by almost $48 billion whereas H.R. 7650 would increase it by still another $10 billion. Thus your choice of H.R. 7650 over H.R. 6432 would mean a diversion of $58 billion that might otherwise be used for more urgent programs, general tax relief, and/or a substantial reduction in the national debt.

We should also like to point out that all of the $10 billion additional net cost of H.R. 7650 would result from putting the widows and surviving children of veterans of World War II and the Korean conflict on equal terms with the widows and children of World War I veterans in determining eligibility for pensions. While on the face of things the rules of justice and fair play would seem to demand such equality of treatment, we do wish to remind your committee that compared with the veterans of World War I, the veterans of World War II and the Korean conflict have already been the beneficiaries of a tremendous amount of Government aid. Under these circumstances, we submit that the need for equalizing the treatment of their widows and children for pension purposes is based on a concept of equity that is more apparent than real.

We could spell out additional reasons for believing that H.R. 6432 is superrior to H.R. 7650. However, we could add nothing of substance to the views set forth in the statement made to your committee the other day by Maurice H. Stans, Director of the Bureau of the Budget. Accordingly, in order not to burden the record unduly, we simply wish to express our complete concurrence in those views.

Having thus indicated our support of H.R. 6432, we should now like to recom. mend several amendments to H.R. 7650 in the event that your committee decides to report out that particular measure.

First of all, we note that H.R. 7650 would increase the maximum annual income limitations from $1,400 to $1,800 in the case of single veterans, widows, and dependent children, and from $2,700 to $3,000 in the case of veterans or widows with dependents. Keeping in mind that the sole justification and purpose of this type of legislation is to help the really needy among veterans and their survivors, we see absolutely no reason to increase these limitations. To do so would only result in adding to the pension rolls a large number of people whose total income in many cases would be substantially more than the income received by taxpaying citizens.

Moreover, the proposed increases in maximum income limitations, together with the proposed new system of graduated income limitations, would create numerous anomalies among the pensioners themselves. Let us see, for example, how the total annual income of single veterans age 65 and over would be affected under H.R. 7650, as compared with existing law.

In the case of married veterans age 65 or over, the results would be as follows:

From the above, it is obvious that those veterans least in need would be the principal beneficiaries of H.R. 7650.

Second, the bill provides that in computing the annual income limitations, there shall be excluded a number of items such as payments under policies of U.S. Government Life Insurance and National Service Life Insurance; payments under public or private retirement, annuity, endowment, or similar plans or programs equal to the veteran's contributions thereto; etc. Exclusion of income from sources such as these would result in many individuals of substantial means continuing to qualify for pension payments. Again keeping in mind that the pension program should be designed to help only those in real need, we recommend that all income received by a veteran or his widow or children, other than donations from public or private relief or welfare organizations, be made subject to the income limitations of the law.

Third, we think that H.R. 7650 takes a step in the right direction by providing that under proposed new section 521(e) of title 38, United States Code, a portion of the income of a veteran's wife may be treated as income to the veteran himself. However, the proposed new section contains some questionable "hedging" language to the effect that the wife's income will not be counted unless "reasonably available to or for the veteran" or if "in the judgment of the Administrator to do so would work a hardship upon the veteran." Furthermore, there would be excluded the greater of $1,200 or 50 percent of the wife's income, even though such income was entirely unearned. This might lead many veterans to transfer income-producing assets to their wives in order to get around the income limitations of the law.

Therefore, we recommend that proposed new section 521 (e) (1) be amended to read substantially as follows:

"(e) For the purposes of this section

"(1) in determining annual income, where a veteran is living with his spouse, all income of the spouse, except $1,200 of her earned income or 50 per centum of such earned income, whichever is the greater, shall be considered as the income of the veteran;"

Fourth, H.R. 7650 also takes another step in the right direction by providing in proposed new section 522 of title 38, United States Code, for the denial or discontinuance of a pension "when the corpus of the veteran's estate is such that under all the circumstances, including consideration of the veteran's income, it is reasonable that some part of the corpus be consumed for the veteran's maintenance." However, this section should also provide for consideration of the veterans wife's estate in this type of situation for what we think are obvious

reasons.

Finally, H.R. 7650 would provide that under proposed new section 542 (c) of title 38, United States Code, the child of a deceased veteran would be disqualified from receiving a pension only if he had annual unearned income of more than $1,800. We see no reason why this income limitation should not be based on both earned and unearned income.

Notwithstanding the above recommendations regarding the amendment of H.R. 7650, we wish to make it absolutely clear that we support the provisions of H.R. 6432. My association has enthusiastically applauded the growing recognition by Congress and the administration of the increasingly devastating threat that inflation poses to the Nation's economy and the need for very sober reflection and restraint in considering legislative proposals that would tend to increase the national debt or jeopardize the achievement of a balanced budget. As an association we have long endorsed all programs of economy in Government, and we are even now conducting an extremely active program in opposition to further inflation. We see in H.R. 6432 a measure that would not only make adequate provision for needy veterans and their survivors but also-and equally important-represent a great advance in the direction of sound economic housekeeping for the Nation as a whole.

Respectfully submitted.

THOMAS R. BUCHANAN, Chairman, Committee on Affairs of Veterans and Servicemen.

SENATE FINANCE COMMITTEE,
U.S. Senate, Washington, D.C.

YAUN MANUFACTURING CO., INC.,
Baton, Rouge, La., August 4, 1959.

(Attention: Senator Harry F. Byrd, Chairman).

GENTLEMEN: We noted in a recent publication that the Senate Finance Committee is presently studying a House-passed bill (H.R. 7650) which, if approved, will cost the American taxpayers approximately $95 billion more, over the next 40 years, than the present veteran pension payments are now costing us.

We want to see our veterans treated fairly, but we sincerely believe that H.R. 6432 would take care of our veterans and at the same time help to relieve taxpayers of some of their burden, which at the present time is so great that the American people hardly know which way to turn.

Therefore, we would like to go on record as being opposed to H.R. 7650 and urge you to replace this bill with H.R. 6432 or a bill with similar features.

Yours very truly,

J. CLIFTON YAUN, Sr.

(Whereupon, at 12:15 p.m. the committee adjourned.)