On Monday, July 9, 2012, the House is scheduled to consider H.R. 4114, the Veterans’ Compensation Cost-of-Living Adjustment Act of 2012, under a suspension of the rules requiring a two-thirds majority vote for approval.  The bill was introduced on February 29, 2012, by Rep. Jon Runyan (R-NJ) and referred to the Committee on Veterans Affairs.  The committee held a mark-up session on April 27, 2012, and ordered the bill to be reported by voice vote.

H.R. 4114 would increase the amounts paid to veterans for disability compensation and to their survivors for dependency and indemnity compensation by the same cost-of-living adjustment (COLA) payable to Social Security recipients. The increase would take effect on December 1, 2012, and the resulting adjustment would be rounded to the next lower dollar.

The basic purpose of the disability compensation program is to provide relief from the impaired earning capacity of veterans disabled as the result of their military service. The amount of compensation payable varies according to the degree of disability. This amount in turn is required by law to represent, to the extent practicable, the average impairment in earning capacity in civilian occupations resulting from such disability or combination of disabilities.

To be eligible to receive disability compensation, a veteran must have a disability incurred or aggravated during military service, which is not the result of willful misconduct, and have been discharged under other than dishonorable conditions. The responsibility for determining a veteran's entitlement to service-connection for a disability rests with the Department of Veterans Affairs (VA).

Congress has provided annual increases in these rates for every Fiscal Year since 1976.

The Committee is following its longstanding practice of setting the cost-of-living adjustment (COLA) by reference to the yet-to-be-determined Social Security increase. At the time of the filing of this report, the increase is expected to be 1.3 percent, but it may be higher or lower depending on changes in the Consumer Price Index.

According to the Congressional Budget Office (CBO), “the COLA that would be authorized by this bill is assumed in CBO's baseline, consistent with the Balanced Budget and Emergency Deficit Control Act, and savings from rounding it down were achieved by the Balanced Budget Act of 1997 as extended by the Veterans Benefits Act of 2003.

“Because the COLA is assumed in CBO's baseline, the COLA provision would have no budgetary effect relative to the baseline.  Relative to current law, CBO estimates that enacting this bill would increase spending for those programs by $686 million in fiscal year 2013.  (The annualized cost would be about $915 million in subsequent years.)  This estimate assumes that the COLA effective on December 1, 2012, would be 1.3 percent.”