A dispute between House and Senate armed services committees over whether to slow growth in military housing allowances and raise off-base pharmacy co-payments has put at risk passage of a defense authorization bill.

“This is as bad as I’ve ever seen it,” said one armed service committee staffer, describing the impasse between House-Senate negotiators striving to reach a defense policy bill compromise two months into the new fiscal year.

If no deal can be struck, this Congress would be the first in 52 years not to enact a bill to shape defense policy and resets budget priorities. It would mean no new programs, thousands of hours of wasted effort on Capitol Hill, and a budget mess for the 114th Congress in late January as Republicans will take charge of both chambers.

The lame-duck Congress also needs to pass a new CR or continuing resolution by Dec. 11 for the Department of Defense to be able to spend at 2014 levels absent a separate deal on a 2015 defense appropriations bill.

Knocking heads over the policy bill are the chairmen of the armed services committees, Sen. Carl Levin (D-Mich.) and Rep. Harold “Buck” McKeon (R-Calif.). Both men are retiring. Both also have colleagues ready to honor them by including their names in the title of the final defense authorization bill. That alone should be incentive for compromise.

For now, however, Levin and colleagues, including prominent Republicans, support the Joint Chiefs’ call to take at least a few steps to slow compensation growth. They accept President Obama’s plan to cap the Jan. 1 military pay raise at 1 percent versus 1.8 to match private sector wage growth. They also would cap Basic Allowance for Housing (BAH) increases for several years, and phase in hefty increases in beneficiary co-pays for drug prescriptions filled off base.

House negotiators don’t support the last two provisions. Capping BAH raises until recipients pay five percent of rental costs out of pocket would save DoD $3.9 billion through 2019. Planned increases to drug co-pays would save $1.5 billion in direct health costs by 2019 and $3 billion more in accrual payments to cover drugs costs for elderly retirees and dependents.

That’s money the Joint Chiefs want to divert to readiness accounts as Congress refuses to repeal defense spending cuts for 2016 and beyond as set under the 2011 Budget Control Act and enforced through a spending cut formula called sequestration.

Chairman McKeon told Politico that to accept the Senate position of smaller BAH adjustments and larger pharmacy co-pays would mean breaking promises to people, which he “can’t do.”

A committee spokesman confirmed the accuracy of those remarks but added McKeon believes there is still time to get a bill done. “Beyond that,” he said, “the chairman does not wish to negotiate…through the press.”

In opposing compensation curbs, McKeon and colleagues argue for delaying any such action until Congress receives the recommendations of the Military Compensation and Retirement Modernization Commission. That nine-member panel is to deliver its final report in February.

One of the commissioners suggested Tuesday that pressure on defense budgets likely won’t be relieved by commission recommendations.

In a phone interview, former congressman Steve Buyer, an architect of the Tricare for Life benefit for Medicare-eligible military beneficiaries while he was chairman the House military personnel subcommittee, said he doesn’t accept the “theme” of Pentagon leaders that substantial gains to military compensation since 2000 are unsustainable.

He also called the proposed compensation curbs that now delay agreement on a defense bill a “Pentagon cut exercise to find funds to deal with the sequester.” Yet those who look for commissioners to back a fresh set of cuts to compensation might be waiting in vain, he hinted.

“We’re going to work on what’s important to properly recruit and retain and resource the force necessary for the war after next,” Buyer said. “I have told leadership at the Pentagon that their present budget issue is not my problem. Don’t look to me [as a commissioner] to solve your present budget problem. If you’ve got issues with sequester, then you deal with that with the Congress. That’s not my job.”

Buyer cautioned that he wasn’t speaking for the commission. But as a former lawmaker with years of experience on armed services, as a career reserve officer and as someone who has studied compensation issues for the past 18 months, Buyer said he believes the “baseline argument” that current pays and benefits are unsustainable “is false.”

“I learned immediately as a freshman congressman on the House Armed Services Committee [in 1993] about the power of the defense industrial base in Washington D.C.” Its “appetite on programmatic” defense spending “is so strong” that personnel budgets feel “tremendous pressure” and those backing other programs “will do everything they can to either cut personnel numbers or benefits to gain access to money to pay for programs.”

That’s why, Buyer added, “when I created Tricare for Life, we created a different funding mechanism” using accrual accounting to “fence off” these health dollars from other defense accounts. Congress approved this and many other benefit gains for legitimate reasons, he added.

Military associations using social media have helped to even the fight for resources, Buyer acknowledged. Military Officers Association of America said its members had sent almost 45,000 “messages” to Capitol Hill in the last few weeks to urge rejection of the pay cap and compensation curbs.

“We shouldn’t be debating between readiness and the pay and benefits for those in uniform,” said retired Air Force Col. Michael F. Hayden, MOAA’s director of government relations. “The Pentagon should have a budget that provides training, equipment and the pay and benefits needed to sustain the volunteer force.”

Ryan Crotty, budget analyst at the Center for Strategic and International Studies, said he is surprised to see disagreement over compensation blocking a final bill. Yet given growth in personnel costs amid shrinking defense budgets it also likely was inevitable, he added.

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