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A revision in the calculation methods for cost-of-living adjustments in military retired pay, veterans' disability benefits and Social Security could save $339.8 billion over 10 years, the nonpartisan Congressional Budget Office said Friday.
The adjustment in the Consumer Price Index is strongly opposed by military and veterans' groups because it would reduce monthly benefits, although the loss would be small.
CBO, the budgetary arm of Congress, said the so-called "Chained-CPI," which would take into account changes in spending patterns as prices increase, would result, on average, in a COLA 0.25 percent smaller than under current calculations. For example, what would be a 1 percent COLA calculated under the current formula for the Consumer Price Index would be an increase of 0.75 percent increase under the proposed formula.
Sen. Bernie Sanders, I-Vermont, the Senate Veterans' Affairs Committee chairman, has been one of the leading opponents of the change, and he has veterans' groups lining up behind him in opposition.
"It is morally and economically unacceptable that anyone in Congress would propose more tax breaks for millionaires, billionaires and large corporations while at the same time proposing significant cuts for disabled veterans," Sanders said. "This is not what the American people want and it is not what must happen."
At a Thursday hearing, the policy director of Iraq and Afghanistan Veterans of America called the change a "terrible idea."
"It astounds me that we keep asking veterans to sacrifice more and more," said Tom Tarantino, an Iraq veteran and former Army captain.
He wasn't the only one complaining. Retired Marine Sgt. Maj. Gene Overstreet, president of the Non Commissioned Officers Association, said it was a "bad idea" because "veterans have paid their due." World War II veteran Charles Susino, national commander of American Ex-Prisoners of War, called the change "unconscionable."
The revised COLA formula has been endorsed by House Republicans and has been mentioned by White House aides as one of the changes in federal entitlements that President Obama might accept as part of deficit reduction package.
Reduced Social Security payment increases would account for $127 billion of the savings, and $123 billion would come from slower growth in COLA-indexed tax breaks. The reduced COLA would generate about $37 billion in savings when applied to military and federal civilian retired pay, veterans' disability, and pension benefits and survivors benefits, according to the report.