This article originally appeared in the September issue of Military Officer.
As advocates for military personnel, retirees, veterans, their families, and survivors approach Congress an inequity - often a need for a new benefit or revision to an existing benefit - they often are met with a legislative brick wall known as the “pay-as-you-go,” or PAYGO, rule.
PAYGO is both an ever-present obstacle for new spending initiatives, large or small, and yet it can be ignored entirely or circumvented by congressional leaders.
Recall, for example, how floor speeches about budget deficits destroying the futures of our children and grandchildren, even by our most fiscally conservative lawmakers, disappeared on Capitol Hill as lawmakers prepared to vote on massive tax cuts for corporations, the wealthiest of Americans and, of course, for a majority of common taxpayers, though the latter tax breaks are only temporary.
By contrast, the long campaign to eliminate the “widows tax” for 66,000 surviving spouses of service members who either died on active duty or died in retirement of conditions linked to time in service, continues to be blocked by PAYGO, as do multiple other ideas involving higher benefits or entitlements.
The military widows tax is also known as the Survivor Benefit Plan-Disability Indemnity Compensation (SBP-DIC) offset because these surviving spouses see SBP payments cut dollar-for-dollar by amounts they receive in tax-free DIC from VA. With Congress deciding it can't afford to end the offset, it moved last year to make permanent, and to adjust annually for inflation, a Special Survivor Indemnity Allowance (SSIA) started in 2008 to ease the impact of the offset.
And yet to make SSIA permanent, Rep. Mac Thornberry (R-Texas), chairman of the House Armed Services Committee, said he had to find a “pay for,” as PAYGO required, by reducing current “mandatory” spending elsewhere. The only such accounts controlled by the armed services committees are the retirement trust fund and another trust established in 2001 to cover medical costs for service elderly under the TRICARE for Life and mail order pharmacy programs.
Thornberry and colleagues therefore chose to pay for permanent SSIA by accepting a Senate and DoD proposal to raise pharmacy co-payments for TRICARE users, including services for the elderly. House conferees, he said, were reluctant to do it but understood the Senate's argument that higher pharmacy fees made mandatory budget dollars available to fix an issue for surviving spouses.
A similar tradeoff is occurring with the proposal to extend Vietnam-era Agent Orange benefits to Blue Water Navy veterans who patrolled territorial waters during that war. Nearing approval on Capitol Hill, this long-sought initiative has a clear path to enactment because, to address demands of PAYGO, the veterans affairs committees reached a bipartisan deal to raise fees on initial VA home loans.
Without cutting some benefits to create space in mandatory VA spending accounts, VA committees contend, they wouldn't be able to fund VA health care and disability compensation for Blue Water Navy veterans with illnesses on the list of conditions that VA presumes were caused by exposure to wartime defoliants.
Beneficiary vs. Beneficiary
Military associations and veterans' groups increasingly are frustrated by PAYGO restrictions as they fight to help currently serving military and veterans. Some contend they are being told more often than ever not to press for new benefits unless ready to identify fees to be raised or benefits to be trimmed to pay for them.
“Attaching any cost of [improved] benefits squarely on the beneficiary, as opposed to the nation as a whole, diminishes the selfless service and in-kind payments already made by those in uniform,” wrote retired Air Force Lt. Gen. Dana T. Atkins, president and CEO of MOAA, to the House and Senate chairs and ranking members of the armed services committee May 9.
“This resourcing option places the financial burden solely on our nation's 1.3 percent who serve or have retired from service and relieves the remaining 98.7 percent of our citizens of any responsibility to pay for these costs,” Atkins added.
Another concern is that when authorizing committees finally do reach agreement to help a particular group, such as Blue Water Navy veterans, it can mean dampening benefits for others, which pits deserving groups against one another and weakens military associations and veteran groups generally.
Current and former staff members of these committees concede that the PAYGO rule is frustrating for advocacy groups seeking to improve benefits for their members. But they contend the frustrations should be familiar because authorizing committees as far back as 1993 have had to live with PAYGO and have been citing its restrictions, like a mantra, to advocates for currently serving, veterans, and families.
They contend PAYGO has been applied consistently through the years. Perhaps the rising frustrations now felt, a few staffers said, might be a consequence of turnover among advocates for military and veteran communities rather than any tightening of adherence to PAYGO by authorizing committee staffs.
The Senate established the first PAYGO rule in 1993. As originally written, it prohibited consideration of any direct spending and revenue legislation that would increase the federal budget deficit over a 10-year period. Senators modified and extended the rule eight times in subsequent resolutions. Today it prohibits any bill that would increase the deficit in its first year or its sixth year or the 11th year after it takes effect, according to the Congressional Research Service (CRS).
The House adopted its own PAYGO rule in 2010 but later changed it to a “CUTGO rule” that seeks only to control deficit spending and not how new legislation would impact taxes or revenues.
A January CRS report on the history of the Senate PAYGO law concludes that from 1993 through last year, the rule was used to prevent consideration of 44 amendments. During that same span, the Senate voted to waive PAYGO only 14 times and none of those actions involved military or veteran benefits.
Getting Around PAYGO
What the CRS report doesn't document, however, are countless instances when congressional leaders the last 25 years chose to ignore, suspend, or circumvent PAYGO in ways that didn't require a recorded vote by authorizing committees and aren't subject to a point-of-order challenge during floor debate.
Some maneuvers that neutralized PAYGO produced historic benefit gains for military and veterans' communities. These included the following:
- 2000, establishment of TRICARE for Life and a robust mail order pharmacy program. In 2003, the dramatic easing, in phases, of the ban on “concurrent receipt” of both military retirement and disability compensation;
- 2004, phase out of the Survivor Benefit Plan offset that beneficiaries faced at age 62;
- 2008, creation of the Post-9/11 GI Bill education benefit for persons who served in the military since Sept. 11, 2001.
How did Congress accomplish these goals without repealing PAYGO?
With TRICARE for Life, it created a special health care trust fund, fenced off from budget deficit debate. With the Post-9/11 GI Bill, it simply added the education benefits' costs - billions of dollars annually - to obligations payable directly by the U.S. Treasury without budgetary impact on the VA.
For a time, to pay for concurrent receipt and ending the SBP offset, Congress considered painful measures such as narrowing eligibility rules for disability pay. In time, it found a variety of other offsets - for example, a tobacco bill projected to cut Medicare costs and a canceled military aircraft contract - to free up sufficient mandatory spending dollars.
Shifting Priorities Shape the Future
These bold strokes to bypass PAYGO occurred at a time when military faced serious recruiting challenges and later, during Afghanistan and Iraq wars, when lawmakers rushed to have names attached to any legislation that solve inequities or enhance military and veteran benefits.
With those wars wound down, priorities have shifted to stimulating the economy, shrinking federal spending, and also growing military force strength and modernizing equipment, in part, by keeping entitlement spending under control.
Aniela Szymanski, who works veteran affairs issues for MOAA, recalls a recent visit with a staff member on a veterans affairs committee who tossed cold water immediately on her pitch for a modest benefit enhancement.
“He said, 'If you don't want to come up with 'pay-for' suggestions, then stop asking for things.' I said, 'That's not only an obnoxious thing to say, but we're not coming to Congress for the sake of being greedy on behalf of veterans. The reason we're asking is there are still things that need to be fixed.'”
The vast majority of veterans benefit changes sought, Szymanski added, are small fixers, not major new benefits. Bigger items still not addressed are the SBP-DIC offset and lifting the ban on concurrent receipt for all disabled retirees including those forced to retire for medical reasons before completing 20 years.
“When it came to giving tax breaks to billionaires, the White House and Congress couldn't act fast enough to shovel $2.3 trillion - with a 'T' - from the treasury down that drain,” said retired Air Force Col. Steve Strobridge who lobbied Congress for years before he retired from a second career as MOAA's director of government affairs two years ago. “But ask them to put a tiny fraction of 1 percent of that amount toward ending the military widows' tax, and all the widows get, literally, is 'Happy Memorial Day.' It's beyond revolting.”
“We just don't have the offset to pay for it,” said a professional staff member of one of the armed services committees, regarding proposed legislation to end the SBP-DIC offset. For at least the past decade, he said, “if we could do it, we would have done it. But we can't find mandatory offsets for it.”
This long-time staff member could recall only one instance when an authorizing committee bypassed the PAYGO rule to fund new benefit. That was in 2008 to establish the Post-9/11 GI bill. Leadership decided to fund it as a separate emergency bill, which removed it from annual National Defense Authorization Act and a possible point-of-order challenge during floor debate. As emergency legislation, the Congressional Budget Office wasn't required to provide “scoring” or an official cost estimate and no lawmaker sought to derail the plan as unfunded.
“That's the way they got that done,” he said.
Authorizing committees insist they don't selectively enforce or waive the PAYGO rule based on lawmaker whims.