A little-understood proposal to cut federal spending would demand sacrifice from a group that has given more than its share -- our nation's veterans, including those with severe disabilities and elderly survivors of World War Two.
The proposal, known as the chained CPI, is touted as a more accurate way to compute cost-of-living adjustments to federal benefits than the current inflation index. Unfortunately, that’s not true for older Americans, including many veterans and people with disabilities, whose hard-earned benefits would no longer keep up with inflation if this proposal takes effect.
Even more troubling, permanent adjustments for the cost-of-living take a bigger and bigger bite over time. The effect would be a stealth and growing benefit cut for the rest of a veteran’s life.
“America’s heroes deserve better from a grateful and caring nation,” declared Barry A. Jesinoski, executive director of Disabled American Veterans, in a letter to Sen. Bernie Sanders of Vermont.
A chained CPI underestimates the health care spending of seniors, as well as others who may have chronic conditions and disabilities, because it is based on a younger, working population. Further, it overestimates the ability of older veterans and many others to substitute services and products when prices rise. (While veterans may qualify for Veterans Administration health care coverage, rising health care costs have forced many to pay an increasing amount out of their own pockets.)
Nationally, 23 million veterans would lose an estimated $19 billion over a 10-year period. In New Jersey alone, almost 460,000 vets would lose over $200 million.
What do these statistics mean for an individual? Consider a 30-year-old veteran who has severe disabilities. Compared to current law, this warrior’s VA benefits would be reduced by $1,425 a year at age 45, $2,341 at 55 and $3,231 at 65, according to the Congressional Budget Office.
Reductions would also build up for Social Security benefits, which millions of veterans depend on as the foundation of their financial well-being in old age. Under a chained CPI, a retiree who lives to age 92 would actually lose a month’s worth of benefits each year.
For people who survive on modest, fixed incomes, every dollar counts, and this proposal would mean real sacrifice. Under a chained CPI, the outlook becomes bleaker the longer you live. That is because the benefit cut grows over time, and the gap continues to widen between current law and the benefit cut under a chained CPI. Adequate inflation protection is crucial, especially for those who are unable to compensate for losses in their purchasing power.
Now, I want to be clear about something: Veterans respect the value of personal sacrifice. They know what it means to step up, and they have proven this in their actions. Veterans also understand the need for fiscal discipline. Their lives are testament to a belief in keeping America strong.
But budget decisions should be fair, and promises should be kept. Reducing the cost-of-living adjustment by shifting to an improper formula falls short on both counts. That is why the American Legion, Disabled American Veterans, Iraq and Afghanistan Veterans of America, and more than a dozen other veterans’ organizations oppose the chained CPI.
Surely, our great nation can find a way to strengthen its finances without taking even more from those who already have given so much.
Past State President
AARP New Jersey