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(Statement referred to follows:)

STATEMENT OF E. H. GOLEMBIESKI, DEPUTY DIRECTOR NATIONAL REHABILITATION

COMMISSION, THE AMERICAN LEGION, BEFORE THE SUBCOMMITTEE ON COMPENSATION AND PENSION, COMMITTEE ON VETERANS' AFFAIRS, HOUSE OF REPRESENTATIVES

Mr. Chairman and members of the subcommittee, the American Legion welcomes this opportunity to comment on two of its major legislative objectives for this session of the 90th Congress. These are

To establish for the Vietnam Era veterans a program of wartime benefits comparable to that which had been provided for veterans of World War I, World War II, and the Korean Conflict; and

To make further improvements in the death and disability pension pro gram for war veterans and their survivors. With your permission, Mr. Chairman, I will now comment on the details of each of these objectives.

COMPARABLE WARTIME BENEFITS FOR THE VIETNAM ERA VETERAN

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Much has been said and done by the people and the Congress that bears witness to the honor and esteem given war veterans of this nation. In the text of his budget message of January 24, 1967 to the Congress, the President of the United States said on Veterans' Benefits and Services:

“This nation continues to recognize a particular obligation to those who have served in the Armed Forces. Special programs have long been available to aid the veteran and his dependents in the event of disability, death, ill health,

Certain gaps currently exist in the benefits available to veterans of service in Vietnam relative to those for veterans of previous active military operations."

And in his message of January 31, 1967, on America's Servicemen and Veterans, to the Congress, the President said:

“We have not forgotten the veterans of past wars. At Belleau Wood and Chateau Thierry, at Normandy and Midway and at Heartbreak Ridge, these brave men earned an honored place in history. Their sacrifices have brought greater justice and decency to the world.

“Today, the members of our Armed Forces are again fighting and giving their lives in the defense of freedom. It is essential that we convey to them—and to all Americans-our full recognition and gratitude for their service in Vietnam and in other troubled areas of the world.”

With this brief reference to the attitudes and thoughts of the Congress, the President, and the Nation, on war veterans, I would like to comment on the philosophy and position of The American Legion with respect to the special consideration that should be given those with service in our Armed Forces on and after August 5, 1964, the day on which their status ceased to be advisory-defensive. From that date, accelerated training, increased uniformed services strength, the prolonged existence of warlike conditions, and high casualty lists have placed the situation in Vietnam beyond what is considered a campaign or hostile action. Since that day, the members of our uniformed services have been subjected to risks and exposures akin to conditions of war, in defense of our government and in support of our worldwide obligations. To The American Legion there is no dissimilarity between the degree of commitment in Korea and in Vietnam. For these reasons, The American Legion supports the concept the Nation should establish a program of veterans benefits for the Vietnam Era veteran no less comprehensive in scope and purpose than that which is in existence for those veterans of the Korean Conflict or of World War II.

Although the Veterans Readjustment Benefits Act of 1966, approved March 3, 1966, established for the Vietnam Era veteran and for those with service since January 31, 1955 a program of educational assistance and made available several other valued benefits formerly restricted to those with wartime service, it did not define the Vietnam Era veteran as a war veteran nor did it establish entitlement to the following benefits

Wartime rates of compensation for service-connected disability
Pension for nonservice-connected disability or death
Burial allowance

Two-year presumption for psychosis for the purpose of hospital and medical care at VA expense

Reimbursement of State Soldiers' Homes for domiciliary, hospital, and nursing care

Financial assistance to the veteran seriously disabled of service-incurred conditions in the purchase of an automobile or other conveyance

Entitlement to drugs and medicines on prescription of a private physician, and to invalid lifts, therapeutic and rehabilitative devices, and medical services (excluding medicines) for nonservice-connected conditions

Hospital care on contract in private facilities for women veterans, and for those veterans residing in a Territory, Commonwealth, or possession of the

United States Mr. Chairman, there are some who say that military service in time of war or national emergency is an obligation of citizenship and that it should not be considered a basis for future Federal benefits. While it is true that our Nation's survival and our ability to assume world responsibilities require that each citizen do his part and make whatever contribution is required of him, the burden of physical, emotional, and economic privation is most heavy on those who serve in the Armed Forces. For this reason, The American Legion feels that war veterans' benefits are a means of equalizing the sacrifices that directly or indirectly are the result of wartime service in the Nation's Armed Forces. A comprehensive program of war veterans' benefits should be the means by which our Nation eases or relieves the human and economic tragedy of war and distributes its burdens.

Althongh there are more than 3 million members now in the Armed Forces, this figure is considerably less than the Nation's potential manpower. Perhaps more than ever before, a small part of the Nation's manpower is making greater sacrifices than the rest of us. For this reason, they are entitled to a distinct recognition that they are war veterans and entitled to the complete gamut of benefits which the Nation and the Congress have established and reserved for those with such service.

Mr. Chairman, we urge the enactment of HR 2584, to define service in the Armed Forces since August 5, 1964, as service during the Vietnam Era, and to provide that veterans of such service be eligble for those benefits restricted to veterans of wartime service.

IMPROVE THE DEATH AND DISABILITY PENSION BENEFITS PROGRAM

For the purpose of this statement and for laws administered by the Veterans Administration, pension is a monthly payment made by the Administrator of Veterans Affairs to a veteran of World War I, World War II, and the Korean Conflict, because of nonservice-connected disability, or to a widow or child of a veteran because of the nonservice-connected death of the veteran.

The pension program for these veterans and their surviving widows and children is a needs program; one designed to help relieve or prevent need which is or presumed to be due to permanent and total disability with associated unemployability, or the need which follows the death of the primary means of support—the veteran spouse. It is an income maintenance plan. In its original concept, it was provided to keep war veterans from turning to public or private charity for financial assistance when, because of ill health or age, they were no longer able to meet their needs by employment or from other income sources. While pension is a form of public relief or welfare, it lacks many of the embarrassing aspects of administering entitlement to these benefits. It is the Nation's means of assuring its war veterans an honorable form of assistance for themselves and their survivors when they are unable to provide for, and lack sufficient money resources to meet, the cost of their reasonable needs of food, housing, medical services, and other necessities.

Much of the recent discussion associated with the war on poverty has centered on a definition adopted in 1964 by the Council of Economic Advisersan annual income of $3000 for a family, regardless of size and location, and $1500 for an individual, regardless of location. Initially, the concept was used to determine the number of poor in the economy of the United States. This standard of poverty, thus developed, is arbitrary. Few persons could call it too high-many would call it too low. Generally, the term poverty is defined in terms of those denied the lowest essential levels of health, housing, food, and

education that our present knowledge and culture specify as necessary for life as it is now lived in the United States. An examination of the many studies associated with the poverty programs discloses the difficulty of defining a satisfactory standard budget for any particular group. This is so mainly because no clear line can be drawn between necessities and luxuries at any given time, and because individual living patterns differ, even within a relatively similar group.

From its inception, the pension needs test maintained a distinction between those receiving pension and those receiving ordinary public assistance. When the disability pension program was initiated in 1930, the needs test was set at a level high enough to insure against anyone confusing pension with charity, or of associating the receipt of pension with indigency. Congress wanted to avoid anything which resembled a pauper's oath in form or substance. Initially, the law did not include specific income limitations. The pension—then called a Disability Allowance—was payable for a specified degree of disability provided the veteran had been exempted from payment of a Federal income tax for the preceding year. Thus, the personal exemption credits for income tax purposes served as pension entitlement income limitations. At that time the personal exemption credits were: $1500 for a single person, $3500 for a married person, plus $400 for each aditional dependent.

Subsequent legislative Acts changed and modified the standards and criteria for determining eligibility to receive pension, but the distinction between it and public assistance prevailed. Although the maximum incomes may be considered sufficient in some individuals' situations to meet the cost of the basic necessities of living in some regions, they still permit the payment of death and disability pension. Thus, in these instances, the incomes are above the bare subsistence level. In contrast, the test of need or poverty for the ordinary program of public assistance is such that the welfare recipient is given support only up to the subsistence level.

In legislative retrospect, the evolution of the pension program demonstrates clearly that the Nation wants its war veterans and surviving widows and children to be able to live at a level beyond the constant shadow of want, and that the test of need should be above the bare essentials of the subsistence standards used in welfare and public assistance standards.

Of late, consumer and economic reports have been replete with the fact that inflation is taking away the purchasing power of those on fixed incomes by increasing the costs of goods and services. Unlike those who are gainfully employed, the income of those on retirement plans or pensions (with some exceptions) usually does not respond to the increased cost of living or to increased living standards.

With respect to those in retirement, the Social Security system is the only retirement plan for about 85 percent of them. Over the next 25 years the figure may change to 95 percent. In other words, at the present but 15 percent of those in retirement have income from another retirement plan. In his address of April 14, 1966, the Commissioner of Social Security, Robert M. Ball, said:

“Yet improvements in cash benefits in recent years have not quite kept the benefits up to date in terms of purchasing power. The 7 percent increase last year fell slightly short of restoring the 1958 purchasing power of benefits, and the 1958 increase of about 742 percent fell slightly short of restoring the 1954 level. This means that those on the rolls throughout this period have not shared in the rising level of living of the rest of us, and, of course, the benefits were low to begin with, even in terms of the 1954 standard of living."

INCOME LIMITS AND RATES OF DEATH AND DISABILITY PENSION

For the convenience of the Subcommittee in following this part of our testimony, we have attached a comparison of annual incomes and corresponding rates of death and disability pension with those now provided under chapter 15 of title 38, United States Code, and those proposed in HR 3133, the bill sponsored by the Legion.

Section 1 of our bill would substitute a two-step annual income and monthly disability pension scale for the present three-step scale, and section 2 would change the existing three-step pension scale by substituting therefor the twostep annual income and monthly death pension scale as Tables I and II of the attachment.

In the forepart of this testimony, we discussed our concept of the needs test in relation to the pension program and those factors materially affecting the ability of those on fixed income because of retirement, death, or disability, to pay for essential goods and services.

A variety of studies and surveys have been made to determine the dollar value of an adequate budget for those in poverty or in a limited fixed income status. In 1960, the Bureau of Labor Statistics devised a Modest but Adequate Budget based on the average cost of its items in 20 cities—some large and some small. According to this budget, a couple 65 and older would need an annual income of $3010 to live in an average city. Although the BLS did not devise such a budget for a person living alone, other studies or standards indicate that such an individual would need an income of $1540. Considering the fact that the cost of living, based on the Consumers Price Index, has increased 11.6 percent (December 1966) since the study was made by the Bureau of Labor Statistics, it is apparent that many widows and veterans, particularly those with dependents, have an income which places them in a poverty or near-poverty level. For them, a substantial dollar gap exists between their income and the amount needed to meet the cost of the budget devised by BLS.

Perhaps another measure of the adequacy of the rates is to consider them in the light of the trend in consumer costs of goods and services since the monthly pension rates were last increased, effective January 1, 1965, under Public Law 88–664. At that time, the CPI (1957–59) stood at 108.1 and, as of January 1, 1967, the index advanced to 114.7 percent-an increase of 6.6 percent. According to many reports, the predicted and anticipated trend in the Consumer Price Index is 4.0 percent per year.

An amendment of chapter 15 of title 38, United States Code, as proposed by HR 3133, would assure, we believe, that those in the lower income levels would not be adversely affected by small increases in social security, railroad retirement annuities or pensions, civil service annuities, and earnings from small bank deposits and Government bond holdings. Many members of this Subcommittee, we know, have experienced complaints from some of their constituents on the adverse results of some of these increases; that is, the VA pension dollar loss is greater than the increased retirement or income. In addition, it would permit pensioners an income which is consistent, to a degree, with their budget needs before they are removed from the VA pension rolls or reduced to the next lower rate of pension. Another feature is that it would, by increasing the maximum income limits by $600, bring on the VA pension rolls those who are presently excluded by the $1800 and $3000 income limit. The liberal philosophy associated with the needs test for VA purposes and the dollar value of the BLS budget justify, we feel, the increase of the maximum income limits to $2400 for the single veteran, or widow without a child, and $3600 for those with dependents.

ANNUAL INCOME DETERMINATION

Mr. Chairman and Members of the Subcommittee, we seek to further improve the pension program by amending 38 USC 503 to provide for the exclusion of three types of income, and deduction of two types of unusual expenses, in computations of annual income to determine entitlement to pension.

HR 3132 would authorize, in claims for death pension only, the exclusion of $10,000 in the aggregate of all types of insurance death benefits. Under the present provisions of section 503(4) of title 38, United States Code, in determinations of annual income, a widow or child may exclude only payments under policies of United States Government life or National Service life insurance, and payments of servicemen's indemnity. As you know, in some cases all of these may not aggregate in excess of $10,000. In considering this amendment, it should be recognized that many veterans, at time of death, do not have the full amount of available Government life insurance many have dropped their policies. In many instances, the veteran's life insurance program was designed merely to provide his surviving spouse or child with a sum sufficient to take care of expenses associated with his terminal illness and burial. On the basis of VA statistics on the Government life insurance policies held by living veterans, only about 30 per cent of the potential survivors will have the right to exclude payments of insurance from their annual income computations for death pension. Since Government life insurance is a contractual agreement with the Federal Government for which premiums are payable—aside from servicemen's indemnity—these cannot be considered gratuitous payments. Therefore, enlarge ment of this service to permit exclusion of an aggregate total of $10,000 insurance payments would correct what obviously is an inequitable provision of law. It would apply the same income standards in determination of income for death pension. This change would in no way disturb the test of net worth in determinations of a widow's or child's entitlement to pension.

In addition, HR 3132 would amend section 503 (7) to authorize, in claims for death pension, exclusion of additional expenses associated with a veteran's last illness. At present, the language of this section authorizes, in part, a deduction or exclusion from a widow's or child's annual income amounts equal to amounts paid by them for the expenses of his last illness. Veterans Administration regulations on the application of this provision permit only the exclusion of those amounts paid by them on the expenses remaining unpaid at the time of death. This manner of application does not give consideration to the fact that a veteran may be hospitalized for several weeks or months during the terminal illness and that the wife or child is meeting these unusual expenses out of resources available to them. Consequently, at the time of the veteran's death, considerable sums may have been paid on these terminal expenses and the prohibition against their exclusion along with those due at his death may result in a denial of death pension at the time of greatest need because of the depletion of the family resources during this prolonged terminal illness. An amendment of this section in accordance with this provision of this bill would improve the financial situation of many widows and some children.

HR 3132 would add two new subsections to section 503. The first authorizes a veteran, widow, or child to exclude from reports of annual income those amounts paid by them for unsual medical expenses. It is our conviction that the rates of pension and the tests of annual income do not take into consideration other than the usual or average type of medical expenditure. In the modest but Adequate Budget computed by the Bureau of Labor Statistics, allowance is not made for the large medical bills that accompany a hospital stay. Although the medicare provisions of Public Law 89-97 alleviated the burden of medical expenses for those who attain age 65 and others, there is a lack of uniformity throughout the States in the programs under the Kerr-Mills provisions, and under title XIX of this Act. An amendment of the income determination provisions of section 503 of title 38 would permit some to receive pension, or to receive it at a higher rate, at the time they are experiencing unusual medical expenses under a limited or inadequate income.

The second provision of HR 3132 would exclude, from determinations of annual income, payments to patients participating in the Community-HospitalIndustrial Rehabilitation Program (CHIRP), while hospitalized in a Veterans Administration, other Federal, or State, hospital.

The community-hospital-industrial rehabilitation program was designed for the rehabilitation of the mental patient. Working conditions under this program, as well as payments for work done, have proved to be extremely effective in rehabilitating these patients and, while they are not the main objectives of the therapy, the payments serve as a motivating force. This is a medically prescribed program; the control and direction of the patients are vested in a doctor. The money received for their work is not subject to income tax deductions, and their earnings are not subject to a self-employment tax. Yet, the Veterans Administration considers payments received by the patient from work participation in these programs as income for pension purposes. There is some indication that some patients will not participate in the program for the reason that it will affect the monthly pension they are receiving from the Veterans Administration.

Since these payments are a motivating factor to participate in CHIRP, and since this program is so vital in the rehabilitation of mental patients and their eventual return to the community as self-sustaining, useful members, it seems wrong to the American Legion that the payments be considered income.

Information from Veterans Administration hospitals having such a program in being is that most patients remain in it for not more than two months. This is done to avoid creating the atmosphere of sheltered employment.

The final proposed amendment to section 503 would restore the recoupment provision. For many years, by regulations of the Administrator of Veterans Affairs and later under the authority of 38 USC 503, as amended by Public Law 86-211, payments under public or private retirement, annuity, endowment, or similar plans or programs were excluded from determinations of annual income

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