17 December 2012 Legislative News Update 


Legislative News is AUSA Government Affairs Directorate's
weekly electronic newsletter, and is published
every Monday when Congress is in session.

In this issue:

  • Congress' To Do List
  • Letter Urges Leaders to Include Defense Cuts as Part of Fiscal Cliff Deal



With only two weeks before the end of the year, Congress’ To Do list is not getting any shorter.  Here is what we think lawmakers need to accomplish before midnight, 31 December.

* Pass the fiscal 2013 defense authorization bill

The outlook on the bill’s passage is good.  Conferees could file the conference report as early as tomorrow.  Once filed, both chambers will need to vote on the final bill, possibly by Friday.  

Unfortunately, we have no idea what the conferees have decided on one of our main items – increases to co-pays for the military pharmacy program.  If you recall, AUSA urged that conferees adopt the House version which would increase pharmacy co-pays, but not as drastically as the Defense Department’s plan.  

We also urged that they discard a provision in the Senate’s plan that would establish a BRAC-like commission to examine ways to “modernize” the military’s compensation and retirement systems.  The commission’s final plan would require an up-or-down vote by Congress, without any amendments and would significantly restrict oversight and debate by the Armed Services Committees and subcommittees.  AUSA adamantly opposes this commission and urged that the Senate’s plan not be adopted in the final version of the bill.  

In a letter to House and Senate Armed Services Committee leaders, Defense Secretary Leon Panetta said that if the final authorization bill does not include the modifications the Pentagon requested, he would recommend that the President veto the bill.  

With regards to the Army, Panetta said that he strongly objects to a provision contained in the House bill that would limit active duty end strength reductions to 15,000 for the Army in fiscal years 2014-2017.  As expected, he also reiterated his strong support for the Department’s TRICARE fee initiatives.  

 * “Fix” the huge reduction to Medicare physician reimbursement rates

For years, Congress has staved off the scheduled cuts to the payment doctors receive for treating Medicare and TRICARE beneficiaries by implementing a “fix”. However, each deferral just increases the size – and price tag – of the fix needed the next time. Finding a permanent solution to the annual cuts in reimbursement rates has proven to be next to impossible. 

On Jan. 1, physicians will face a nearly 27 percent drop in reimbursement rates.  Since it is estimated that it would cost about $300 billion to replace the current formula, Congress has not be able to find a permanent solution.  In any event, with time running short, Congress needs to slap another patch on the problem while they try to solve the problem once and for all next year.

* Stop Sequestration

Although the President and Congressional leaders are talking about how to avoid the “fiscal cliff” which includes sequestration, extending Bush-era tax-cuts, raising the debt ceiling, extending the alternative minimum tax, unemployment insurance and extending the cut to the payroll tax, no deal has been reached.  

With the effective date looming, the Office of Management and Budget has issued guidance to the Defense Department and they are now planning for sequestration.  

Defense Secretary Leon Panetta and Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey have repeatedly warned Congress that sequestration, which would cut the DOD budget by $500 billion on top of the $487 billion in cuts already planned, would be a disaster for national security.  

Gen. Dempsey reiterated that warning last week.  He said that the decision to exempt military personnel from the cuts will increase the impact sequestration has on operations, maintenance, training and infrastructure.  

“It'll be a significant degradation.  It will have an effect, and I think it'll be an effect felt for two or three years.”

Dempsey added that non-manpower areas of the Pentagon’s budget would face 10 percent cuts from sequestration, rather than 8 percent, because of the manpower exception.  “There could be some civilian employees placed on unpaid furloughs.  So it's really serious.”

Leaders in both chambers have suggested that lawmakers will have to work through the Christmas holiday.

Whatever it takes…


While they have “serious concerns about the careless and arbitrary way that sequestration reduces defense spending” a group of bipartisan lawmakers informed the President and House and Senate leaders that they support its general intent as a way to improve the nation’s fiscal condition. 

The letter, signed by 22 lawmakers, went on to say that “The Pentagon’s budget has increased dramatically over the last decade, due in large part to the wars in Afghanistan and Iraq.  As we transition from wartime to peacetime, and as we confront our nation’s fiscal challenges, future defense budgets should reflect the conclusion of these wars and acknowledge that our modem military is able to approach conflicts utilizing fewer but more advanced resources.  Congress must consider these changes, not past spending or percentages of GDP, and move toward defense budgeting that focuses on meeting specific military requirements.”

AUSA is concerned because the Defense Department is already taking a huge hit to its budget.  We will continue to watch developments closely and take action, if needed.