Veterans groups gear up to fight any proposed changes to disability payments
Obama and others support changing the benefit calculations to a variation of the Consumer Price Index, a measure called "chained CPI." The conventional CPI measures changes in retail prices of a constant marketbasket of goods and services. Chained CPI considers changes in the quantity of goods purchased as well as the prices of those goods. If the price of steak goes up, for example, many consumers will buy more chicken, a cheaper alternative to steak, rather than buying less steak or going without meat.
Supporters argue that chained CPI is a truer indication of inflation because it measures changes in consumer behavior. It also tends to be less than the conventional CPI, which would impact how cost-of-living raises are computed.
Under the current inflation update, monthly disability and pension payments increased 1.7 percent this year. Under chained CPI, those payments would have increased 1.4 percent.
The Congressional Budget Office projects that moving to chained CPI would trim the deficit by nearly $340 billion over the next decade. About two-thirds of the deficit closing would come from less spending and the other third would come from additional revenue because of adjustments that tax brackets would undergo.
Isabel Sawhill, a senior fellow in economic studies at The Brookings Institution, a Washington-based think tank, said she understands why veterans, senior citizens and others have come out against the change, but she believes it's necessary.