NewsBytes January 25, 2019
In this issue:
Shutdown Continues
CBO: TRICARE Fees, Smaller Pay Increases, Reduced Benefits
SBP/DIC Offset Repeal Introduced
CFPB Regulation of MLA
Government Shutdown Continues
The Senate voted on two funding bills that would re-open several government agencies. They have gone unfunded for more than a month due to the partial government shutdown. The Senate first voted on President Trump’s proposal to extend protections for some illegal immigrants already in the country in exchange for $5.7 billion to fund a border wall. The second bill would open the government for three weeks, supposedly to give lawmakers time to negotiate border wall funding. Both bills failed to obtain the necessary 60-vote threshold to stop a filibuster.
Before the votes on the two funding bills Senator John Kennedy (La.) asked leave for the Senate to vote in favor of paying the U.S. Coast Guard. The Senator claimed President Trump would sign such a measure into law. Senator Dan Sullivan (Alaska), a supporter of the motion, argued the Coast Guard is the only uniformed service not being paid during the partial government shutdown, and that there should be pay parity for the Coast Guard. Senate Minority Leader Chuck Schumer (N.Y.) objected and stopped the motion from moving forward.
The Department of Veterans Affairs and the Department of Defense are fully funded, but the Coast Guard is part of the Department of Homeland Security (DHS) and is not funded. Coast Guard active duty have missed one pay check and Coast Guard retirees will not get paid on February 1 unless funding is restored. FRA is supporting the “Pay Our Coast Guard Act” (S.21/H.R.350). The act provides continuing appropriations to the Coast Guard during any period which interim or full-year appropriations are not in effect. The appropriations are provided to the Coast Guard for pay and allowances for active duty and retired guardsmen, civilian employees and contractors. The bill also provides payment of death gratuity, funeral travel and temporary continuation of the housing allowance for dependents of members of the Coast Guard who die on active duty. The appropriations would provide funding until the enactment of specified Coast Guard appropriations legislation. Members are urged to use the FRA Action Center to contact their legislators on this important issue.
CBO Calls for TRICARE Fees, Smaller Pay Increases, and Reduced VA Benefits
The Congressional Budget Office (CBO) has recently published an annual report: Options for Reducing the Federal Deficit: 2019-2028. This report is an extensive list of possible options for Congress to consider for reducing the budget deficit. They are not legislative proposals but rather recommendations. However, concern in Congress is increasing about the growing annual spending deficit, currently estimated at $984 billion. Some of the many recommendations in the report include:
• A new TRICARE-For-Life (TFL) annual enrollment fee of $485 for individual coverage and $970 for family coverage, and increased cost-shares;
• Increasing TRICARE Prime enrollment fees to $650 for individual and $1300 for family;
• Increasing TRICARE Select annual enrollment fee to $485 for individuals and $970 for a family;
• Reduce active duty BAH to 80 percent of actual cost;
• Limit active duty annual pay increases; and
• Eliminate the VA’s Individual Unemployability payments to disabled veterans at the full retirement age for Social Security.
Members can use the FRA Action Center to tell their legislators NOT to reduce the deficit by directly impacting active duty military, veterans, retirees and their families.
SBP/DIC Offset Repeal Bill Introduced
Rep. Joe Wilson (SC) has introduced legislation in the house (H.R.553) that repeals the SBP/DIC offset for survivors, sometimes referred to as the “Military Widows Tax.” Survivor Benefit Plan (SBP) and Dependency and Indemnity Compensation (DIC) payments are paid for different reasons. SBP is purchased by the retiree and is intended to provide a portion of retired pay to the survivor. DIC is a special indemnity compensation paid to the survivor when a member’s service causes his or her premature death. In such cases, the VA indemnity compensation should be added to the SBP that the retiree paid for, not substituted for it. It should be noted as a matter of equity that surviving spouses of federal civilian retirees who are disabled veterans and die of military-service-connected causes can receive DIC without losing any of their federal civilian SBP benefits.
Senator Doug Jones (Ala.) indicated he will introduce a companion bill in the Senate. Members are urged to use the FRA Action Center on the website to ask their legislators to support this important legislation.
CFPB Regulation of Military Lending Act
New Consumer Financial Protection Bureau Director Kathleen Kraninger is asking Congress to give the bureau specific authority to supervise companies for compliance with lending rules aimed at protecting service members. The Trump Administration nominated Kathleen Kraninger to serve as director of CFPB. Previously she served at the Office of Management and Budget (OMB) were she oversaw the budgets for a wide swath of government agencies, including the Treasury Department, the Department of Homeland Security and the Department of Housing and Urban Development. After graduating from Marquette University (1997) with a BS in Political Science she volunteered to serve in the Peace Corps. She then attended Georgetown University and obtained a law degree (J.D.) in 2007. She was confirmed by the Senate on December 6, 2018.
Kraninger dispatched a letter asking Vice President Mike Pence, in his role as Senate president, and House Speaker Nancy Pelosi (D-Calif.) to pass legislation that would specifically allow the CFPB to supervise payday lenders, banks and other firms to ensure compliance with the Military Lending Act (MLA). Kraninger’s predecessor, acting White House Chief of Staff and Office of Management and Budget Director Mick Mulvaney, suspended such supervision last year, arguing that the Dodd-Frank Act did not give the CFPB that authority. Consumer groups claim Mulvany is misinterpreting the law and that CFPB already has this authority.
“The Bureau is committed to the financial well-being of America’s service members. This commitment includes ensuring that lenders subject to our jurisdiction comply with the Military Lending Act so our service members and their families are provided with the protections of that law,” Kraninger said in the letter.
Among other protections, the MLA bars companies from offering loans to active duty service members with interest rates higher than 36 percent and makes it illegal to insert mandatory arbitration clauses in consumer loan contracts.
Rep. Andy Barr (Ky.) introduced a bill (H.R.442) to give the CFPB supervisory authority for MLA. No similar legislation has been introduced in the Senate. FRA will fight to ensure that the Servicemembers Civil Relief Act (SCRA) is enforced by regulatory agencies, including the CFPB, Office of Military Affairs and work to ensure that active duty personnel are protected from predatory lenders. The Association wants to make mandatory arbitration agreements in financial contracts unenforceable.
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