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This section further provides that 10 percent of any waived retirement income shall not be considered as income for pension purpose. Would you comment

upon

that section? Mr. CORCORAN. Yes, sir.

The Legion has no official position on this at the present time. The objectionable characteristic of such a provision is that it permits a man to fabricate "need.". It permits a man to frustrate the needs test by declining to receive a certain amount. That is the objectionable portion.

The commendable characteristic of it is that it does not force a man to take a net loss in dollars; that is, when you consider both VA pension and whatever the retirement is, even though he may not want to take the additional small increase in the retirement.

Our position at present is a slightly different approach; that is, we ask that the amount of money that the pensioner paid into this retirement plan in his early life, as he begins to receive the benefits of the plan, not be counted as income.

Mr. ADAIR. Do you not feel, John, if we were to follow your approach, we would be getting into a very large administrative bookkeeping problem?

Mr. CORCORAN. Our approach?
Mr. ADAIR. Yes.

Mr. CORCORAN. Mr. Adair, actually our proposal was the law at one time, and I had not heard it stated that it was administratively difficult, particularly where social security is involved and this I suppose is the major source of income to these pensioners. This is a minor matter. VA just asks social security how much did this man pay in, and gets an immediate response.

Mr. ADAIR. I think you have given us a point here we can profitably explore further with the Veterans' Administration representatives when they come up:

Mr. CORCORAN. Mr. Adair, the recoupment provision was eliminated because it was forecast-I have not reviewed material on this point for several years, so my memory may be hazy and my facts may not be current. "But, at the time this provision came under scrutiny by the Bureau of the Budget and the VÀ and Congress, it was pointed out that it was taking the average social security man on the VA pension rolls, let's say, 7 to 12 months to recoup his personal contribution. So, during this 7- to 12-month period he did not count that as income. So, he was getting a benefit out of it, but it was only for a relatively short period. But 20 years from now, when people of our age bracket begin to receive social security, it will take us years to recoup the premiums that we had paid in. So, all during this long period of time, the social security payments would not be counted as income.

My conclusion and convictions are that the recoupment provision was eliminated, not because of administrative difficulty, but as a longrange saving device.

Mr. ADAIR. It is my recollection that you are generally correct on that. I think the matter of administrative requirements was a factor which was considered at that time, also.

You do feel that some action needs to be taken upon this matter of income limitation. You feel very definitely in that regard?

Mr. CORCORAN. Yes, sir. I suppose when you asked me about the waiver provision I should have also said that we think that, generally,

if you set the income limitations high enough, that should be the fundamental solution. Now whenever you have a limitation or steps, somebody is going to get hurt by any small increase.

Mr. ADAIR. That was going to be my rejoinder to your remarks. And who has $1 over that limitation, no matter where it is placed, is going to write to his Congressman and say “Why don't you change that and make it $2 higher?

Mr. CORCORAN. I think this is almost a dilemma.

As I say, we think the relatively good solution would be to set the income limits high enough.

Another is one that I do not personally favor, although the Legion has not spoken on it, and that would be—and I hope it would not be confused with the negative income tax approach but it might bewould be to say that every single pensioner ought to have at least $2,400 a year and then we, the Government, will make up anything that he does not have.

In that case, you have set the $2,400 figure, and nobody ever gets hurt by any increase in outside income. I do not think I favor this because I think it has a slightly socialistic aspect to it.

Mr. ADAIR. And slightly costly aspect to it, I assume, as well.
Thank you, Mr. Chairman.
Mr. HANLEY (presiding). Are there any further questions?

On behalf of Chairman Dorn, I want to extend our gratitude to you, Mr. Corcoran, and the American Legion for your fine testimony, and' to Commander Houston of the Veterans of World War I for his fine testimony. And at this point we will adjourn until 10 o'clock in the morning, at which time we will hear from the VFW and the VA.

Mr. CORCORAN. Thank you, Mr. Chairman.

(Whereupon, at 11:45 a.m., the committee adjourned, to reconvene at 10 a.m., Wednesday, July 27, 1966.)

PENSION LEGISLATION

WEDNESDAY, JULY 27, 1966

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON COMPENSATION AND PENSION
OF THE COMMITTEE ON VETERANS' AFFAIRS,

Washington, D.C. The subcommittee met, pursuant to adjournment, at 10:10 a.m., in room 356, Cannon House Office Building, Hon. W. J. Bryan Dorn (subcommittee

chairman) presiding: Mr. Dorn. The subcommittee will come to order.

We are meeting this morning to conclude our hearings on nonservice-connected pensions and are happy to have as our first witness our good friend, Francis (Smokey) Stover.

Mr. Stover, we are very pleased, delighted, and happy to have you with us this morning. Needless to say, we on the full committee and on the subcommittee, and in the Congress for that matter, appreciate the splendid service you render our country in your capacity as director of the National Legislative Service of the Veterans of Foreign Wars.

I hope you will pardon me. I have to be in South Carolina in about 2 hours. But I did want to come here and present you to the committee before I have to leave. I hope you will forgive me. I will take your statement with me.

I want to say, too, that I think we have one of the finest subcommittees of any subcommittee in the Congress. They are very loyal and are dedicated to the legislation at hand here, and they have been very loyal in coming to the meetings.

Mr. STOVER. Thank you very much, Mr. Chairman.
Mr. ROBERTS (presiding). You may proceed.

STATEMENT OF FRANCIS W. STOVER, DIRECTOR, NATIONAL

LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS OF THE UNITED STATES; ACCOMPANIED BY COOPER T. HOLT, EXECUTIVE DIRECTOR, VFW WASHINGTON OFFICE

Mr. STOVER. Thank you very much.

First I want to introduce the gentleman on my left. I am honored and privileged to have here with me this morning our executive director of the Washington office, Cooper T. Holt. I know you know him very well.

Mr. ROBERTS. It is always very nice to have you here, Cooper. Mr. Holt. Thank you, Ray.

Mr. STOVER. Mr. Chairman and members of the subcommittee, may I express my deep appreciation for this opportunity to present the views of the Veterans of Foreign Wars with respect to this most important program which is of intense interest to our 1,300,000 members.

My name is Francis W. Stover and my title is national legislative director.

It is noted that there are over 180 pension bills and resolutions now under consideration by this subcommittee which have been introduced in this 89th Congress. Among these bills are several which reflect and embody national resolutions adopted by the delegates to our most recent national convention.

On a general basis the resolutions of the Veterans of Foreign Wars urge the Congress to improve and liberalize the pension program for both income limitations and rates. In other words, it is the hope of our organization that the pension rates for both veterans and, if deceased, their widows, will be substantially increased, particularly in light of the increased cost of living, which has risen rather sharply with the acceleration of the Vietnam engagement.

Basic to the size of pension payments, however, are the income limitations and the determinations which must be considered in arriving at these income limitations. Generally speaking, the Veterans of Foreign Wars strongly recommends that the income limitations be increased in all categories and that some of the principles involved in determining these income limitations be substantially liberalized.

Perhaps most important of all to our membership is a longstanding resolution which urges the Congress to have the pension payment reflect the length and type of service that was rendered by the veteran. Since our membership is limited to overseas campaign veterans who were awarded a campaign badge or medal and received an honorable discharge therefor, the delegates to our national conventions down through the years have urged the Congress to increase all pension. rates by 10 percent for those who served overseas during wartime and were awarded a campaign badge or medal in recognition of that service..

In 1964 in anticipation of a social security increase of 7 percent, the Congress approved a provision in a VA pension bill (H.R. 1927) which became Public Law 88–664 to exclude 10 percent of any retirement income as income for pension purposes for veterans and their widows, which went into effect January 1, 1965. However, the House and Senate got bogged down in agreeing on amendments to the social security bill and the 7-percent increase failed enactment that year.

Subsequently, the following year one of the first pieces of legislation to be enacted by the 89th Congress was the social security amendments which included a 7-percent increase in social security retirement benefits (Public Law 89–97). Consequently, there was a large number of veterans and widows who had been enjoying the exclusion of 10 percent of their social security payments as income for veterans pension purposes who were granted a belated or delayed 7-percent increase in their social security payments. The net result was that for about 28,000 of these veterans and their widows, there was a sharp reduction and, in some cases, complete elimination of their pension payments, caused by their income being increased by the 7-percent social security increase which put them in a higher income bracket for determination of their pension payments. Their veteran pension payments were cut more than they received in a social security increase.

The 10-percent exclusion of retirement benefits went into effect on January 1, 1965. The 7-percent social security increase was reflected

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