Mr. CHRISTOPHER. Mr. Nelson, I believe you said that present pension programs were considered to be on an income-maintenance basis, that that was the theory.

Mr. NELSON. Yes, sir.

Mr. CHRISTOPHER. Can you tell us just when that $1,400 and $2,700 income limitation was established?

Mr. NELSON. There has been an income limitation over the years, and the income limitation has been changed from time to time. I cannot recall the most recent amendment, but the most recent change in the law brought about a $1,400 and a $2,700 limitation.

Mr. CHRISTOPHER. I am wondering if counsel or anyone here knows how many years ago the income limitations were brought up to $1,400 for a single veteran or $2,700.

COUNSEL. About 5 years ago. They previously were $1,000 and $2,500, and Public Law 357, of the 82d Congress increased it to $1,400 and $2,700.

Mr. CHRISTOPHER. The question I wanted to ask Mr. Nelson is this: How much will a dollar buy now compared to what it would buy 5 years ago? What has been the change in the cost of living during that 5 years?

Mr. NELSON. I could not give you the percentage, but it of course has changed in those 5 years.

Mr. ECKERT. May I inject this, Mr. Christopher. We are not concerned as to whether the committee believes there should be an adjustment of the income limitation. In fact, if there is to be an adjustment, we feel that may be the direction in which the committee should look. We are concerned here primarily with this continual recommendation to exclude items from income which in our opinion do not make for uniformity of application.

They certainly do a disservice to the overall interpretation that for years has been placed upon this pension program in that it is to fill a need and, therefore, is to take the place of income of all sorts that a veteran might have.

That is our problem here with these types of bills which would exclude various forms of income. Should the committee feel that assistance is needed in this area, they might well consider whether the income limitations today are sufficient or whether they should be adjusted.

Mr. CHRISTOPHER. The thing I am primarily interested in is how this veteran who wore the uniform of this United States honorably and offered his life and his body on the altar of his country that we might be free, how he is going to live out there, how his children are going to live, and what is going to become of his widow under a circumstance that whenever we look at a dollar it is worth less than it was last month, and every time we look at the cost of living it is higher than it was last month. That is my prime consideration, as to that veteran himself and his dependents, just what road we take to make it possible for him to live is not as material to me as that we travel some road that will lead us to that point where we can take care of him and his dependents.

Mr. NELSON. Let us say that under the income ceiling of $1,400 on the single veteran, for example, the chap who makes $1,500 would be ineligible and the chap who makes $1,300 would be eligible. Likewise, let us say the chap who has a wife and earns nothing would be eligible

for $945 income for himself and wife, but the chap who made $2,600 would also be eligible for another $945 from Veterans' Administration.

Mr. CHRISTOPHER. I understand there are inequities there.

Mr. CARPENTER. Mr. Christopher, your question is directed to the adequacy of the pension program as a whole. We have no comment in that respect.

However, we do feel that this procedure, a kind of a piecemeal relaxation on this basis, which would not apply uniformly-some States have bonuses, some States do not, some people inherit property, some people do not, some people have one income, some have another-is of doubtful merit.

Mr. DORN. Any further questions? Thank you, Mr. Nelson and gentlemen.

STATEMENT OF HON. OVERTON BROOKS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA

Mr. BROOKS. Mr. Chairman and gentlemen of the committee, in Louisiana at the present time the State has approved a constitutional amendment and is about to pay veterans a bonus for services performed in prior wars. This involves a huge outlay of taxpayers' money by the people of the the State of Louisiana who wish to recognize their veterans for the services which they rendered to this Government during times of great emergency. Other States plan a similar program and from time to time will be in the same position which my own State of Louisiana finds itself at the present time.

Under the law approved by Congress a veteran may draw nonservice-connected disability benefits after he has established his case before the Veterans' Administration of a disability. If, however, he is single and has an income above $1,400 he cannot draw these benefits and they are reduced, as I understand the situation, to the extent that his income plus the benefits might exceed $1,400 if he is single. A married man is allowed to earn $2,700 under the same circumstances. A widow receiving non-service-connected death benefits may draw these benefits provided her income does not exceed $1,400. If she has children she may draw $2,700. The children, as survivors of the deceased veteran, may draw benefits in like amount.

The States who are now paying bonuses to their veterans in appreciation for their services find that in the case of the non-serviceconnected disabled veteran, and in cases involving surviving widows and children of veterans whose death was of non-service-connected origin, these people in many cases are being denied their bonus. In the event the State pays the bonus to these people it will mean a reduction or the discontinuance of these benefits for the time being by the Veterans' Administration. These States, therefore, naurally feel that they are in effect subsidizing the United States Government in these cases and therefore cannot be of assistance to these needy people. In many instances in the law at the present time, the veteran is allowed certain credits without charging these credits against his income. In other words, the credits from certain Federal payments and retirement payments are not considered income when the amount of allowable income is calculated. This bill simply permits the further deduction of the amount received by non-service-connected disabled

veterans receiving benefits above the $1,400 allowed by law at the present time if he is single. It permits the married non-service-connected disabled beneficiaries to add this to the amount of allowable income above $2,700. It would have the same effect with the surviving widow and children of a veteran who dies of non-service-connected ailment.

Mr. Chairman and gentlemen of the committee, I think this bill is fair and proper. The Bureau of the Budget does not state how much money this will cost the Government in the way of taxes. It is, however, a nonrecurring matter. The State that pays a bonus does not continue paying the bonus year after year. It cannot be a large amount because these poor veterans and their survivors are in the lowest of the income brackets and under the law would pay the minimum amount of taxes if any is due whatsoever. I think, therefore, it is merely justice to our disabled veterans and their survivors that we make this amount allowable without disturbing the payments which these people are so dependent upon at this time.

I want to go on record in favor of H. R. 5153, which I introduced at the request of the State of Louisiana, and which accomplishes substantially the purpose discussed here in this general discussion. I want to just say one more thing in reference to it, that unless we do give some relief to these men and to the survivors of these men, we in effect are levying a very heavy tax upon the very poorest of our disabled veteran population.

That is what I think is so inequitable about it. My own State of Louisiana has begun that program of paying bonuses. They paid out a great deal in the way of bonuses before the law was passed. Now they have renewed that program and it brings it up again.

If we cannot pay the disabled, non-service-connected veteran, who is drawing a small pension, with income limitation of $1,400 where single or $2,700 where married, then it is a denial to him of something that I feel he has earned in the way in which he fought. We are powerless to pay him without having the Government immediately take it away from him.

I say this. It reaches down into the very poorest of that group of people that are limited by law to $2,700.

Another thing that I think is so inequitable about it is that it is not a permanent stipend at all. It is something that will not repeat. It is a payment which is made today and will never be repeated by any State, I think, to the same individual. It covers certainly the lowest tax brackets, if it covers any. I think the Government will be denied the very small amount, if any, of taxes by giving them the right to receive this bonus.

Therefore, it seemed doubly inequitable to deny them this opportunity of being paid because it is in effect a serviceman's readjustment pay by the States. To deny them that opportunity of accepting that is an inequitable situation. I do not go into the general proposition. I think a man cannot possibly carry on with his wife and himself and maybe other dependents on $2,700 in the standard we would like our veterans to occupy. But that is the subject of another bit of legislation.

I think right now this is urgent and we will certainly appreciate the help of your subcommittee on it.

Mr. DORN. Are there any questions?

Mr. FINO. Mr. Brooks, this bill you have pertains to State bonuses; is that correct?

Mr. BROOKS. That is correct.

Mr. FINO. Which are paid to the veteran once and that is it.

Mr. BROOKS. That is it. Never will be repeated.

Mr. FINO. What is the amount the State of Louisiana expects to pay its veterans?

Mr. BROOKS. It will vary according to where the veteran served and how long he served. It will also vary according to whether a veteran was killed or died of a service-connected disability.

For instance, the amounts run from, I would say, perhaps a hundred dollars up to a thousand dollars. I do not have the law before me. In my own particular case I would get, I think, $250 because I have served more than a year and I served overseas.

Mr. FINO. So under the present law if a married veteran in the State of Louisiana had an income of $2,600, he would be eligible for the State bonus.

On the other hand, if his buddy had an income of $2,750, he would be ineligible for that bonus; is that right?

Mr. BROOKS. Substantially that is the way it will work because there is no reason for the State paying that bonus to the veteran if the United States will immediately make a deduction to offset the payment. It in effect works exactly as you indicate.

Mr. FINO. This is a gift of the State of Louisiana to its boys who served in the Armed Forces?

Mr. BROOKS. Some look at it that way. I look at it rather as an teempt to adjust to some extent the sacrifices, employment sacrifices, for instance, that a man in service makes during time of emergency rather than an actual gift. But in either event, whether it be to try to make that man more equal to what those who did not go had or whether it is a gift, the same thing applies. It is in appreciation for the services those men rendered during time of great national emergency. I hope we can work it out so they can receive it.

The trouble is I will be able to get mine all right, but these men here that are the poorest of our group that are compelled to obtain this nonservice-connected disability benefit from the United States Government because of the lack of income, they are going to be the ones who are hurt. So I thank you very much, Mr. Chairman and gentlemen.

Mr. CHRISTOPHER. I have no questions, but I want to compliment Mr. Brooks for an excellent statement and assure the gentleman that I am in agreement with what he has said.

Mr. BROOKS. I certainly thank you, Mr. Christopher. Thank you very much, Mr. Chairman and gentlemen.

Mr. DORN. Mrs. Rogers.

STATEMENT OF HON. EDITH NOURSE ROGERS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MASSACHUSETTS

Mrs. ROGERS. I do not want to take up the time of the committee. Mr. DORN. I am glad you think enough of us to come and make the statement.

Mrs. ROGERS. I thank the gracious chairman very much. This is a fine committee and it is doing a fine piece of work.

Mr. Chairman, I am in favor of legislation designed to exclude from computation for the purpose of determining eligibility for non-serviceconnected disability or death pension, compensation, or dependency and indemnity compensation any amounts received by a claimant under a commercial life insurance contract. In this field I introduced H. R. 416, which I understand is one of the bills before you this morning. I have learned, however, that this bill might not accomplish my purpose.

I would, therefore, very much appreciate your subcommittee giving favorable consideration to legislation which would accomplish this purpose.

I am also very much interested in other measures before your subcommittee this morning which propose to exclude amounts received from designated sources in determining annual income for benefits under laws administered by the Veterans' Administration, or to preclude the Veterans' Administration from considering as income any portion of retirement pay which has been waived by the person entitled thereto, and which is not recoverable.

Mr. DORN. Thank you very much.

Our next witness is Mr. Howard Bernstein, of the Veterans' Administration.

STATEMENT OF HOWARD BERNSTEIN, DIRECTOR OF LEGISLATIVE SERVICE, GENERAL COUNSEL'S OFFICE; ACCOMPANIED BY WILLIAM DRIVER, DIRECTOR, COMPENSATION AND PENSION SERVICE, DEPARTMENT OF VETERANS' BENEFITS; AND KENNETH M. MEYER, LEGISLATIVE ATTORNEY, OFFICE OF THE GENERAL COUNSEL, VETERANS' ADMINISTRATION

Mr. BERNSTEIN. May I first introduce for the record my associates from VA. I have here Mr. William Driver, Director of the Compensation and Pension Service-we have two representatives from his office, Miss Thomas and Mr. Hall-and also with me is Mr. Kenneth M. Meyer, of the legislative office.

I am Howard Bernstein, Director of Legislative Service, General Counsel's Office.

The committee counsel reminds me that all VA reports have been inserted in the record.

With the permission of the chairman, I will attempt to go over them briefly. There are basically three reports involved.

Mr. FINO. Where is Mr. Higley?

Mr. BERNSTEIN. He happens to be out of the city.

The first bill that I will discuss is the Senate-passed bill, S. 2080. As has been explained to this committee by the Members of Congress who have been sponsoring it, it proposes to exclude bonus payments in determining eligibility for disability or death pension.

Mr. DORN. That is all it does?

Mr. BERNSTEIN. Yes, sir. Currently, any such bonus payment would be chargeable as income. Presumably, the theory of the legislation is to equate it with the Federal bonus which by law was excluded from computation of income. In his report the Administrator points out that he feels this is a matter primarily for congressional determination and, if it should be determined as a matter of policy