As a part of fiscal negotiations, President Obama has offered to calculate both veterans and Social Security benefits with a “Chained CPI,” which would involve huge cuts to both programs.
Seventeen different veterans organizations wrote an open letter to Congress opposing this change last week, before Obama endorsed it. The full letter is below as well as the different organizations that have endorsed it:
As efforts to address our nationai??i??s debt continue, we are writing to express our opposition toAi??changing the formula used to calculate the annual cost of living adjustment (COLA) because ofthe harmful effects it will have on veterans and Social Security benefits.Ai??The Congressional Budget Office estimates that adopting the chained consumer price indexAi??(CPI) to calculate annual COLAs could save the government $208 billion over ten years byAi??reducing Social Security, disability, and other benefits, and by increasing revenues. More thanAi??half of this amount ai??i?? $112 billion ai??i?? would come from Social Security cuts, which veterans relyAi??on very heavily for both retirement and disability benefits. Another 11 percent of the savings ai??i??Ai??$24 billion ai??i?? would come from VA benefits, civilian pensions, and military retirement pay.Ai??We estimate that use of the chained CPI would have a significant effect on benefits that millionsAi??of veterans depend on in the following ways:Ai??Social Security Retirement Benefits: Social Security is one of our nationai??i??s most importantprograms serving veterans and their dependents and survivors. It currently pays benefits to overAi??9 million veterans ai??i?? about 4 in 10. The average retirement benefit of a veteran receiving SocialSecurity was about $15,500 in 2010. Adopting the chained CPI would significantly reduceAi??those benefits, by changing the manner in which COLAs are determined. A veteran withaverage earnings retiring at age 65 would get nearly a $600 benefit cut at age 75, and a $1,000Ai??cut at age 85. By age 95, when Social Security benefits are probably needed the most, thatAi??veteran would face a cut of $1,400 ai??i?? a reduction of 9.2 percent.Ai??Not only would a Social Security COLA cut hurt veterans and their families; it is alsoAi??misguided policy. Social Security is self-financed by the contributions of workers andemployers. In effect, it belongs to its contributors. It is separate from the rest of the budget. ToAi??use it to reduce the federal deficit, which it did not cause, or effectively to fund other parts ofAi??the government or to help maintain tax breaks unrelated to Social Security, is to break theAi??promise of Social Security.VA Disability Compensation Benefits: Veterans are generally eligible for VA disabilityAi??compensation benefits if they become disabled due to injuries or illnesses sustained during, orAi??as a result of, military service. There were 3.2 million veterans receiving these benefits inAi??2010. A veteran receiving VA disability compensation due to a service-connected disabilityAi??rated at 100 percent is currently entitled to receive $33,288 a year. Under the chained CPI,Ai??which is a cut in the formula traditionally used to determine the COLA for VA benefits, aAi??disabled veteran who started receiving benefits at age 30 would have their benefits reduced byAi??$1,425 at age 45, $2,341 at age 55 and $3,231 at age 65.Ai??VA Pension Benefits: Veterans with low incomes who are either permanently and totallyAi??disabled, or age 65 and older, may be eligible for pension benefits if they served during aperiod of war. More than 310,000 veterans received VA pension benefits in 2010. TheAi??current benefit for a veteran is just $12,256 a year. Under the chained CPI, VA pensionAi??benefits for veterans aged 65 and older living in poverty would be reduced by $353 at age 75,Ai??$696 at age 85 and $1,029 at age 95.Social Security and veteransai??i?? benefits need to be based on an accurate measure of inflation. TheAi??current COLA formula understates the true cost-of-living increases faced by seniors and peopleAi??with disabilities because it does not take into account their higher share of spending devoted toAi??health care, and that health care prices rise much more rapidly than overall prices. AlthoughAi??veterans who have service-connected disabilities and those receiving pension benefits areeligible for VA health care, they may still be impacted by rising out-of-pocket health care costs.Ai??Adopting the chained CPI would make the situation worse.Ai??Instead, Social Security and VA benefits should be based on a formula that takes account ofthese higher health care costs called the CPI-E (Experimental CPI for the Elderly) developed byAi??the Bureau of Labor Statistics. The CPI-E rises at a slightly faster rate than the formula currentlyAi??used to calculate the COLA, and at a still faster rate than the proposed chained CPI, providing aAi??modestly more generous COLA for seniors and people with disabilities.We agree that political leaders need to restore fiscal discipline, but we believe it should be doneAi??with great care and without reneging on this countryai??i??s promises to veterans, including thepromises of Social Security and VA disability compensation and pension benefits ai??i?? all of whichAi??are modest in size. Many veterans who rely on these programs live on fixed incomes and veryAi??tight budgets. For them, every dollar of hard-earned benefits counts in meeting basic expenses,Ai??attaining quality of life, and building a better future for themselves and those who depend onAi??them. For many of them, reducing the annual COLA would mean real sacrifice. We ask that youAi??not do that for those who have already sacrificed so much for this great country.Thank you for your serious consideration of our views. We look forward to working with you onAi??this important matter.Sincerely,Air Force Sergeants AssociationAir Force Women Officers AssociatedAmerican Military Retirees AssociationAmerican Military SocietyAssociation of the United States NavyBlinded Veterans AssociationGold Star WivesIraq and Afghanistan Veterans of AmericaJewish War VeteransMilitary Officers Association of AmericaNational Association for Uniformed ServicesNational Guard Association of the United StatesNational Military Family AssociationParalyzed Veterans of AmericaVeterans for Common SenseVeterans of Foreign WarsVetsFirst, a program of United Spinal AssociationVietnam Veterans of America
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