Lawmakers Want Permanent Link for COLA and Social Security Increases

By Debbie Gregory.

In an effort to ensure that veterans continue to receive the same annual cost-of-living increase as Social Security recipients, lawmakers are pushing for legislation that would permanently tie the two rate increases together.

The house has already adopted the “American Heroes COLA Act,” which provides an automatic cost-of-living adjust for benefits such as disability compensation and living allowances.

The purpose of COLA is to ensure that the purchasing power of Social Security and SSI benefits is not eroded by inflation.

COLA is determined each year by the Social Security Administration based on inflation over the previous year. In particular, SSA looks at uses a measure called the CPI-W, the Consumer Price Index for Urban Wage Earners and Clerical Workers, which looks at price changes of a “basket” of goods and services to determine the rate of inflation. The CPI-W is calculated by the Bureau of Labor Statistics, and measures the prices of food, clothing, housing, transportation, medical care, recreation, education, and many other goods and services.

There are those who argue that the CPI-W is not an accurate measure of inflation’s impact on seniors, and that the Consumer Price Index – Elderly (CPI-E) should be used instead. The CPI-E is a measure that gives greater weight to goods and services, such as medical care, used disproportionately by seniors.

Under the current law, annual increases are automatic for Social Security benefits. But veterans benefits fall into a different category, requiring lawmaker intervention each year.

The bill is sponsored by Rep. Ralph Abraham (R-LA). He and other lawmakers cite congressional infighting in recent years as justification for the law, discord which has resulted in the sidelining of other legislation that was assumed routine. Making the veteran benefits increases automatic avoids that pitfall.

Last year, because of a drop in consumer prices, neither veterans nor Social Security recipients saw an increase in their payouts

The bill would not affect adjustments for military retirement pay, which are calculated through other methods.

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