in their struggle for a place in our competitive society. They resent this disadvantage. They often feel they have been rejected. On return to civilian life they must once more be recognized. They must compete with those who are not called. Enactment of this bill will assist those individuals to find their place in our society. It will express, in no uncertain terms, the appreciation of this Nation to those who also served. It will assure such individuals an opportunity to complete favorably with those who managed to stay behind. In conclusion, gentlemen, I would like to point out that passage of this bill will increase the educational level of our country and provide, in the long run, further revenue for the Nation. All of you are familiar with the number of veterans who took advantage of the GI bill. All of you are aware that the increased earning capacity of such veterans will in a few years pay in additional income taxes, for the entire program. An increase in the educational level of the Nation, a benefit national in scope, a benefit to enable us to compete with other world powers in scientific fields, is vital to our survival. The program advocated here, like the GI bill, will increase the educational level of our Nation; it will provide educational opportunities for those who are called to serve in the cold war; it will recognize and provide some means of restitution for those who, for 2 years, are called away from their jobs and friends; and it will, over the years, provide additional revenues offsetting, in no small way, the expenditures required. I am certain that after careful consideration this committee will favorably report this much needed legislation. Thank you. Mr. DORN. Thank you, Mr. Multer. Our next witness this morning is from Fleet Reserve Association, Comdr. Fred J. Scanlan. Mr. Scanlan, will you come forward, please? I notice you have a rather brief statement, but please feel free to take as much time as you so desire. I think you represent a great association and we want you to feel absoutely at home and give us the benefit of any thinking you or your association might have, Mr. Scanlan. STATEMENT OF COMDR. FRED J. SCANLAN, NATIONAL SECRETARY, FLEET RESERVE ASSOCIATION Commander SCANLAN. I am speaking on S. 1138. Mr. Chairman, and members of the House Veterans' Affairs Committee, my name is Fred J. Scanlan, lieutenant commander, U.S. Navy, retired, representing the Fleet Reserve Association. I am speaking as a representative of the more than 50,000 career enlisted personnel of the Navy and Marine Corps in favor of the amendment which would grant an extension to the period covered in the Veterans' Readjustment Assistance Act of 1952 to include postKorean conflict service. My association in its 1959 annual national convention urged support for such legislation as may be proposed. Many of our career enlisted personnel who have been discharged and reenlisted for continuous service to complete the necessary time for transfer to the Fleet Reserve or to the retired list of the Navy or Marine Corps have lost those benefits already. Enlisted personnel who have received the so-called unconditional discharges in the past 4 or 5 years have been denied the right to pursue such courses of education under the rulings of the Veterans' Administration in the operation of the present law. This unconditional discharge is one whereby the enlisted man is discharged upon the expiration of his enlistment without the obligation of reenlisting immediately to continue his chosen career. He does reenlist immediately but by the operation of the law he is denied such educational benefits. With the passage of this law, amending the present law, his education benefits will be continued. We believe that the passage of this bill will aid and further promote the opportunities for the young veteran returning to civil life to pursue a course in higher education, with some assistance from the U.S. Government. We earnestly recommend passage of this legisla tion. Mr. DORN. Mr. George. Mr. GEORGE. Commander Scanlan, I know you have a wonderful organization in the Kansas City area. Commander SCANLAN. That is right. Mr. GEORGE. Fred Belke out there, you know, has done a lot of work for the Fleet Reserve. Commander SCANLAN. Yes, sir, I know him. Mr. GEORGE. Do you feel that our educational system, our standards of education today, are much farther behind than they should be? You do, do you not? Commander SCANLAN. I believe that the veterans' assistance in furthering the education of young veterans after completion of service has certainly increased our educational facilities in this country. Mr. GEORGE. Yes. It has been estimated, I think, it is 113,000 scientists, 180,000 doctors, 230,000 schoolteachers that we gained out of the two GI bills Commander SCANLAN. Yes, sir. Mr. GEORGE. We might not otherwise have had. If that same percentage or similar percentage was to be evident in this law, if it should become law, it would not only be a benefit to many veterans but to the country as a whole, is that correct? Commander SCANLAN. Yes, sir. Mr. GEORGE. Have you gone into the cost of this bill? Have you examined it? Commander SCANLAN. No, sir, I have not. Mr. GEORGE. This pays, I think, $110 a month which now would amount to about the $78 which it was under the old 1952 act. Commander SCANLAN. Yes, sir. Mr. GEORGE. So the cold war boys would not be getting near the benefits that the boys got under the older bills. Commander SCANLAN. That is true; yes, sir. Mr. GEORGE. So when someone says, "Well, why give these nonwar or cold war boys as much as we gave the others," we are not doing it, are we? Commander SCANLAN. Not in effect; no, sir. Mr. GEORGE. Are you familiar with the President's committee and various committees that have gone into the entire educational field? Commander SCANLAN. Not entirely; no, sir. I have read of them. Mr. GEORGE. You realize that all of them have found as to education, we need school buildings, we need schoolteachers, we need scientists and engineers and practically everything in the field of education. Do you feel that if this bill should become law that would help rectify the situation considerably? Commander SCANLAN. I believe it would. It would help many people who could otherwise not go to college at all. Mr. GEORGE. It would be an incentive for those who drop out and are out a year or two to return. In other words, it would set them apart and give them sufficient prestige so they would not mind returning behind the rest of the students? Commander SCANLAN. That is right. The age groups. Mr. GEORGE. If I am not mistaken I think it is 140,000 schoolteachers we are short now. If this measure would become law and produce that many or half that many, it would certainly help. Do you agree with that? Commander SCANLAN. I do. Mr. GEORGE. Of course I hate to compare our system with Russia but apparently we are not educating our people as fast or as seriously as the Communists, according to reports. Do you think if this bill should become law it would help us in the cold war? Commander SCANLAN. I believe it would. Yes, sir; I think our military machine has become more complicated and requires higher educated people to operate it than we had 30 or 40 years ago. And I think quite frequently we might find some of these people coming back in the service again when they are 24 or 25 in the commissioned grades. Mr. GEORGE. Do you have any experience of GI's who have undertaken a course in education and changed and dropped out and then want to come back and can't? Commander SCANLAN. Come back in the service, sir? Mr. GEORGE. No. Come back into the field of education, because they have been out too long and they are denied the privilege of the GI Bill? Commander SCANLAN. I have run into numerous ones whose educations were interrupted by military service, who have gone back to college in their late 40's in some cases. Mr. GEORGE. What I was thinking of was someone who completed his hitch in the service, then undertook some program in education and possibly got married and for some reason or other could not complete it under the rules of the agency or under the law. Commander SCANLAN. I have run into a few of those who could not continue their education because of economic reasons, having been married. Mr. GEORGE. Then when they want to come back and take advantage of the GI bill, they cannot because they have had too many changes in their program or something of that sort? Commander SCANLAN. That is right. Mr. DORN. Commander, this is Congressman Everett of Tennessee. Mr. GEORGE. I just want to compliment you on your message to us, Commander, and appreciate you being here and I know the gentleman to my right does, too. Mr. DORN. Commander, you do not have any thinking here today concerning S. 1138 by Senator Yarborough. I notice your testimony here more or less is amending the present law. Commander SCANLAN. Generally. Nothing in particular; no, sir. Mr. DORN. Public Law 550 has corrected most of the abuses under the old GI educational training bill followed in World War II. I was just wondering if you had any thinking on how you might stop some minor abuses of older people who have been 20 or 25 years in the service and then who enroll in some college. I know some of them of course do that with the best of intentions and possibly by taking a refresher course and brush up and would be of great service in the field of teaching. But also in some cases I am sure it is like a Member of Congress retiring at age 62, draw his retirement and then enroll in a course on political science or how to win elections or something like that. That would be a joke. Commander SCANLAN. Yes, sir. Mr. DORN. So something like that takes place when you go into college and see these men 55 or 60 years old sitting in there drawing this money. So you do not have any recommendations on that phase of it. You know it is a hard thing to write in law to govern that. I think things like that really should be up to a man's conscience and the individual. If he feels he could be of service to the country maybe he should take a course of education. But just to draw the money is a terrible thing and there is an abuse in the program, I think. And it is being done. Commander SCANLAN. Yes, I know. Mr. DORN. Congressman Everett, do you have any? Mr. EVERETT. No questions. Mr. DORN. Commander, we do appreciate so much your coming and we do have the highest regard for your great Reserve Association and this will be made a part of the record. Commander SCANLAN. Thank you, sir. Mr. DORN. Thank you so much. Our next witness, gentlemen of the committee, is Hon. Phillip S. Hughes, Assistant Director for Legislative Reference of the Bureau of the Budget. Mr. Hughes, we are glad to have you. Please feel free to proceed and say anything that is on your mind. I notice you have a prepared statement, a brief one. Just go right ahead. STATEMENT OF PHILLIP S. HUGHES, ASSISTANT DIRECTOR FOR LEGISLATIVE REFERENCE, BUREAU OF THE BUDGET Mr. HUGHES. All right, sir. Thank you very much. Mr. Chairman and members of the committee, I do appreciate this opportunity to present the views of the Bureau of the Budget regarding the vocational rehabilitation, the educational and vocational training, and the home and farm loan guarantee and direct loan benefits proposed for peacetime ex-servicemen by S. 1138. These proposed benefits raise some extremely important issues of policy, not only with respect to the ex-servicemen directly affected, but also from the standpoint of national education, defense, and budgetary objectives. The bill would provide essentially the same benefits for peacetime service that the Korean GI bill provided for wartime service and its total cost would be high-an estimated $3.2 billion through fiscal 1973. There would be two principle differences from the Korean program: First, in the educational benefits area, loans to a college student are to be substituted for grants after the student's first year in college if he fails to place in the upper half of his class. The loan would, however, be forgiven if he finally finishes in the upper half in the year when receiving a loan. Second, in connection with home and farm loans, a fee of one-half of 1 percent would be charged the ex-servicemen to help cover losses. We are in agreement that vocational rehabilitation should be authorized for peacetime ex-servicemen who have substantial serviceconnected disabilities. The President has recommended that such a program be established. The vocational rehabilitation benefits proposed in S. 1138 will add up to $19 million annually to the costs of the substantial program of benefits already provided to peacetime exservicemen, and, in our view, will adequately discharge the Federal Government's responsibility to them as their employer. With respect to other vocational rehabilitation provisions of S. 1138, however, we have recommended that the presently established terminal dates for the wartime vocational rehabilitation program for Korean conflict veterans be continued without change. While we favor the enactment of vocational rehabilitation benefits, the educational and vocational training and home and farm loan benefits proposed in S. 1138 appear to us unwarranted and undesirable. First, the conditions of peacetime service do not, in our judgment, justify readjustment assistance. Second, such assistance would impair the ability of the Armed Forces to retain essential skilled personnel. Third, the $3 billion student aid program which S. 1138 would establish raises a number of issues affecting our national educational policies. We do not believe peacetime military service to be a justifiable basis for Federal scholarship and loan awards. We question whether this vast student-aid program would represent a necessary and appropriate allocation of Federal funds among various national educational objectives. The committee has heard a great deal of testimony from the executive agencies on each of these points. Accordingly, we believe it desirable to devote the remainder of our comments to a highlighting of our conclusions on these major issues. READJUSTMENT ASSISTANCE AND CONDITIONS OF PEACETIME SERVICE The provision of readjustment assistance for wartime veterans developed logically out of the circumstances and needs of World War II. That experience provides a clearcut basis against which to appraise the need for readjustment benefits for peacetime servicemen. The draft during World War II reached a large proportion of the young men in the manpower pool. In the span of a few years 15 million individuals, two-thirds of them inductees, entered the Armed Forces, which reached a peak of over 12 million. Neither enrollment in school nor dependent children were considered a sufficient basis for deferment, as is now the case. The age |