Veterans Benefits Shouldn’t Be Compromised by Deficit Reduction

Written by on December 14, 2012 in Health Care & Benefits, Veterans Advocacy Issues

VetsFirst is leading efforts to defend essential, and hard-earned, VA and Social Security benefits from the ongoing deficit reduction process.

In a letter to House and Senate leaders, VetsFirst and 17 other military and veterans’ service organizations informed congressional leaders about the devastating impact adopting the chained consumer price index (CPI) to determine the cost-of-living adjustment (COLA) for benefits would have on veterans.  The chained CPI would lead to lower COLAs because it is based on the assumption that if something your normally buy becomes more expensive that you will simply switch to something cheaper instead.

The Congressional Budget Office estimates that changing the formula used to calculate the annual COLA to the chained CPI could save the government $208 billion over ten years.  However, more than half of this amount – $112 billion – would come from Social Security cuts, which veterans rely on very heavily for both retirement and disability benefits.  Another 11 percent of the savings – $24 billion – would come from VA benefits, civilian pensions, and military retirement pay.

VetsFirst believes that instead of adopting the chained CPI, which would lead to cumulative benefit cuts, the current formula should actually be replaced with one that is a more accurate measure of inflation. The current formula understates the true cost of living increases faced by older veterans and disabled veterans; it doesn’t take into account their higher share of spending devoted to health care, and that health care prices rise much more rapidly than overall prices.  The chained CPI would be worse than the current formula because it doesn’t take into account that you can’t easily substitute one medical procedure for something less costly like you might by choosing the store brand in the vegetable aisle at the market.

We are not alone in our belief that the chained CPI is the wrong formula for determining an accurate COLA.  Elected-defenders on the Hill include Senator Bernie Sanders, member of the Senate Veterans’ Affairs Committee, and founder of the Defending Social Security.  During a recent teleconference, Sanders explained his belief that although deficit reduction is an issue that must be dealt with, cutting benefits for the men and women who have served their nation through military service is not the answer.

We agree.

Click to learn more about chained CPI

Click to read the letter VetsFirst and other veterans organizations sent to congressional leaders.

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