Over the last two years military retirees and VA compensation recipients have complained about the lack of a cost-of-living adjustment to their pay. As reported here, the issue was not political or even deficit reduction; it was due solely to the fact that COLA is based on inflation as determined by the previous year’s Consumer Price Index.
But, that may all soon change — right when retirees are looking forward to getting a COLA for the first-time since 2009. In an effort to reduce government expenses, the Senate is now considering changing the rules for how COLA is determined. The proposed changes will likely result in reducing the COLA in 2012 by up to .3 percent.
Tom Philpott reports that the new basis for COLA would be the Chain Consumer Price Index for All Urban Consumers (or C-CPI-U). Adopting the Chain CPI to adjust entitlements has been recommended by every group looking for ways to address the federal debt crisis.