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Affairs Committee along with you. We are entrusted with the responsibility of providing equitable and realistic benefits and programs for this country's more than 28 million veterans. I know that you gentlemen accept this responsibility as a privileged duty, as I do. I believe that my compensation bill, H.R. 14736 would provide a system of compensation which is directly alined with our goals as members of this committee. This bill would increase the rates now payable for disability compensation and would also institute two new provisions. One of these would make the rates of peacetime compensation equal to those for wartime disability and the other would provide a clothing allowance for veterans in certain circumstances.

As you know the last increase in disability compensation was enacted in the 91st Congress and took effect on July 1, 1970. Though this was only 2 short years ago, this system is in need of constant review to insure that disabled veterans receive their necessary benefits. Since the passage of the last compensation increase the Consumer Price Index has risen 6.3 percent from 116.7 in July 1970 to 124.0 in March of 1972. We must keep the rates of disability compensation in tune with the cost-of-living otherwise it will be the veterans who suffer. My bill would provide a general 11 percent increase in the rates of disability compensation. This increase I feel is justified because of the increase in the cost-of-living and because in the past these rates have only been increased every 2 years. The increase that I have provided above the increase in the cost-of-living will enable the veterans to withstand any further increases in the Consumer Price Index until such time as the rates of disability compensation are again reviewed. I do not think gentlemen that it is enough to just provide for today's needs, I believe that we must look ahead to what the veterans will need tomorrow. The March Consumer Price Index showed an increase of 3.5 percent above March 1971. If this trend should continue the increases before the next disability compensation increase would normally be considered would be between 6 and 7 percent. My bill provides for an increase of less than 5 percent above the increase in the Consumer Price Index. I do not think that this is too great an amount in order to insure that our veterans will not be hard hit if the prices in this country continue to increase. Should the price index not increase at the present rate, perhaps there would be no need for an increase 2 years from now. We must look ahead gentlemen, we must safeguard the interests of those who depend upon us for their assistance. I believe that H.R. 14736 is a forward looking bill and a necessary step for us to take.

This bill would also provide an 11-percent increase in the amount of assistance that disabled veterans receive for dependents. Since prices go up for dependents as well as for the disabled veterans, increases for dependents are amply well justified.

The present rates of peacetime disability compensation are 80 percent of those paid for wartime disability. Gentlemen, is it any less disabling to lose a leg while serving your country in peacetime? Is this service worth any less to the United States? I do not believe so. I cannot believe that it is just for this country to compensate a veteran any less for disability suffered during a peaceful era. These men are still in the service of their country, they are an integral part of our defense and I want to see that they can receive equal benefits. This provision would cause an increase of 20 percent in the peacetime compensation rates. I feel this is little enough to do to show these men that their service to this country is held in equal esteem as those who served during a war.

My bill would also provide a clothing allowance for those veterans whose disability requires them to be fitted with a prosthetic appliance when the appliance tends to wear out or tear the veterans' clothing. As you gentlemen know this can be a severe problem with some disabled veterans. H.R. 14736 would also provide a clothing allowance for those veterans who use a wheelchair on a regular basis. This clothing allowance is only a modest sum, $150 per year. Not all disabled veterans would need such an allowance and actually the number of veterans who will receive these benefits is probably very small. I do not think that the amount that would be spent would be great enough to prohibit this small additional assistance to our disabled veterans who deserve our every help.

This is not a complex bill nor a very lengthy one. The problems which it attempts to solve are not very complex either. We must make our best effort to insure that the benefit levels for disabled veterans will enable them to live their lives without any greater strain than that already placed upon them by their disability. These men have sacrificed for this country, they have served with honor and distinction. They deserve equitable benefits and I believe that H.R. 14736 provides the needed assistance.

Thank you.

Mr. Dorn. Thank you very much, Mrs. Hicks. We appreciate your coming by. Our last witness this morning will be Congressman John E. Hunt. You may proceed, Mr. Hunt.

STATEMENT BY HON. JOHN E. HUNT, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF NEW JERSEY

Mr. HUNT. Mr. Chairman, I am glad to have this opportunity, in connection with the subcommittee's hearings on bills to increase the rates of disability compensation for veterans, to submit a statement in support of my bill, H.R. 4853. This legislation would amend title 38 of the United States Code to provide for cost-of-living increases in compensation, dependency and indemnity compensation, and pension payments.

In reviewing my testimony on this same legislation during hearings before the subcommittee last October, I feel that what I said then is equally appropriate today.

No one, I am sure, will fault the Administration for its efforts in trying to control inflation and I am equally sure that everyone, including the Congress, will cooperate in insuring that the inflationary spiral that has plagued us over the past few years will be brought under control. Nonetheless, the economy will continue to grow, wages will continue to rise, spending from all sectors will increase, and the value of the dollar will con nue to decline relative to this growth but, hopefully, at a much lesser rate than at present. At the same time, however, there are admittedly those who would live on an absolutely fixed income in the absence of specific Congressional action from time to time to adjust that income upwards as a setoff against the rising cost of living. Among those in this group are the large number of veterans who are retired or who are disabled, either service or non-service connected, or who are the survivors of veterans whose death is service connected."

Mr. Chairman, while it might be said that there is flexibility in the manner by which the payments to veterans covered by this legislation are now adjusted, i.e. piecemeal, I believe that the hardships created by times of economic uncertainty and instability can better be met by setting up the permanent machinery for automatic adjustments based on a formula geared directly to the Consumer Price Index (CPI)."

H.R. 4853 provides for the creation of such machinery and its operation is relatively simple. The Administrator of the VA would be required at the beginning of each calendar quarter to determine the amount by which the Consumer Price Index figure (averaged over the 3-month period immediately preceding) has increased over the average CPI figure in the applicable base period. Outside the base period (calendar quarter commencing January 1, 1970) applicable to the first increase under the Act, the base period for all future increases will be the calendar quarter next preceding the quarter that immediately precedes the quarter in which the Administrator makes his determination. If he determines that the CPI has risen by 3 or more percent of the base period figure, benefits will then be increased by the same percentage beginning in the quarter immediately following that in which the determination is made. Thus, considering there are four calendar quarters in a year, if quarter 1 is the base period (as it would be for the first increase), quarter 2 is the one whose average CPI figure is measured against the base period, quarter 3 is the one in which the Administrator calculates the percentage increase of the average CPI figure of quarter 2 over that in quarter 1 (base period), and quarter 4 is the one in which the increases would become effective and payable, providing the Administrator's calculation reflected an increase of 3 or more percent of the base period's average CPI figure. The next computation would utilize quarter 2 as the base period, with quarter 3 becoming the one whose average CPI figure is measured against the base period, and so on. Under this rotating sytsem, every quarter would eventually become a base period.

Mr. Chairman, in the wisdom of this Subcommittee it may be determined that another formula would be more desirable, but the point to be made, I believe, is that the concept of automatic adjustments to reflect rising living costs ought to be established in the law. Although the argument has been made that automatic adjustments tend to be inflationary, I can only say that if this is so, the sacrifices that must be incurred to counter inflation must not be levied on the fixed income recipients, and especially our retired and disabled veterans who have already sacrificed so much of their lives in faithful and dedicated service to this nation.

Mr. Chairman, I would make one further observation with respect to automatic cost-of-living adjustments. There is an existing precedent in the civil service retirement system which contains a system of automatic adjustments similar to that which is urged here. It will also be remembered that the House adopted an automatic, cost-of-living provision in connection with the social security bill that was passed by the House last June. I respectfully urge an increase in the rates of disability compensation for veterans with the inclusion of a cost-of-living provision.

Mr. DORN. Any questions by counsel ?

All right, the subcommittee will stand adjourned until tomorrow morning at 10 a.m.

(Whereupon, at 11:15 a.m., the subcommittee adjourned.)

78-995—72-6

VETERANS' SERVICE-CONNECTED DISABILITY

COMPENSATION

WEDNESDAY, MAY 24, 1972

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON COMPENSATION AND PENSION,
COMMITTEE ON VETERANS' AFFAIRS,

Washington, D.C. The subcommittee met at 10:10 a.m., pursuant to recess, in room 334, Cannon House Office Building, the Honorable G. V. (Sonny) Montgomery presiding.

Mr. MONTGOMERY. The committee will come to order. We are resuming our hearings this morning on the subject of veterans' compensation legislation with particular emphasis on the adequacy of the present rates authorized for veterans suffering with service-connected disabilities.

In addition, we have several related proposals which the Veterans' Administration representative, in his testimony yesterday, either recommended specifically or indicated no objection to their enactment.

Our first witness this morning is Mr. William J. Flaherty, assistant national director of legislation for the Disabled American Veterans. Mr. Flaherty, we are pleased to welcome you and you may proceed as

you see fit.

STATEMENT OF WILLIAM J. FLAHERTY, DEPUTY NATIONAL DI

RECTOR OF LEGISLATION, DISABLED AMERICAN VETERANS, ACCOMPANIED BY WILLIAM GARDNER, ASSISTANT DIRECTOR FOR LEGISLATIVE RESEARCH

Mr. FLAUERTY. Mr. Chairman, with me this morning is William Gardner, our assistant director for legislative research.

Mr. Chairman, members of the subcommittee, I am very pleased for this opportunity to appear before you to express the views of the Disabled American Veterans on a subject of high importance and great interest to our organization.

I want to say at once, Mr. Chairman, that it is reassuring to note that the committee is holding these hearings on the compensation program so early in this second session of the 92d Congress.

It is another instance of the committee's determination to give steadfast recognition to the concept that our Nation owes a very special debt to those men and women who were disabled in the service of their country.

As you know, Mr. Chairman, the basic rates of compensation payable in wartime cases presently range from $25 for a 10-percent disability to $150 per month for a total disability.

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