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Budget deal offers stability to Pentagon spending

House Budget Committee Chairman Paul Ryan, R-Wis., and Senate Budget Committee Chairwoman Patty Murray, D-Wash., walk together to announce a tentative agreement between Republican and Democratic negotiators on a government spending plan, at the Capitol in
House Budget Committee Chairman Paul Ryan, R-Wis., and Senate Budget Committee Chairwoman Patty Murray, D-Wash., walk together to announce a tentative agreement between Republican and Democratic negotiators on a government spending plan, at the Capitol in Washington, Tuesday, Dec. 10, 2013.
J. Scott Applewhite, Associated Press

WASHINGTON — Working-age military retirees would see fewer dollars in their federal pensions and the Pentagon would get some long-sought stability in spending under Congress' budget deal.

The agreement eases some of the pain of the automatic, across-the-board spending cuts that past and current defense secretaries, senior military leaders and Congress' defense experts have railed against for months. It would reverse a $20 billion financial hit that the Pentagon faced next month, although the robust, post-9/11 military spending through wars in Iraq and Afghanistan is clearly over.

Under the deal, defense spending in the current 2014 fiscal year would be capped at $520.5 billion, up from the current level of $498.1 billion. In fiscal 2015, the amount would be capped at $521.4 billion, up from $512 billion. Pentagon spending would be about the same in 2014 as in the 2013 fiscal year.

The numbers weren't exactly what they wanted, but defense leaders and members of Congress' military panels welcomed the certainty promised in the deal. A House vote is likely Thursday.

"I support the legislative proposal, as I understand, which provides relief to the immediate and urgent readiness problems we face," Army Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, said in response to questions from The Associated Press. "I hope this is the beginning of a conversation on the longer-term challenge to the capability and capacity of our force that is developing over time because of sequestration."

The Pentagon has struggled for years as Congress could only manage temporary spending bills. Now the numbers-crunchers and defense strategists will know what the budget is for two years, and can plan accordingly.

"We've had one cut after another. We have also continually kept the defense of this country in an unpredictable and unstable position," said Rep. Randy Forbes, R-Va., a senior member of the House Armed Services Committee. "What this agreement will do will at least stabilize that."

The budget deal marks one of the few times that Congress has shown a willingness to even touch the costly benefits in the military. Lawmakers have resisted the Pentagon's proposals to raise health care fees or scale back benefits, warning that it would undermine recruitment and be unfair to those who volunteer to serve.

Under the plan, working-age military retirees under the age of 62 would see lower cost-of-living increases, adjusted to the rate of inflation minus 1 percent. The formula would be no change in the current year, a 0.25 percent decrease in December 2014 and a 0.5 percent decrease in December 2015. It would not apply to retirees who left due to disability or injury.

"Remember, these are people who are under the age of 62 who retire early. Most of them have another job," said Rep. Mac Thornberry, R-Texas, another senior member of the House Armed Services Committee. "It's minus 1 percent, it's phased in gradually so it's the least painful way possible."

The pension changes also would apply to new civilian workers, saving a total of $12 billion over 10 years.

Sen. John McCain, R-Ariz., a member of the Senate Armed Services Committee, said Congress may need to do more to deal with skyrocketing military benefits such as health care.

"In the words of Secretary (Robert) Gates, the personnel and entitlement costs are eating us alive. We're going to have to make changes," McCain said.

Another Armed Services Committee member, Sen. Lindsey Graham, R-S.C., said Congress should look at all benefit plans, calling them unsustainable.

"I don't mind asking our military members to make some sacrifices when it comes to ... getting us off the path to becoming Greece," he said of a nation reeling from debt.

Arnold Punaro, who worked for former Sen. Sam Nunn, D-Ga., from 1973 to 1997 as a top aide and later staff director of the Armed Services Committee, said the change in military retiree benefits "sends a signal to the Pentagon and service chiefs that Congress can bite some bullets."

The budget deal also imposes a cap on executive compensation, limiting how much a contractor could charge the federal government to $487,000 for an employee.

AP National Security writer Robert Burns contributed to this report.