Thank you for your letter of May 2, 1975 in which you advise us of the introduction of S. 1597, the "Veterans Disability Compensation and Survivorship Act of 1975". The BVA indeed is grateful to you and the other members of your Committee who have introduced this Bill; we are pleased that hearings are proceeding with respect to this legislation.

In view of the continuing rise in the cost-of-living since the last increase in disability compensation in May 1974, and the fact that the costof-living is still rising, the BVA supports the 14 percent increase in disability compensation ratings. In this connection, we endorse the May 8, 1973 testimony of the Disabled American Veterans which also supports this 14 percent increase across-the-board.

We particularly are pleased with that portion of S. 1597 which would provide Dependency and Indemnity Compensation (DIC) entitlement for the survivors of veterans who are rated as totally and permanently service-connected disabled veterans, regardless of the cause of death. As reflected in our testimony presented to your Committee on March 13, 1975, the extension of DIC entitlement to the survivors of these veterans has long been a major priority of the Blinded Veterans Association.

CWW: RDC:c

Sincerely yours,

Clyde W Waugh

Clyde W. Waugh

National President and
Chairman of the Board

Senator TALMADGE. Our first witness this morning is Senator Daniel K. Inouye to testify on his bills, S. 110 and S. 770. Senator we are pleased to have you with us, please proceed.

STATEMENT OF HON. DANIEL K. INOUYE, A U.S. SENATOR FROM THE STATE OF HAWAII

Senator INOUYE. Mr. Chairman, I appreciate having the opportunity to testify today in support of S. 110 and S. 770.

During the 93d Congress, I was pleased to be able to work closely with the Senate Veterans' Affairs Committee in securing favorable action on several improvements in our Nation's veterans assistance programs, especially the Vietnam Era Veterans Readjustment Assistance Act of 1974. Obviously, there are more improvements to be made, for that is the purpose of these hearings and the focus of my remarks.

On January 15, 1975, I introduced S. 110, a bill designed to assist widows of servicemen who were totally disabled due to service-connected injuries but who died of a cause unrelated to his disability. Many of these women were unemployed or underemployed during their adult lives because it was necessary to care for their husbands. As a result, they have no provisions for any income after the disability pay ceases following their spouses' death. This is most unfair because these widows would have been eligible for dependency and indemnity compensation had their husbands died of the service-connected disabilities, yet they very possibly had to spend even more time and energy in caring for their ill and disabled husbands.

In addition, there are many situations in which a service-connected disability may not be the direct cause of death, but the proper treatment or medication cannot be administered due to complications caused by the disability. Thus, the disability may actually have caused the death by preventing proper care.

This bill, if passed into law, will not provide handouts to those who do have adequate income from other sources. The size of the payments to which the widows will be entitled will be reduced by an amount. equal to one-half of income from other sources. I also wish to bring to the attention of the Committee on Veterans' Affairs a typographical error which occurs on page 2 of the bill. Line 16 should read “(d), dependency".", rather than "(c), dependency"."

When this committee reported out S. 3072 last year, which became Public Law 93-295, attention was paid to a long-ignored deficiency in the statutory awards paid to veterans who have suffered anatomical loss or loss of use of one foot, one hand, or one eye-under 38 U.S.C. 314(k).

In 1946, Public Law 79-662 set the "k" award at $42 per month. In 1952, Public Law 82-427 increased it to $47 per month. And the 93d Congress increased the award an additional $5 per month to $52 with Public Law 93–295. The report of the Senate Committee on Veterans' Affairs to accompany S. 3072 stated:

The "k" award while a minor portion of the total award of compensation is nonetheless a compensatory award for anatomical loss. Thus in the light of the extraordinary inflation disabled veterans are experiencing, the committee is of the opinion that a 10-percent increase in the "k" awards is warranted.

Thus, between the years 1946 and 1974 when the cost of living has increased more than 152 percent, the "k" award has risen only 24 percent. The increase provided in S. 3072, while salutory and well warranted, is insufficient to the needs of effected veterans in these inflationary times. S. 770 would increase the present $52 per month to $80. This reasonable and overdue improvement in the "k" awards is essential in those rare cases where the statutory award is all the assistance a veteran receives. It will demonstrate to every veteran who has made a personal sacrifice on behalf of this country that the country appreciates that sacrifice and will not forget it.

I urge the committee to give favorable support to each of these measures. I share the concern of each member that Federal spending be kept at a responsible level. I would not be urging the adoption of these bills if I did not believe that the expenditures they will require are necessary and just.

Senator TALMADGE. Thank you, Senator Inouye, for your fine state

ment.

We welcome as our next witness today, Mr. Rufus H. Wilson, Chief Benefits Director of the Veterans' Administration.

Before you proceed, Mr. Wilson, if Senator Stone has any remarks, he's recognized at this time.

Senator STONE. Mr. Chairman, I appreciate that, I have no state

ment.

Senator TALMADGE. You may proceed, Mr. Wilson.

STATEMENT OF RUFUS H. WILSON, CHIEF BENEFITS DIRECTOR, VETERANS' ADMINISTRATION, ACCOMPANIED BY J. CHARLES PECKARSKY, DIRECTOR, COMPENSATION AND PENSION SERVICE; HOWARD M. DENNEY, DEPUTY GENERAL COUNSEL; ARTHUR F. CARLEY, ACTING ASSISTANT GENERAL COUNSEL; AND DALE GRUBB, ASSISTANT DEPUTY ADMINISTRATOR FOR CONGRESSIONAL RELATIONS

Mr. WILSON. Thank you Mr. Chairman and Senator Stone. I am pleased to appear before you this morning in response to your request for the views of the Veterans' Administration on several pending measures relating to service-connected compensation.

We understand that the subcommittee is particularly interested in the provisions of S. 1597, which would, among other things, increase by 12 percent disability compensation benefits for veterans up to 50percent disabled; increase such rates 14 percent when above 50-percent disabled; and increase by 14 percent the rates of dependency and indemnity compensation (DIC) for widows and children. The estimated first-year cost of this bill is in the magnitude of $585 million.

Other designated measures are S. 110, payment of DIC to certain widows of veterans who die from non-service-connected causes; S. 770, an increase of 38 U.S.C. 314 (k) statutory benefit for certain anatomical or other losses, from present $52 to $80; and S. 1432, recognition of certain prisoners of war as having a 50-percent, service-connected disability, along with other liberalizations regarding prisoners of war. Additionally, the first mentioned measure, S. 1597, would, as in the

case of S. 110, provide for payment of DIC in certain cases of nonservice-connected death.

The needs of the disabled have been recognized in the face of changing economic conditions. In fiscal year 1973, compensation benefits were increased by an average of 10 percent and again in fiscal year 1974, they were increased by 17 percent. The widows and children of veterans who die of service-connected causes have not been neglected either. The rates of DIC payable to them have also been regularly increased, the latest such increase having become effective May 1, 1974. It has been the policy of the administration to recommend VA benefit increases for disability compensation and DIC programs, when needed, to insure that our programs recognize changing economic conditions.

However, such increases should also be related to overall Federal income policies. On March 19, 1975, the President recommended, in the light of considerable inflationary pressures, a temporary 5-percent limitation on increases in certain monthly benefits in a number of federally supported programs, including social security, supplementary security income (SSI), food stamps, and child nutrition programs. In a letter transmitting the legislative proposals to the Congress, the President said:

As we move forward with tax reductions to revitalize the economy, with energy conservation and self-reliance measures, and with substantially expanded aid to the unemployed, it is essential that we restrain the overall growth of Federal expenditures. In the interest of the long-run as well as near-term health of the economy, we simply must curb the rate of increase in the budget that has occurred in recent years.

The President further noted that his proposed 5-percent ceilingWould not eliminate or reduce any benefit payments from the present levels, but would merely slow down, through June 30, 1976, the rate at which these payments would be rising. Their enactment would help us begin to gain some control over the longer-run growth in the Federal budget.

The President concluded:

During this time when thousands of workers are being laid off and we are still experiencing considerable inflationary pressures, I believe the modest restraint that I am proposing on pay raises and increases in benefit programs makes sense for the future and is urgently needed in the present.

We believe that any increase should be consistent with those proposed in other Federal income maintenance programs. Accordingly, we are prepared to recommend approval of increases of 5 percent in disability compensation rates, excepting the 38 U.S.C. 314(k) rate, and in DIC rates for widows and children. It is estimated that the firstyear cost of such 5-percent increases in compensation would approximate $220 million.

We also oppose the S. 770 proposal to increase from $52 to $80 the special rate provided by 38 U.S.C. 314(k) for certain anatomical and other losses or losses of use. That rate is payable in addition to basic rates of disability compensation and any higher statutory rates of compensation. Accordingly, it is believed that rates paid under general compensation increases are generally adequate for the veterans contemplated by S. 770. Similarly, we would not favor any increase in the 314(k) rate provided by a general compensation bill.

As previously mentioned, two of the measures which are subjects of this hearing include provisions for payment, under certain conditions, of service-connected dependency and indemnity compensation (DIC) in cases of death from non-service-connected causes.

S. 110, 94th Congress, would authorize payment of such benefit to the widow in the case of any death of the described nature after December 31, 1956, subject to the following conditions; (a) Veteran was at time of death totally disabled from service-connected disabilities; (b) the DIC rate would be reduced by any amount equal to one-half of all income in excess of the exclusions authorized from income of parents for DIC purposes; and (c) the widow would be paid death pension whenever DIC payable under the specified conditions would be less than the amount of death pension otherwise payable.

Section 204 of S. 1597 would provide for payment of DIC to the widow, children, and parents of any veteran who dies after December 31, 1956, from a non-service-connected cause while entitled to receive compensation for a total service-connected disability permanent in

nature.

The described S. 110 and S. 1597 proposals are similar to or identical in purpose with bills which have been introduced in the Congress over a period of years. The most recent example is S. 3414, 93d Congress, identical to S. 110, which was pending before your committee at the conclusion of that Congress and which the Veterans' Administration opposed.

Under the outlined pending proposals, the non-service-connected death of any veteran would be conclusively presumed service-connected if at the time of the veteran's death he was in receipt of, or entitled to receive compensation for a service-connected disability which was permanently and totally disabling.

By presuming, contrary to fact, service connection as the cause of death in cases covered by the subject proposals, enactment would constitute a major departure from the longtime policy of the Congress in maintaining separate systems of monetary benefits for deaths due to service and those unrelated to service. Such enactment would be tantamount to superimposing on the present pension program new nonservice-connected death benefits equivalent to the present service-connected benefits, and would result in new and highly discriminatory benefits for surviving dependents of certain disabled veterans.

The Veterans' Administration believes that existing law and regulations provide liberal and equitable conditions for determining that death is service-connected. For example, a VA study required by Public Law 93-295 and recently furnished to this committee showed that the VA recognized 75 percent of the claims filed for DIC. Moreover, there is no justification for presuming a death to be serviceconnected when the evidence does not support such a finding.

Data are not available upon which to base an estimate of the cost of S. 110 and section 204 of S. 1597 if enacted.

S. 1432 would, among other things, consider any veteran who was held as a prisoner of war for not less than 6 months as having a service-connected disability of 50 percent rated as permanent. Congress has recognized the extraordinary hardship of prisoners of war as evidenced by enactment of Public Law 91-376. Also, Veterans' Ad