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Ayotte Files Bill to Kill Retirement COLA Cut

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Sen. Kelly Ayotte, R-N.H., announced on Tuesday she will file legislation to repeal the controversial law trimming military retirement pay starting in December 2015 and make up for the $6 billion in revenue it would have gained by ending an outstanding tax scam.

Ayotte announced plans to file the bill following a Senate Armed Services Committee hearing into the provision in the 2014 budget to reduce the cost-of-living-adjustment for retirees, which Congress passed in December. The provision will limit future COLA increases for working-age military retirees to 1 percentage point below the rate of inflation.

Under the law, the retirees would have their pensions adjusted at age 62, to bring them up to the amount they would have gotten if they had not incurred the cuts during the intervening years.

Still, the provision has been attacked by veterans groups and military associations as a betrayal of American servicemembers and veterans, especially since other federal employees will continue to get the full COLA each year.

During the hearing on Tuesday, no lawmaker defended the COLA provision and all who spoke agreed it should be repealed.

The only disagreement appeared to be when the law should be repealed. Veterans groups want it gone immediately, even though it does not take effect until fiscal year 2016.

"Take this [issue] off the table now," retired Army Gen. Gordon Sullivan told the panel. Sullivan, the president and chief executive officer of the Association of the U.S. Army, said troops currently serving in Afghanistan should not have to be thinking about cuts to future retirement benefits in addition to everything else.

The Pentagon has indicated it can leave the COLA law as is, but would prefer that it be "grandfathered" so that no one currently serving would be affected.

But because the provision does not begin until the end of December 2015, "Congress could wait to modify or repeal it until the Military Compensation and Retirement Modernization Commission presents its final report in February 2015," Acting Deputy Secretary of Defense Christine Fox told the lawmakers.

But Senators appeared in agreement that it is best to axe the provision as soon as possible.

Sen. Roger Wicker, R-Miss., said waiting until the commission finished its work resembled too much like the wait and see attitude the Congress had when it passed the sequester legislation, all the time hearing witnesses say the sequester cuts would never happen.

Ayotte said her legislation will save the government far more than will the $6 billion COLA law.

She said her bill to require parents to include a social security number for children they are listing on their taxes to claim the Additional Child Tax Credit will bring in about $20 billion. That credit enables an individual to reduce their tax liability by as much as $1,000 per child, she said.

In 2011, according to Ayotte, the Treasury Department reported that individuals not authorized to work in the U.S. were doing so and claiming as much as $4.2 billion annually by claiming the credit.

The children in these cases either did not exist at all or were living outside the United States, Ayotte said, making her bill as much about ending tax fraud as restoring full COLA increases to military retirees.

The savings from this legislation, she said, would more than offset the loss of the COLA provision, and even allow for some discussion of extending unemployment benefits for three months, she said.

Ayotte's co-sponsors include Wicker and Sen. Lindsey Graham, R-SC, though she expects broad and bipartisan support.

She said she will be including her bill as an amendment to every piece of legislation coming up in the Senate.

Since Congress passed the budget in December, veterans and military advocates have repeatedly slammed the so-called COLA-minus-1 percent provision as a breach of faith or trust with servicemembers.

During the hearing on Tuesday, a senior Pentagon official said permitting personnel costs to increase at the expense of equipment and training needed by troops is itself a betrayal.

Veterans groups and military advocates say the breach is with Congress passing legislation last month that will reduce by 1 percent below the inflation-adjusted cost of living increases on retirees age 62 and younger. But the Pentagon says the breach comes from continuing to saddle the armed forces with increasing personnel costs, including retirement, forcing them to reduce elsewhere, such as overall end strength.

"Our men and women recognize that if they are well paid, the [DoD] does not have money to maintain their equipment, or supply them with the technology, or send them to get the training they need, then we have not done them a service, but rather a disservice," Fox said. "And when we send them into harm's way, this disservice can quickly transition into a breach of trust."

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