As a concession to Republican members of Congress who want to see meaningful entitlement reform, President Barack Obama included in his budget the so-called Chained CPI, a cumbersome economic fix that will lead to thousands of dollars lost to Social Security beneficiaries.
This has been the most controversial aspect of Obama's budget, one that has his allies and big organizations like the AARP rallying against cuts to existing beneficiaries.
But one veterans' advocate says what is most galling about Chained CPI is the effect the cut will have to young veterans of the Afghanistan and Iraq wars with debilitating injuries.
Business Insider spoke to Tom Tarantino— the Chief Policy Officer for Iraq and Afghanistan Veterans of America— about the effect he thinks the cuts will have on the most vulnerable in America.
Business Insider: So, chained CPI will impact young veterans with debilitating injuries by cutting their Social Security Disability Insurance benefits over the course of the rest of their lives. We know that has a negative effect, but how bad is it really?
Tom Tarantino: Well, I mean, it’s pretty bad. It gets to the core value of veterans benefits over the lifetime of the beneficiary, which is pretty significant.
Obviously with the chained CPI, one of their selling points is, “Well, this is really just a negligible cut."
Well, it’s not. For veterans — especially the most severely disabled — they get disability compensation from the VA, which is impacted by chained CPI, they get Social Security Disability Insurance which is impacted by the chained CPI, as well as a whole host of severely disabled veterans that have calculated through the CPI their COLA.
With chained CPI, [it] at least gives a double hit to wounded veterans, potentially a triple or quadruple hit.
So for any individual — I know AARP has this really cool calculator that shows $1,000, $2,000 over the life of the benefits — when you're talking about multiplying that by four.
These are men and women living primarily off their benefits because they’re so severely wounded due to their service to their country. They don’t have a lot of money to spare.
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BI: The reason being that the cut to the benefits for young people compounds over a much longer period of time than the cut to the benefits of the elderly?
Tarantino: The biggest problem that I have with it is that once again we’re going to the most vulnerable and those who have sacrificed the most and make them sacrifice more.
We all get that times are tough. Nobody gets that more than the military families that have been fighting this war for the past 11 years. To come back to them and try to pull more from that well — in addition to I believe being morally reprehensible — I think it’s just the wrong way to go.
When we talk about implementing this chained CPI — I get it, we want to reduce the deficit, even though Social Security and all those aren’t part of the deficit.
What rancors me is that this is largely a political move so that those in the administration and in Congress can check the box on deficit reduction without actually doing it, without actually having the net effect that we would need to get to a zero deficit.
So really what this amounts to is political motion as opposed to policy progress, and to do that while affecting the lives of the men and women who have sacrificed for their country is very viscerally, very directly just wrong. It’s been really hard to articulate that.
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BI: The cuts come in the form of a complicated adjustment to an economic indicator. This bores most people, and so it's easier to get a cut through. Are they being sneaky with this?
Tarantino: That’s it.
Chained CPI is complicated. It is boring. It's wonky. It’s also really hard to understand; in a way it’s sort of a shell game they're playing.
No one’s ever going to come out and say that "we’re going to cut veterans benefits so that we can save the budget."
They’re going to do things like chained CPI which is a strange way to cut benefits, and it’s not necessarily the most economically accurate.
But I get it. It’s basically going to go back to those who have a hard time fighting for themselves. They know by making it this confusing calculation that nobody really understands they can slip in further cuts to benefits.
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BI: Strangest of all is that it's the president proposing this rather than a fringe faction. Does he know that he's doing this, or was this just an unintended consequence?
Tarantino: I understand the political motivation but I don't think the president or the administration has really factored in all the issues that affect this.
Like I said, this is not about real deficit reduction, this is about checking that political box.
They say we’re going to reduce the deficit, we're going to save so much money, even though it really won’t. I understand the political calculation.
The problem is I don’t think they had a very clear understanding on how this was going to affect severely wounded veterans before they went down this road. And now they’re sort of stuck.
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BI: What was particularly interesting is that shortly after they released the budget — after obliquely mentioning chained CPI in one line on the last page of the announcement — they released a post restating what the cut was. It seemed like a significant walk-back, a Band-Aid on a policy goof. Are they actually trying to cut veterans' benefits or did they just stumble into it?
Tarantino: I think they they stumbled into this. At least I would hope they stumbled into this.
If they didn’t, that means there is a concerted effort to cut veterans benefits which is something that for this administration is a total departure from what they have done in their first four years.
They’ve been very supportive and very proactive. They don't always necessarily get it, it takes some time. It took a little while for them to get educated on the issues. But I would think they stumbled into it.
The fact that they went out and then articulated all these exemptions just totally underscored the fact that this is a shell game.
If this is really about reducing the deficit and using chained CPI to make it budget neutral, in exempting all the people who would qualify, this is really not doing much of anything. You're really just making a public relations bid.