In Congress, Military Benefits Are Still Sacred

For Washington lawmakers who measure the national debt in trillions, $6 billion is a pittance. But for many military veterans—and key lobbying groups—the $6 billion in pension cuts contained in December's budget compromise meant a broken promise.

And it's not a breach they're willing to let Washington forget.

In a Twitter town hall Tuesday night with the theme #KeepYourPromise, service members and their families expressed their outrage. Alia Reese, a military spouse, tweeted a picture of a little boy pressed to a computer screen. "This is how Daddy has read to him for over half his life," she wrote. "We have upheld our end now you do yours."

Military personnel issues have long been sacred on Capitol Hill, and many defense watchers—from Pentagon officials to lobbyists—were surprised when the final deal between Sen. Patty Murray, D-Wash., and Rep. Paul Ryan, R-Wis., emerged including a provision decreasing the annual cost-of-living adjustment for working-age military retirees by 1 percent over the next decade.

Now it appears proponents of the cut may have claimed victory too soon. Backed by veteran outrage, military-advocacy groups have mobilized, and legislative proposals on Capitol Hill to reverse the pension cuts are gaining steam. More than a dozen proposals have been introduced, though there's disagreement on exactly how to replace the savings.

(Read more: Here’s Why the Proposed Military Retiree Benefit Cuts Are No Big Deal)

A bill by Sen. Kelly Ayotte, R-N.H., for instance, wants to offset the cost by changing the tax code to prevent illegal immigrants from claiming a child tax credit, while Sen. Jeanne Shaheen, D-N.H., would like to find the money by closing some overseas corporate tax loopholes.

The growing backlash to the cut—some one in three lawmakers, according to The Hill, have sponsored or cosponsored different bills to repeal the cuts—is a strong signal that personnel issues are likely to remain virtually untouchable in the near future, even if it means sacrificing other important priorities for the military, such as training for combat operations and weapons programs.

The $6 billion cut, Center for Strategic and Budgetary Assessments' analyst Todd Harrison said, is a "drop in the bucket" compared to what we're spending on military compensation over the next 10 years. "Unfortunately, I think that the way Congress has responded to this small change in compensation—and now they're looking at repealing it—is a setback for making meaningful progress on this issue for the foreseeable future."

From 2001 to 2012, the average cost of pay and benefits per active-duty service member grew from $54,000 to $109,000, Harrison says—an increase of 56 percent adjusted for inflation. Yet veterans' service organizations, says Harrison, are proving "very effective at scaring members of Congress about touching this issue again. They're reinforcing the belief that this is a third-rail issue."

Pentagon officials have decried the rising costs of compensation, which threaten to usurp other key priorities in the budget during austere times, and have called for a slower growth rate for pay and higher health care fees and copays for retirees. The trajectory of costs for military personnel, says Eric Fanning, undersecretary of the Air Force, are "unsustainable" and increasingly eating into investment and operation accounts.

But the politics are complex. No one on Capitol Hill wants to be seen as breaking faith with military troops. The proposal does have some thorny consequences: For instance, a sergeant first class or master sergeant retiring this year with 20 years of service, says retired Navy Vice Adm. Norbert Ryan, chief of the Military Officers Association for America, will lose $83,000 from what they would have earned by the time they reach age 62.

The cuts in the budget deal, Ryan says, break faith with the volunteer troops who have already sacrificed so much—because they take effect retroactively. A commission tasked with recommending ways to reform the reform the military's compensation and retirement system, Ryan stresses, was asked to investigate reform efforts that would grandfather retirees and those currently serving.

This message resonates.

"It's not justifiable to have the military retirees take a significant reduction when others ... are not," says Sen. Jeff Sessions, R-Ala. "We all know we've got to tighten our belts every year, but they shouldn't be asked to be the ones to take the primary reduction."

While Sen. Lindsey Graham, R-S.C., says he is in favor of reforming cost-of-living-adjustments, he's troubled that the deal simply gives a retroactive "penalty" to military retirees. "We didn't change the structure of our entitlement problem, we just took $6 billion out of the military retiree community through the COLA penalty," Graham says. And Senate Armed Services Chairman Carl Levin, D-Mich., appears to agree: "Entitlement reform was necessary, but it needs to be more comprehensive, not just picking out military."

However, if the Pentagon has to live within the budget caps that Congress has set, and it cannot reform areas such as compensation, it must make other sacrifices.

That means the military would likely be smaller and less prepared to fight, says Lawrence Korb, who was assistant secretary of Defense for manpower, reserve affairs, installations, and logistics in the Reagan administration. "Something's got to give," says Korb, a senior fellow at the Center for American Progress. "The costs of people are going up—so you can't have as many. Or you can't keep as many units as you want to see for readiness." If the cost per person continues to go up, even hacking into procurement and research accounts won't be enough, Harrison adds. "You will end up with a force too small to follow through on our global security commitments," Harrison says.

Virtually every item the department may consider cutting, Fanning notes, has a constituency on the Hill—from the growth of military benefits to bases in members' districts.

"If you can't go after infrastructure, your bases, and you can't go after force structure, the cost of your people, what that leaves is investment and operations," Fanning says. "So either you're not modernizing, buying the next generation of weapons, and/or not using them, not training."