Bill would preserve vets' cost-of-living adjustments
Responding to veterans upset over plans to cut cost-of-living increases for some military pensions as part of a budget deal, Sens. Mark Warner and Tim Kaine have introduced legislation to cancel the reductions.
A two-year budget plan that passed the House last week and is being considered by the Senate would ease some automatic cuts aimed at defense and domestic programs. But it pays for those changes in part with a 1 percent cut in the annual cost-living increases on pensions of working-age veterans.
The reduction would begin in January 2015.
Once vets reach age 62, the annual increase would start again with those retirees getting a one-time increase in benefits so that payments during retirement would be the same as if there had been no cuts.
Budget analysts say the change would save about $6.2 billion over 10 years.
A proposal being introduced by Warner, Kaine and Sen. Jeanne Shaheen, a New Hampshire Democrat, would repeal the pension reduction and replace the lost revenue by ending a tax haven for corporate overseas operations.
Their proposal would prohibit companies incorporated overseas but managed in the United States from avoiding U.S. taxes by claiming the overseas revenue is nontaxable foreign income. The tax change will raise more than $6.6 billion over 10 years, according to Warner's office.
"While the changes to military pension COLA increases may look insignificant to some, this is real money to a lot of families," Warner said Tuesday.
The Virginia Democrat said his bill would remove what he considers an unfair singling out of veterans, without trying to rewrite and possibly stalling the larger budget bill agreed to by House and Senate negotiators.
The budget legislation has been hailed as an important compromise between Democrats and Republicans that avoids another government shutdown and provides some stability for the next two years.
"We shouldn't blow the whole compromise that got some strong support in the House," Warner said, noting there is time to fix the pension issue before it would take effect in 2015.
The pension reduction drew objections from military veterans almost as soon as the budget compromise was announced last week. The Military Officers Association of America argued that a veteran retiring at age 40 would lose 20 percent of retirement by age 62. Many Virginia veterans contacted Warner's office to protest.
Kaine praised the budget bill during a floor speech Tuesday but was critical of the provision that would curtail the pension increase. He noted that Sen. Carl Levin, chairman of the Senate Armed Services Committee, will conduct hearings to review the pension issue - long before the change would begin.
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