Bloomberg News

Supercommittee May Seek Commission on Federal Pay and Benefits

October 06, 2011

Oct. 6 (Bloomberg) -- The U.S. congressional supercommittee charged with cutting the deficit may consider whether cuts in federal pensions, pay and health-care benefits should be drafted by an independent commission.

The panel might operate similarly to the 2005 Defense Base Closure and Realignment Commission, which presented Congress with a plan it had to either accept or reject without changes, according to two congressional staff members who weren’t authorized to speak on the record.

Reducing the cost of benefits might protect funds for weapons systems such as Lockheed Martin Corp.’s F-35 Joint Strike Fighter or the Textron Inc.-Boeing Co. V-22 aircraft.

The Defense Department faces cuts of at least $450 billion from its 10-year spending plans, even before the supercommittee makes its recommendations. If Congress fails to act on the recommendations by Dec. 23, the August budget bill signed by President Barack Obama calls for automatic cuts, including an additional $500 billion from defense spending over a decade, not including interest.

Defense Secretary Leon Panetta and defense industry trade groups, such as the Aerospace Industries Association, have raised alarms. Panetta said further cuts would “do serious damage” to the U.S. ability to make changes in the “defense structure that are responsible and that do protect this country for the future.”

Congressional panels with jurisdiction over federal agencies must make their recommendations to the supercommittee by Oct. 14.

Entitlement Spending

Senator Carl Levin, the Michigan Democrat who is chairman of the Armed Services Committee, and Arizona Senator John McCain, the panel’s top Republican, are expected to give a presentation to the supercommittee over the next few days, according to Levin.

“We have not been asked to make any additional recommendations on discretionary spending,” Levin said in an interview. “We may make recommendations on some of the entitlements.”

McCain said in a short interview that savings in the “area of military health care” will be part of the discussion with the supercommittee.

Former Defense Secretary Robert Gates has said that rising health-care costs are “eating us alive.” According to the most recent Tricare annual report to Congress, the Defense Department was estimated to spend $50.9 billion on all military health care in fiscal 2011, which ended Sept. 30.

Rising Premiums

The Pentagon in its 2012 budget proposal requested an increase to Tricare premium fees from $460 a year to $520 a year for retirees and their families.

Representative Doug Lamborn, a Colorado Republican and member of the House Armed Services Committee, said that health premiums may go up “at least modestly.”

Any changes to pensions would “damage the trust” of those who served in the military, he said.

Another Armed Services Committee member, Missouri Republican Todd Akin, said that Congress should balance commitments to those who serve in the military with the current fiscal circumstances.

“You have promises that have been made and you can’t jerk the rug from under people,” Akin said. “At the same time, the government has promised more than we can afford.”

New Jersey Democrat Rob Andrews, also a member of the armed services panel, said that having the supercommittee recommending another commission “would be a choice of last resort.”

“They were set up to make some decisions,” he said. Congress wouldn’t have “enough appetite” for another commission, Andrews said.

--With assistance from Joe Hicken in Washington. Editors: Steven Komarow, Jim Rubin.

To contact the reporter on this story: Roxana Tiron in Washington at rtiron@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net


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