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The "Debt Crisis": Veterans and Potential Benefit Cuts

By Jen Tayabji

While the US "debt crisis" has been all over the headlines for the past six months, one crucial aspect — the effect that some of the proposed cuts would have on veterans — has been glossed over by most media outlets and politicians alike.

On August 2, 2011, President Obama signed into law a dangerous and one-sided compromise bill that reduced the federal deficit, avoided immediate default, and allowed the President to raise the debt ceiling. This last-minute compromise was developed behind closed doors, providing no transparency to the American public.

This Budget Control Act of 2011 provides two phases of spending cuts, with no guaranteed revenue increases:

• $1 trillion in cuts over 10 years, with more than half coming from non-defense discretionary spending programs;
• The remainder of cuts, at least $1.5 trillion, will be left for the bipartisan bicameral Super Committee to determine and propose to Congress by November 23, 2011.

Possible Cuts Regarding the Cost of Living Allowance (COLA)

One of the many possible cuts that was considered over the summer during negotiations and are still being considered by the Super Committee is altering the Cost of Living Adjustment (COLA) calculation. The Social Security Administration determines the COLA every year to keep Social Security benefit payouts in line with the increase in cost of living. The COLA for veterans' pension benefits are equal to what the Social Security Administration sets for the COLA each year and the COLA for veterans' disability compensation benefits are equal to or less than that COLA. What this means is that any discussions to cut or alter the COLA calculations for Social Security is just as relevant to veterans and their benefits!

Since many Vietnam-era veterans are now eligible for Social Security, or will be in the next few years, veterans will be adversely affected by the cuts being considered by the Super Committee. Already, there have been no Cost of Living Adjustments for two years. Currently, the COLA is based on one of the Consumer Price Indices (CPI). What has been proposed is changing which CPI is used to calculate the COLA. The Congressional Budget Office estimates that switching to a chained-CPI would save $208 billion over ten years by reducing Social Security, disability and other benefits, and by increasing revenues. More than half of this amount — $112 billion — would come from Social Security alone; an additional $24 billion would come from VA benefits and retirement pay (Source: Strengthen Social Security Coalition).

The proposed chained-CPI is argued to be a more accurate way of measuring inflation because it calculates both a consumer's choice as well as changes in price. However, both the current CPI and the proposed chained-CPI are not accurate assessments of the cost of living for aging Americans, people with disabilities, and veterans, who have a greater need and higher cost for health care access and coverage. The chained-CPI would significantly cut the benefits of all current and future Social Security beneficiaries — including retired and disabled veterans — as well VA disability compensation and pension benefits.

Representative Donna Edwards explained it best, in a letter sent to the President and co-signed by 69 other members of the US House:

"The evidence is clear. Social Security has a $2.7 trillion surplus in 2011 that is projected to grow to $3.7 trillion by 2022, and is therefore not a contributing factor to our national debt. Make no mistake, the chained CPI is a benefit cut for current and future beneficiaries. While we strongly support efforts to reduce our federal debt and curb deficit spending, we do not believe balancing our nation's budget should be done on the backs of seniors, veterans, the disabled, or children. Applying the chained CPI to current government benefit programs would cause deep cuts to current beneficiaries."

For more information on Social Security and potential cuts to benefits, resources, and ways to take action, please visit the Strengthen Social Security Coalition's website at: www.strengthensocialsecurity.org.

Jen Tayabji is a Community Organizer with Champaign County Health Care Consumers (CCHCC) and co-organizer of CCHCC's Campaign for the American Dream. She is also the Executive Director of the Illinois Disciples Foundation. She can be emailed at jen@healthcareconsumers.org.