This sensitive issue must be addressed, since during the consideration of the fiscal year 1982 budget there were serious proposals which could have a devastating impact on various veterans' programs.

First, the House Post Office and Civil Service Committee proposed legislation in response to the first concurrent resolution, and incidentally without the benefit of hearings, which would have reduced about 114,000 veterans' salaries by the amount they receive in military retired pay. Many in this category receive military retired pay for disabilities resulting from military service. This proposal would also have had an adverse impact on many reservists who spent 20 or more years in service to their nation had it been enacted.

I believe it is a responsibility of this committee and its members to insure that veterans' benefits be protected and therefore they should have objected to the action of the House Post Office and Civil Service Committee.

That same committee has been especially hostile to veterans by removing the veterans' preference eligibility from those veterans who have been military retirees with 20 or more years of service and who may have attained the grade of O-3 or above. That committee also passed legislation to restrict post military service employment in the Federal Government.

I consider the actions of the House Post Office and Civil Service Committee to be a slap in the face and a breach of faith to the veteran community.

The Senate Veterans' Affairs Committee, in reaction to the first concurrent budget resolution held hearings on seven bills only 7 days after their having been introduced. Each of these bills were attempts to curtail or reduce various veterans' programs.

This is a poor method of legislating, and I would suggest that this committee resist this haphazard approach to the review of veterans' programs.

I would like to comment on several of these proposals that were only set aside when it was determined that the required savings could be accomplished by deferrals and delay in other programs.

The Senate Veterans' Affairs Committee proposed a reduction in VA compensation by the amount an individual may receive in social security benefits by reason of disability or having reached age 65.

Now, you must consider that a spouse's benefit may accrue to a veteran by social security attributed to another's employment. A benefit derived from a wife's work who may also provide the care and attendance for a 100-percent disabled veteran should not have that spouse's benefit be the basis for a reduction in veterans' benefits. Our association would strongly object to this proposal. The Senate Veterans' Affairs Committee also proposed that a single check be sent by the various military departments which would reflect his retired pay and any VA benefits.

First, I fail to see how this would reduce costs since each department or agency must separately determine the amount of each benefit, and I believe added costs would accrue by the need for coordination. It is strange that certain sectors which have opposed our efforts to authorize military retirees to pay VGLI premiums

through military allotments, and the reason that they objected was that that was too costly, would now consider combining the two compensation systems.

And, one last thought. Whether the budget process was responsible or not, the delay in increasing in compensation and DIC results in a reduction in the benefits to the beneficiaries. Even a 1-month delay results in over a half-a-million-dollar loss to beneficiaries, even though the payments are made retroactive to October 1. The delay adds costs to the taxpayers through the necessity of issuing additional checks and mailing, as previously indicated. There has been considerable talk of proposals to change the methods by which entitlement programs are adjusted.

And just this morning coming to this hearing I heard that the Department of Labor has come up with a new proposal to adjust the CPI. This committee should insure that any change will not forever place the disabled veteran and dependents of veterans in a position whereby their standard of living will constantly diminish. To change the CPI adjustment to the lower of the average wage growth or CPI increase or to a lesser percentage of the CPI would cause a constant reduction in real income. These approaches should be resisted with all your vigor.

I want to thank the committee for allowing me to provide the views of the Retired Officers Association on these important matters, and I will be very glad to provide any answers which I may. [The prepared statement of the Retired Officers Association appears on p. 51.]

Mr. HALL. Thank you, Commander, for your usual well-worded statement.

I would like to ask you one thing. You say that the term "average impairments of earning capacity" is vague.

Commander Wanamaker. Yes, sir.

Mr. HALL. Do you feel that each claim should be based upon the individual under consideration rather than an average, overall average impairments of earning?

Commander WANAMAKER. Sir, to answer your question, yes. There is a considerable difference between individuals and their earning capacity, and it should be considered when that determination is made.

Mr. HALL. Well, I know that, and I always have to kind of relate sometimes to the trial of a lawsuit on damages. In any special issue that might be submitted by a court to a jury there is always a question submitted, what do you find from a preponderance of the evidence to be the lost earning capacity or the lost future earnings of this person during his workable lifespan, and that term is used interchangeably in any case, whether it be a musician or a butcher or a baker or whatever. Do you say that that is not the proper procedure to follow?

Commander WANAMAKER. When that court question is asked. they are talking about the individual, and that is a correct procedure to follow; yes, sir, not to blanket across the board every individual. It should be for that individual. Yes, sir.

Mr. HALL. And you say now that for a person who is compensated based upon the language I mentioned at the outset, average impairment of earning capacity is not adequate?

Commander WANAMAKER. That is correct, sir.

Mr. HALL. How would you change it? If the average earning capacity of an individual is not sufficient how would you change the wording?

Commander WANAMAKER. I would make it applicable to someone involved.

I would suggest, Mr. Chairman, that you use the criteria that have already been established for the Federal civilian employee, and they use factors such as his service record, which is a vague term itself, considerations of his length of service, his position, and these various factors, and they consider things other than just his average wage.

And it is listed, in title 5, United States Code, for the Federal civil service, there is a schedule of determination; it may not fulfill the exact requirements for this committee in these cases, but I think that is a good start.

Mr. HALL. I just want to ask Mr. Paulson a question.

Are these proceedings, and you might want to get on a mike, I don't want to prolong this but I am interested in the point I am trying to make.

When a veteran has a claim decided, is not it a fact, using the special-issue approach that I mentioned a moment ago in the trial of civil cases, don't you take into consideration all of the veteran's background based upon his future loss of earning capacity in arriving at an award?

Mr. PAULSON. Under the present circumstances, no. It is an average impairment of earning capacity schedule. This permits, for example, a person who may be scheduled 100 percent disabled, but who is nevertheless holding down a good job, payment of compensation for a 100-percent disability along with his earnings.

Mr. HALL. If you consider Van Cliburn who uses his hands, if he lost a hand, I am using this as a comparable, would you take Van Cliburn on one hand as opposed to a man working in a meat market carrying meat, but you would consider the loss of earning capacity for the future equally for both of those people?

Mr. PAULSON. The average impairment.

Mr. HALL. The existing law structure?

Mr. PAULSON. Under the schedule as presently set up, the average earning capacity of the individual, with that type of disability is considered for the scheduler rating. Nevertheless, because of the nature of Van Cliburn's profession he may be totally unemployable even though the scheduler rating was considerably less.

Mr. HALL. Well, aren't you still considering it from each individual standpoint in the ultimate end result?

Mr. PAULSON. Only to that extent, that he may be, one individual may be totally and permanently unemployable with a scheduler rating under 100 percent. But as I set out, if the individual earning capacity or earning probability were considered as distinguished from average impairment, a person who is fully employed, even though under the schedule he was 100 percent disabled, would not be able to get his compensation.

This would be a disincentive. In other words, under the schedule as it is set up now and under the regulations for adjudication, this encourages a disabled person to construct a useful life for himself

and earn in addition to his compensation, whereas if you were basing the rating only on the individual capacity this would be destroyed.

Mr. HALL. I see what you are getting at. I am not sure I altogether approve of policy.

Mr. Moon. I think to illustrate the point Commander Wanamaker was making, that if you have two veterans who are each totally disabled and unable to work, one of them was a lowly paid janitorial-type worker who never made much money, and the other one was a skilled surgeon who had annual income in six figures, under the rating schedule they would receive the exact same total disability evaluation.

To take it a step further, as you were just discussing Van Cliburn, his loss of a hand would be less than total, but the VA does have the authority to make extra scheduler ratings in certain cases. His average employment would probably be in the 30 to 40 percent range, but if he could prove that his loss of his hand had a most devastating effect on his ability to earn a living the VA would have the authority to grant an extraschedular increase to him.

But for a totally disabled veteran there would be no difference in the rate of pay, rate of VA benefits, based on his standing in civilian life.

Mr. HALL. I direct this to Mr. Wanamaker or Mr. Paulson or Mr. Moon, has any estimate been made as to the increase, how much more it would cost if you considered each case on its individual merits with reference to future earning capacity or the loss of future earning capacity?

Commander WANAMAKER. I have not, Mr. Chairman, made that estimate.

But I think, Mr. Chairman, that there probably are close bases for making this determination by looking back at the civil service history. They have as you know, for a long time made these determinations on various individuals, and I think that type of information should be available.

Mr. MOON. Such a policy would be fraught with administrative details. It is very easy to measure the salary of a Federal employee that is fixed by statute, but when you have a man who is in business for himself, doesn't have an economic status that can be measured with any degree of certainty, such determinations as to his individual loss of earning impairment would be subject to a never-ending litigation, of appellate procedures that could not be arrived at with any degree of certainty.

That is one of the reasons we go to the average impairment concept.

Mr. HALL. The gentleman from Ohio, Mr. Wylie.

Mr. WYLIE. Thank you very much, Mr. Chairman.

I want to refer to your testimony on page 6, Commander. You say a reduction in VA compensation by the amount an individual may receive in social security benefits by reason of disability or having reached age 65.

Now that doesn't apply to a pension, if a veteran gets 20-years active duty in and is eligible for a pension?

Commander WANAMAKER. No, sir; it does not.

Mr. WYLIE. Tell me a situation in which this would apply to what you are talking about.

Commander WANAMAKER. Well, I am speaking now of the proposal that was introduced in the Senate (S. 1059), but what it would have done is that a 100-percent totally disabled veteran [code 18 veterans] who may be receiving compensation that would have the compensation limited to the greater of the code 18 rate reduced by the value of social security at age 65 or disability. It was not favorably considered over there, but it was proposed over there. Mr. WYLIE. But at the present time a veteran can receive compensation from the VA and then have to have an extra 5 years or 20 quarters, if they get 20 quarters in under the social security system they can receive disability benefits under the social security system?

Commander WANAMAKER. Yes, sir.

Mr. WYLIE. That's right, and you say there is a bill in, but that's not, the situation now is that they do receive both of those, right? Commander WANAMAKER. Yes, sir.

Mr. WYLIE. Okay. I wanted to clear that up in my mind.

Now you also talk about a situation where a wife, for example, might qualify for 100 percent disability compensation from social security.

Commander WANAMAKER. I might clarify that. I am speaking now of the wife of a veteran who may be caring for a 100 percent disabled veteran, receiving 100 percent total disability compensation from the VA.

And that wife is working, she works under social security and she gets her 20 quarters in and becomes disabled or retires.

Mr. WYLIE. That's right.

Commander WANAMAKER. And when she is eligible to draw social security and her spouse reaches age 62, that spouse, then, is also eligible to receive a social security benefit based on that wife's employment.

Mr. WYLIE. So what is it, half of her benefit?

Commander WANAMAKER. Half of her benefit. It varies a little bit whether she takes early or late retirement, the exact half, if you go the full amount. But if he takes early benefits it would be reduced. But basically one-half would be the veterans spouse benefit.

What I am saying here is that here is a wife of a veteran working hard all her life and providing a spouse's benefit for her veteran husband. That spouse's benefit should not be the basis of reducing a veteran's benefit when he is 100-percent disabled and not able to be employed.

I think that is really unfair.

Mr. WYLIE. The spouse's benefit is the benefit as defined by law. Of course that has been the subject of some considerable amount of discussion. There was also a proposal that if a spouse received the benefit under the circumstances and the other spouse was, say, drawing from public employees' retirement benefit that the amount of the spouse's benefit, it would be reduced.