House GOP weighs repealing military pension cuts as condition for federal debt limit increase

The Associated Press

White House press secretary Jay Carney speaks during his daily news briefing at the White House in Washington, Monday, Feb. 10, 2014. Carney answered questions on topics including recent developments in Congress. (AP Photo/Jacquelyn Martin)

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By ANDREW TAYLOR, Associated Press

WASHINGTON (AP) — House Republican leaders Monday unveiled a plan to reverse a recently passed cut to military pensions as the price for increasing the government's borrowing cap, but it received a rocky reception from skeptical conservatives.

GOP leaders briefed rank-and-file GOP lawmakers at a meeting in the Capitol on Monday evening in hopes of passing it on Wednesday before departing Washington for a week-long vacation. It's unclear whether the vote would still go forward after it was rejected by many conservatives.

"Right now we've got a debt ceiling bill that increases spending, which is diametrically 180 degrees opposite of what we were battling over just two years ago — where the question was how much in spending cuts we were going to get," said Rep. Mo Brooks, R-Ala.

The GOP bill would extend Treasury's borrowing authority for at least another year, repeal the curb passed in December on pension inflation adjustments for military retirees under the age of 62, and extend automatic cuts to Medicare and other programs to 2024, another year than presently scheduled.

It's not clear that the plan will fly with Democrats. Their votes would be needed to help pass the measure since some Republicans refuse to vote to raise the debt ceiling under any circumstances. A spokesman for House Minority Leader Nancy Pelosi, D-Calif., said Democrats will continue to insist that any debt limit legislation omit add-ons, even bipartisan proposals like repealing military pension cuts.

But a 94-0 Senate procedural vote on Monday demonstrated the widespread support in both parties to repeal the pension cut, and GOP leaders seem confident they would win Democratic votes. The Senate tally came in relation to a stand-alone bill to repeal the cut. A key consideration for Republican leaders is whether to schedule the vote — with the markets open — if they are uncertain of the outcome.

If Monday's plan falls through, GOP leaders may have little choice but to yield to Democratic demands for a debt ceiling measure that's "clean" of GOP add-ons, which would be a bitter defeat for a party that has sought to use must-pass debt ceiling measures as leverage to force spending cuts on Democrats.

The cuts to cost-of-living pension increases for military retirees under the age of 62 were part of December's budget agreement, backed by House Budget Committee Chairman Paul Ryan, R-Wis. Repealing them would cost $7 billion over the coming decade, the Congressional Budget Office said Monday.

The reduction has sparked an uproar among advocates for veterans, and lawmakers in both parties want to repeal it. The cost of canceling the cut would be borne by extending for an additional year a 2 percentage point cut to Medicare reimbursements to doctors and hospitals, as well as cuts to a handful of other benefit programs. Those cuts, known as sequestration, would now extend through 2024, with savings for that year finally appearing to make up for almost a decade's worth of additional pension spending.

Time is running out for lawmakers to act to lift the debt limit. Treasury Secretary Jacob Lew told lawmakers last week that Treasury will exhaust by Feb. 27 its ability to employ accounting maneuvers to borrow to pay its bills.

Lew told congressional leaders on Monday that he had begun tapping two large government worker retirement funds to clear room under the debt limit. The action involving the Civil Service Retirement and Disability Fund will provide $50 billion to $75 billion in additional borrowing room while tapping the Government Securities Investment Fund will provide about $175 billion in borrowing room, Lew estimated.

Lew announced that he would suspend payments to these two pension funds and would also draw down investments made in the funds. Previous Treasury secretaries have also employed this bookkeeping maneuver. Once Congress approves a new debt ceiling, the Treasury makes the funds whole by replacing the withdrawn funds and lost interest earnings.