Mr. HUGHES. Two facts are immediately apparent from the data in the table.

First, total disbursements for compensation and pensions will rise for the next several decades, reaching their peak shortly before the turn of the century.

Second, during this period expenditures for these benefits will shift from predominantly service-connected to predominantly nonservice-connected. Both of these developments are occasioned by the same set of circumstances: the increasing age of first, the World War I veteran population, and, later, of the World War II and Korean conflict veteran populations. Under existing laws and regulations participation in non-service-connected pension benefits by veterans and survivors of all wars increases sharply as the age of the veteran population increases, with the maximum participation not reached until sometime after age 65. It is this fact which causes the peak in compensation and pension benefit expenditures to occur between 1985 and 2000.

It should be pointed out that the above tabulation does not reflect the total Veterans' Administration expenditures for any given year. It excludes:

(1) Medical outpatient and inpatient care costs exceeding $800 million a year throughout the period of the forecast, assuming the limitation of inpatient bed capacity in accordance with the current construction program of the Veterans' Administration.

(2) Insurance and indemnity benefits approximating 60 to 80 million dollars per year for the entire period.

(3) Readjustment and rehabilitation benefits now approximating $800 million which will largely disappear after 1965, assuming no change in existing law.

(4) Administration and miscellaneous costs ranging from 100 to 200 million dollars per year for the entire period.

(5) Burial benefits, increasing from $16 million annually to $60 million annually by the end of the century.

Attached, for your consideration, is a more detailed tabulation which breaks down the forecast of compensation and pension expenditures by war, and an additional table indicating the estimated number of beneficiaries.

(The table referred to follows:)

Veterans' Administration expenditures by program or purpose, projected on the basis of assumptions stipulated by the President's Commission on Veterans' Pensions

Veterans' compensation and pension cases by program projected on the basis of assumptions stipulated by the President's Commission on Veterans' Pensions

Mr. HUGHES. That is the end of my prepared statement, Mr.

Chairman.

The CHAIRMAN. Mr. Byrne?

Mr. BYRNE. I have no questions.

The CHAIRMAN. Mr. Long?
Mr. LONG. I have no questions.
The CHAIRMAN. Mr. Christopher?

Mr. CHRISTOPHER. I have no questions.

The CHAIRMAN. The President's budget message said that

Under existing legislation, significant increases in the cost of these direct payments may be anticipated annually until the end of this century, when payments may be twice their present yearly total of nearly $3 billion. This longterm outlook arises chiefly from the very large number of veterans who may become entitled to pension benefits not connected with disabilities arising from their service.

Is my understanding correct that the quoted statement has been challenged as being very excessive?

Mr. HUGHES. It was not my understanding that it was, sir. I have not heard of the challenge.

The CHAIRMAN. Do you know whether the VA agrees with this contention or not?

Mr. HUGHES. I do not believe they disagreed. We have discussed our testimony here with the VA people. It is my under standing that they have not formulated an estimate of their own, but that they do not disagree with the estimate that we have cited here, including the 50 percent figure.

The CHAIRMAN. What you are saying is the same as the budget message?

Mr. HUGHES. Substantially. Actually, as you will notice if you will match figures precisely, it is a little more conservative than the budget message estimate.

The CHAIRMAN. Mr. Bernstein, do you have any idea where I received the impression that the VA disagrees with the estimates in the President's budget message?

Mr. BERNSTEIN. I do not think the VA has acquiesced or disagreed in one way or the other.

The CHAIRMAN. I got the idea that the VA said it was too high. Mr. HUGHES. The last word I had, Mr. Chairman, was when I talked with the Veteran's Administration people when you made your request of us for this estimate. I told them that, if we were to make an estimate, we wished, insofar as possible, to represent an Administration view on this point; and they have informed me that they would not disagree with this figure.

The CHAIRMAN. Are there any questions?

We have a rollcall so we will have to adjourn. Thank you, Mr. Hughes. I believe that will be all. I had hoped to have more members of the committee when you testified. They will talk to you later. The committee will be adjourned until 10 o'clock tomorrow.

(Thereupon, the committee recessed at 3:20 p. m., to reconvene at 10 a. m. on Wednesday, February 29, 1956.)