conflict veterans and their families. These veterans are also in a much different situation than veterans of earlier wars, because with the extension and improvement of our social security programs 90 percent of them are currently insured under the survivorship provisions of OASDI. Furthermore, dependents of World War I veterans did not receive eligibility on the basis proposed by H.R. 7650 until 1944, 26 years after that war ended, whereas only 14 years have elapsed since the end of World War II.

We believe that the eligibility requirements for survivors incorporated in H.R. 7650, which would cost $154 million the first year and $23 billion in the next 40 years, are not as meritorious as other changes favored by the administration and are particularly undesirable in their present form in view of the high income limitations and the numerous exemptions which, as I have pointed out above, depart from the principle of need-a principle which, we believe, should be as applicable to widows and children as to veterans.

H.R. 7650 is a bill that, in the eyes of the administration, is too costly to the American taxpayer. In its first year the benefits provided by the bill would cost $308 million more than authorized by present law. In other words, there would be an immediate increase of 30 percent in Federal expenditures for non-service-connected veterans' pensions. Furthermore, over the next 40 years, H.R. 7650 would add $10 billion to the cost of these pensions under present law whereas the administration proposal would, with liberal pensions but a strict test of need, reduce future pension costs. This is illustrated in the following table:

If the veterans' pension system is to be reasonable, we believe it must be modified so that payments are fully justified on the basis of real need, which means that they must be properly related to other social welfare programs and must take account of other veterans' benefits.

Readjustment benefits, for example, have provided education and training, unemployment compensation, and home loan benefits for World War II and Korean conflict veterans at a cost to date of about $27 billion. Furthermore, we should and will continue to provide disability and death compensation and hospital and other benefits for veterans disabled in service, who are our first responsibility.

The Federal Government is presently spending $5 billion a year for veterans' services and benefits and veterans already enjoy a highly

preferred position among the groups which receive special Federal assistance.

There is one more important point. World and domestic developments have placed upon the Federal Government a whole range of urgent responsibilities which have resulted in the continuation of a high Federal budget and create the prospect that financial stringency will continue for many years. Continuing world tension requires large security expenditures, and there are also great pressures for expansion in a wide range of domestic programs. The continuation of Federal expenditures and taxes at record peacetime levels has helped generate inflationary pressures, which, if allowed to continue unabated can weaken our whole economy. In this situation, there are many claimants for Federal resources and not all desires can be met.

We are gratified that the principle of basing veterans' pensions on need has received wide acceptance. However, this will mean little or nothing if the income Imitations and other specific provisions of law which govern the payment of veterans' pensions are allowed to deviate to widely from the basic standards in the other social programs applicable to the general population.

We support the continuation of a separate veterans' pension system. However, we believe that the benefit provisions of H.R. 7650 are deficient in the many respects which I have noted and that the cost of pensions under this bill would be far higher than is necessary. We urge your committee to adopt a pension bill which will provide a sound, equitable, and adequate program free from the serious defects which H.R. 7650 contains.

The CHAIRMAN. Thank you very much, Mr. Stans.

Mr. Stans, do I understand that this bill as passed by the House would increase the non-service-connected pensions by 30 percent? Mr. STANS. In the first year.

The CHAIRMAN. How much would the increase be over the 40-year period?

Mr. STANS. The increase would be $10 billion between now and the year 2000.

The CHAIRMAN. How long has it been since the last increase?

Mr. STANS. The last increase in pensions, I understand, occurred in 1954.

The CHAIRMAN. Was it last year that this committee reported on a bill granting a 10-percent increase for those in the service-connected. categories?

Mr. STANS. As I understand it, the bill that was reported out was enacted last year, but I am not sure of the percentage at the moment. The CHAIRMAN. Can that information be furnished?

Mr. STANS. I will furnish it for the record.

(The information supplied by the Director of the Bureau of the Budget follows:)

The last general increase in veterans' service-connected disability compensation rates was authorized by Public Law 85-168, approved August 27, 1957. It provided increases of 10 percent in basic rates for disabilities rated from 10 to 90 percent in degree and in the aditional allowances for dependents. The basic rate for total disability was increased from $181 to $225 a month (about 24 percent). Most statutory rates were increased 10 percent, although some were raised by 30 percent and others were left unchanged. The estimated first-year cost of the bill was $169,700,000.

The CHAIRMAN. It is my recollection that it was 10 percent.

Mr. Stans, are you prepared to furnish a statement showing an itemized cost comparison between the House bill and the administration bill?

Mr. STANS. Breaking down each of the money changes in cost. I am not prepared today, but I will be very glad to supply that to the committee with the assistance of the Veterans' Administration. (The following was later received for the record:)

2 Limitation of spouse income provision to $1,200 or 1⁄2 reduced terminations or decreases by $17,557,000.

277, 700

246, 200

(72, 000)

(40, 500)

(205,700)

854, 400

369,000 (339, 700)

(29, 300)

(27,300)

1 World War I, World War II, and Korean conflict.

2 Limitation of spouse income provision to $1,200 or 1⁄2 reduced termination

(84, 824)

(60, 392)

(24, 432)

creases by $35,114,000.

3 Includes effect of spouses income.

4 55 percent.

56 percent.

• 53 percent.

7 45 percent. 8 44 percent. ⚫ 47 percent.

Limitation of spouse income provision to $1,200 or 1⁄2 reduced terminations or decreases.

(205, 700) $854, 400

7 369.000 (339, 700)

(29,300)

Includes effect of spouses income.

4 55 percent.

$70 percent.

45 percent.

7 30 percent.

The CHAIRMAN. The bill before the committee, as I understand it, takes in all the widows of non-service-connected veterans.

Mr. STANS. That's correct.

The CHAIRMAN. At the present time World War II widows are eligible provided the veteran has 10 percent or more disability? Mr. STANS. Providing he had a disability of zero percent or greater. The CHAIRMAN. Under present law?

Mr. STANS. That is what I was referring to. That is what I understand.

Mr. Chairman, on some of these technical questions, it might be helpful if Mr. Whittier, the Administrator of Veterans' Affairs, could come to the table with me and help to answer them.

The CHAIRMAN. What is the answer to that question?

Mr. WHITTIER. 10 percent, Mr. Chairman.

The CHAIRMAN. Is what?

Mr. WHITTIER. 10 percent.

The CHAIRMAN. In other words, a widow is only eligible for pension providing she has been married to a veteran that had a minimum of 10-percent disability.

Will you identify yourself for the record?

Mr. WHITTIER. Sumner Whittier. I am the Administrator of Veterans' Affairs.