crease in the cost of living, particularly the rampant inflation of the last 3 years. The fact that inflation is today so evident should render it similarly evident that the current $47 rate is simply inadequate. These circumstances lead me to conclude that the burden of proof should legitimately rest with those who oppose S. 1564. Opponents of S. 1564 should be required to factually demonstrate in their reports that inflation has not made the current $47 rate inadequate. Both Mr. Rommel's and Mr. Johnson's "reports" certainly fall nowhere near satisfying this reasonable burden of proof.

Second, Mr. Johnson estimates that S. 1564, if enacted, would cost an additional $34 million during the first year of its operation, eventually rising to an additional cost of $41 million during the fifth year. While $34 million may seem large when viewed alone, it is not at all unreasonable when viewed in context. The full budgetary cost of the Vietnam War from fiscal year 1966 through fiscal year 1970 was $104.3 billion. If the estimate for fiscal year 1971 is included, total cost would be about $120 billion. The 6-year total of $120 billion averages $20 billion per year or almost $55 million per day. (See Impact of the Vietnam War, Senate Foreign Relations Committee, 92d Congress, 1st Session, page 2, June 30, 1971.) In other words, the average daily cost ($55 million) of the Vietnam War is considerably more than the additional yearly cost ($34 million) of S. 1564. After spending $120 billion to transport and maintain our soldiers at war in Vietnam, it seems rather strange to begrudge our injured veterans a mere $34 million per year when they finally return home.

Third, and quite apart from the above issues, neither Mr. Rommel nor Mr. Johnson ever confronts the fundamental problems which I identified when introducing S. 1564 on April 19, 1971: "While awards for multiple amputations have been increased, the award for a single injury has not risen since 1952. In fact, the rise since 1946, when this program was initiated, has been only $5." Hence, although increases in basic compensation rates may have benefited those veterans with multiple amputations, the lack of increases in supplemental benefits has continued to harm those veterans with single injuries. Finally, single injuries may often be more serious in nature than lesser multiple injuries.

Mr. Chairman, in conclusion, and on the basis of the foregoing, I strongly urge the committee to seriously consider S. 1564 before rejecting it merely upon the unsupported recommendations of the above and any other similarly unsubstantiated and untimely reports. With thousands of injured young men returning from Indochina and qualifying for the compensations program, an increase in the current rate from $47 to $80 is the least that we should do for our injured veterans. I hope that this committee will soon take expeditious action on this long overdue legislation. Thank you.

Senator TALMADGE. Thank you, Senator Inouye. We are honored today to have as our next witness, Mr. Olney B. Owen, Chief Benefits Director, Veterans' Administration. He is accompanied by several of his associates.

You may proceed as you see fit, Mr. Owen. If you desire, your entire statement will be inserted in the record and you may summarize it as you see fit, sir.

STATEMENT OF OLNEY B. OWEN, CHIEF BENEFITS DIRECTOR, VETERANS' ADMINISTRATION, ACCOMPANIED BY J. C. PECKARSKY, DEPUTY CHIEF BENEFITS DIRECTOR; J. T. TAAFFE, JR., DIRECTOR, COMPENSATION, PENSION, AND EDUCATION SERVICE; LOUIS A. TOWNSEND, DEPUTY DIRECTOR OF POLICY; FRANK B. WILLIAMS, DEPUTY DIRECTOR OF PROGRAM ADMINISTRATION; ROBERT J. DEWEY, ASSISTANT DEPUTY DIRECTOR OF POLICY, PLANNING, AND BUDGETING; JOHN E. KERBY, ASSISTANT GENERAL COUNSEL; AND HOWARD BERNSTEIN, ASSISTANT GENERAL COUNSEL, VETERANS' ADMINISTRATION

Mr. OWEN. Thank you, Mr. Chairman. If you have no objection, I will read the statement.

Before proceeding, I would like to introduce my associates here with me. On the extreme right, John Kerby, Assistant General Counsel. Next to me is Mr. Howard Bernstein, also an Assistant General Counsel. On my left Mr. Charles Peckarsky, Deputy Chief Benefits Director and Mr. James Taaffe, Jr., Director, Compensation, Pension and Education Service.

Senator TALMADGE. We are delighted to have you gentlemen.

Mr. OWEN. Mr. Chairman and members of the subcommittee. I am pleased to appear before you today to present the views of the Veterans' Administration on four veterans' benefit proposals now being considered by the subcommittee.

Three of the bills-S. 1564, S. 3338 and S. 3344-are concerned with increasing service-connected disability compensation rates for veterans. One of those bills, S. 3338, contains an additional proposal to provide clothing allowance for certain veterans who wear prosthetic appliances. The fourth measure, S. 3074, is concerned with remission of forfeitures of VA benefits.

DISABILITY COMPENSATION RATES

As you know, the basic purpose of the disability compensation program, throughout its history, has been to provide relief for the impaired earning capacity of veterans disabled as the result of their military service. The amount payable varies according to the degree of disability which, in turn, is required by the law to represent, to the extent practicable, the average impairment in earning capacity resulting from such disability or combination of disabilities in civil occupations. Additional compensation for dependents is payable to any veteran entitled to basic compensation for disability rated at not less than 50 percent.

Since the disability compensation program was first established, the Congress has periodically reviewed the rates of compensation provided as to their adequacy, and has made adjustments when such were deemed necessary. The rates of compensation were last increased by Public Law 91-376, effective July 1, 1970. From that date through January 1972, the cost of living, as reflected by the Consumer Price Index, has risen about 6 percent.

You will recollect that in our report of November 8, 1971, to the committee chairman on S. 395, 92d Congress, we recommended cost

of-living increases in veterans' service-connected disability compensation as well as in service-connected death benefits for their survivors. This position was also asserted in my statement before this subcommittee on November 8, 1971. At that time, we also favored cost-of-living increases in nonservice-connected disability and death pension

benefits.

Rate increases for survivors of veterans who die of service-connected causes were subsequently enacted, as Public Law 92-197, effective January 1, 1972. Increases in the rates of nonservice-connected disability and death pension were accomplished by a companion measure, Public Law 92-198, also effective January 1, 1972. We believe it only reasonable that similar increases be provided in the rates of veterans' service-connected disability compensation. Accordingly, we renewed our recommendation for such increases on March 8, 1972, by submitting to the President of the Senate a draft bill, which is now pending before you as S. 3344. That measure proposes disability compensation rate increases approximating 6 percent commensurate with the previously mentioned cost-of-living increase.

We estimate that the cost of S. 3344, if enacted, would approximate $170 million the first year, increasing gradually to $184 million during the 5th year.

The other major compensation bill before the subcommittee is S. 3338. Subsection (a) of the first section, and section 2, of that measure would increase disability compensation rates payable to veterans by approximately 10 percent.

We estimate that the first-year cost of the compensation increases proposed by S. 3338 would approximate $260 million, increasing gradually to $264.4 million during the fifth year.

The rates proposed in S. 3344 are more consistent than those in S. 3338 with the cost-of-living increase since the compensation rates were last increased. Accordingly, we do not favor sections 1 and 2 of S. 3338, and urge, instead, favorable consideration of S. 3344.

The third bill on the subcommittee agenda, S. 1564, proposes to increase to $80 the existing $47 monthly rate of disability compensation provided in 38 U.S.C. 314 (k) for certain anatomical and other losses or losses of use. This rate is payable in addition to the basic percentage and statutory rates of disability compensation.

It is estimated that the first-year cost of the bill would approximate $34,324,000, increasing gradually to $40,685,000 during the fifth year. The $47 rate provided by section 314 (k) was last increased by Public Law 427, 82d Congress, August 1, 1952. Since 1952, the rates of disability compensation have been generally increased on six occasions, but the $47 rate has been maintained without change. In reporting the rate increase bill which was ultimately enacted in 1962, the Senate Committee on Finance explained the absence of an increase of this rate as follows:

Inasmuch as all veterans who are entitled to receive the $47 statutory rate will be benefited by the bill by an increase in the basic rate, the committee felt fully justified in taking the action indicated.

In reporting on the measures which increased the rates in 1968 and 1970, the House Committee on Veterans' Affairs pointed out that the $47 rate, which was not increased, is paid in addition to basic rates of compensation, which were increased. The Senate Committee on

Finance commented identically regarding the 1962 rate increases, and did not propose an increase in the $47 rate in connection with the 1968 and 1970 rate increase. We believe that this history indicates a continued feeling on the part of Congress that the rates being paid veterans covered by section 314(k) are adequate. The Veterans' Administration fully concurs with that conclusion and, accordingly, recommends against favorable consideration of S. 1564.

CLOTHING ALLOWANCE

Reverting now to S. 3338, section 3 of that bill would direct the payment of a special clothing allowance of $150 per year to each veteran who wears a prosthetic appliance because of a disability which is compensable as service-connected, which the Administrator determines tends to wear out or tear his clothing.

The group of severely disabled veterans contemplated by this bill is now given special consideration through payment of compensation at higher rates than the amounts authorized for their degree of disability as determined under the schedule for rating disabilities. These higher rates of compensation give extra recognition to the fact that, in addition to the veteran's impairment of earning capacity, he faces a variety of special problems because of the crippling nature of his disability, which in many instances requires the wearing of appliances. Existing law authorizes the Administrator to furnish "special clothing made necessary by the wearing of prosthetic appliances" to veterans entitled to medical services from the Veterans' Administration. This provision does not authorize the furnishing or replacement of conventional clothing by reason of extraordinary wear and tear occasioned by the use of a prosthetic appliance.

Nevertheless, the Veterans' Administration has long recognized that the use of certain types of prosthetic appliances unquestionably results in unusual wear and tear on ordinary clothing of the wearer. To alleviate this situation, and consistent with the authority to furnish special clothing, Veterans' Administration field stations have been authorized since April 1948 to furnish repairs, reweaving and special protective linings to those areas of clothing where damage or excessive wear is, or could be, the result of wearing a prosthetic appliance. While we have a most sympathetic concern with the problems of persons disabled from service-connected causes to the extent that prosthetic appliances are necessary, we are unable to regard the proposed special clothing allowance as a justifiable addition to the special compensation benefits and other services already available to this group. We, therefore, cannot recommend favorable consideration of this section of the bill. The estimated first-year cost of this section would be approximately $6.6 million, increasing gradually to $7.8 million during the fifth year.

REMISSION OF FORFEITURES

S. 3074 is identical to the administration proposal which was forwarded to the President of the Senate with our letter of August 2, 1971. The bill would authorize the Administrator to review certain forfeiture actions imposed prior to September 2, 1959, which were based upon submission of fraudulent evidence in connection with

gratuitous veteran's benefits; and to grant remission of the forfeitures if they would not have been imposed under the law in effect after September 1959. From 1921 until 1959, the Veterans' Administration had authority to administratively forfeit the rights of veterans and dependents to gratuitous VA benefits for the submission of a false or fraudulent statement in connection therewith. Those provisions of law now appear in section 3503 (a) and (c) of title 38, United States Code. This forfeiture for fraud was in addition to the penalties imposed by Federal criminal statutes. In 1959, the law was amended and Congress discontinued administrative forfeiture for fraud in domestic cases where the person who submitted the fraudulent statement is subject to criminal prosecution for such act. The change was predicated upon the conclusion that criminal conviction should constitute sufficient penalty.

There were approximately 4,100 forfeitures for fraud prior to 1959. We have become aware of a number of cases in which the forfeiture penalty, in retrospect, is obviously too severe. Since the 1959 remedial act is specifically limited to situations arising thereafter, authority is sought under this proposal to review those cases and grant remission of those forfeitures effected prior to 1959 which would not be forfeited under the 1959 law. This would, in effect, extend the philosophy of the 1959 enactment to cover similar cases which arose prior to that amendment. We urge your favorable consideration of this bill. Since we do not know the extent of benefits to which individuals would be entitled after remission of their forfeiture we are unable to estimate the cost of this measure.

In summary, we oppose enactment of S. 3338 and S. 1564; but favor enactment of S. 3344 and S. 3074.

Gentlemen, this concludes our statement. My associates and I will be pleased to respond to any questions you may have.

Senator TALMADGE. Thank you very much, Mr. Owen. We often hear reports that because of the extensive use of booby traps in Vietnam, plus superior medical care which saves more lives, we have a larger number of disabled veterans returning to the United States today.

Would you please tell the committee what percentage of all Vietnam veterans have rated disabilities and how this compares with similar figures for disabled veterans immediately following World War II and the Korean War. Also, when you submit this information to the committee, would you break it down by the degree of impairment? You may need additional time to get that information.

Mr. OWEN. We will be pleased to do this, Mr. Chairman. We have the information available but it is in the form of rather extensive tables.

Senator TALMADGE. Please submit it in detail.

(The Veterans' Administration subsequently furnished the following information :)