Mr. DORN. Thank you, Charlie. We welcome you as representatives of our organization. When I speak of the American Legion I say our national organization because I think all members of the subcommittee this morning are members of the American Legion.

I regretted this incident at the national convention in Atlanta involving law and order. Incidentally, a lot of people don't know this, but the American Legion was planned on and its preamble has reference to law and order, and in 1919 in St. Louis they had the very same thing going on on the platform. They had to forcibly eject demonstrators from the platform before the meeting could proceed.

I am glad to have you here this morning.

Mr. MATTINGLY. Thank you for your kind remarks, Mr. Chairman.

STATEMENT OF EDWARD H. GOLEMBIESKI, DIRECTOR, NATIONAL REHABILITATION COMMISSION, THE AMERICAN LEGION

Mr. GOLEMBIESKI. Mr. Chairman, I appreciate this information on what occurred in St. Louis. I was not aware of that.

Mr. Chairman and members of the subcommittee, we appreciate the opportunity given the American Legion to appear before this subcommittee to present our views on the variety of measures under consideration to improve the program of dependency and indemnity compensation for widows, children, and dependent parents.

In general, our statement is directed to those areas in which we have specific mandates to seek improvement.

As a career incentive, and to provide for equitable treatment of survivors, House of Representatives Resolution 35 of the 82d Congress authorized a full and complete investigation and study of the benefits provided under Federal law for the survivors of deceased members and former members of the Armed Forces where death is related to such service, and authorized the committee, on the basis of such investigation and study, to make such recommendations as it deemed advisable, and to prepare such legislation as it considered appropriate to carry out such recommendations.

These investigations and studies conducted in 1955 resulted in the passage of H.R. 7089, and approval on August 1, 1956 of Public Law 81-881, an act cited as the Servicemen's and Veterans' Survivor Benefits Act.

One of the act's complex and interlocking provisions established, in lieu of fixed death compensation rates unrelated to rank or grade, a program of dependency and indemnity compensation for widows based on a formula related to rank or grade; that is, $112 plus 12 percent of basic pay received by a serviceman whose rank and length of service are the same as her deceased spouse's.

Under this act, specific rates of dependency and indemnity compensation were made payable to children of a serviceman or veteran where there was no widow entitled to dependency and indemnity compensation, as well as supplemental rates of DIC to surviving children of servicemen and veterans under varying circumstances of helplessness, and because of dependency while attending a course of instruction at an educational institution approved by the Administrator of Veterans' Affairs in accordance with the requirement of 38 U.S.C. 104.

In addition, this act departed from the all-or-nothing death compensation criteria for dependent parents by establishing a five-step table of annual income limits and monthly payments of dependency and indemnity compensation.

In devising the formula relating the widow's monthly DIC rate to her spouse's basic military pay, Congress intended that the monthly rates would rise as the servicemen's basic pay was increased, to provide incentives to make the Armed Forces a career, and to meet the rising costs of living.

Unfortunately, this has not been the case. Since enactment of Public Law 84-881, eight pay increases have been granted the Armed Forces. On analysis of these increases, although granted in the main to meet the rising costs of living, we find that the percentages of increase in dependency and indemnity compensation have not been uniform. In addition, under the base rate plus 12 percent of basic pay formula, the widow's rate is increased by only 12 percent of the full cost-of-living increase granted members of the Armed Forces for each $8.33 increase in basic pay, the widow's dependency and indemnity compensation goes up $1.

In 1963, in an effort to correct this disparity in DIC rates for widows, the Congress enacted Public Law 88-132. This act revised the formula to set the base rate at $120 in lieu of the $112 rate. It was explained that this offset the cost-of-living increase which had occurred since 1956. Increases in the rates payable to children and dependent parents were authorized by Public Law 88-21, approved May 15, 1963, and Public Law 89-730, effective January 1, 1967.

Although enactment of Public Law 90-275 restructured the table of annual income and rates, and created additional eligible parents. by increasing the income ceilings, the maximum dependency and indemnity compensation rates were not increased.

Mr. Chairman, all the economic indicators establish beyond a doubt that increases must be made in rates of dependency and indemnity compensation for widows and children if this benefit is to help them meet their economic needs. From 1956 through May 1969, the Consumer Price Index (1957-59 index) advanced from 98 to 126.8. In the Monthly Labor Review, April 1969, based on Bureau of Labor Statistics, cost estimates for the spring of 1967 of living expenses of a single person under 35 years of age were $1,700 for a lower budget, $2,530 for a moderate budget, and $3,490 for a higher budget. Since the spring of 1967 the Consumer Price Index has advanced about 10 percent.

At this point, the rest of our statement is directed to those specific areas of dependency and indemnity compensation that the American Legion believes require the attention of the Congress.

INCREASED MONTHLY PAYMENTS OF DIC FOR WIDOWS

Earlier, we recited the fact that the DIC formula for computing monthly payments to widows was not, particularly in the lower enlisted men's grades, keeping pace with military pay cost-of-living increases.

Aside from this, the monthly payment for those widows of men in the lower ratings is much below cost estimates of living expenses

of a single person. As an illustration, the dependency and indemnity compensation payment to a widow of an E-1 with 2 years service is $140 monthly, or just under the amount estimated by the Bureau of Labor Statistics as needed by a single person for a lower budget. We believe that the monthly DIC payment should be such that it would approach the needs of a moderate budget. In view of this, we support the provisions of section 1 of H.R. 12410 which would provide that dependency and indemnity compensation shall be paid to a widow at a monthly rate equal to $130 plus 12 percent of her deceased spouse's basic pay but not less than $165.

Perhaps a more realistic approach to the needs of these widows would be to discard the formula approach, create a table of survivor annuities for each grade and rank, and provide that these annuities would respond to the Consumer Price Index.

At this time, Mr. Chairman, we would direct your attention to the unrealistic approach made by the dependency and indemnity compensation provisions of law to the widow with one or more children. We say unrealistic because it appears to assume that a widow with a child or children has the same budget needs as a widow alone. In essence, section 411 of title 38, United States Code, provides that if there is a widow and two or more children below the age of 18, and the total of the monthly benefits payable to her under 38 United States Code 412 or certain provisions of the Railroad Retirement or Social Security Acts is less than the amount that would be payable for an average monthly wage of $160, then the DIC paid monthly to the widow shall be increased by $28 for each child in excess of one, but the total of increases shall not exceed the differences between the amounts referred to above. Not only is this approach cumbersome, but it also ignores the needs of a widow with one child, or the widow in the situation that does not permit payment of $28 for each child in excess of one.

A review of the legislative history of the Servicemen's and Veterans' Survivor Benefits Act will disclose that The American Legion accepted with reluctance the provision of the act which failed to provide a specific rate of dependency and indemnity compensation to the widow for each child of the veteran. Although unsuccessfully, from time to time we have petitioned the Congress to amend the DIC provisions so as to provide that a specific rate is payable to the widow for each child of the veteran in her custody.

We recommend a revision of section 411 to provide that the widow's monthly payments of dependency and indemnity compensation be increased by $30 for each child below age 18 of a deceased veteran. Such an amendment would nullify the need for section 412(b) which provides for payment of an amount of dependency and indemnity compensation equal to pension in those instances where the amount of dependency and indemnity compensation is less than the amount of pension which would be payable.

The bill which would accomplish our recommendation is H.R. 4617.

INCREASED DEPENDENCY AND INDEMNITY COMPENSATION TO CHILDREN

Section 413 of title 38, United States Code, provides for specific monthly payments of dependency and indemnity compensation_to children of the veteran whenever there is no widow entitled to DIC.

And section 414 of this title provides for supplemental DIC payments to those children who have attained age 18.

As the subcommittee knows, the monthly dependency and indemnity compensation payments to these children were last increased effective January 1, 1967. Since then, the cost of living has advanced by approximately 10 percent.

Section 2 of H.R. 12410 would increase these monthly payments by 10 percent. We urge the enactment of its provisions.

INCREASED DEPENDENCY AND INDEMNITY COMPENSATION FOR WIDOWS IN NEED OF AID AND ATTENDANCE

Traditionally, the Federal Government has been more generous in providing benefits to the survivors of those whose death is causally related to their service in the Armed Forces. Public Law 90-77 for the first time authorized an additional rate of $50 to widows entitled to death pension, a nonservice-connected benefit. In view of the distinction between eligibility for dependency and indemnity compensation and death pension, we recommend, Mr. Chairman, that the increased rate for widows entitled to dependency and indemnity compensation who are in need of regular aid and attendance be set at $75.

H.R. 3301 would accomplish the purpose of our mandate.

REPEAL OF RESTRICTION ON DIC PAYMENT TO SURVIVORS OF THOSE HAVING IN EFFECT AT TIME OF DEATH A WAIVER OF PAYMENT OF USGLI AND NSLI PREMIUMS

Mr. Chairman, I respectfully direct your attention to the inequitable restrictions of subsection (a) of section 417 of title 38, United States Code. This subsection states that no dependency and indemnity compensation shall be paid to the widow, children, or parents of any veteran dying after April 30, 1957, having in effect at time of death a policy of U.S. Government life insurance or national service life insurance under section 724 of this title, unless waiver of premium on such policy was granted. Where dependency and indemnity compensation is not payable by reason of this provision, that subsection provides that death compensation may be paid. Under section 321, the rate of death compensation to a widow on a wartime service connection is $87, and 80 percent of this amount where death is determined to be due to peacetime service. This inequity is compounded by the fact that the monthly payment of death compensation was last increased by the act of August 28, 1954. Because of the hardship imposed on the survivors of those servicemen who chose to retain the waiver of premiums on their Government life insurance, it is urged that subsection (a) of section 417 of title 38, United States Code, be repealed. H.R. 4613 would accomplish the purpose of our mandate.

STATUTORY PRESUMPTION OF DEATH FOR DEATH COMPENSATION OR DIC

Under chapters 11 and 13, death compensation or dependency and indemnity compensation is payable to the widow, child, or parent because of death from service-connected disease or disability.

Under current regulation, there is provision for determining entitlement to dependency and indemnity compensation where it is estab

lished that the service-connected disability materially or substantially contributed to the cause of death.

Disability compensation authorized under 38 U.S.C. 314(a) to (j) (10 to 100 percent) is based on ratings of reduction in earning capacity from specific injuries or combination of injuries. As far as practicable, these ratings shall be based upon the average impairments of earning capacity resulting from such injuries in civil occupations.

No consideration is given in the Veterans' Administration schedule for rating disabilities to such factors as reduced life expectancy, loss of income to the family unit, loss of insurability, et cetera.

In view of these factors, and because of the fact that it is difficult. to determine whether a total disability of long standing did or did not materially contribute to death from other causes, we urge the enactment of H.R. 13166, a bill to provide a statutory presumption of service-connected death of any veteran who has been rated totally disabled by reason of service-connected disability for 20 or more years.

TO PROVIDE THAT AMOUNTS INHERITED FROM BANK ACCOUNTS JOINTLY OR SEPARATELY OWNED SHALL NOT COUNT AS INCOME IN PARENTS DIC ANNUAL INCOME DETERMINATIONS

At present, section 415 of title 38 provides that in determinations of annual income for dependent parents' dependency and indemnity compensation, all payments of any kind from any source shall be included except those specifically exempted.

A specific exemption is profit realized from the disposition of real and personal property other than in the course of business, notwithstanding that these properties may be separately or jointly owned. When inherited, they do not become income until they are sold and a profit is realized from the transaction.

From the standpoint of income, there is little if any distinction between real and personal property and ready assets in the form of inherited bank accounts. This distinction of treatment between real and personal property and bank accounts, jointly or separately owned, is discriminatory against those whose only inheritance is money in a bank account. This distinction in treatment creates a hardship in the year of death-a period for many surviving spouses in which immediate financial assistance is needed.

Our mandate would be accomplished by the enactment of H.R. 3302. In conclusion, we appreciate the subcommittee's consideration of these bills, notwithstanding the fact that there is a need to curtail Federal Government spending. In the face of rising costs, the needs of these survivors cannot be ignored. We thank you for your thoughtful approach to their economic needs.

And, Mr. Chairman, I would ask that the six resolutions covering our position be made a part of our statement.

Mr. DORN. Without objection they will be included in the record at this point.

(The resolutions follow:)

RESOLUTIONS ADOPTED, FIFTIETH ANNUAL NATIONAL CONVENTION OF THE AMERICAN LEGION, NEW ORLEANS, LOUISIANA, SEPTEMBER 10, 11, 12, 1968 Resolution: No. 248 (Ohio).

Committee: Rehabilitation.

Subject: Sponsor and support legislation to increase a widow's rate of dependency and indemnity compensation by $30 for each child.