What the Fiscal Cliff Means for Veterans, Service Members and Families
Posted by Ramsey Sulayman on December 6
If Paul Revere were alive today, he might drive through Boston crying, “The fiscal cliff is coming! The fiscal cliff is coming!” He might get the same reaction as he did on his original ride when he warned of the impending arrival of British troops - but he very well might not. Everyone knew who the Redcoats were and why they were coming…and it wasn’t for the tea and crumpets. But much confusion surrounds the fiscal cliff: What is it and what does it mean?
In a nutshell, the “fiscal cliff” is a term coined by Ben Bernanke, chairman of the Federal Reserve Board, that describes a perfect storm of financial events that will take place on December 31st of this year:
Sequestration. A series of cuts to the federal budget agreed to by the White House and Congress in the Budget Control Act of 2011. These cuts are evenly split between domestic and defense programs.
A Potential Increase in Taxes. Partly as a result of expiring tax cuts and partly as a result of new laws, taxes for Americans have the potential to revert to previous levels. Among these cuts are the Bush era tax cuts that were passed in 2001 and originally meant to expire in 2010; they were extended in 2010 for two years and now are scheduled to expire at the end of 2012. The other tax provisions include the expiration of the Alternative Minimum Tax, payroll tax cut and tax cuts from the stimulus. Some taxes might increase as a result of implementing the Affordable Care Act.
There is great debate on the practical effect of those events. Some economists predict a negative impact on our economy and some believe the effects will be negligible and short-term. The bottom line is that should sequestration and tax hikes occur, the fiscal cliff will affect all Americans, whether through diminished government services, a bigger tax bite or both. This potential is pushing Congress to craft a deal.
This all begs the question: Is the fiscal cliff inevitable? The short answer is “no.” Congress and the Administration could reach a deal to avoid the major impact of sequestration. If Congress reaches a deal on sequestration, though, some of the things we think we know about what could be cut will change. Some programs we have been told are exempt from sequestration could indeed be cut as part of a deal to avert sequestration. In addition, there is no requirement that the tax effects have to occur. Congress could extend some or all of the tax cuts and let them expire at a later date when the economy isn’t as fragile. The Congressional Budget Office recently released a study showing the impact on the economy of individual elements of the fiscal cliff, and as expected, some are bigger than others.
The DoD is not immune. The effects of sequestration on the DoD is expected to have an impact on service members and their families. While the DoD maintains that cutting personnel will not be done, other programs that service members rely on are on the chopping block. For example, $3.2 billion in DoD health programs might be cut. Many programs that support military families and retirees - such as community services, morale events, child care and support for commissaries - could be on the table for cuts as well. $38 million is also expected to be cut from the Zadroga Bill, which provides compensation and benefits to 9/11 first responders with health problems.
We still don’t know how sequestration will impact the VA, but it will likely impact wait times for benefits and services. While the White House has said that the VA’s budget for programs won’t be cut, according to testimony from Secretary Shinseki, the VA administration and personnel budgets could be cut. Practically, that means that although the GI Bill and disability benefits would be spared, there would likely be fewer staff to process the benefits which would lead to greater delays in processing and payment than already exist. The already unacceptable claims backlog and mental health wait times would also likely grow. If Congress averts sequestration by reaching a deal, though, ALL avenues are open, meaning that they could choose to cut VA programs and benefits.
To prevent the nation from falling off the fiscal cliff, Congress will have to strike a deal. While there are a lot of questions about what that deal will look like, Congress cannot balance the budget on the backs of veterans and their families. This generation of veterans volunteered to serve in two wars, at a time when the vast majority of Americans chose not to. As a country, we have made a promise to take care of veterans and Congress and the White House need to honor that commitment. Demanding “double jeopardy” by asking veterans to sacrifice upon their return home after sacrificing during military service is unacceptable. As Congress crafts their bargain to avoid the fiscal cliff, veteran benefits and services must be off the table.
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