With Pension Vote, Congress Proves Durability of Mandatory Spending

Published Feb 19, 2014. By David Harrison.

Leaders on both sides of the aisle cast a budget agreement reached by the House and Senate budget chairmen as a small but important step in tackling the country’s fiscal problems, one that took the so-called grand bargain off the table but at least made slight progress in addressing spending concerns in both parties.

But last week’s vote on a bill (S 25) to repeal cuts in the budget deal (PL 113-67) to military pensions for current veterans and military servicemembers showed that even small deals have pitfalls and may be even more difficult than larger compromises. That, budget watchers say, should cause lawmakers to reconsider whether modest agreements really are preferable to the elusive grand bargain.

“The irony of this is it appears that it’s harder for them to agree to a big deal but a big deal is actually easier,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

Grand bargains fell out of favor in 2011, when a bipartisan House and Senate group could not reach an agreement on how to cut $1.2 trillion in spending, setting in automatic, across-the-board cuts under sequestration. Since then, lawmakers have aimed for less ambitious goals and appeared to have struck gold last year when they adopted the two-year plan negotiated by Rep. Paul D. Ryan, R-Wis., and Sen. Patty Murray, D-Wash.

The deal notably included a $6.2 billion cut in cost-of-living increases to military pensions for veterans up to age 62, a small but significant step toward curbing the growth of autopilot spending programs.

It didn’t last. Last week, just before leaving for their Presidents Day recess, the House and the Senate rapidly cleared legislation undoing the cuts in military pension increases after veterans groups marshaled forces against the plan. The House vote was 326-90, and it was even more lopsided in the Senate, at 95-3. President Barack Obama signed the legislation over the weekend.

To deficit hawks both inside and outside Congress, the vote was a deflating reminder of how difficult it will be to rein in spending on popular programs they say are at the root of coming problems with the country’s long-term debt. Mandatory spending, driven largely by Social Security and Medicare, is projected to grow 76.7 percent over the next decade, dwarfing the projected 15.8 percent increase in discretionary spending, according to the Congressional Budget Office.

If lawmakers cannot agree on small changes in entitlement programs, it is hard to imagine how they can agree on a package of cuts or revenue increases to bring the larger programs in line.

“How do we convey to the nation the seriousness about solving the debt crisis when at the first sign of political pressure we repeal one of the deficit reduction measures?” asked Sen. Jeff Flake, R-Ariz., one of the three senators to vote against repealing the pension cuts. “Year after year, members of Congress simply refuse to stick by the budget discipline that we said we’d stick to.”

In the House, Ryan also voted against the bill repealing the cuts.

“Rather than making the tough choices, it sidesteps them,” he said. “I’m open to replacing the reform with a better alternative. But I cannot support kicking the can down the road.”

“It’s not a great confidence builder in entitlement reform,” said Robert Bixby, executive director of the Concord Coalition. “This was the one hard choice that was made in the budget deal and it did signal that military pay and retirements had to be one of the things that were considered. And then they fall all over themselves to reverse it. I don’t know how they’re going to do any major entitlement reform if they can’t stomach something like this.”

Perhaps, Bixby said, the ideal would be to try once more for a grand bargain.

“The veterans were able to argue that they were being singled out, and they have a point,” he said. “A broader deal would have been much harder to argue for reversing if there had been a whole bunch of hard choices made.”

To MacGuineas, a broader agreement has the advantage of both solving the long-term fiscal problem without singling out one segment of society.

“It’s going to take so many mini-deals instead of one big deal and you’ll always have a group that’s treated unfairly,” she said. In a broader agreement, military pension changes “would be a no-brainer.”

But as lawmakers have learned over the past few years, big deals present enormous hurdles.

“You need a stronger political consensus on both sides of the value of doing a grand bargain to provide the necessary cover before you can sit down and hash out the details,” said Joel Friedman, vice president for federal fiscal policy at the Center on Budget and Policy Priorities.

That means, Friedman said, Republicans have to make peace with the idea of raising tax revenues and Democrats with cutting some entitlement programs before launching the talks.

So far, there are few signs that either party is willing to make those kinds of concessions in advance.