An Important Budgeting Principle is About to Be Violated

February 12th, 2014 at 1:12 pm

My CBPP colleague Joel Friedman makes an important point here, one worth amplifying.  When it voted yesterday to repeal the military pension savings from an earlier budget deal, members upended “a key feature of the agreement, which Congress adopted with a large, bipartisan vote — that policymakers should not pay for higher defense funding by cutting domestic programs.”

Let’s be crystal clear about this: no one thinks military retirees shouldn’t be entitled to a secure, robust pension.  The fact is they are, and the original deal did not change that fact:

The budget agreement trimmed annual cost-of-living adjustments (COLAs) by one percentage point for military retirees under age 62.  Once they reach 62, they’ll receive their full benefits, including a catch-up for the years of lower COLAs.  Census data show that over three-quarters of those affected are working in second careers and that nearly 60 percent of them are in the top fifth of the income distribution.

So be it.  If the political forces align such that policy makers want to reverse part of what they just agreed to, that’s their prerogative (importantly, I suspect the Senate to go along with the House on this).  But they definitely should not violate the principle against robbing non-defense, domestic spending, which has already taken the largest discretionary hit, to boost defense.

Remember—well, hopefully you’re not so far in the weeds that you ever knew this—the budget deal that included these savings already boosted defense spending relative to sequestration levels.  In fact, these savings—about $7 billion over 10 years—helped pay for that increase.

True, that’s not huge bucks in the scheme of things.  But the violation of this budget principle should not be taken lightly.  A key point of the budget machinations that brought us to where we are today is that automatic spending cuts should be split between evenly between defense and non-defense (forget for a moment, that it’s not the discretionary side of the budget that’s responsible for our longer term fiscal challenges anyway).  If Congress starts stealing from domestic programs to boost defense, it will unfairly and unwisely exacerbate already unsustainable pressures on domestic spending.

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