Senate lawmakers will force the Defense Department to move ahead on a military retirement overhaul but will go along with DoD's plans to trim troops' pay and benefits.
The moves were approved as part of the Senate Armed Services Committee's draft 2016 defense authorization bill, which came as the full House began debate on its version of the budget legislation.
The Senate committee's bill sets guidelines for $613 billion in defense funding next year and was touted as a "reform bill" by committee chairman Sen. John McCain, R-Ariz.
"This is not about how much we added or subtracted," he told reporters Thursday. "We have to reform, or else we will lose what little confidence taxpayers have in us now."
The Senate bill calls for sweeping reforms in defense acquisition policy and civilian personnel staffing. (A previous reported incorrectly said otherwise.) McCain said changes approved by the committee would save $10 billion in annual spending, money that would be reinvested in training and modernization accounts.
But the most ambitious plans in both the House and Senate versions of the defense bill are dramatic changes to the military's current 20-year, all-or-nothing retirement system, which leaves roughly 83 percent of troops with no benefit when they leave the ranks.
The Senate plan follows recommendations from the Military Compensation and Retirement Modernization Commission earlier this year, which called for a blended retirement system with reduced payouts for 20-year troops and 401(k)-style investments to all service members' Thrift Savings Plan accounts.
Under both the House and Senate plans, troops would receive a 1 percent automatic federal deposit to those investment plans and receive up to a 5 percent government match to their own contributions.
The Senate plan would vest after two years of service. It would also end the government match after 20 years of service, a concession House lawmakers included in an effort to calm critics who worry the moves could hurt retention.
While the change would provide new retirement benefits for most troops, other proposals by the Senate would strip away other existing compensation.
For example, committee members went along with Pentagon requests to trim back growth in housing allowances, potentially leaving troops with higher out-of-pocket rent costs.
Under that initiative, military leaders could reduce housing allowance growth in coming years to a level that eventually leaves troops with payouts that cover only 95 percent of average housing costs.
Officials have said that would help pay for other service priorities. But critics say it would amount to a pay cut, one potentially harmful to military families' finances. House lawmakers rejected the idea in their draft of the bill.
The Senate also approved only a 1.3 percent pay raise for troops next year, below the 2.3 percent expected growth in average private-sector wages. House members said they prefer the higher raise, but left out of their bill specific legislative language to mandate it.
The Senate committee approved its bill by a 22-4 vote. One of the "no" votes was cast by Sen. Jack Reed, D-R.I., the committee's ranking Democrat, who largely praised the legislation but said he could not support plans to use temporary war funding to get around mandatory federal spending caps.
Republican defense leaders in both chambers have supported making available about $90 billion in overseas contingency funds as a way to avoid the caps without simultaneously raising nondefense spending.
House Democrats have promised a difficult floor fight over that issue, but Reed would not commit to voting against the Senate authorization bill when it comes to a full vote in his chamber.
Instead, he said he's still hopeful that an alternate plan may emerge. Lawmakers in both chambers have expressed support for repealing the federal spending caps for much of the last four years, but have failed to find a realistic compromise.
No timetable has been set for when the defense authorization bill will come to a full vote in the Senate. The House was expected to wrap up its work on the legislation Friday.
The two chambers will have to reconcile differences on the military pay and retirement provisions in a conference committee before a final compromise bill can go to President Obama to sign into law.
Leo covers Congress, Veterans Affairs and the White House for Military Times. He has covered Washington, D.C. since 2004, focusing on military personnel and veterans policies. His work has earned numerous honors, including a 2009 Polk award, a 2010 National Headliner Award, the IAVA Leadership in Journalism award and the VFW News Media award.