The news that Congress passed the Veterans' Compensation Cost-of-Living Adjustment Act of 2010 likely sparked some excitement for many veterans last week. But before anyone rushes off to spend the increase, it is important to note that this is an annual congressional ritual. By law Congress has to okay the linking of VA benefit increases to the increase in Social Security COLA. This happens every year.
The official summary of H.R. 4667 reads as follows: To increase, effective as of December 1, 2010, the rates of compensation for veterans with service-connected disabilities and the rates of dependency and indemnity compensation for the survivors of certain disabled veterans, and for other purposes.
But, here is "the Rest of the Story."
The increase is tied to the Social Security Administration COLA for 2011 which will likely be zero for 2011. This is because the SSA COLA is based on the previous year's rate of inflation (Consumer Price Index). Which for 2010 has been less than zero. Furthermore the SSA COLA is determined based on the last year in which the CPI rate was positive, this means that the 2010 CPI is weighted against the 2008 CPI. The 2010 CPI is currently tracking at 0.6% below the 2008 CPI.
The bottom line is that although the President will soon sign this into law, this annual legislative ritual will likely have no impact on any one's VA benefits or Military Retirement pay.