Where did the $7 billion needed to offset military pension cuts come from in debt limit bill?

Photo credit: Mark Wilson, AP
Photo credit: Mark Wilson, AP

The Murray-Ryan budget, which was passed the House late 2013, was a deal involving about $1 trillion in savings. The deal was set to make it through the fall of 2015 without raising the debt ceiling. That plan fell through.

When that deal was struck in 2013, Ezra Klein’s Wonkblog revealed how the Republicans had a stronger hand in these negotiations because the GOP wants the sequester to continue despite it being an even split between discretionary and non-discretionary spending.

The reason Republicans want the sequester to continue is because it will get in the way of a smooth transition for the Affordable Car Act. Also, Republicans have the steadfast support of the Pentagon and the military behind them. This faction is a much stronger than that of Social Security, Medicare and Medicaid.

Klein wrote,

“Democrats flatly got beat on sequestration. Republicans are keeping — and increasing — the deficit reduction without ever giving up a dime in taxes. And many Republicans don’t want to alter sequestration at all. Ryan entered the negotiations with a much stronger hand than Murray.”

But where things start to get clearer is when Klein discusses how both parties were denied their sacred cows in the Murray-Ryan budget negotiation talks. Similarly, Democrats weren’t able to get new revenue. Much to the Republicans’ dismay pensions for new military enlistees would be cut under this deal.

However, as the debt ceiling came about in early 2014, veteran groups fought hard to have these pension cuts repealed and it worked. The House’s new debt limit bill pushed by Boehner passed both the House and Senate without any strings attached. The bill went to the president and he signed it into law while golfing at Rancho Mirage’s Sunnylands estate. The kicker is that Obama also signed a separate bill to reinstate the pension cuts to new military enlistees.

Ultimately, there were strings attached to the House’s debt limit bill. The 2014 midterm elections were all the strings Democrats could handle.

So this left the country with $7 billion that needed to be offset. Right? Wrong. As I stated earlier, with the 2014 midterm elections nearing, Democrats in the House and Senate didn’t want to be caught voting for military cuts — especially those that directly affecting soldiers). Those $7 billion worth of cuts would be offset by “extending the sequester on Medicare spending for one additional year, to 2024” according to the Hill.

Specifically, the new bill is a tax on medical health care providers, slashing their reimbursement by 2 percent until 2024 (instead of 2023).

This debt limit bill has me wondering how sound the Democrats were during the bill’s inception. Why would Democrats look for savings from soldiers knowing this would be extremely unpopular and that they would be blamed for the cuts ahead of the 2014 elections? Why not find revenue by taxing military vehicles or bonuses given to high level officials? Taxing the soldiers is something vastly unpopular to many Americans no matter their party affiliation.

It seems as though the Republicans have come away ahead of the recent debt limit bill as they freed themselves $7 billion while the Democrats agreed to cut from health care providers and Medicare (ultimately the ACA) for an additional year.

The Republicans were able to bring up a separate bill that undid the budget deal between Reps. Paul Ryan (R-Wisconsin) and Patty Murray (D-Washington), but the Democrats were unable to make Republicans aware of the recently passed farm bill, which cut food stamps by $8 billion. If the Democrats had fought hard enough on this, they wouldn’t have had to offset the military pension cuts by extending the sequester an additional year for Medicare.

The debt limit was a successful attempt by Republicans to damage the ACA’s rollout and cut food stamps making the recent budget deals (farm bill and debt limit bill) solid wins for the Grand Old Party.

If this still isn’t enough to convince you, read the quotes from Senate members which help to shed light on the winners and losers. Sen. Angus King (I-Maine) said, “It’s pretty hard to oppose it (extension of sequester cuts for Medicare) since it’s one of the things we proposed a month ago on unemployment.” Sen. Lindsey Graham (R-S.C.) added, “I think Democrats understand there’s an appetite to help the veterans, but there’s also an appetite not to add to the debt, and it seems like reason prevailed here.”

Graham basically said his party is not going to hold their end of the bargain (despite agreeing to do so last year), which adds to the debt. And the savings won’t come from the things his party values, but the concessions will come from the Democrats and the health care law they’ve been fighting to uphold.

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