section 3010(g), regarding awards based on a change in law. Clarification of the matter is indicated in the event the bill is favorably considered.

There are no readily available data upon which to base an estimate of the cost of the bill, if enacted.

Enactment of H.R. 4010 would be discriminatory and would undoubtedly result in requests for further exemptions from the remarriage bar. Furthermore, enactment would be a deviation from the theory on which death benefits have been based and on which they have not been provided for remarried widows; namely, that they are intended as a partial substitute for the economic loss suffered by a widow through the death of the veteran and that this loss of support is overcome when she remarries and becomes entitled to support from another husband.

I am in agreement with the general concept of the laws which we administer that the Government has no obligation to provide financial assistance to a widow of a veteran after her remarriage.

For the foregoing reasons, I recommend that H.R. 4010 be not favorably considered.

Advice has been received from the Bureau of the Budget that there is no objection to the presentation of this report from the standpoint of the administration's program.

Sincerely,

W. J. DRIVER, Administrator.

67-235 66-4

VETERANS' ADMINISTRATION,

OFFICE OF THE ADMINISTRATOR OF VETERANS' AFFAIRS,

Hon. OLIN E. TEAGUE,

Washington, D.C., October 29, 1965.

Chairman, Committee on Veterans' Affairs,

House of Representatives,

Washington, D.C.

DEAR MR. CHAIRMAN: This report on H.R. 3364, 89th Congress, is furnished in response to your request.

The bill would establish an additional liberalized pension program for veterans of World War I, and their widows.

H.R. 3364 has the same purpose as H.R. 5227 and H.R. 2332, 88th Congress, which were pending before your committee at the close of that Congress.

The pension programs for veterans of World War I and later wars, and their widows and children, were the subject of extensive study by the legislative and executive branches, culminating in the enactment of Public Law 86-211, effective July 1, 1960. The new law retains (a) the requirements of permanent and total disability and need in the payment of veterans' pension, and (b) the requirement of need in the payment of death pension to their widows and children. Service requirements are discharge under conditions other than dishonorable after 90 days' service, or less if discharged for disability. Benefits are provided on a sliding scale according to income and family status, giving the greatest amount of pension to those in the greatest need. It also permits certain persons, who would be disqualified under the old program because of excessive income, to receive some pension.

For veterans unmarried and without a child, the monthly rates range from $43 to $100 depending upon yearly income, which may not exceed $1,800. For veterans married or with a child the monthly rates range from $48 to $115 depending upon the number of dependents and annual income which may not exceed $3,000. The applicable rate is increased by $100 monthly for veterans in need of regular aid and attendance, or by $35 if housebound but not entitled to the rate for aid and attendance. For widows without children the monthly rates range from $27 to $64 depending upon annual income which may not exceed $1,800. For widows with one child the rates range from $43 to $80 depending upon annual income, which may not exceed $3,000. A benefit of $15 monthly is payable for each additional child.

Age is considered in association with disability and unemployability in determining permanent and total disability in payment of veterans' pension. For example, at age 65, such rating will be assigned to a veteran with a permanent 10-percent disability if he is unable to follow substantially gainful employment by reason of the disability.

As of December 31, 1964, the average age of World War I veterans was 70.5 years.

Consistent with the philosophy of need underlying these programs, with certain limited exceptions income from all sources is considered in determining income. Among the exclusions from income is an annual exclusion of 10 percent of payments to an individual under a public or private retirement, annuity, endowment, or similar plan or program. The remaining 90 percent of such payments is counted as

income.

In veterans pension cases, annual income of a spouse reasonably available to the veteran in excess of whichever is greater, $1,200 or the total earned income of the spouse, is considered his income except in hardship cases. Further, in all pension cases, payment is not made if the corpus of the claimant's estate (net worth) is such that under all the circumstances, including consideration of income, it is reasonable that some part of the corpus be consumed for the claimant's maintenance.

While H.R. 3364 needs technical clarification, it ostensibly intends to provide a separate pension of $100 monthly, plus $70 monthly if in need of regular aid and attendance, for honorably discharged veterans of World War I, and $75 monthly for their widows, based on a 90-day service requirement (less if discharged for disability) and income limitations of $2,400 for a single veteran or widow without a child, and $3,600 for a veteran or a widow with a dependent. The income exclusions of existing law would apply, and in addition the bill would provide a $1,200 annual retirement income exclusion. The spouse's income and net worth provisions of existing law would not apply. The bill would provide a right of election and reelection between this and other pension programs where otherwise entitled. Public Law 86-211 instituted a graduated scale of benefits with three income categories, designed to avoid the "all or nothing" feature of the old law and to more equitably distribute benefits according to the relative need of pensioners. H.R. 3364 would violate this principle by returning to the one category "all or nothing" feature sought to be avoided in the new law, but with even less relationship to need. The bill is objectionable from this standpoint.

As previously noted, in the computation of annual income under the bill, the scope of the retirement income exclusion of existing law would be broadened to exclude $1,200 of payments received under a retirement plan. This new exclusion would be applied after deduction of 10 percent of such retirement payments pursuant to a present statutory provision. Almost all World War I veterans are of retirement age, or approaching retirement age. The same factors appear applicable to their widows. Considering that retirement income is normally derived from some form of public or private retirement plan, it is questionable whether the proposed income limitations would be meaningful.

We do not favor the retirement income exclusion of H.R. 3364. It would arbirtarily exclude money available for the claimant's support. This, and the failure of the bill to provide for the counting of spouse's income-thereby permitting a veteran to create his own need by transferring income producing assets to his wife are basically inconsistent with the underlying philosophy of the pension program.

The bill's failure to include a corpus of estate test is likewise inconsistent with that philosophy.

H.R. 3364 provides no increase for the most needy case, the married veteran with one or more children and no income. But for the least needy cases, those with no dependents and income of $2,400 who qualify for no pension under present law, the bill would authorize $100 monthly. Tax-free pension of $1,200 would be payable to a married veteran with countable annual income of $3,600 per year plus at least $1,200 in noncountable social security or other retirement. This could produce a combined income of at least $6,000 per year. Yet, according to data from the Bureau of the Census, the median income for all families headed by a 65-year-old in this country in 1964 was only $3,376, and almost half of the male population of this country 14 years of age or older had an income of only $4,647 or less per year. Enactment of H.R. 3364 may well stimulate requests for a similar pension, or for an increase in pension rates and liberalized income standards, for veterans of World War II or the Korean conflict, and their widows, who are currently eligible for pension on the same basis as World War I veterans, and their widows.

It is estimated that the first-year cost of H.R. 3364 over the cost of the existing program would be $1,154,154,000, and that the additional cost would decrease annually to approximately $935,433,000 in the fifth year.

We see no reasonable basis to support this proposal which would provide pensions so disproportionate to need. Additionally, we must always consider whether pension proposals of the cost magnitude of the subject bill could result in adversely affecting the serviceconnected disability and death programs, the Nation's primary obligation.

For the reasons indicated, I recommend that H.R. 3364 be not favorably considered.

Advice has been received from the Bureau of the Budget with respect to a similar Veterans' Administration report to the chairman, Senate Committee on Finance, on S. 2372, 89th Congress, a bill with the same purpose as the subject bill, that there would be no objection to the presentation of such report from the standpoint of the administration's program.

Sincerely,

W. J. DRIVER, Administrator.

VETERANS' ADMINISTRATION,

OFFICE OF THE ADMINISTRATOR OF VETERANS' AFFAIRS,

Hon. OLIN E. TEAGUE,

Washington, D.C., January 13, 1966.

Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: This report on H.R. 7009, 89th Congress, is furnished in response to your request.

The bill proposes to increase to $85 monthly the rates of nonservice-connected death pension payable to widows of veterans of the Spanish-American War.

Pension is payable to widows of veterans of the Spanish-American War without regard to need. The present monthly rates are $65, or $75 if the widow was the wife of the veteran during his service. Pension for widows of veterans of World War I and later wars is based on need. The law in effect since July 1, 1960, provides benefits on a graduated scale of three income levels with maximums of $600, $1,200, and $1,800 annually for a widow without a child, with respective monthly rates of $64, $48, and $27. For a widow with a child, the maximums are $1,000, $2,000, and $3,000, with respective monthly rates of $80, $64, and $43, plus $15 monthly for each additional child. In addition to the cited income limitations, pension under the latest law is subject to a net worth test of need. The Administrator of Veterans' Affairs is required to deny or discontinue payment when the corpus of the widow's estate is such that under all the circumstances, including consideration of income, it is reasonable that some part of the corpus be consumed for her maintenance.

Pensions for widows of veterans of World War I and later wars who were on the pension rolls on June 30, 1960, and have not elected to receive pension under the new law, are subject to annual income limitations of $1,400 for a widow without a child and $2,700 for a widow with a child. The respective monthly rates are $50.40 and $63, plus $7.56 for each additional child.

As indicated above, the standards for payment of pensions for widows of veterans of the Spanish-American War are more liberal than those relating to widows of veterans of later wars. For example, every eligible Spanish-American War widow, regardless of income or corpus, presently receives a monthly pension benefit greater than that of any widow of a veteran of a later war without a child. Owing to income or corpus, widows in the latter class can be denied any pension whatsoever, while Spanish-American War widows with even more income, or a larger corpus, receive $65 or $75 per month. Enactment of H.R. 7009, further increasing the patent disparity, would be discriminatory and precedential.