The Senate easily advanced the fiscal 2016 defense authorization bill on Wednesday, setting up a veto showdown with President Obama with military personnel policies caught in the crosshairs.

The policy bill would reauthorize a host of military bonuses and benefits, allow a 1.3 percent pay raise for troops on Jan. 1, significantly overhaul the military retirement system and mandate reforms in the defense acquisition process.

Lawmakers also included language to allow base commanders to set new rules on troops carrying personal firearms while on duty, provisions to send defensive weapons to Ukrainian fighters, and several legal provisions to better protect military sexual assault victims.

But the measure also includes language supporting a $38 billion plus-up in overseas contingency funds, a budgeting move designed to get around mandatory defense spending caps put in place by Congress itself for the fiscal year that began Oct. 1.

Obama has threatened to veto the measure, as well as any appropriations bill that Congress passes by using the same "budgeting gimmick."

On Monday, White House spokesman Josh Earnest called the legislation "an irresponsible way for funding our core national defense priorities."

Republicans have countered by accusing Obama of playing politics with troops' pay.

"The president wants to take a stand for greater domestic spending, and he wants to use the vital authorities and support for men and women in uniform as leverage," said Sen. John McCain, R-Ariz., chairman of the Senate Armed Services Committee. "At a time of increasing threat to our nation, this is foolish, misguided, cynical and dangerous."

Earlier this month, the House approved the authorization bill on a 270-156 vote, well short of the 290 needed to override a presidential veto.

The Senate passed the measure by a vote of 70-27. But on Tuesday, Senate Minority Leader Harry Reid, D-Nev., said Democrats in that chamber will sustain a White House veto if Obama follows through on his threat.

What's at stake

The defense authorization bill has been signed into law for more than 50 consecutive years, one of the few bipartisan bright spots in an increasingly divided Congress.

Hill staffers noted that during that stretch, the measure has been vetoed only four times, each time over issues that lawmakers were able to quickly and easily correct. The larger budget fight this year is unlikely to be included in that category.

Republican leaders have been discussing a broader budget deal with the White House in recent weeks, one that would delay or drop the mandatory budget caps to avoid similar fights in coming years.

But the two sides have only until Dec. 11 to reach a new long-term budget deal or pass another short-term budget extension. If they fail, that would lead to a partial government shutdown, which Pentagon officials already have warned could stall troops' paychecks and shutter many non-combat services.

Any deal there will likely come after a presidential veto on the authorization bill. Obama has 10 days to do that.

He has threatened to veto each of the last six annual defense authorization bills of his presidency over a series of policy and budget fights, but eventually signed all of them into law. Since taking office, he has vetoed only four bills, all of which have withstood congressional override attempts.

What's in the bill

Outside advocates have petitioned against a veto, arguing that the bill contains too many important military policies to be scuttled over accounting concerns.

Among the highlights is the military retirement overhaul, which would replace the current 20-year, all-or-nothing deal with a "blended" compensation system featuring a 401(k)-style investment plan and a "lump sum" option at retirement.

The move would promise that nearly all future troops would leave service with some money for retirement, unlike the current system in which only about one in five see any retirement pay.

Advocates had hoped for a larger basic pay raise than the 1.3 percent hike, but Pentagon officials successfully argued that a pay raise below anticipated private-sector wage growth is needed to help pay for other training and modernization initiatives.

Under the authorization plan, growth in the Basic Allowance for Housing would be reduced steadily in coming years to cover only 95 percent of troops' average off-base housing costs. Tricare co-pays also will rise next year for individuals filling prescriptions at off-base pharmacies.

The measure includes language prohibiting the Defense Department from closing down detention facilities at Naval Station Guantanamo Bay, Cuba, an ongoing point of contention between Obama and Congress that has prompted past veto threats.

Lawmakers also added language allowing commanders to develop their own policies for both personal and military firearms on base for self-defense, in accordance with local laws. Lawmakers says the goal was to get rid of the military's current "one size fits all" approach in favor for a smarter, more practical policy for individual facilities.

Hill staffers said they have not yet made contingency plans for what to do with the authorization bill if Obama vetoes it, and added that they could not guarantee all of the proposed reforms would remain untouched if the measure is revived later in the year.