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Pay hike to shrink with Bush defense bill veto

Service members expecting a 3.5 percent pay raise effective Jan. 1 are in for a small but rude surprise after President Bush allowed the 2008 defense authorization bill to die Friday.

The pocket veto means that troops will get a 3 percent raise Jan. 1 instead of the 3.5 percent authorized by the bill. The extra half-percentage point will not be paid until Bush and Congress resolve their dispute and Bush signs the bill into law.

When that happens, the extra half-point would be paid retroactive to Jan. 1, the White House said. But because Congress is not due to return to work until Jan. 15, and the Defense Finance and Accounting Service needs about 10 days to make military payroll changes, that may not happen until February at the earliest.

The difference between a 3 percent and 3.5 percent pay raise is not large. For an E-5 with six years of service, for example, it’s about $12 per month. For an E-8 with 16 years of service, it’s about $19 per month, and for an O-3 with 10 years of service, about $25 per month.

Bush’s decision to use a “pocket veto,” announced while vacationing at his Texas ranch, means the legislation will die at midnight Dec. 31. This tactic for killing a bill — which involves taking no action on it — can be used only when Congress is not in session. Under the U.S. Constitution if the president does not sign a bill within 10 days, it becomes law so long as Congress is in session. But with Congress in recess, the bill dies.

The veto, which apparently caught congressional leaders off guard, was prompted by a single provision that the White House says would derail Iraq’s efforts to rebuild its country.

The provision would permit plaintiffs’ lawyers to immediately freeze Iraqi funds and would expose Iraq to “massive liability in lawsuits concerning the misdeeds of the Saddam Hussein regime,” said White House spokesman Scott Stanzel.

“The new democratic government of Iraq, during this crucial period of reconstruction, cannot afford to have its funds entangled in such lawsuits in the United States,” Stanzel said in a statement.

Democrats say the provision would have allowed the victims of the executed Iraqi dictator Saddam to seek compensation in court. The Iraqi government has warned that former U.S. prisoners of war from the first Gulf War might cite this legislation in an attempt to get money from the Iraqi government’s reported $25 billion in assets now held in U.S. banks, they say.

House and Senate Democrats said Friday that the first time they’d heard of any White House concerns with the legislation was after Congress had sent the bill to Bush for his signature.

“The administration should have raised its objections earlier, when this issue could have been addressed without a veto,” House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., said in a joint statement. “The American people will have every right to be disappointed if the president vetoes this legislation, needlessly delaying implementation of the troops’ pay raise, the Wounded Warriors Act and other critical measures.”

The White House contends that the legislation would imperil Iraqi assets held in the U.S., including reconstruction and central bank funds.

“Once in place, the restrictions on Iraq’s funds that could result from the bill could take months to lift,” Stanzel said. In turn, he said, those restrictions must not be allowed to become law “even for a short period of time.”

In their joint statement, Reid and Pelosi responded that the White House is bowing to demands from the Iraqi government, “which is threatening to withdraw billions of dollars invested in U.S. banks if this bill is signed.”

Stanzel said the administration will work with Congress to get the additional 0.5 percentage point military pay raise approved and retroactive to Jan. 1 under a reworked bill.

Discuss: The veto