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further be pointed out that in the 1890's the benefits available to veterans were mostly confined to military pensions, medical treatment of a sort, and some domiciliary care, compared to the wide range of benefits available today, including educational aid and training. So we have a yardstick to measure the present with the past.

Let us examine another phase of the problem of cost. How much are we spending annually on veterans now and on what type of benefits is the money being spent? Are we putting first things first or are we shooting all over the lot with the taxpayers groaning and complaining about handouts to veterans?. Yes, there are some persons who believe that all veterans are receiving pensions and free hospitalization. I am sure we can all agree that veterans who are disabled by reason of service are entitled to first and major consideration when it comes to appropriations for veterans. I strongly suspect there are some who either forget, or selfishly ignore, this premise.

After giving first consideration to the service disabled, what next? Here is where we scatter out all over the landscape. Shall we give the next consideration to aged, destitute, and permanently disabled non-service-connected veterans in the form of pension assistance, hospitalization, and domiciliary care or should we place major emphasis upon educational aid and training for able-bodied veterans regardless of income, age, or previous educational attainments? If we can afford only to spend a limited sum of money on our veterans, where shall the emphasis be placed? Perhaps a few statistics on spending for veterans in recent years will help point up the issue.

ANALYSIS OF SPENDING FOR VETERANS

In a 6-year period, 1947 to 1952, inclusive, acording to the Veterans' Administration, we spent a total of $1512 billion on hospitalization, outpatient care, compensation, and pensions for all veterans and/or their dependents. This includes veterans and dependents of all wars and peacetime service. In the same period of time we spent $1314 billion for educational aid and training under Public Law 346 on World War II veterans. This does not include vocational rehabilitation under Public Law 16 for the service disabled. It may also be revealing to point out that the total cost of all benefits to World War I veterans, excluding hospitalization and outpatient care for which specific costs are not available, but including the World War I bonus and insurance appropriations from the end of World War I to March 31, 1952, amounted to $1614 billion, or only $3 billion more than the cost of educational aid and training for one group of veterans over a 6year period.

The value and desirability of educational aid and training assistance for able-bodied veterans is not questioned and the Veterans of Foreign Wars vigorously pioneered in requesting educational aid and training, particularly for those veterans whose education had actually been interrupted or delayed by reason of entry into the military service. We also believe the Government and the American people have a traditional obligation to render modest assistance to aged and destitute veterans who are unable to take care of themselves and their dependents. The fact that the Government is now providing educational aid to veterans to enable them to earn more and theoretically become more useful citizens should not warrant neglect and intoler

ance for those destitute and sick old veterans who did not receive this advantage.

Inconsistency is developing among taxpayers, professional leaders, and among veterans themselves over the question as to where emphasis on spending for veterans shall be placed. Many of those who strongly advocate educational aid and training, with demands for an even more liberal program, take a dim view and shake their heads over the idea of the Government providing free hospitalization and modest pension assistance to our aged and destitute veterans. Former President Truman may have unwittingly exemplified this inconsistency when he vetoed a bill granting increases in the payment of pensions to blind and helpless veterans amounting to about $9 million per year, on the grounds there should be no discrimination between veterans and nonveterans merely because the veteran wore the uniform of the Armed Forces in time of war. Later, Mr. Truman approved without question a bill granting educational aid and assistance to able-bodied Korean veterans regardless of financial circumstances, age, or previous educational attainments which is estimated by the Veterans' Administration to cost approximately $1 billion per year when the program gets into full swing:

The problem, therefore, of how much money can we afford to spend on veterans and how it shall be expended is pointed up by some of the foregoing remarks. The solution is not to deny the one in favor of the other. Perhaps a reasonable approach to the problem might be to give consideration to charging the cost of educational aid and training to national welfare or to Federal aid to education rather than as a charge against the veteran benefit program.

RECOMMENDATIONS

I have tried to point up the problem of costs and notwithstanding our appreciation of the task that confronts this committee, acting for the Congress, I consider it my duty as the spokesman for the Veterans of Foreign Wars to make certain specific recommendations. Our national legislative director, Omar B. Ketchum, will offer for the record, after I have concluded my statement, a digest of the current legislative program of the Veterans of Foreign Wars. I shall not attempt to discuss our entire program but will mention only a few of the things which we believe this

committee and the Congress should carefully consider in the 83d Congress.

1. An immediate deficiency appropriation of not less than $15 million for the hospitalization, medical treatment, and outpatient care program of the Veterans’ Administration to restore the closed beds and lost services which have developed as a result of inadequate appropriations by the 82d Congress. It should be pointed out that dental treatment has been approved and authorized for thousands of veterans but the treatment cannot be applied because of lack of funds. The longer this treatment is postponed the more involved and costly it will become.

2. Adjust the inequity in compensation payments created by the 82d Congress when that Congress approved legislation granting a 5 percent compensation increase to those veterans rated less than 50 percent disabled while granting a 15 percent compensation increase to those veterans rated 50 percent or more disabled. The amount of compensation payments are determined by the rate of disability and when a cost-of-living increase is granted the increase should be across the board. The gracious chairman of this committee has introduced a bill supported by the Veterans of Foreign Wars, identified as H. R. 2575, which would correct the inequity in compensation payments created by the last Congress and would, at the same time, establish a uniform rate of payments in realistic amounts.

3. Give careful consideration to increasing the present inadequate rates of pensions payable to the aged and permanently and totally disabled veterans of World Wars I and II. Perhaps the time has come to give consideration to a special pension program for the aging veterans of World War I.

4. Give Public Law 550, the Education and Training Act for Korean Veterans, known as the Teague bill, an opportunity to prove its provisions before making any substantial changes. We recognize that some representatives of private institutions of higher learning are complaining that their schools are not receiving a fair share of the enrollment of Korean veterans because of the payment provisions of Public Law 550. We believe the number of Korean veterans presently enrolled in colleges and universities do not constitute a valid test. The VFW supported the principle of direct payments to veterans and permitting veterans to make their own educational contracts. We see no reason at this time to recommend a change.

5. The VFW is traditionally opposed to increasing the present 4 percent interest rate applying to ĜI home and business loans. Our last national encampment again went on record opposing any increase in these interest rates and we strongly recommend to the Congress that where such loans are not available from private lenders at the 4-percent rate, consideration should be given to expanding the direct loan authorization by the Veterans' Administration.

This concludes specific recommendations which I shall make in this statement but I would like to discuss another important problem confronting this committee, the national administration and the Veterans' Administration. I refer to the much-discussed and highly controversial subject of reorganization in the Veterans Administration.

REORGANIZATION OF VETERANS' ADMINISTRATION

The Veterans of Foreign Wars has opposed and no doubt will continue to oppose certain aspects of reorganization in the Veterans' Administration as recommended by the Hoover Commission and its task forces. We are unalterably opposed to the creation of a United Medical Administration wherein hospitalization and medical treatment for veterans would be transferred from the Veterans Administration. We know from past experience that such a plan would result in interminable delays in hospitalization, medical treatment, outpatient care, and examinations for our veterans.

I am sure this committee has knowledge of the fact that some 32 years ago hospitalization, medical treatment, outpatient care, and examinations for compensation were handled outside of the old Veterans' Bureau and resulted in such endless confusion and delays that President Hoover, by Executive order, consolidated all such activities dealing specifically with veterans under a Veterans' Administration. It is almost unbelievable that more than 30 years later a commission headed by former President Hoover would recommend that we go back to the same intolerable conditions which existed when he issued the Executive order.

The Veterans of Foreign.Wars shall continue to insist that the Veterans' Administration be retained as a single agency dealing specifically with problems affecting veterans and/or dependents in their relations with the Federal Government. This does not mean that the Veterans of Foreign Wars has opposed, or is opposing in general, all of the recommendations of the Hoover Commission. We have expressed no opposition to any recommendations of the Hoover Commission except some of those which deal with veteran preference and the transfer of authority and activities from the Veterans' Administration to some other agency of the Federal Government. We doubt the wisdom of transferring the veterans' home and business loan privileges from the Veterans' Administration to the Federal Housing Administration and we are apprehensive that the creation of a separate insurance corporation would result in increased costs without increased efficiency.

Our national staff has carefully studied the highly publicized BoozAllen-Hamilton report on a survey and analysis of the Veterans' Administration. There is some question in the minds of our staff members as to the value of this survey. We are of the opinion that the advisory staff to the Administrator of Veterans Affairs was available, ready and competent to prepare a workable reorganization at a savings of some $600,000—the cost of the Booz-Allen-Hamilton report—if they had been called upon to make such a recommendation. We are gratified, however, that the Administrator of Veterans Affairs was not persuaded to adopt the complete findings and recommendation of the report.

Our national staff has also made a careful study of a proposed reorganization outlined by the Administrator of Veterans Affairs which was based, to some extent, on the Booz-Allen-Hamilton report. In view of the fact that the Administrator's reorganization plan is the only specific proposal to change the existing VA organization structure, which, no doubt, is in need of some changes, we are willing to go along with the proposal but with certain reservations. When the Administrator's reorganization plan was first proposed our reaction was somewhat unfavorable and in a letter to former President Truman we suggested that the reorganization be deferred until after January 20, 1953. This would give President Eisenhower and his advisers an opportunity to decide changes in policy and future operation. In suggesting that the Administrator's reorganization plan be deferred we took the liberty of pointing out some of our objections.

We pointed out that the Administrator's proposed reorganization plan would, in effect, create duplication of services, substantially increase the number of Assistant Administrators, or persons of equal rank and would move farther away from a functional type of administration in the Veterans' Administration. Specifically, the plan would create 2 supply services, 3 engineering services, 4 budget and finance offices, and 4 personnel offices. It is difficult to believe such duplication will actually result in either increased efficiency or economy, It seems to the Veterans of Foreign Wars that a return to a simplified functional operation of the Veterans' Administration which existed for several years prior to 1945, with 1 or 2 changes, would result in a more simplified operation with increased efficiency and substantial economy in administrative costs.

Under the simplified functional type of operation which existed in the Veterans' Administration prior to 1945 there was an Administrator, an Administrative Assistant or Deputy Administrator, three Assistant Administrators, and a Solicitor. All functions of the Veterans' Administration were correlated with, or under the specific jurisdiction, of those officers. The principal change which we would recommend in this simplified system would be to create a fourth Assistant Administrator, or Director of Medicine and Surgery, under whom the hospitals, medical treatment, and domiciliary homes would be operated. We believe this system operated efficiently and at a minimum of administrative costs. Any criticism directed at the Veterans' Administration following our advent into World War II was not because of the simplified or functional type organization but rather because the Veterans' Administration was given no priority or standing among defense agencies in the matter of manpower, supplies, or construction.

The Veterans' Administration during the early part of World War II helplessly watched their manpower, doctors, nurses, technicians, and supplies being drained away without any priority rating or being recognized as a critical agency. They could not retain or requisition personnel, supplies, and material necessary to maintain the existing Ioad and to absorb the increasing demand for services, hospitalization, and medical treatment. A hue and cry went up that the Veterans' Administration was an archaic institution which was furnishing thirdrate medicine and services to first-rate men. The subsequent VA reorganization created a superstructure of 13 branch offices which proved to be expensive and unwieldly and the Veterans of Foreign Wars protested both to the Veterans Administration and to the Congress on this topheavy setup. The Veterans of Foreign Wars, always interested in economical operation of the Veterans Administration consistent with efficient services to our disabled veterans, continued to point out the excessive cost and unworkability of the branch offices. Nothing was done until a subcommittee of this House Committee on Veterans' Affairs made a detailed study of the branch office setup and submitted a report specifically recommending that branch offices be abolished with the exception of the insurance activity.

The Administrator of Veterans Affairs in 1949 abolished the topheavy, unworkable branch offices with the exception of insurance activities. In abolishing the branch offices the Administrator pointed out the action would save the taxpayers approximately $10 million per year. The VFW believes that if its recommendations had been initially followed the savings would have been considerably more than $10 million per year. This is water over the dam but we mention it to illustrate the fact that the Veterans of Foreign Wars is constantly alert to point out excessive administrative costs to obtain maximum utilization of every dollar that is appropriated for our veterans and/or their dependents.

In pointing out what we consider a duplication of effort it might be significant to relate that the Administrator, himself, used this same argument in a letter dated April 18, 1950, to Chairman John E. Rankin, of the House Committee on Veterans Affairs, with respect to a proposal to set up a separate insurance corporation within the

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