I think the problem that is being discussed is sometimes referred to as equalization or parity. There is a distinction in the treatment between the widows of World War I and the widows of World War II veterans.

The CHAIRMAN. I am speaking of World War II. I am not speaking of World War I.

Mr. WHITTIER. In order to be eligible for World War II, a widow needs some service-connected percentage; the husband at the time of death must have some percentage of service-connected disability.

The CHAIRMAN. How long were World War I widows in this situation before the qualifications were liberalized to the present point? Mr. WHITTIER. I should think about 26 years.

The CHAIRMAN. And for World War II widows the time would be 14 years?

Mr. WHITTIER. That's correct, sir.

The CHAIRMAN. In other words, that is 12 years sooner?

Mr. WHITTIER. That would be correct, Mr. Chairman.

The CHAIRMAN. At the present time, there must have been some degree of disability for a widow to be eligible?

Mr. WHITTIER. The husband must have had some degree of serviceconnected disability at the time of the veteran's death in order for his widow to be eligible.

The CHAIRMAN. I understood it was 10 percent, but you say it may be less?

Mr. WHITTIER. It need not be 10 percent. It can be less than 10 percent.

The CHAIRMAN. It can be less than 10 percent. Is there a fixed minimum?

Mr. WHITTIER. I think the law says, zero percent.

The CHAIRMAN. Zero percent?

Mr. WHITTIER. Zero percent.

The CHAIRMAN. That means none?

Senator KERR. Would the Senator yield?

Are you telling the committee, Mr. Administrator, that under the law in order for eligibility not to exist there must be no service-connected disability?"

Mr. WHITTIER. Not quite, sir. The Veterans' AdministrationSenator KERR. If there is zero disability, there is no eligibility for pension, is there?

Mr. WHITTIER. No, there is a distinction, sir, between having an ascertainable disability and having a zero percentage of disability.

A zero percentage means there was a service-connected disability which is now latent or dormant and which may increase at some time, may return.

Senator KERR. Well, the distinction is that there must be serviceconnected disability?

Mr. WHITTIER. That is the basic distinction.

Senator KERR. Although, at the time, even, of death, that might not be to the extent of being effective to the extent that it would be determinable?

Mr. WHITTIER. You are absolutely right, Senator. A man may have been killed from a non-service-connected cause. He may have. died of influenza or in an automobile accident.

The distinction of whether or not his widow would be eligible was whether or not at the time of that death he had a percentage of ascertainable disability granted by the Veterans' Administration, service connected.

Senator KERR. Thank you.

The CHAIRMAN. The law says, "at the time of his death had a service-connected disability for which compensation would be payable at 10 per centum or more in degree disabling, or at the time of his death the veteran was receiving or was entitled to receive compensation based upon service-connected disability"?

Mr. WHITTIER. Yes, sir.

The CHAIRMAN. The law says service-connected disability, but it doesn't say the extent.

What is the minimum percentage?

Mr. DRIVER. Mr. Chairman, I am William J. Driver, Chief Benefits Director, Department of Veterans Benefits.

In order to draw compensation, he must have a minimum disability ratable at 10 percent but in order for the widow to be eligible there must have been present at the time of death a condition, regardless of its degree, 1, 2, 3, 4 percent, which, if it had been ratable at 10 percent, would have been compensable, so that actually, in order for the widow to be eligible, the severity of the disability does not have to be great enough to qualify for compensation.

The CHAIRMAN. How many widows would come in under the provision in the House bill?

Mr. DRIVER. An addition of about 206,000.

The CHAIRMAN. Is there any question about the fact that under present law a widow is eligible if there is any service-connected disability?

Mr. DRIVER. That's right, sir.

The CHAIRMAN. This House bill eliminates all requirements for service-connected disability?

Mr. DRIVER. There must just have been the required number of days' service on the part of the veteran and the meeting of the income limitation on the part of the widow or child.

The CHAIRMAN. But under the pending bill there is no requirement for any service disability.

Mr. DRIVER. That is correct, sir. The number of cases, sir, in the first year, we would add 205,700, approximately.

The CHAIRMAN. What would this cost?

Mr. DRIVER. The cost of that would be $154 million.

The CHAIRMAN. You figure these programs, as I understand it, on the average life expectancy of those affected, is that right?

Mr. DRIVER. Yes, sir.

The CHAIRMAN. And that is 40 years?

Mr. DRIVER. Yes, sir.

The CHAIRMAN. Over the 40-year period, how much would this widow provision in the House bill cost?

Mr. DRIVER. Approximately $22 billion.

The CHAIRMAN. Now, do you have other items of increased cost under the House bill as compared with the administration bill?

Mr. DRIVER. I have a breakdown of the cost of the House bill. I haven't got them compared.

The CHAIRMAN. Do you have a comparison with the present law? Mr. DRIVER. Yes, sir.

The CHAIRMAN. The committee would like the comparison with the present law and with the bill recommended by the administration. The administration bill proposes some increases?

Mr. STANS. Yes, it did; and some decreases.

The CHAIRMAN. So we would like to have an itemized comparison with present law and with administration recommendations.

Mr. STANS. We will present that in a table.

The CHAIRMAN. You do not have it with you?

Mr. STANS. No, sir.

Mr. DRIVER. I have all but the data comparing a detailed breakdown of H.R. 7650 with the administration bill. The cost of the present law for the cases weare talking about, World War I, World War II, and Korea, is just under $1 billion $992,702,000.

The increase proposed in the administration's bill would be just short of $98 million-$97.7 the first year; and, of course, there was no provision in the proposal for the equalization of the widows feature. The increase proposed by H.R. 7650, the bill which passed the House is in total of $307,886,000.

Senator KERR. Over present law?

Mr. DRIVER. Yes, sir.

Senator KERR. $209 million over the administration bill?

Mr. DRIVER. Approximately, yes. The breakdown on that cost in total is as follows:

For living veterans, $103,315,000. This would go to veterans themselves.

For decreased veterans cases, to the widows and orphans of deceased veterans, $204,570,758.

Senator KERR. Just right there, the administration bill would provide that the $98 million increase over present law, what that would be to living veterans

Mr. DRIVER. Living veterans, and also widows who qualified under present law.

There are rate increases proposed.

Senator KERR. So that insofar as the cost for the first year is concerned, as between the administration bill and the bill before us, it comes about by reason of the provision for benefits to the widows of the Korean war and later?

Mr. DRIVER. That isn't true altogether, sir.

Senator KERR. I said, in the main.

Mr. DRIVER. The largest single item of cost in the House proposal is the equalization feature for widows and orphans.

Senator KERR. You said that would be $203 million?

Mr. DRIVER. No, sir; that provision, the equalization provision, is $154 million.

Now, you must know that on the rolls under present law we have a substantial number of widows and orphans cases from World War I and we also have World War II and Korean widows who qualify because the veteran at the time of death met the service-connected requirement.

The CHAIRMAN. The new widow provisions account for about half the total cost of the House bill?

Mr. DRIVER. Yes, sir, for the first year.

For deceased cases, there are about $150 million for the new feature for equalization of World War II and Korean cases, and another $50 million which would go to cases already on the rolls qualifying under present law.

Going back to the breakdown again, $122,795,000 is due to rate increases proposed by the bill; $154,268,000 to equalization.

There is $69,872,000 due to the savings provision, the so-called grandfather clause in the bill.

The CHAIRMAN. That aggregates $307,885,000.

Over the period of 40 years, what would be the total cost?

Mr. DRIVER. $10 million above the present law.

The CHAIRMAN. I understood you to say the widow provision would cost $22 billion?

Mr. DRIVER. Yes, sir. The proposal, if we were to separate the widows' equalization feature from it, the House bill, H.R. 7650, would result in a reduction of approximately $12 billion from present law's anticipated expenditures.

The $22 billion feature, which the widows equalization would cost, results in a net increase of $10 billion over present law.

The CHAIRMAN. How much would the increase be under the House bill, compared with present law?

Mr. DRIVER. Total increase of the House bill in the net would be $10 billion over present law.

The CHAIRMAN. There would be a $22 billion increase for widows and a saving of $12 billion elsewhere? Is that due to the deaths? Mr. DRIVER. No, sir; it is due to the lower rates paid in the higher income categories and the fact that as time passes, as Mr. Stans indicated in his statement, we will find more and more veterans in the upper-income categories because of receipts of money from income maintenance programs, such as social security, and they, then, under this proposal of a graduated scale of payment, would qualify for the lower amount and that would bring about a reduction. It is the widows feature that causes the increase.

The CHAIRMAN. The House bill would result in a net decrease of $10 billion during the period? And the administration bill would cost how much?

Mr. DRIVER. The administration bill which did not include a proposal for widows equalization would cost, as compared to the $12 billion less than H.R. 7650 would cost on that basis, about $47 billion less. It would save $47 billion from the present anticipated expenditures for the next 40 years of the present legislation.

Senator KERR. The present law?

Mr. DRIVER. Yes, sir.

The CHAIRMAN. Would any of that be due to the deaths of veterans?

Mr. DRIVER. It would be due in the main to the lower income limits at the upper levels and smaller payments of pension at these levels. The CHAIRMAN. During the next 40 years the death rate of World War I veterans will increase?

Mr. DRIVER. For World War I, II, and Korea, when we project the cost of present legislation, we do it taking an actuarial evaluation of deaths which will occur so that the present law cost which is $105 bil

lion to the year 2000 is projected on an anticipated number of losses, deaths, among all veterans.

This same basis is used to compare H.R. 7650 or any other proposal, so that we have taken into account the deaths.

Senator KERR. Would the Senator yield?

As I understand it, the reason for the $47 billion saving in the administration bill, as compared to the present law, is because of the need factors which would be written into the program by the administration bill.

Mr. DRIVER. Yes, sir; we would propose that all income be counted. We would propose that lesser pensions be paid.

Senator KERR. The implementing of the need factor or formula?
Mr. DRIVER. Yes, sir.

Senator KERR. Now, the House bill has a part of that in it?
Mr. DRIVER. Yes, sir.

Senator KERR. So that if you were to eliminate the provision from the House bill providing widows equalization, the application of the need factor formula for living veterans and deceased veterans cases would bring about a saving of $12 billion by the House bill as compared to present law?

Mr. DRIVER. Correct, sir.

Mr. STANS. May I interrupt, Senator, to give you an illustration of why and how the administration bill proposes to reduce the cost over a significant period of years?

Under present law, a veteran with $1,400 of income, qualifies for a pension which means that he would receive the regular monthly payment of either $66.15 or $78.75.

Senator KERR. Under present law?

Mr. STANS. Under present law.

Now, he gets the same check every month whether his income is zero or whether it is a thousand dollars a year. If he qualifies and receives social security of a thousand dollars, that does not affect in any way the size of his pension check.

The administration provision is to recognize that social security and any other income in steps, in brackets, so that as his outside income goes up to a thousand dollars or more, he then receives a smaller amount of veteran's pension check. That is the basic principle inherent in the administration proposal to recognize need by aggregating and considering all other income.

Senator CURTIS. Where do you start those steps, at $1 or $1,440? Mr. STANS. For a single veteran it starts at $390 as the first step. The second step is-this is in the administration proposal-the second step is $690; the third step, Senator Curtis, is $990; the fourth step is $1,290; the next is $1,440.

Senator CURTIS. So under the present law, a veteran can earn or have income up to, say, $1 less than the exemption, and get the full benefit

Mr. STANS. That is correct.

Senator CURTIS. You would go back on a single person, if he had as much as $390 income, it would lessen his veteran's pension some? Mr. STANS. That is right, if it exceeded $390.

Senator CURTIS. Would it lessen it a dollar-dollar for dollar?