The Veterans' Administration has been advised by the Director, Bureau of the Budget, that the report is without objection insofar as that Office is concerned and that enactment of this legislation would not be in accord with the President's program.

Sincerely yours,

Hon. JOHN E. RANKIN,

VETERANS' ADMINISTRATION, Washington 25, D. C., May 4, 1949.

Chairman, Committee on Veterans' Affairs,

House of Representatives, Washington 25, D. C.

DEAR MR. RANKIN: Further reference is made to your letter of January 26, 1949, requesting a report on H. R. 910, Eighty-first Congress, a bill to amend the act of July 2, 1948 (Public Law 877, 80th Cong.), to include persons whose serviceconnected disability is rated not less than 10 percent.

The purpose of the bill is to extend the benefits of Public Law 877, Eightieth Congress, July 2, 1948, so that any veteran suffering from a compensable disability would, if otherwise eligible. be entitled to additional compensation because of dependents.

Section 1, Public Law 877, supra, provides that any person entitled to compensation at wartime rates for disability incurred in or aggravated by active service as provided in part I, or paragraph I (c), part II, Veterans Regulation No. 1 (a) as amended, or the World War Veterans' Act, 1924, as amended and restored with limitations by Public Law 141, Seventy-third Congress, March 28, 1934, as amended, and whose disability is rated at not less than 60 percent, shall be entitled to additional compensation for dependents in the following amounts, if and while rated totally disabled:

Has a wife but no child living, $21;

Has a wife and one child living, $35;

Has a wife and two children living, $45.50;

Has a wife and three or more children living, $56;

Has no wife but one child living, $14;

Has no wife but two children living, $24.50;

Has no wife but three or more children living, $35;

Has a mother or father, either or both dependent upon him for support, then, in addition to the above amounts, $17.50 for each parent so dependent. If and while the veteran is rated partially disabled but not less than 60 percent, the additional compensation authorized on account of dependents is in an amount having the same ratio to the amount provided for total disability as the degree of disability bears to the total disability.

Section 2 of Public Law 877 provides that any person entitled to compensation at peacetime rates for disability incurred in or aggravated by active service as provided in paragraph II, part II, Veterans Regulation No. 1 (a), as amended, except paragraph I (c) thereof, and whose disability is rated at not less than 60 per centum, shall be entitled to additional compensation for dependents in the following monthly amounts, if and while rated totally disabled:

Has a wife but no child living, $16.80;

Has a wife and one child living, $28;

Has a wife and two children living, $36.40;

Has a wife and three or more children living, $44.80;

Has no wife but one child living, $11.20;

Has no wife but two children living, $19.60;

Has no wife but three or more children living, $28;

Has a mother or father, either or both dependent upon him for support, then, in addition to the above amounts, $14 for each parent so dependent. In case of partial disability of 60 percent or more the amount of additional compensation is proportionate to the degree of disability.

H. R. 910, if enacted, would grant the following additional amounts for dependents to partially disabled veterans who are entitled to compensation at wartime rates due to disability of less than 60 percent, and are otherwise eligible for benefits under Public Law 877:

Veterans receiving compensation at peacetime rates whose disability is rated at less than 60 percent, would receive 80 percent of the above rates under the provisions of the bill, if otherwise eligible under Public Law 877.

Public Law 877, Eightieth Congress, was the product of extensive study and consideration by the Congress on the subject of payment of additional benefits because of dependents to veterans entitled to disability compensation. The legislative history of that act indicates that one of the reasons that the benefits provided thereby were limited to those persons 60 percent or more disabled was the fact that this group of veterans because of the serious nature of their disabilities would not generally be in a position to supplement their compensation payments by income from steady employment as would those persons disabled to a lesser degree. The question of broad policy now presented by the proposal is whether this requirement as to degree of disablement should be eliminated, thereby making the benefits available to all disabled veterans with dependents in proportion to the extent of the service-connected disability.

It is estimated that enactment of the bill would entitle 1,045,560 veterans to additional compensation benefits during the first year at a cost of approximately $85,619,000.

Advice has been received from the Bureau of the Budget as follows: "Public Law 877, Eightieth Congress, departed from the long-established policy that compensation payments should be proportionate to the disability and not to the number of dependents. This departure was made only after extensive study and consideration, with the basic justification being that veterans 60 percent or more disabled were, in most cases, unable to follow full-time employment. The enactment of H. R. 910 which is not supported by the basic justification underlying the enactment of Public Law 877, Eightieth Congress, could not be considered to be in accord with the program of the President."

Sincerely yours,

O. W. CLARK (For Carl R. Gray, Jr., Administrator).

[No. 74)

Hon. JOHN E. RANKIN,

VETERANS' ADMINISTRATION, Washington 25, D. C., May 11, 1949.

Chairman, Committee on Veterans' Affairs,

House of Representatives, Washington 25, D. C.

DEAR MR. RANKIN: Further reference is made to your letter of January 26, 1949, requesting reports on H. R. 908 and H. R. 937, Eighty-first Congress, identical bills entitled, "A bill to provide certain equitable adjustments in disability compensation and pension to meet the rise in the cost of living."

The bills propose to increase by 25 percent "all monthly rates of compensation and pension" payable under any public laws or regulations to veterans and the dependents of veterans of World War I and World War II, except the increased rates for death compensation provided under Public Law 868, Eightieth Congress, July 1, 1948. The rates of disability compensation and pension payable to veterans of both World Wars under Public, No. 2, Seventy-third Congress, as amended, and Veterans Regulations, as amended, are also applicable to veterans of the Spanish-American War, Philippine Insurrection, and Boxer Rebellion.

Accordingly, compensation and pension payable to the latter group under_Public, No. 2, and the Veterans Regulations would also be increased 25 percent. Further veterans of the peacetime service would receive a like increase in compensation rates by reason of the application of Public Law 876, Eightieth Congress, as hereinafter explained Notwithstanding the exception noted above, certain death compensation rates (contained in laws enacted prior to Public Law 868) increased by 25 percent as the bills propose, would in some cases be higher than the existing Public Law 868 rates. To that limited extent. the bills would increase death compensation rates.

The bills would increase the monthly rates of disability compensation prescribed by paragraph II, part I, Veterans Regulation No. 1 (a), as amended. These rates were last increased 20 percent by Public Law 662, Seventy-ninth Congress. August 8, 1946. The proposed increases in the present rates are shown in the following table:

If the disabled person has suffered the anatomical loss or loss of use of one foot, or one hand, or blindness of one eye, having only light perception, the above present rates are increased by $42. Rates ranging from $240 to $360 per month are provided for the loss or loss of use of two or more extremities, certain degrees of blindness, combinations of such disabilities, and total deafness in combination with total blindness. Under the provisions of the bills, the above-mentioned $42 rate would be increased to $52.50. and the other rates mentioned above would range from $300 to $450

Section 1 of Public Law 877, Eightieth Congress, July 2, 1948, provides additional disability compensation on account of dependents in the case of a veteran having a disability incurred in or aggravated by service, as provided in part I or paragraph I (c), part II, of Veterans Regulation No 1 (a), as amended, who is rated at not less than 60 percent disabled. The increases in this additional compensation proposed by the bills are shown in the following table

Has a mother or father, either or both dependent upon him for support,
then. in addition to the above amounts (each)..

If and while the veteran is rated partially disabled, but not less than 60 percent, the additional compensation authorized on account of dependents is in an amount having the same ratio to the amount provided for total disability as the degree of disability bears to the total disability.

The rates provided under part I, Veterans Regulation No. (a), as amended, supra, are payable on account of disability resulting from injury or disease contracted in line of duty when such disability was incurred in or aggravated by active military or naval service during an enlistment or employment in the Spanish-American War, including the Philippine Insurrection and the Boxer Rebellion, World War I, World War II, or in time of peace if the disability resulted from an injury or disease received in line of duty (1) as a direct result of armed conflict, or (2) while engaged in extrahazardous service, including such service under conditions simulating war. Hence, while the bills refer only to veterans of World War I and World War II, the proposed increases would be payable to the other mentioned veterans as well as to veterans of World Wars I and II.

The bills would also increase the rates for service-connected disability under the World War Veterans' Act, 1924, as restored with limitations by Public, No. 141, Seventy-third Congress, March 28, 1934. These rates are generally comparable with the rates provided under the Veterans Regulations, except as to certain statutory awards such as the $60 monthly award provided for serviceconnected arrested tuberculosis, and the rates provided in cases in which serviceconnection is established only by virtue of presumptions specified in section 200 of the World War Veterans' Act, 1924. For that reason, it is deemed unnecessary to include in this report any detailed comparison of the rates presently provided under that act and the increases proposed by the bills.

The bills would also effect an increase in compensation rates for disability incurred in peacetime service, as paragraph II, part II, Veterans Regulation No. 1 (a), as amended by Public Law 876, Eightieth Congress, July 2, 1948, provides:

"II. For the purposes of part II, paragraph I (a) hereof, if the disability results from injury or discase, the compensation shall be equal to 80 per centum of the compensation now or hereafter payable for the disability, had it been incurred in or aggravated by active military or naval service during a period of war service as provided in part I of this regulation."

Part III of Veterans Regulation No. 1 (a), as amended, provides pension for non-service-connected permanent and total disability at the rate of $60 monthly, except that where such veterans shall have been rated permanently and totally disabled and in receipt of pension for a continuous period of 10 years, or reach the age of 65 years, the amount of pension is $72 monthly. These pension benefits are available to eligible veterans of the Spanish-American War, Boxer Rebellion, Philippine Insurrection, World War I, and World War II. Under the provisions of the bills the above-mentioned rates would be increased to $75 and $90, respectively.

The bills specifically provide that the proposed increase shall not apply to the increased rates provided under Public Law 868, Eightieth Congress, July 1, 1948. However, certain beneficiaries in war-service-connected death cases eligible under the provisions of Public Law 868 would be entitled to greater benefits under the rates authorized by section 14 (a) of Public Law 144, Seventy-eighth Congress, July 13, 1943, or Public, No. 198, Seventy-sixth Congress, July 19, 1939 (as increased by Public Law 662, 79th Cong.), if further increased by 25 percent as proposed by the bills than are now provided under Public Law 868. The cases in which this situation would exist are (1) the rate payable to a dependent mother or father, which would be $67.50 under the bills, as compared with $60 under Public Law 868; (2) the rate payable for each parent where both parents are dependent, which would be $37.50 under the bills, as compared with $35; and (3) the rate payable to a widow with two or more children. A widow with two children would receive $117 as compared with $115 under Public Law 868, and this difference would become greater as the number of children involved increased.

Widows and children of World War I and World War II veterans whose deaths are not the result of service-connected disability are entitled, subject to certain limitations, to pension under the provisions of Public, No. 484, Seventy-third Congress, June 28, 1934, as amended. The rates of pension payable under this law and the rates as proposed by H. R. 908 and H. R. 937 are shown below:

The titles of the bills indicate that the proposed increases are designed to meet the increased cost of living. Twenty-nine public laws have been enacted from 1939 to date which provide increased rates, or operate to liberalize pension or compensation payments in certain types of cases. For the convenience of the committee, there is enclosed a list containing citations of these acts, with a brief explanation of the effect of each. It is believed that this list may be helpful to the committee in determining the degree to which increases in compensation and pensions have kept pace with the increased cost of living since 1939. There is

also enclosed a chart relating to the cost and number of cases which would be affected by these bills, if enacted.

It is estimated that the cost of H. R. 908 or H. R. 937, if enacted, would be approximately $352,790,000 the first year.

The Director, Bureau of the Budget, advised by letter dated May 10, 1949 (photostat copy attached), that in view of the comments set forth in his letter, and because of the cost involved, the enactment of H. R. 908 and 937 could not be considered to be in accord with the President's program.

Sincerely yours,

CARL R. GRAY, Jr., Administrator.

Estimated cost of H. R. 908, 81st Cong., or H. R. 937, 81st Cong.

Hon. CARL R. GRAY, Jr.,

EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET, Washington 25, D. C., May 10, 1949.

Administrator of Veterans' Affairs, Veterans' Administration,

Washington 25, D. C.

MY DEAR MR. GRAY: Reference is made to your letter of March 3, 1949, transmitting four copies of a proposed report to be submitted to the House Committee on Veterans' Affairs on H. R. 908 and H. R. 937, Eighty-first Congress, identical bills entitled "A bill to provide certain equitable adjustments in disability compensation and pension to meet the rise in the cost of living."

While certain blanket increases of compensation and pension rates have heretofore been made because of higher living costs, the proposal to raise benefits 25 percent at this time requires most serious consideration in view of its implications. It first appears to be clear that any proposal to increase pension payments (payments for non-service-connected disability) is not in accord with the Presi dent's 1950 budget message in view of the existing and proposed social-welfare programs for all the people, including veterans.

Secondly, the proposal to increase compensation payments (payments for ser vice-connected disability) in direct relationship to increases in living costs raises the question whether such benefits should be decreased if the cost of living de