throughout the land for superannuated and indigent veterans where they may receive humane attention and which effects the establishment of national cemeteries for the repose of the herioc dead.

Service under wartime conditions calls for rigors, hazards, hardships, suffering, sleeping on wet, muddy ground, lack of food, sanitary conditions, clothing, baths, and many other physical discomforts and disadvantages of a normal life. The effects of this wartime action remain imprinted on a human being's mind. No medical science can erase the horrible scenes of the actual killing of an enemy, the pathetic and tragic sight of the dead and dying warriors on a battlefield.

The requirement of 90 days' active service for pension purposes has been generally recognized by the Congress as a prerequisite to the payment of pension to veterans since Civil War pensions were authorized by a law approved on June 27, 1890. It required that the veteran must have served 90 days or more in the applicable period, or if such veteran served less than 90 days, he must have been discharged from service for a service-connected disability.

Service pension at lower rates is provided for certain veterans of the Spanish-American War group based upon 70 to 89 days' service. The service pension laws pertaining to veterans of the Indian Wars require 30 days' service or, if less than 30 days' service, through a recognized campaign. The minimum period of service for this particular group is less than that generally required and undoubtedly is due to the large number of campaigns of short duration in such wars.

When the first pension law passed in the first Congress, in 1789, whereby military pensions granted and paid by the separate States were taken over by the Federal Government, its purpose and intent was to provide financial security and assistance to veterans and their families. The veterans' pensions in old age is considered delayed pay for service rendered. It has been the long-established policy to restrict pensions to veterans of war service, and dependents of such war veterans, since colonial days. Under existing law, pension benefits are available to veterans of the Spanish-American War, Philippine Insurrection, and the Boxer Rebellion, and their widows and children; service with the U.S. military forces engaged in hostilities in the Moro Province, at rates of $101.59 a month.

As chairman of the Senate Special Committee on Aging, U.S. Senator George Smathers, has reported the following:

Sometimes in our day-to-day worries, we tend to forget some of the oldest advice; count you blessings. The other day the National Industrial Conference Board came up with some statistics that document an amazing change in our way of life. For instance last year one-fourth of the nation's families had earnings of $10,000 or more and accounted for one-half of the total buying power in the country. This income group is expected to expand in the years ahead, so that by 1975 the group will hold two-thirds of the Nation's buying capacity. Even though the total number of families is expected to increase by 18 percent in the next decade, families with earnings of $10,000 to $15,000 a year-measured in today's dollarswill increase by more than half, and those in the $15,000 to $20,000 and over bracket will increase by more than 250 percent. The same study points out that ten years ago we had 10 million families earning less than $3,000 a year—or at a poverty level. Today, the number of families in this bracket has been reduced to eight millions and by 1975 will number only six millions.

So while we can worry justifiably about the high cost of living, tax burdens and other problems, it is a fact that life is improving for more Americans than ever before. We are moving rapidly away from the days when our goal was simply a chicken in every pot toward a time when the average man can enjoy what once was possible for only the very rich.

During the past few years much slanted news was published in newspapers that the veterans of the First World War were seeking a tax-free pension. Inquiry and search of the records has revealed that veterans' benefits have never been subject to tax or any withholding tax at the present time. When checks are issued by the Veterans' Administration there is no tax assessed, but upon that VA pension or compensation check being negotiated into cash, it is s bject to all existing sales tax, that includes sales tax, 3 cents; gasoline tax, 11 cents; service tax for a meal in restaurants, 3 cents; municipal taxes, utilities tax, 10 percent, and many other forms of taxation. The life expectancy of a veteran at age 65 is in the neighborhood of 13 years. This means, of course, that one veteran may live to be 88 and another will die at 68. Some of the most tragic retirement stories of the last 10 years have been those veterans who retired on a fixed income and then were caught by inflation. A dollar which they laid aside in 1939 to buy their retirement pension came back to them now valued at 43 cents. There is no way for veterans of the First World War to know what the inflation will be in the future.

The Veterans' Administration Comptroller reported in 1962 that by the year of 1975 over 1,800,000 veterans of the first World War would die. This mortality rate of an average of 138,461 has each year shown that it was a conservative estimate.

At the end of fiscal year 1963, there was a total of 19,447 on the waiting list; none was awaiting for care for a service-connected condition. The new social security medical care program will take care of these veterans in the future, reducing the expense and waiting list of VA hospitals.

Indebtedness of foreign governments to the United States arising from World War I, and payments due as of June 30, 1963, amount to $20,045,657,134.07.

Congressman Otto Passman stated in 1963 that there was over $19 billion of unspent foreign aid funds.

Senator Harry F. Byrd stated in 1964 that there was $21 billion of unspent foreign aid funds.

The enactment of the social security hospital and medicare program after July 1, 1966, would reduce the cost of treatment for veterans of the First World War by a billion dollars, and the enactment of H.R. 13595 would produce another savings in the cost of paperwork and other expenses. All of the above could be used as credit for the payment of a pension to the veterans who served faithfully. The enactment of HÍ.R. 13595 into law would answer the question as to whether or not the victory scored on Armistice Day, November 11, 1918, was appreciated by the Congress of the United States. Mr. DORN. Thank you so much, Mr. Dwyer.

Any questions?

Mr. FINO. No questions.

Mr. DORN. You made an excellent statement, Mr. Dwyer.
Mr. DWYER. Thank you, Mr. Chairman.

Mr. DORN. Our next and final witness this morning is Mr. William J. Flaherty, representing the Disabled American Veterans. Mr. Flaherty, you can read your statement or summarize it or do whatever you like. I would say that I am personally delighted to have a witness from the Disabled American Veterans appear on this legislation, which is causing all of us a lot of concern. We want to do what

is right by this legislation and we are certainly pleased to hear from

you.

STATEMENT OF WILLIAM J. FLAHERTY, ASSISTANT DIRECTOR OF LEGISLATION, DISABLED AMERICAN VETERANS, ACCOMPANIED BY W. B. GARDINER, LEGISLATIVE ASSISTANT DIRECTOR FOR RESEARCH, DISABLED AMERICAN VETERANS

Mr. FLAHERTY. Thank you.

Mr. Chairman, my name is William J. Flaherty. I am assistant director of legislation for the Disabled American Veterans. With me is Mr. W. B. Gardiner, legislative assistant director for research of the DAV.

On behalf of the membership of the Disabled American Veterans, I wish to express appreciation for the opportunity to appear before you to discuss certain matters pertaining to the non-service-connected disability pension program.

We recognize at once that the committee is faced with a most difficult problem in writing legislation that will serve the best interest of those veterans who are most in need and most deserving, and which will at the same time distribute available funds in the most fair and effective manner.

At the outset, and with your indulgence, I should like to reiterate, in brief, the DAV legislative policy as brought to your attention in previous DAV appearances before this committee.

The DAV was founded on the principle that our Nation's first obligation is to its war disabled and their dependents. Involved in this principle are: (1) proper medical care and treatment of veterans for service-connected disabilities, and adequate compensation for such disabilities; (2) training and/or education for the wartime disabled to restore him to useful, gainful employment; and (3) adequate death benefits for the widows, children, and dependent parents of veterans who die of service-incurred diseases or injuries.

In accordance with the above DAV policy, it is our primary responsibility as an organization to propose or support legislation which would extend justifiable benefits to the service-connected disabled veteran, his dependents and survivors. In this connection, we want to point out here that this committee has responded generously to our many legislative requests, and for this we are deeply grateful. We will offer no opposition to legislation proposing pension benefits, only when firmly convinced that its enactment will in no way jeopardize existing or proposed benefits for veterans with serviceincurred disabilities, and for their dependents. This enjoiner is observed unremittingly by our national conventions. Consequently, it is a rare occasion indeed when this DAV governing body would approve any resolution bearing upon the non-service-connected pension program. One such occasion occurred when the delegates to our national convention adopted a resolution proposing that the serviceconnected wartime disabled veteran be made eligible to receive his full rate of disability compensation (when rated less than total) and, in addition, draw a proportionate amount of non-service-connected pension when he has established concurrent eligibility to both benefits. As you know, Mr. Chairman, existing law provides that in any case where a veteran is entitled to service-connected disability compensa

tion, and eligibility for non-service-connected pension is also established, the veteran must waive his monthly compensation benefits in order to gain a larger monthly benefit of pension.

Many veterans whose service-connected disability is rated 40 percent or less can acquire a greater monthly payment by electing to receive pension when entitlement has been established. Service-conected disabled veterans rated above 40 percent receive no benefit whatsoever from the pension laws.

The inequity becomes quite obvious when we consider the case of a veteran who, upon reaching age 65, need only be 10 percent disabled from non-service-connected causes to qualify for pension; while on the other hand the veteran who carried a 40-percent service-connected disability rating since World War I (a period of 48 years) must renounce his compensation to obtain a monthly pension benefit equal to the man who has only a 10-percent disability entirely unrelated to his military service.

The history of governmental provisions for compensation based on service-incurred disability is specific as to the basic justification. From the beginning there has been a clear purpose to compensate the veteran as far as can possibly be determined for the resultant handicaps he took back to civil life. Compensation is provided as an earned right, over and above all else, including any civil adjustment. Specific provisions are included to prevent any reduction in the rate of compensation for individual success in overcoming the handicaps of any disease or injury.

It is generally accepted that serious wartime injuries and severe disabilities shorten the disabled veteran's span of life and vocational longevity. Consequently, we have service-connected men handicapped by disease and injury who obviously could never be fully compensated either in the field of individual endeavor or in ordinary social activities.

These service-connected disabled veterans meet all the tests of need set out in the pension law the same as many other veteran who incurred no disease or injury in the military service and who may have served for only a brief period of time.

The service-connected disabled veteran is confronted with the disconcerting fact that no part of the normal pension plan can be his without waiving his disability compensation.

The Disabled American Veterans believes that such a waiver requirement is inequitable and we feel the situation should be rectified. This can be accomplished by giving approval to H.R. 1745, which is currently pending before this committee. H.R. 1745 proposes to amend section 523(b), chapter 15, of title 38, United States Code, to enable certain permanently and totally disabled veterans to receive the full rate of disability compensation found payable for their wartime service-connected disabilities and also a proportionate amount of disability pension under a specified formula. The formula would apply to compensable ratings ranging from 10 percent through 90 percent.

The amount payable under the formula is determined by deducting from 100 percent the compensation rating evaluation, the result representing the percentage of pension payable in the case. For example, a veteran rated 40 percent for compensation purposes would receive his full rate of payment, $82 a month, for his service-connected

disability, and in addition, an amount equivalent to 60 percent of the pension ordinarily payable. To cite another example, a veteran rated 90 percent for compensation purposes would receive his full rate of payment $209 monthly-for his service-connected disability or disabilities, and only 10 percent-100 percent less 90 percent-by way of pension.

We realize that existing law contains a prohibition against duplication of benefits. However, it is our sincere opinion that the amendment proposed by H.R. 1745 offers an adjustment which is sound and reasonable.

Non-service-connected pensions are paid to veterans of World War I, World War II, and the Korean conflict who were discharged under other than dishonorable conditions after 90 or more days' service, who are permanently and totally disabled from reasons not traceable to such service. In short, pension payments represent a reward given in return for performing 90 or more days' service during a period of war. On the other hand, disability compensation is payment for personal injury suffered, or disease contracted, in line of duty. Clearly, there is no bearing at all between the two benefits. They are separate, distinct, and unrelated.

For these reasons and those expressed earlier, we believe that there is sufficient basis for granting to the service-connected disabled wartime veterans (who meet the basic entitlement criteria for pension) the same consideration and reward given to those with no serviceincurred disability and who need only have served for a period of 90 days.

We do not contend that a veteran should be awarded the full amounts of both compensation and pension, and we do not request such legislation; but we do earnestly urge this committee to approve the very reasonable modified adjustment proposed in H.R. 1745 as drafted on the basis of a national convention resolution unanimously adopted by the delegates representing our organization of 235,000 wartime disabled members.

As mentioned earlier, Mr. Chairman, the basic philosophy of the DAV is that our Nation's first obligation concerning veterans' benefits is to those who have incurred disabilities as a result of wartime service. This is not to say that our position is one of flat opposition to any and all pension adjustments. Without question, some are needed and very desirable. However, in view of our traditional field of endeavor, we must measure carefully any pension proposal on the basis of the overall effect such proposal would have, either directly or indirectly, upon the service-connected disability compensation program.

We would, in any event, be constrained to oppose any proposal which would involve great expenditures and which would, if enacted, result in the seriously disabled service-connected veteran receiving comparatively less than the non-service-connected pensioner. In short, we cannot accept any legislation which would tip the benefits scale in favor of the non-service-connected disabled.

The DAV is not unmindful that many veterans who served in World War I gave of themselves in extraordinary military effort and sacrifice and are now in desperate financial need. If available funds for pension purposes are to be expended judiciously we know that this committee which has always given the full measure of its efforts.