Vet Groups Question White House Budget Plan

Veteran service organizations are forming a united front against President Obama's debt-reduction plan that shrinks cost of living increases for retirees and disabled vets by linking them to the consumer price index.

 Backers of "Chained CPI" say it would shrink future raises by only fractions.  And the same linkage is proposed for Social Security benefits, a move that also has groups representing America's aged population lining up alongside veterans organizations.

"There is a multiplier effect on retirees and disabled retirees from the military," said Mike Hayden, deputy director for government relations with the Military Officers Association of America.

He explained that an E-7 that retired after 20 years could lose about $100,000 if they lived to 85 in military retired pay with Chained CPI.

"If you're a [retired] lieutenant colonel, you can double that," Hayden said.

In recent months, the Veterans of Foreign Wars, the American Legion, the Disabled American Veterans  and other veterans organizations all have come out in opposition to chained CPI. Though the plan is largely aimed at reigning in future spending on Social Security benefits, it will extend to military retirement benefits of civilian federal and military retirees, and to disabled vets. It will extend as well to veterans spouses and survivors drawing benefits.

"We represent about … 310,000 veterans who are on VA pensions and another 3.2 million veterans who get disability compensation," Dean F. Stoline, deputy director of the Legion said during a press conference in Washington last month.  "Their COLA [cost of living adjustment] is tied in with the Social Security COLA … The ripple effect will in turn harm our people."

On Capitol Hill, Sen. Bernie Sanders, I-Vt., chairman of the Senate Veterans Affairs Committee, has already stated his opposition to chained CPI, as has Sen. Elizabeth Warren, D-Mass. Warren went so far as to publicly announce her "shock" at the Obama White House adopting a plan that would shrink future increases.

Sanders, in a statement on his webpage, said the proposed change would affect more than 3 million veterans receiving disability compensation from the Department of Veterans Affairs. A disabled vet who began receiving benefits at age 30 would have benefits reduced by $1,425 at age 45, by $2,341 at 55 and $3,231 by age 65, Sanders states.

More than 350,000 surviving spouses and children who receive benefits would also be affected, according to Sanders.

Rep. Jeff Miller, R-Fla., chairman of the House Veterans Affairs Committee, is neither supporting nor criticizing the Obama budget provision.

"As chairman of the House Committee of Veterans' Affairs, my first priority is ensuring that America's more than 20 million veterans receive the care and benefits they have earned," Miller told Military.com in a statement on Friday. "But with a national debt fast approaching $17 trillion, Washington's fiscal irresponsibility may threaten the very provision of veterans' benefits."

Miller said a balanced budget and reduced national debt are necessary to help the country keep its promises to veterans and that he is committed to working with both Democrats and Republicans to achieve them.

Lawrence Korb, an assistant secretary of defense for Manpower, Reserve Affairs and Installations during the Reagan administration, believes chained CPI is a step in the right direction. Spending on entitlements is hurting the U.S., said Korb, a retired Navy officer who is a senior adviser to the Center for Defense Information.

"It's not that traumatic," he said of chained CPI. "Not if you accept the fact that something has to be done for Social Security [before it goes broke]. You can't keep on this way."

Korb said the difference is more dramatic when the numbers used reflect what would have been totaled over 10 or 20 years.

"Instead of a 2 percent increase you'd get a 1.5 percent increase. I don't think people will notice it," he said.

Korb also pointed out that Obama's plan does not seek to change the age of retirement, something that others have recommended.

"You're not raising the retirement age. If you raise it to 70 – well, lots of people die before their 70s and won't get the [Social Security] benefit. And it's the lower income people who die early," he said.

Even before Obama included chained CPI in his proposed budget, veterans groups and others were arguing against adopting the plan. Historically, increases to benefits such as disability compensation and Social Security have been tied to annual cost of living adjustments. Advocates for slowing down increases claim that linking adjustments to a Consumer Price Index that tracks actual spending habits among seniors more accurately reflects need.

They argue that older consumers change spending habits – essentially buy less expensive products – so that the adjustments can be tweaked down by a fraction of a percent. It would not be much of a change for the recipients, backers say, but the collective savings to the government will be in the billions of dollars.

Hayden dismissed that argument.

"Chained CPI doesn't keep pace [with the cost of living]," he said. It will mean people buying cheaper because their actual buying power will be less. "You're going to go from eating steak to hamburger, then to chicken and then to Spam," he said.

Every major veteran's organization is opposed to chained CPI, but Hayden points out they have plenty of allies among other groups whose focus is on seniors and the elderly.

This includes one of the most powerful seniors' lobby, AARP. One of its arguments against chained CPI is that it disproportionally affects the incomes of those most reliant on fixed incomes.

Hayden also said MOAA meets monthly with the Leadership Council of Aging Organizations, which represents more than two dozen senior and retiree advocacy groups. In a letter to the House and Senate leadership in December, the LCAO pointed out the irony of trimming future cost-of-living increases for retired military and disabled veterans, "those who would suffer most [under chained CPI] are those who already have sacrificed most to protect America."