mendations, as they relate to this Nation's service-connected disabled veteran, his widow, and orphan.

Since the latest compensation increase in August 1972, the rate of inflation has increased tremendously.

This alarming increase has distressed all veterans and Americans, and has drastically eroded the buying power of the once powerful American dollar.

The need to increase the compensation rates and to keep them in line with the economy is of vital importance, if the Nation's veterans (service-connected disabled) are to continue to maintain a decent way of living and to stand proud while caring for his family.

AMVETS strongly supports legislation that would allow a minimum increase of 15 percent in the VA compensation payments.

It is in this respect that AMVETS considers Senate bill S. 3067 and its provisions, relating to the upgrading in disability compensation benefits, a step in the right direction.

Furthermore, we feel favorable consideration should be given to the Senate on bill S. 3072 as it pertains to liberalizing and amending the provisions of title 38, U.S. Code, relating to payment of DIC (dependency and indemnity compensation), for those widows and children of veterans whose deaths are attributed to service-connected

causes.

It is in this conclusion, that I wish again to express our congratulations for this subcommittee's expedient action, in this vital area, which will affect thousands of this Nation's disabled veterans and their dependents.

That concludes my statement.

Senator TALMADGE. Thank you very much, Mr. Hartley. I have only one question.

The President recommends an increase in benefits, plus a cost-ofliving escalator for future years. Would you recommend the cost-ofliving escalator?

Mr. HARTLEY. On the cost-of-living escalation, would this pertain to later if the cost of living decreased? Is this concern on the sliding scale whereas at a 3-month level?

Senator TALMADGE. Do you have a copy of his recommendation? I think it would be similar to social security.

The staff assistant advised me it would not decrease but would increase with the increase in the cost of living.

Mr. HARTLEY. All right, we are concerned about any provision where the cost of living or where the consumer price index stayed at a 3-month record low, would it deescalate the compensation payments? This is what we were really concerned with, if this is the case, we will object to it.

If this is not the provision within the proposed legislation, we would go along with it.

Senator TALMADGE. I believe social security escalates only once a year, if my memory serves me correctly.

I seem to recall that pensions and other benefits of retired servicemen escalate as computed, four times a year.

Mr. HARTLEY. That is correct, then this would work only three times a year?

Senator TALMADGE. Four times a year, is my understanding.

Mr. HARTLEY. Under this provision, though, there is no deescalation? Senator TALMADGE. I have not seen the recommendation. I do not know how it is drafted. I only heard Mr. Vaughn's testimony earlier in the day indicating that the President has recommended the cost-ofliving escalator.

Mr. HARTLEY. We would like to take his recommendation and go through it quite thoroughly.

Senator TALMADGE. You cannot testify for your organization as to whether you support it or oppose it then?

Mr. HARTLEY. Not at this time.

Senator TALMADGE. Thank you very much, Mr. Hartley.

Our next witness is Maj. Walter Reilly, chairman of the national legislative committee of the Disabled Officers Association. You may proceed, sir.

STATEMENT OF MAJ. WALTER J. REILLY, USMC (RET.), CHAIRMAN, NATIONAL LEGISLATIVE COMMITTEE, DISABLED OFFICERS ASSOCIATION

Major REILLY. Mr. Chairman, and members of the subcommittee, I am Maj. Walter J. Reilly, U.S. Marine Corps, retired, the chairman of our National Legislative Committee, of the Disabled Officers Association, with our National Headquarters at 1612 K Street, NW. here in Washington, D.C.

Formed in 1919 by a group of temporary officers out at old Walter Reed Army Hospital, we try very hard to help our members and their widows with their many problems.

The distinguished Chairman of the Veterans' Affairs Committee, Senator Vance Hartke, Democrat, of Indiana, has pointed out, dependency and indemnity compensation for widows was last increased by 10 percent on January 1, 1972. However, as most of us know, the cost of living has increased from a 123.2 to 139.7 on the Consumer Price Index as of January 1974, an increase of some 16.5 points. Writing it another way, in 1973 food prices soared by 25 percent, placing a specially heavy burden on the fixed income of our elderly widows, and in most localities in January this year, grocery prices went up another 3 percent. For many of our elderly widows, living in genteel poverty, the loss of over 13 percent in purchasing power has meant, not only a great decrease in their standard of living, but has brought them to the edge of disaster as they must choose between paying rent and buying food.

Our association has received many letters from widows, asking why their DIC payments are fixed, when other annuities are increased by the cost-of-living formula. We believe their questions should be answered, that they should not have to wait and suffer while the cost of living skyrockets, ever eroding their limited purchasing power. Therefore, we strongly recommend that dependency and indemnity compensation (DIC) payments be tied to the Consumer Price Index using the same formula as that applied to military retired pay.

As a certified VA contact officer who is authorized to represent our members and their widows before Veterans' Administration appeal boards, this speaker would like to see a liberalization of the criteria for dependency and indemnity compensation (DIC) eligibility for

those widows whose husband has been released from active duty with a service-connected disability.

Oftentimes, although the retirees or veteran did have a severe service-connected disability, the widow will be denied DIC because of many factors, some of them beyond her control. The widow surely knows or knew her husband the best; however, because of lost records, family moves, and the very nature of wartime crippling injuries, she often has a most difficult time proving service connection because of the restrictive provision of the present law.

It has been our long experience that, unless a widow can produce a service or Veterans Administration hospital record to prove that her late husband did have symptoms of the disease or injury which caused his death, while he was on active duty, she will have great difficulty in obtaining DIC.

We, therefore, strongly recommend that a study be instituted to eliminate what we believe are restrictive provisions in the present law, thereby giving veterans and their surviving widows the benefit of doubt where now they bear the full burden of proof.

Mr. Chairman, this concludes my prepared statement. We have not endeavored to elaborate on this matter because we believe the need for this legislation to help our widows is clearly evident.

I thank you for this opportunity to present our views and I will be most happy to try to answer any questions.

Senator TALMADGE. Thank you Major Reilly. Our next witness is Mr. Robert W. Nolan, national executive secretary of the Fleet Reserve Association. Mr. Nolan.

STATEMENT OF ROBERT W. NOLAN, NATIONAL EXECUTIVE SECRETARY, FLEET RESERVE ASSOCIATION

Mr. NOLAN. Mr. Chairman and members of the committee, on behalf of our more than 94,000 members I thank you for giving us the opportunity to voice our views on the legislation you are now considering. The Fleet Reserve Association is composed of career enlisted personnel, and commissioned officers who have prior enlisted service, of the U.S. Navy, Marine Corps, and Coast Guard. Approximately one-half of our membership are still serving on active duty and the remainder are in a retired status.

As you may know, an enlisted careerist of the Navy and Marine Corps does not retire at the completion of 20 years of active duty service. Rather, the Secretary of the Navy may transfer him to the Fleet Reserve or Fleet Marine Corps Reserve components, respectively. The enlisted careerist continues to serve in this inactive status subject to 24-hour recall at the pleasure of the Secretary of the Navy. He remains in this category and receives retainer pay (equivalent to his military retired pay) until he completes a total of 30 years of service. He is then placed on the military retired roll and receives retired pay.

Our association takes its name from the Fleet Reserve components of the Navy and Marine Corps. We have no legal connnection with these components. We feel because our members serve in the Fleet Reserve components, the name is more truly descriptive of our membership.

THE NEED FOR INCREASES TO VETERANS COMPENSATION AND DEPENDENCY AND INDEMNITY COMPENSATION

Even before we received President Nixon's message of March 4, 1974, addressed to the chairmen of the Senate and House Veterans' Affairs Committees, we were aware of the need for increases in veterans compensation and dependency and indemnity compensation (DIC) rates. The rising costs and inflation that all Americans have experienced since the rates were last increased in 1972 are ample justification for increasing compensation and DIC. The purchasing power for the American dollar has diminished by almost 14 percent since January 1, 1972. Dependency and indemnity compensation rates have not been increased since January 1, 1972, when the Consumer Price Index (CPI) stood at 123.1. Disability compensation rates have not been increased since August 1, 1972, when the CPI stood at 125.6. On February 22, 1974, when we made our monthly check with the Bureau of Labor Statistics' office we learned that as of January 31, 1974, the CPI stood at 139.7 and it is still climbing.

As you know, military retired pay is linked to the increases in the Consumer Price Index and escalates whenever the CPI increases by 3 percent and maintains the increase for a period of 3 months. Military retirees received a CPI increase effective January 1, 1974, based on the October 1973 CPI standing and already, another increase in military retired pay is predicted by July or August 1974. Based on the above stated facts, there is clear evidence and justification for the 16-percent increase provided in S. 3072.

PROTECTING COMPENSATION AND DIC FROM INFLATION IN THE FUTURE

The experience cited in previous paragraphs also justifies congressional action to link all future increases to disability compensation and DIC_to_the_automatic cost-of-living increases as measured by the Bureau of Labor Statistics reflecting the Consumer Price Index. Indeed, this move is long overdue. The retired pay of all Federal retirees, both military and civilian, has been so affected for over a decade. The Fleet Reserve Association feels that this is a proven and practical method of protecting monetary benefits from the erosion of inflation. The disabled veteran and his surviving dependents should receive the same protection in this regard as do Federal retirees. The Fleet Reserve Association fully supports this provision of S. 3072.

In addition, we support the provision of S. 3072 which would equalize rates of death compensation payable for peacetime, service-connected death to dependent survivors with those payable for wartime service-connected deaths. We believe there should be no difference in surviving dependents' benefits when a serviceman gives his life in service to his country. This is especially true in today's era of the cold war and the "hot" peace. The fact that the serviceman is a member of the all volunteer force and lost his life in peacetime does not lessen the needs or the hardships his surviving dependents must endure alone.

STRUCTURAL CHANGES TO THE DISABILITY RATING SCHEDULE

We note with interest that President Nixon's message of March 4 proposes, "Structural changes in veterans compensation which will bring the disability ratings of underrated veterans up to a level cor

responding to what survey data show to be their actual degree of impairment."

The Fleet Reserve Association views this proposal as but another attempt by the Administration to accomplish what they could not accomplish by executive fiat last year. I am speaking of the Administrator of Veterans Affairs previous attempt to revise the Veterans Administration schedule for rating disabilities. As you know, President Nixon directed him to recall the draft revision on February 14, 1973. In other words, "If at first you don't succeed, try, try again."

We are aware that under the existing law (section 355, title 38, United States Code), the Administrator of Veterans' Affairs has unlimited authority to revise the disability rating schedule. However, it is our adamant contention that any changes to the schedule of rating disabilities should be made only after the Congress has considered, evaluated, and approved the proposed changes.

CONCURRENT RECEIPT OF DISABILITY COMPENSATION AND MILITARY RETIRED PAY

Mr. Chairman, the provision of the law, section 3104 (a), title 38, United States Code, which requires military retired personnel to waive an equal amount of their military retired pay to receive disability compensation is an inequity of gross proportions. No other Federal or retired Federal employee must waive a portion of his earned compensation to receive disability compensation. Why is the military retiree the only veteran so affected?

Disability compensation is paid on the basis of disability, not need. If a veteran is fortunate enough to be rich, he still receives his disability compensation, and, rightfully so. But the military retiree cannot receive his retirement and disability compensation concurrently. Military retired pay is an earned entitlement that is earned by years of faithful service. Disability compensation is paid to compensate the veteran for the reduction in his earning capacity due to a serviceconnected injury or disease. If a military retiree has a ratable disability, is the disability any the less severe because he is a military retiree? Does the disability affect his wage-earning ability to a lesser degree? Certainly not. Please remember, that even though it is by personal choice, the military careerist is usually a veteran twice over. The vast majority of my shipmates in the Fleet Reserve Association have served in at least two of the past four of our country's wars.

For those senior military retirees who are now fully retired and living on a fixed income it is cruelly unfair to make them forfeit a portion of their military retired pay to receive what every other qualified veteran receives without question. Therefore, we sincerely urge you to initiate an amendment to section 3104 (a) containing the provisions of H.R. 1039, H.R. 2070, and H.R. 2906 which will permit concurrent receipt of full military retired pay and veterans disability compensation.

MUSCULAR ATROPHY DISEASE AS A SERVICE-CONNECTED DISABILITY

The inequity of the current 1-year presumptive period in cases of progressive muscular atrophy should be corrected immediately. This has been one of our legislative goals for more than a decade. Sections 301 and 312, title 38, United States Code should be amended to provide