high-ranking retirees wrote in The Hill newspaper.

But veterans groups said military retirees were unfairly singled out, and the organizations lobbied Congress to overturn the decision. Some Republican and Democratic lawmakers agreed, and the retreat soon became a rout.

"A sizable political constituency opposed an action by Congress and exercised its political muscle to reverse it," said Rep. Adam Smith, D-Wash. "There's nothing terribly complicated about it."

The savings from the military pensions cut — just $7 billion over a decade — is dwarfed by the savings wrung out of Medicare to help pay for the new health care law. Last month, the White House announced cuts to Medicare Advantage, which lets seniors enroll in Medicare through private insurance plans. The cuts will translate to about 2 percent next year. Already, an effort is underway to roll them back.

"The hard truth is now apparent — millions of seniors who rely on the Medicare Advantage program will lose the plans, benefits, doctors and financial protection they currently have," said Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee.

What Camp didn't say is that he had voted to keep the cuts as part of the GOP's plan to balance the budget.

Not surprisingly, an effort to reverse the cuts has won the support of 40 senators from both parties who, in a Feb. 14 letter, called on the administration essentially to hold Medicare Advantage rates steady.

Among the signers were six Democratic senators in contested races whose outcomes will determine whether Obama faces a Congress next year that's completely controlled by Republicans.

Budget hawks noted that the GOP's complaints about Medicare cuts came just days after the White House withdrew a plan to trim Social Security cost-of-living increases — which itself prompted complaints that the administration isn't serious about cutting spending.

The administration, though, is standing behind — at least officially — changes to the troubled federal flood insurance program passed two years ago. Lawmakers in both parties are working overtime to repeal most of the changes, which could raise insurance costs for hundreds of thousands of homeowners.

Then there's the Pentagon budget. It was cut in the 2011 budget pact and slashed further last year by automatic cuts known as sequestration. Many Senate Republicans voted against a measure in December to undo some of the cuts — only to complain when Defense Secretary Chuck Hagel announced reductions last Monday.

"We are deeply concerned that the policy of austerity will be limited to our national security at a time when what we need most is a commander in chief willing to lead in a dangerous world," Sens. Lindsey Graham, R-S.C., and John McCain, R-Ariz., said in a joint statement.

Federal spending has been trimmed through across-the-board stabs, born of partisan standoffs, that leaders of both parties call far from ideal. The annual deficit has been reduced by nearly two-thirds from its 2009 high, thanks to tax increases, an improving economy and the mandatory cuts in many programs.

But the nonpartisan Congressional Budget Office projects deficits will start rising again in a couple of years, pushed by an aging population, rising medical costs and anticipated increases in interest on the nation's debt, the accumulated sum of annual deficits.

Flake, a freshman senator, rejected the idea that Americans won't accept cuts in government benefits.

"They haven't had to choose for so long, that's the problem," Flake said. "But I think that they understand, maybe better than we do, the seriousness of this. We've got to do it."

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