Yesterday afternoon, the Senate passed a House bill that rolled back cuts to military pensions that were included in the Murray-Ryan budget deal.
To offset the cost of it, Congress agreed to extend the sequester’s cuts to mandatory spending (mostly cuts to Medicare providers) yet another year until 2024.
If that spending offset sounds familiar, it’s because Democrats attempted to use it to offset the cost of an 11-month extension of unemployment insurance (UI) just a few weeks ago.
When that came up for a vote, Republicans filibustered it, saying that it would break the budget agreement that the parties had just agreed to. But yesterday? 40-one Republicans voted in favour of the bill. Only Republican Sens. Jeff Flake (Ariz.) and Dan Coats (Ind.) opposed it. (Sens. Tom Coburn and Saxby Chambliss did not vote.)
The sequester originally cut mandatory spending until 2021. Then the Murray-Ryan budget extended those two years until 2023. At the time of the budget agreement, conservatives were furious that these uncertain future cuts were in exchange for increased spending the next two years. That was why Senate Republicans opposed using yet another year of the cuts to pay for a renewal of unemployment insurance (UI).
“It is an utter violation of the spending agreements that we agreed to.” said Sen. Jeff Sessions (R-Ala.), the ranking member on the Senate Budget Committee.
You may be wondering: How can Sessions say that then, but then use the exact same cuts to justify rolling back the cuts to military pensions? Well, for budgetary reasons that mostly have to do with timing, CBO scored the 11-month UI extension as increasing the deficit by $US18.3 billion. It scored the military pension bill as deficit neutral. However, the spending offset is identical in both bills. (Read the budget note at the bottom for more details on this.)
In short, the CBO scores it as a violation of the spending agreement when the savings go towards renewing unemployment insurance, but not when they go toward undoing changes to military pensions. But the actual policy is the same. The score just changed for timing reasons.
In fact, Sessions and his colleagues are saying that using the sequester’s mandatory spending cuts as a spending offset is unacceptable for extending unemployment benefits, but is fine for rolling back the cuts to military pensions.
Republicans can hide behind the timing of CBO’s score to justify their position, but the truth is they aren’t interested in extending unemployment benefits. They are only looking for an excuse to hide their opposition. This military pension bill proved that one and for all.
*Budget note: The extension of the sequester’s mandatory spending cuts until 2024 saves $US18.1 billion in FY 2024 and FY2025, according to CBO. When CBO scored the 11-month UI extension on January 9, their budget window extended from 2014-2023. Thus, all of those savings fell outside of that window and CBO scored it as increasing the deficit by $US18.3 billion (the full cost of the 11-month extension).
When CBO scored the rollback of military pension cuts on February 11, they used a budget window from 2014-2024. Thus, some of the mandatory spending cuts now fall within that window. ($9.2 billion to be exact.) In the bill Congress passed yesterday, $6.8 billion is allocated to offset the cost of undoing the cuts to military pensions and another $US2.4 billion is for a “Transitional Fund for Sustainable Growth Rate Reform,” which will likely be used as part of the doc fix. There will be both additional costs from rolling back the pensions and savings from additional mandatory spending cuts in FY2025 and beyond, but CBO did not score them.
Summary: In both the 11-month UI extension bill and the military pension bill, the spending offset is identical. However, CBO’s scores differ due to the timing, which is why Republicans are claiming that the UI extension busts the budget while the military pension rollback is revenue neutral. (Thanks to the Committee for a Responsible Federal Budget’s Loren Adler for walking me through this.)
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