Senate panel approves $612B defense bill that overhauls benefits

Senate panel approves $612B defense bill that overhauls benefits
© Greg Nash

The Senate Armed Services Committee passed its 2016 defense authorization bill by a 22-4 vote on Thursday.

Chairman John McCainJohn McCainA Cabinet position for Petraeus; disciplinary actions for Broadwell after affair Meet Trump’s ‘mad dog’ for the Pentagon Wrestling mogul McMahon could slam her way into Trump administration MORE (R-Ariz.) announced the results of vote, hailing the $612 billion measure as a "reform bill" with "overwhelming bipartisan support."

Ranking Member Jack Reed (D-R.I.), however, was one of the four 'no' votes against the bill, which boosted the Pentagon's war funding account $38 billion by over the president's request.

Democrats are opposed to the move, which they say skirts budget caps on federal spending in order to boost defense spending, but leave caps in place for non-defense spending. Democratic Sens. Kirsten Gillibrand (N.Y.), Bill Nelson (Fla.) and Mazie Hirono (Hawaii) also voted against the bill.

"There comes those points where you have to make what you think is an appropriate decision based on what you think is important," Reed told reporters. 

Still, he said the bill was able to do "things that I think are very important." 

The bill would overhaul the military's retirement system from one that benefits those who serve for at least 20 years to a 401(k)-like plan with up to five percent of matching government funds. Troops who serve at least 20 years would still receive retirement payments up through retirement age, albeit at a reduced rate. 

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The reform would save $15 billion per year in its out-years, and apply only to troops who begin serving after 2018, McCain said. 

The overhaul, based on a recommendation by a blue-ribbon panel, would also allow troops to receive a lump-sum retirement payment. 

The House bill, which contains similar reforms, does not include the lump-sum option, which McCain said would save the Defense Department $5 billion per year. 

McCain called it a "very significant change" that would benefit 75 percent of service members who leave without any retirement benefits.

Earlier in the week, the committee's subpanels released authorized a 1.3 percent pay raise for troops, versus the 2.3 percent pay raise authorized in the House's bill. The bill would also gradually reduce basic housing allowance payments to cover only 95 percent of off-base housing, versus the 100 percent today.

It would also privatize military grocery stores -- a move that Sen. James Inhofe (R-Okla.) said he disagreed with and will seek to remove it on the Senate floor.

The bill would also require the Pentagon to cut down headquarters and management staff by 30 percent over the next four years, which goes beyond a 20-percent reduction contained in the House bill. 

The cuts would begin with a 7.5 percent reduction next year, which would save $1.7 billion in 2016, McCain said. 

The bill also provides the administration with a path to closing the Guantanamo Bay detention facility.

The bill asks the White House to submit a plan for closing the prison, which would then be subject to a vote in Congress. If both the House and Senate approve, the facility could be closed. 

McCain, who supports closing the prison at Guantanamo, called it a "bipartisan compromise." Reed said that McCain and Sen. Joe Manchin (D-W.Va.) worked out the compromise. 

McCain also supports a separate bill introduced by Sen. Kelly Ayotte (R-N.H.) earlier this year that would place restrictions on detainee transfer, but said his position on ultimately shuttering the facility remains the same.

"I've always been in favor of closing Guantanamo because of the image... deserved or not deserved," he said, adding that the problem was that the administration has never provided Congress with a plan as promised. 

The bill would also contain money for the A-10 "Warthog" attack jet, which provides ground troops in battle with close air support, rejecting the Air Force's call to retire the aircraft. 

The bill would also provide $300 million in military assistance and authorize lethal weapons for Ukrainian forces, who are fighting pro-Russian separatists in Eastern Ukraine.

There is also $600 million for the Pentagon's program to train and equip Syrian rebels -- the amount the White House requested for 2016. 

The bill, however, orders the Defense Department to report to Congress on the program's progress. 

"Right now, basically there's been no briefing as to the role of DOD," McCain said.

McCain said he expected a Senate floor amendment on providing arms directly to Kurdish peshmerga fighters in Iraq, which many members of Congress support. 

McCain said there is language in the bill on whether all drone strike operations would be shifted from the CIA to the Pentagon, but said the language was classified. 

He said there were also provisions on enhanced interrogation, but that issue would be addressed by amendment on the Senate floor, since it affected multiple committees, not just his.  

The bill also goes farther than the House's defense policy bill to rein in wasteful spending on weapons systems, said an aide. 

Like the House bill, the panel's version would authorize $523 billion for base defense spending, subject to spending caps, and $89.2 billion for the Pentagon's war fund -- which is not subject to caps. 

Democrats have decried that move as a "gimmick" to skirt the spending caps mandated by the 2011 Budget Control Act, and the White House has issued a veto threat against any bill that leaves the caps in place. 

McCain, who has previously criticized the use of war funding, referred to as Overseas Contingency Operations or OCO, for items in the Pentagon's base budget, acknowledged it was a "very generous interpretation of OCO."  

"It's about as generous as I can think of in the English language," he said.

McCain acknowledged the White House has issued a veto threat on the final bill if it looked like the current House version.

"I hope that we can satisfy some of those concerns," McCain said, calling the president's veto threat "very serious." 

Reed said he hoped that Republicans and Democrats could come together to find a way to lift the spending caps, referred to as "sequestration." 

"If this is not fixed promptly, we're going to get in the habit of relying on OCO funds. They're going to get more and more each year, and you're going to find more items that look less and less like an overseas contingencies support and more and more like, 'Well, we've got to spend it and this is the only place money can be made available,'" he said. 

The House is expected to pass its version of the defense bill on Friday.

-- Updated at 7:45 p.m.