year he has not transferred any property in order to avoid the imposition of some of the requirements of this particular law.

The CHAIRMAN. Well, John, what about a woman that inherits a considerable amount of money? There is only going to be a certain amount of money for budgeting into the veterans' program and it is the duty of this committee and responsibility of this committee to see it goes to the place where it will do the most good. So, take a woman that inherits a considerable sum. I would leave it up to the Administrator to determine whether it is proper or not proper for the widow's income to be counted. For example, in this case which you mention, certainly it is wrong for her income to be counted.

Mr. CORCORAN. Incidentally, on this case it does appear that the Veterans' Administration had the authority to disregard the income by virtue of a hardship being imposed upon this woman and we have referred this matter to our service officer to investigate that part of the thing. I have to say that with reference to the law. But then I also have to come back to our major argument and that is that this is a matter of principle, that the pension is a result of a personal relationship between the individual and his country. This man has given something to the country and the country through its history is making an effort to show its gratitude.

Now, we think that this, therefore, is a personal relationship and that it is an extremely unpleasant thing, Mr. Teague, to require that you look at the man's income, the man's wife's income, in order to determine whether or not he should receive this pension.

In addition to reducing the rate payable to the veteran, a spouse's income can serve to bar payment of any pension. To deny a veteran, already unemployable by reason of disability, a pension because his wife earns or has income slightly over the applicable limits would be a constant source of embarrassment to him if it meant that he would have little or nothing to contribute to the family's finances. The provision may tend to cause some wives to remain unemployed or to seek lower salaried employment. In either event, the result would be undesirable.

We believe that the relatively small amount of money saved by the consideration of a spouse's income is more than offset by the unfavorable effects. We urge you to give our proposal to eliminate the pertinent provision serious consideration.

INCOME DETERMINATIONS

H.R. 886 would amend the list of items that may be excluded from income determinations under the new pension law by the addition of two categories of expenses, both of which are recognized already by title 38 as justifiable exclusions for certain purposes.

One would permit a veteran to discount the amount expended in connection with the last illness and burial of his deceased spouse or child. Public Law 86-211 permits a widow or child to exclude amounts equal to amounts paid for the expenses of a deceased veteran's last illness and burial when computing annual income for pension purposes. H.R. 886 seeks to extend the same privilege to veterans who may have considerable expenses in connection with the death of a spouse or child.

The other exclusion sought by the bill has to do with unusual medical expenses. In income determinations for purposes of entitle

ment of a parent to dependency and indemnity compensation, the VA is authorized to permit the exclusion from the annual income of such parent amounts equal to amounts paid for unusual medical expenses (38 U.S.C. 415(g) (2)). We think it reasonable and proper that similar authority should be granted for purposes of entitlement to disability and death pension.

EFFECT OF HOSPITALIZATION

Under the law in effect prior to June 30, 1960, the pension of a veteran having no wife, child, or dependent parent was reduced by 50 percent while receiving hospital treatment or domiciliary care by the VA, beginning with the first day of the seventh calendar month following the month of admission for such treatment or care. Provision was made for payment of the withheld amounts following the veteran's release from VA care. Public Law 86-211 repealed these provisions (for purpose of claims under the new law) and provided that pension otherwise payable to any veteran may not exceed $30 a month while receiving hospital treatment or domiciliary care by the VA, beginning with the first day of the third calendar month following the month of admission. Provision is made for payment of the reduced amount to a veteran's wife or children; but, in no event will the reduced amount be paid to the veteran.

H.R. 886 would repeal this provision of the new pension law and restore the former provision.

The new provision is more difficult to administer and payment of the reduced amount to dependents is frequently delayed.

The provision works an undue hardship on veterans without a wife or child since they may have continuing expenses in excess of $30 a month, even though hospitalized; and, upon discharge, they may be without any accumulated savings with which to defray expenses incident to their discharge, including the cost of drugs and medication.

It has been found by the VA that some veterans who would be entitled to a higher rate of pension under the new law have failed to switch from the old law because they fear that a future period of hospitalization will mean a lesser payment in the long run.

We are convinced that there should be a return to the withholding provisions which had served the pension program well since 1946; and, which were adopted after trial and rejection of provisions similar to those of the new pension law.

Incidentally, in keeping with this position, the American Legion. opposes enactment of the pending bill, H.R. 869, that would extend the reduction provisions of the new law so as to cover veterans while maintained in State homes.

In concluding our discussion of the changes believed necessary in the new pension law, we wish to review briefly the nature and purpose of the war veterans' pension program. We think this may serve to bring into proper perspective some of our earlier statements about the necessity of maintaining the honorable status of the program.

THE NATURE AND PURPOSE OF PENSION

The disability pension program for veterans of World War I, II, and the Korean conflict is a needs program; that is, it is a program designed to help relieve or prevent need which is or is presumed to

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be due to permanent and total disability (and the concomitant unemployability). It is an income maintenance plan; not a retirement plan.

Pension is made available by the Nation out of gratitude for service in time of war; it is not paid as a duty or legal obligation.

Pension is intended to be money which a veteran can accept without the slightest loss of self-respect. While it is a form of public relief or welfare, it is not the same as a dole or charity. In fact, it is provided in an effort to keep war veterans from having to fall back on public or private charity. This may seem to be a play on words to some people; but, in the minds of both the giver and the receiver, there is a marked distinction between a gratuity which springs from gratitude and one which is extended solely on the basis of compassion or in compliance with a social necessity.

The purpose of the disability pension program may be summed up as follows: It is the Nation's means of assuring its wartime defenders of an honorable form of assistance when they are unable to provide for themselves and lack sufficient resources to care for their reasonable needs.

While the Nation cannot provide full support (through the pension system), it wants its war veterans to be able to live at a level beyond the constant shadow of want; to be able to enjoy their remaining years in comfort and dignity, and not merely exist on a barebones standard. Although it is a needs program, the concept of need for purposes of veterans' pension differs considerably from that which applies in the case of ordinary public assistance. Were this not true, the distinction between pension and public assistance would break down.

Traditionally, the needs test in pension legislation has been designed to maintain this distinction; that is, so as to uphold the honorable status of pension.

The measurement of need under the State-administered public assistance programs is such that it tends to offend and humiliate applicants. Support is generally given only up to the subsistence level. Property liens and stringent net worth standards are used in some States.

Such a concept of need will not satisfy for purposes of the war veterans' pension program. It has been observed repeatedly that veterans' pension is a far more acceptable form of income than public assistance. The difference lies in the nature and purpose of the pension program, in the sympathetic methods employed by the VA in the administration of the program, and in the relative liberality of the program's needs test as compared with the means test of public assistance.

When the disability pension program was initiated in 1930, the needs test was set at a level high enough to insure against anyone confusing pension with charity, or of associating the receipt of pension with indigency. Congress wanted to avoid anything which resembled a pauper's oath in form or substance.

The 1930 law did not include specific income limitations. The pension (then termed "disability allowance") was payable for specified degrees of disability provided the veteran had been exempt from payment of a Federal income tax for the year preceding application. Thus, the "personal exemption credits" for income tax purposes served in effect as the pension income limitations. At the time, these

levels were: $1,500 for a single person, $3,500 for a married person, plus $400 for each additional dependent.

In 1933, when the pension provisions were modified by the Economy Act (and the subsequent Veterans Regulations), specific income limitations were incorporated into the law. These were: $1,000 for an unmarried veteran without child, and $2,500 for a married veteran or veteran with child. These amounts were then considered to be sufficient to cover a veteran's basic needs.

In 1952, Congress raised these amounts to $1,400 and $2,700, respectively. (The House-passed bill had called for limitations of $1,800 and $3,000; and, the accompanying report stated that these figures were realistic "in view of the increase in cost of living which has transpired since the income limitations were originally placed in the pension laws in the 1930's.")

Public Law 86-211, effective July 1, 1960, contained the first major revisions of the pension needs test. Many of the changes were advanced with a view to correcting alleged inequities in the system.

After reviewing these proposals, the national executive committee of the American Legion expressed concern for the end product when it offered the following guidelines for any changes to be made in the pension program:

1. The respectable position of pension as a form of income must not be placed in jeopardy.

2. The change must not create more defects or inequities than it seeks to eliminate.

3. The result should permit ease and economy of administration. 4. The result must be readily understandable to the average

veteran.

5. The result must make for continued public acceptance of the pension program. (Proceedings of the national executive committee, the American Legion, April 29-May 1, 1959; p. 96.)

We think these same guidelines may now be used as yardsticks for analyzing the effects of Public Law 86-211.

As previously stated, we are not satisfied that all of the changes made by the new pension law will serve to maintain the respectable status of the benefit. We have identified the areas of our concern and we have offered what we think are reasonable and necessary modifications. We respectfully urge your favorable consideration of the provisions of H.R. 886.

AUTHORIZE RESTORATION OF CERTAIN "REMARRIED" WIDOWS TO ROLLS

H.R. 1928 would permit the VA to restore to the compensation or pension rolls, as widow of a deceased veteran, a woman whose purported remarriage is either "void" or "voidable." Thus, it would serve to reestablish the criteria in use by the VA for adjudication of such cases prior to the enactment of Public Law 85-56, and would make for uniformity of application of the definition of "widow."

AUTHORIZE PAYMENT OF PENSION ON BASIS OF CERTAIN IN-SERVICE DEATHS

H.R. 1953 would provide a basis for payment of death pension by the VA to a widow or child of a person who served in World War I,

World War II, or the Korean conflict, and who dies while on active duty under circumstances which are held not to be a basis for an award of death compensation or dependency and indemnity compensation.

Under present law, for a widow or child to be entitled to death pension, it is required that the person who served die while in a "veteran" status. The bill would modify the definition of the term "veteran" for the purpose indicated.

LIBERALIZE DISABILITY DETERMINATIONS

H.R. 2237 would provide that a veteran shall be considered permanently and totally disabled for purposes of entitlement to pension if he (1) has attained age 65, or (2) is suffering from active pulmonary tuberculosis and is hospitalized because of such disease. The existing definition of permanent and total disability would be retained for purposes of claims not meeting the proposed additional criteria.

Your interest in the views of The American Legion is greatly appreciated.

Mr. Teague, I see in completing my statement that we did not develop for the purpose of the committee the results of our study in September and I request permission for us to submit the statistics that we accumulated and our analyses themselves.

The CHAIRMAN. We would like to have it.

John, I would also like to say that I think Congress has a moral obligation when we pass a bill reported by this committee that we say under our best judgment and educated guess that it is going to to accomplish certain things. If it does not do that I think the committee has a moral obligation to try to see that the original purpose was accomplished-and that would be my attitude as chairman of the committee. I know in Texas that there are many older peopleI think the average in this county was about $13 per person per month-who would have gotten an increase and they were told not to accept it. When you know that kind of thing is going on across the country, it worries you. Once I know this bill is not doing what we said, then I am ready to make a change to make the bill work out the way we said it would.

Any questions by members of the committee? Mr. Saylor.

Mr. SAYLOR. Mr. Corcoran, do you believe that the primary duty of this committee is to the service-connected veteran, his widow and children?

Mr. CORCORAN. What do you mean by the word "primary"?

Mr. SAYLOR. Well, the basis for the existence of Veterans' Administration has in my opinion always been the service-connected veteran. That is why the hospital program was set up. That is why the original compensation bills were set up. Now, the reason I ask this question is that, whether you know it or not, there is a definite movement on in this country to transfer the veterans hospitals to HEW. It is gaining wide support in some sections and the thing that concerns me most in this whole provision of all of these bills that we consider is that we do something that will turn that public opinion-that you referred to as being the reason for your coming to us-against the veteran and ending up that a man with a service-connected disability, to whom I think we owe a great responsibility and the primary responsibility,