Budget deal calls for troop benefit cuts next year

12/3/2014

WASHINGTON — Troops will see smaller pay raises and housing and health care benefits next year under a defense budget agreement unveiled Tuesday in Congress.

Lawmakers agreed to White House and Pentagon requests to reduce personnel and equipment costs by capping pay raises at 1 percent, slowing housing allowance increases, and ratcheting up Tricare prescription copays. The Air Force will not be able to retire the A-10 Thunderbolt but was given authority to reduce its flying time.

The compromise breaks a months-long impasse on Capitol Hill over the benefits. Now, the bill must be fast-tracked and passed in the House and Senate without any amendments, which sponsors hope can be done by next week before Congress wraps up business for the year.

“I think we all recognized we have to provide some savings, but we didn’t want to get too far out in front,” a senior official said during a briefing on the bill by the armed services committees of both chambers.

The White House and the Defense Department earlier this year proposed cuts to benefits including raises, allowance and health insurance, and planned to save money by retiring the Air Force’s A-10 Thunderbolt aircraft, mothballing some ships and curbing other equipment costs.

Top brass came to Capitol Hill and made their case to lawmakers for a spending reduction plan that covers the next decade, saying mandatory budget caps set to kick in 2015 will put the Pentagon in a money crunch. The Senate backed many of the military proposals but the House balked at finding savings by carving out troop benefits.

The compromise bill says nothing about the proposed pay-raise cap, a budgeting method that ensures President Barack Obama’s 1-percent ceiling on increases will be in place next year instead of the typical 1.8-percent increase mandated by law.

Basic housing allowance now covers 100 percent of rental costs for troops. The Pentagon had proposed slowing inflation increases in the coming years until it paid only 95 percent of costs. The compromise budget unveiled Tuesday instead calls for reducing increases next year so the allowance covers 99 percent of costs.

A similar deal on prescription copays for troops covered by Tricare insurance would increase out-of-pocket costs by $3 next year and put off any decisions beyond that. The DOD and the White House proposed a plan that would, over a decade, increase copays by $30, congressional staff said.

A senior staff member said House and Senate lawmakers wanted to see the results of a landmark review of benefits slated to be finished by Military Compensation and Retirement Modernization Commission in February before planning any cuts farther into the future. The commission is expected to weigh in on how to manage ballooning costs.

Supporters of budget cuts also won out in the battle for the future of the A-10, a ground-support aircraft beloved by infantry and championed by a group of lawmakers including Sen. John McCain, R-Ariz.

The bill bars the Air Force from retiring the aircraft as planned but allows Defense Secretary Chuck Hagel to reduce maintenance costs through fewer flying hours.

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