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OPEN HEARINGS

TUESDAY, APRIL 19, 1977
SUBCOMMITTEE ON COMPENSATION, PENSION,

AND INSURANCE,
COMMITTEE ON VETERANS' AFFAIRS,
U.S. HOUSE OF REPRESENTATIVES,

Washington, D.C. The subcommittee met, pursuant to notice, at 10 a.m., in room 334, Cannon Office Building, Hon. G. V. Montgomery, chairman, presiding.

Mr. MONTGOMERY. Good morning. The subcommittee will come to order. I might say that as you can see, other members of the subcommittee will be coming in. We will not, however, be having a large attendance.

The hearing today is to consider the need for cost-of-living increases in monthly cash benefits to disabled veterans for service-connected compensation and in indemnity and compensation payments to the surviving widows and children of veterans who have died of service-connected causes.

Throughout the years, the Congress has addressed itself to the needs of these beneficiaries and has regularly provided, as needed, increases in monthly benefits both to these veterans and their dependents. These increased benefit levels have been related to and not inconsistent with increases in living costs as reflected by the most widely used standard, the Consumer Price Index, which is updated monthly.

The last increase in benefit rates became effective October 1, 1976, and resulted from enactment of Public Law 94433. The rate of increase provided at that time was approximately 8 percent for all payment levels. And increase of a similar amount, from $175 to $190 yearly, was provided in the clothing allowance for those veterans whose service-connected disabilities require the wearing of prosthetic or orthopedic devices which tend to wear or tear the clothing,

The most recent report of the Department of Labor's Bureau of Labor Statistics released March 19 showed that there had been at the end of February a 2.6-percent increase in the Consumer Price Index since our last adjustment in compensation and dependency and indemnity compansation rates. We have an estimate from the Congressional Budget Office staff that by October 1, 1977 we can expect continued increases in the cost-of-living index to a level between 5 percent and 6 percent over the prior increase date of October 1, 1976.

In addition to a need to consider basic rate levels, the subcommittee has for its study to other bills that would extend benefits to disabled veterans.

(1)

The first of these would amend chapter 39 of the title 38, United States Code. This chapter contains the provisions of law granting automobiles and necessary adaptive equipment for use of automobiles to certain veterans and servicemen.

Currently, automobile grants and needed adaptive equipment are provided to members of the armed forces and veterans of service on or after September 16, 1940 when they have suffered the service-connected loss or loss of use of one or both hands or feet or blindness to a prescribed degree. The bill. under consideration would grant such benefits to veterans of World War I with such service-connected disability.

The other proposed extension of entitlement would amend section 360 of title 38 of the code. That section of law now provides that where a veteran has suffered blindness of one eye, deafness of one ear or loss of use of one kidney as the result of a service-connected injury or disease and subsequently suffers blindness, deafness, or severe kidney involvement of the paired organ of non-service connected origin the resulting disability will be evaluated and compensation paid as though both organs were impaired as a result of service-connected disability. The proposed amendment would add another pairedorgan grouping, that is paired extremities, to the current list of entitling disabilities.

If there are no objections, the bills and official comments from the Veterans Administration will be made a part of the hearing following the testimony we will be receiving.

And I would like to recognize the distinguished ranking minority member of the subcommittee, and my good friend, the gentleman from Ohio, Mr. Wylie.

Mr. WYLIE. Thank you very much, Mr. Chairman, for those complimentary remarks, and I might say the feeling is mutual.

I would like to express my thanks to you, Mr. Chairman, for these hearings, and to the Veterans' Administration and the various organizations that will appear before this subcommittee in the next 2 days to discuss the three bills now pending before us.

I'm sure that no one on this subcommittee, or no one who will testify, will disagree with me when I say that this legislation dealing with our service-connected disabled veterans must have our highest priority.

We must be conscientious in our efforts to assist those who have given so much, and I look forward to hearing the statements from the witnesses who will appear before us.

Thank you very much, Mr. Chairman.

Mr. MONTGOMERY. Thank you, Mr. Wylie. I might point out, as you also mentioned, in the past we have had hearings and we have included both the nonservice and service-connected compensation and pension programs in the one hearing. Now we are breaking it up. We think this would be better for all concerned.

And without objections, our first witness this morning is Mr. J. C. Peckarsky, who is the Director of the Compensation and Pension Service in the Department of the Veterans Benefits of the Veterans' Administration.

Mr. Peckarsky, if you would like, you may present those you brought with you, and you may proceed in any manner that you so desire.

STATEMENT OF J. C. PECKARSKY, DIRECTOR, COMPENSATION AND

PENSION SERVICE, DEPARTMENT OF VETERANS' BENEFITS, VETERANS' ADMINISTRATION, ACCOMPANIED BY JOHN S. WISNIEWSKI AND JOHN MEERS

Mr. PECKARSKY. Thank you very much, Mr. Chairman. I have with me today my deputy, Mr. John Wisniewski, and the Assistant General Counsel of the Veterans' Administration, Mr. John Meers.

Mr. Chairman and members of the subcommittee, I am happy to be here this morning on behalf of the Veterans' Administration to discuss H.R. 1862, H.R. 1864 and H.R. 1866.

Turning first to 1862, it proposes increases of 6 percent in rates of service-connected disability compensation, dependency and indemnity compensation (DIC) for surviving spouses and children, and in the annual clothing allowance to certain veterans wearing or using a prosthetic or orthopedic appliance.

It has been the policy of the Congress and the executive branch to provide periodic increases in disability compensation and DIC benefits when needed to insure that our programs recognize changing economic conditions. In fiscal year 1974 compensation benefits were increased by 17 percent. Effective August 1, 1975, they were increased by approximately 10 percent or 12 percent-depending on the degree of disability and effective October 1, 1976, they were increased by approximately 8 percent. The widows and children of veterans who die of service-connected causes have received similar increase. The rates of DIC payable to them were increased by approximately 12 percent effective August 1, 1975, and 8 percent effective October 1, 1976.

The basic purpose of the disability compensation program throughout its history has been to provide relief for the impaired earning capacity of veterans disabled as the result of their military service. The amount payable varies according to the degree of disability which, in turn, is required by the law to represent, to the extent practicable, the average impairment in earning capacity resulting from such disability or combination of disabilities in civilian occupations. Additional compensation for dependents is payable to any veteran entitled to basic compensation for disability rated at not less than 50 percent.

Mr. Chairman, at this point, if you will allow me to depart from some of my prepared speech and summarize briefly our position, and then introduce the entire speech for the record.

Mr. MONTGOMERY. Without objections, the total statement will be submitted for the record.

[Statement follows:]

STATEMENT OF J. C. PECKARSKY, DIRECTOR, COMPENSATION AND PENSION SERVICE,

DEPARTMENT OF VETERANS BENEFITS, VETERANS' ADMINISTRATION Mr. Chairman and Members of the Subcommittee, I am happy to be here this morning on behalf of the Veterans' Administration to discuss H.R. 1862, H.R. 1864 and H.R. 1866.

Turning first to H.R. 1862, it proposes increases of 6% in rates of serviceconnetcted disability compensation, dependency and indemnity compensation (DIC) for surviving spouses and children, and in the annual clothing allowance to certain veterans wearing or using a prosthetic or orthopedic appliance.

It has been the policy of the Congress and the Executive branch to provide periodic increases in disability compensation and DIC benefits when needed to insure that our programs recognize changing economic conditions. In fiscal year 1974 compensation benefits were increased by 17 percent. Effective August 1, 1975, they were increased by approximately 10 percent or 12 percent (depending on the degree of disability), and effective October 1, 1976, they were increased by approximately 8 percent. The widows and children of veterans who die of service-connected causes have received similar increases. The rates of DIC payable to them were increased by approximately 12 percent effective August 1, 1975, and 8 percent effective October 1, 1976.

89-856-772

The basic purpose of the disability compensation program (ch. 11, title 38, United States Code), throughout its history has been to provide relief for the impaired earning capacity of veterans disabled as the result of their military service. The amount payable varies according to the degree of disability which, in turn, is required by the law (38 U.S.C. 355) to represent, to the extent practicable, the average impairment in earning capacity resulting from such disability or combination of disabilities in civilian occupations. Additional compensation for dependents is payable to any veteran entitled to basic compensation for disability rated at not less than 50 percent.

Under chapter 13 of the stated title 38, DIC payments are made to surviving spouses and certain parents and children of veterans who die of a service-connected cause. For surviving spouses, the monthly rates are geared to the pay grade of the deceased veteran, ranging from $260 for the surviving spouse of an E-1, to $644 for the surviving spouse of an 0–10. The applicable surviving spouse's rate is increased by $31 for each child of the veteran under age 18. An additional amount of $78 is payable where the surviving spouse is (1) a patient in a nursing home, or (2) helpless or blind or so nearly helpless or blind as to need or require the regular aid and attendance of another person.

For children, where no surviving spouse is entitled, the monthly rates range from $131 for one child to $243 for three children (plus $49 for each additional child). In the case of certain children specified under 38 U.S.C. 414(a) who are permanently incapable of self-support, the applicable basic rate is increased by $78 for each child. Under 38 U.S.C. 414(b) and (c), in cases wherein a surviving spouse is receiving benefits, monthly amounts of $131 and $67 are respectively paid separately to certain children of the veteran who are (1) permanently incapable of self-support, or (2) attending school while between 18 and 23 years

of age.

The President's fiscal year 1978 budget revisions, submitted last February, included provision of a cost-of-living increase in Veterans' Administration disability compensation and DIC_programs to keep these programs responsive to changing economic conditions. It is the Veterans Administration's position that increases designed to offiset the decline in purchasing power due to inflation should be based on changes in the Consumer Price Index (C.P.I.) Since these benefits were last increased on October 1, 1976, the cost of living has risen ap-. proximately 2.6 percent through February 1977, as measured by the C.P.I. In furtherance of this policy, we have submitted a legislative proposal to the Speaker which would increase disability compensation rates and rates of DIC for surviving spouses and children consistent with the anticipated C.P.I. on October 1, 1977.

In preparing our legislative proposal, we proceeded on the basis of an assumption that the C.P.I. would increase by 4.9 percent for the period October 1, 1976, to October 1, 1977, and have used this figure in our budget estimate for fiscal year 1978. Should this assumption prove to be inaccurate, we would support a change in rates consistent with an updated anticipated C.P.I. figure on the effective date of the increase. We recommend favorable consideration of our legislative proposal rather than H.R. 1862.

Turning now to H.R. 1864, this bill would extend entitlement to an automobile assistance allowance and automotive adaptive equipment to veterans of World War I under the same conditions as veterans of service on or after September 16, 1940, who are now eligible. In addition, the bill would entitle an otherwise ineligible veteran to adpative equipment if the veteran has a service-connected. disability not less than 30 percent disabling, and which constitutes a permanent loss or impairment of the use of an anatomical part and impairs the ability to operate an automobile or other conveyance.

The automobile allowance was established as a rehabilitative benefit, principally as a means of assisting certain disabled veterans in their employment endeavors. While originally limited to wartime-service veterans, entitlement to this

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