Obama Vetoes Bill Affecting Troop Pay and Benefits

This story has been updated. 

President Obama on Thursday vetoed a major Defense bill that contains a pay raise for service members and several other provisions affecting their benefits.

The veto signing, which involved a photo-op for the press, happened late Thursday afternoon. The main sticking point over the fiscal 2016 Defense authorization bill involves sequestration. The legislation Congress sent to the president allows the Defense Department to sidestep sequestration caps by increasing the “emergency” Overseas Contingency Operations fund. The White House has said it wants a total reversal of the automatic budget cuts in both defense and non-defense spending.

“It keeps in place the sequester that is inadequate for us to properly fund our military in a stable, sustained way and allows all of our armed forces to plan properly,” Obama said of the Defense bill during the veto ceremony.

“I have repeatedly called on Congress to eliminate the sequester and make sure that we’re providing certainty to our military so they can do out-year planning, ensure military readiness, ensure our troops are getting what they need. This bill instead resorts to gimmicks that does not allow the Pentagon to do what it needs to do.”

A veto override in Congress is unlikely because the House doesn’t have the votes. While the Senate passed the legislation 70-27, Minority Leader Harry Reid, D-Nev., has said Democrats will sustain the veto if Obama nixes the bill, but that’s no guarantee. If Obama’s veto stands, service members will need to keep an eye on Dec. 11. That’s when the current continuing resolution funding the government expires. If Congress can’t agree on a long-term spending plan or another stop-gap funding measure by then, the government will shut down and troops’ paychecks (as well as the pay of federal civilian employees) will be delayed.

The bill includes a 1.3 percent pay raise in 2016 for troops, an overhaul of the military’s retirement system, and money for basic housing allowances, among other provisions affecting service members’ finances.

Some of the most significant pay and benefits provisions in the bill affect the military’s retirement system, phasing in changes that would allow non-career military service members to boost their retirement nest eggs. The changes, based on recommendations from the Military Compensation and Retirement Modernization Commission, would automatically enroll new troops into the Thrift Savings Plan at 3 percent of their pay with a 1 percent government deposit. Later, the government would be able to match up to 5 percent of any extra contributions service members make. 

In addition, service members who stay in the military for 20 years, and are thereby entitled to a retirement pension, would receive a less generous calculation for their annuity. To encourage members to stay in the military, they would receive “continuation pay” after 12 years of service.

The new blended retirement system would only affect new service members. Current service members are grandfathered into the current system, but could opt into the new one.

The fiscal 2016 Defense bill also:

• Continues providing two basic housing allowances to dual-military married couples and unmarried service members living together.
• Covers 95 percent of estimated housing expenses, reducing the monthly amount of the BAH through a phased decrease of 1 percent (which began in fiscal 2015) per year over four years.
• Requires “modest” increases to TRICARE pharmacy drug co-pays for many enrollees.
• Requires the Defense Department to reduce its workforce by 25 percent over the next five years. Savings already realized by the Pentagon’s self-initiated cuts implemented in recent years would count toward the final reduction goal, which must be met in fiscal 2020.
• Preserves cuts to per diems for service members and Defense civilian employees on long-term government travel.
• Maintains the current structure of the commissary system.

Rep. Mike Coffman, R-Colo., has introduced the Pay Our Military Act, which mandates that all active-duty, reservists, National Guard troops, as well as any civilians and contractors working in support of those forces, be paid on time regardless of a shutdown’s duration.

The House Republican leadership this week has criticized Obama for his veto of the Defense bill, saying he is playing politics with legislation that affects the troops and their families. “It’s sad to see our commander-in-chief embrace such a reckless political strategy -- and even sadder to see he plans to boast about it,” said an email sent from the office of Speaker John Boehner, R-Ohio. “But at least this afternoon’s veto photo-op will make clear to our troops – and the American people – who is blocking the tools and resource our military needs to carry out their important missions. They won’t forget.”