The Administration's grant program for all needy children would be available to the nearly 700,000 children who now do not receive program benefits. The proposal would enable States to provide onethird of a needy child's daily nutritional requirement.

Earned income credit.-The Tax Reduction Act of 1975 provided low-income families with children a credit equal to 10% of earned income with a maximum credit of $400; where the credit exceeds any taxes owed, the Government pays the difference to the family in cash. This credit was applicable to incomes earned in calendar year 1975, with payments being made the following spring. Recent tax legislation extended this credit into calendar year 1976 at half the previous rate. Federal payments in excess of the tax liability otherwise owed-counted as outlays-are estimated at $1.2 billion in 1976 and $0.6 billion in 1977.

The reduction in taxes owed resulting from this credit-counted as a tax expenditure-is estimated at $0.3 billion in 1976 and $0.1 billion in 1977.

VETERANS BENEFITS AND SERVICES

This function consists of those Federal programs specifically designed for veterans, their dependents, and survivors.

Program Highlights

• Increase VA medical care staffing by 1,757 full-time employees, completing personnel improvements recommended in the 1974 "Quality of Care" study.

• Provide compensation and pension benefits to 4.8 million veterans and their survivors.

. Enact pending legislation to eliminate VA GI bill education benefits for future members of the peacetime All-Volunteer Force.

⚫ Change current law to limit education program eligibility for active duty personnel now in service to a readjustment period of 8 years following separation.

• Revise existing legislation to require health insurers to reimburse the VA for care of insured patients with nonservice connected disabilities.

• Establish, through legislation, a new grant program for construction and operation of State veterans cemeteries. • Propose legislation to eliminate veterans burial payments to the extent that they duplicate other federally funded benefits.

This budget provides a high level of benefits and services to veterans and their families. It provides recipients of compensation and education benefits with higher average benefits in 1977 than in 1976. It also includes funds for additional medical personnel to complete staffing improvements recommended in the 1974 "Quality of Care" survey and for high priority construction projects that will improve VA health care delivery. Legislation reflected in the budget will align education benefits to the concepts of an All-Volunteer Armed Force and an 8-year readjustment period; require health insurers to reimburse the VA for medical care provided to covered beneficiaries with non-service-connected disabilities; and eliminate VA burial benefits. which duplicate other federally funded benefits.

Proposed spending for benefits and services to veterans and their families totals $17.2 billion in 1977 and in 1978. Expected decreases in pension and education caseloads, reflecting respectively improve

Information on budget authority for 1975, 1976, and the transition quarter is shown in table 14

of Part 8.

ments in other Federal income security programs and declining active duty force levels, combined with the legislative proposals reflected in the budget, result in 1977 and 1978 spending which is lower than that for 1976. In addition, tax expenditures flowing from the tax-exempt status of compensation and pension payments and of readjustment benefits are estimated at $0.6 billion and $0.3 billion respectively in 1977.

Income security for veterans. In addition to other Federal income security programs, such as social security and unemployment assistance, veterans and their families are eligible for special VA programs which help maintain their income when the veteran is disabled, aged, or deceased. Outlays for these programs will total an estimated $8.3 billion in 1977.

Service-connected compensation.-Monthly compensation payments are provided to veterans who are disabled as a result of military service. The amount of the benefit is related to the loss of earning capacity resulting from the disability. Disability and indemnity compensation payments are made to survivors of veterans who die from service-connected injuries. Recently enacted legislation provided benefit increases ranging from 10% to 12% for veterans and survivors.