[Senate Report 110-135]
[From the U.S. Government Publishing Office]
Calendar No. 283
110th Congress Report
SENATE
1st Session 110-135
======================================================================
VETERANS' COMPENSATION COST-OF-LIVING ADJUSTMENT ACT OF 2007
_______
July 24, 2007.--Ordered to be printed
_______
Mr. Akaka, from the Committee on Veterans' Affairs,
submitted the following
R E P O R T
[To accompany S. 423]
The Committee on Veterans' Affairs, to which was referred
the bill (S. 423) to increase, effective as of December 1,
2007, the rates of compensation for veterans with service-
connected disabilities and the rates of dependency and
indemnity compensation for the survivors of certain disabled
veterans, having considered the same, reports favorably thereon
and recommends that the bill do pass.
INTRODUCTION
On January 29, 2007, Committee Chairman Daniel K. Akaka
introduced S. 423, a bill to increase, effective as of December
1, 2007, the rates of compensation for veterans with service-
connected disabilities and the rates of dependency and
indemnity compensation for the survivors of certain disabled
veterans. Committee Ranking Minority Member Larry E. Craig is
an original cosponsor of S. 423, as are Committee Members John
D. Rockefeller IV, Patty Murray, Sherrod Brown, Bernard
Sanders, Jim Webb, and John Ensign. Senators Barbara A.
Mikulski, Claire McCaskill, and Olympia J. Snowe were later
added as cosponsors. The bill was referred to the Committee.
COMMITTEE HEARING
On May 9, 2007, the Committee held a hearing on legislation
pending before the Committee. Among the measures on which the
Committee received testimony was S. 423. Testimony on S. 423,
among other bills, was offered by: Daniel L. Cooper, Under
Secretary for Benefits, Department of Veterans Affairs; Carl
Blake, National Legislative Director, Paralyzed Veterans of
America; Eric A. Hilleman, Assistant Director, National
Legislative Service, Veterans of Foreign Wars; Brian E.
Lawrence, Assistant National Legislative Director, Disabled
American Veterans; and Alec S. Petkoff, Assistant Director,
Veterans Affairs and Rehabilitation, American Legion.
COMMITTEE MEETING
On June 27, 2007, the Committee met in open session to
consider legislation pending before the Committee. Among the
measures so considered was S. 423. The Committee voted by voice
vote to report favorably S. 423, as introduced, to the Senate.
SUMMARY OF THE COMMITTEE BILL AS REPORTED
The Committee bill contains freestanding provisions that
would require the Secretary of Veterans Affairs to increase,
effective December 1, 2007, the rates of, and limitations on,
certain benefits paid by VA by the same percentage as the cost-
of-living adjustment (hereinafter, ``COLA'') provided to Social
Security recipients and VA pension beneficiaries that become
effective on the same date. The COLA would apply to:
1. basic compensation rates for veterans with service-
connected disabilities and the rates payable for certain severe
disabilities;
2. the allowance for spouses, children, and dependent
parents paid to service-connected disabled veterans rated 30
percent or more disabled;
3. the annual clothing allowance paid to veterans whose
compensable disability requires the use of a prosthetic or
orthopedic appliance (including a wheelchair) that tends to
tear or wear out clothing or requires the use of a medication
prescribed by a physician for a service-connected skin
condition if the medication causes irreparable damage to the
veteran's outer garments; and
4. the dependency and indemnity compensation (hereinafter,
``DIC'') rates paid to:
(a) surviving spouses of veterans whose deaths were
service-connected;
(b) surviving spouses for dependent children below the age
of eighteen;
(c) surviving spouses who are so disabled that they need
aid and attendance or are permanently housebound;
(d) surviving spouses covered under section 1318 of title
38, United States Code; and
(e) the children of veterans whose deaths were service-
connected if no surviving spouse is entitled to DIC, the child
is age 18 through 22 and attending an approved educational
institution, or the child is age 18 or over and became
permanently incapable of self-support prior to reaching age 18.
The Congressional Budget Office (hereinafter, ``CBO'')
currently estimates that the COLA to be provided to Social
Security recipients in 2008 will be 1.5 percent.
BACKGROUND AND DISCUSSION
A. Disability Compensation
The service-connected disability compensation program under
chapter 11 of title 38, United States Code, provides monthly
cash benefits to veterans who have disabilities incurred or
aggravated during active duty in the Armed Forces.
The amount of compensation paid depends on the nature and
severity of the veteran's disability or combination of
disabilities and the extent to which the disability impairs
earning capacity. The Department of Veterans Affairs
(hereinafter, ``VA'') rates compensable disabilities according
to its Schedule for Rating Disabilities on a graduated scale
ranging from 10 to 100 percent, in 10 percent increments. VA
pays higher monthly rates (known as ``special monthly
compensation'') to disabled veterans with certain specific,
very severe disabilities or combinations of disabilities.
According to VA, as set forth in its Fiscal Year 2008
budget, the department estimates that it will provide
disability compensation to 2,867,329 veterans with service-
connected disabilities in Fiscal Year 2008. Among the veterans
estimated to receive such compensation are 2 Mexican Border
Period veterans; 3 World War I veterans; 288,777 World War II
veterans; 155,980 Korean-conflict veterans; 993,494 Vietnam-era
veterans; 845,085 veterans of the Persian Gulf War era; and
595,988 veterans who served during peacetime.
A veteran with a disability rated at 30 percent or more may
receive additional compensation on behalf of the veteran's
spouse, children, and dependent parents. These dependents'
allowances are prorated according to the percentage of
disability.
B. Dependency and Indemnity Compensation
Under chapter 13 of title 38, United States Code, VA pays
DIC to the survivors of servicemembers or veterans who died on
or after January 1, 1957, from a disease or injury incurred or
aggravated during military service. Survivors eligible for DIC
include surviving spouses, unmarried children under the age of
18, children age 18 or older who are permanently incapable of
self-support, children between the ages of 18 and 22 who are
enrolled in school, and certain needy parents. Under section
5312 of title 38, parents' DIC rates are adjusted automatically
at the same time and by the same percentage as Social Security
and VA pension benefits. Surviving spouses, children, and
parents who are receiving death compensation based on deaths
before January 1, 1957, may elect to receive DIC instead of
death compensation.
For deaths on or after January 1, 1957, but prior to
January 1, 1993, surviving spouses received DIC at rates
determined by the pay grade (service rank) of the deceased
veteran. For deaths on or after January 1, 1993, DIC is paid at
a flat rate. Surviving spouses currently receive $1,067 per
month and, if the deceased veteran was totally disabled for
eight years prior to death, an additional $228 per month.
Surviving spouses who had been receiving benefits under the
prior DIC program are paid under whichever program will pay the
higher benefit.
A surviving spouse who is so disabled as to be housebound
or in need of regular aid and attendance is eligible to receive
an additional amount. A surviving spouse also may receive
additional allowances on behalf of the veteran's surviving
children.
Children are entitled to DIC if there is no surviving
spouse, if they are 18 years of age or older and became
permanently incapable of self-support before reaching age 18,
or if they are 18 to 22 years old and pursuing an approved
course of education.
Parents of deceased veterans whose incomes are below
statutorily prescribed income thresholds are eligible for DIC
under section 1315 of title 38. As previously noted, parents'
DIC rates are adjusted automatically at the same time and by
the same percentage as Social Security and VA pension benefits.
In its Fiscal Year 2008 budget, VA estimates that it will
pay DIC benefits to 340,702 survivors, a total that includes
surviving spouses, children, and needy surviving parents.
Under section 1318 of title 38, United States Code, VA pays
benefits at DIC rates to the surviving spouses and children of
veterans whose deaths are not service-connected if the veteran,
immediately prior to his or her death, had been receiving (or
had been entitled to receive) compensation at the 100 percent
rate continuously for 10 or more years or for at least five
years from the date of discharge or release from active duty.
VA also pays DIC benefits to the surviving spouses and children
of veterans who were former prisoners of war who die after
September 30, 1999, and whose deaths were not service-connected
if the veterans had been receiving (or had been entitled to
receive) compensation at the 100 percent rate continuously for
not less than one year preceding death.
Committee Bill
The Committee bill would direct VA to compute and provide
increases in the monthly rates of compensation and DIC,
effective December 1, 2007. The rates would be increased by the
same percentage as the Social Security and VA pension COLA that
will take effect on that date. In accordance with section 8031
of the Balanced Budget Act of 1997 (Public Law 105-33), amounts
of compensation so computed that are not even multiples of $1
will be rounded down to the next lower whole dollar amount. In
2003, this provision was extended until 2013 by section 706 of
Public Law 108-183.
The increases in DIC would automatically result in
identical percentage increases in benefits paid at DIC rates
under section 1318 of title 38, United States Code, to the
surviving spouses and children of veterans who had a service-
connected disability at the time of death for which they
continuously were rated totally disabled for at least (1) 10
years, (2) five years from the date of discharge from active
duty, or (3) one year if the veteran was a former prisoner of
war who died after September 30, 1999, and whose death was not
service-connected if the veteran had been receiving (or had
been entitled to receive) compensation at the 100 percent rate
continuously for not less than one year preceding death.
Under section 156(e)(1)(A) of Public Law 97-377, the DIC
increases also would automatically result in the same
percentage increases in Social Security benefits that were
terminated by section 2205 of the Omnibus Budget Reconciliation
Act of 1981 (hereinafter, ``OBRA 1981'') (Public Law 97-35).
Prior to OBRA 1981, those Social Security benefits had been
paid to certain surviving spouses of those who died on active
duty or from a service-
connected disability on behalf of their children under 18 and
children over age 19 who were secondary-school students; OBRA
1981 reduced the eligibility cutoff age from 18 to 16 years
old.
Section 314 of Public Law 100-322 amended section 156(a)(1)
of Public Law 97-377, the Further Continuing Appropriations Act
of 1993, to restore the benefits eliminated by OBRA 1981. The
DIC increase also would apply to these restored benefits,
effective December 1, 2000.
The CBO, in its most recent baseline, estimated that the
Social Security COLA affecting Fiscal Year 2008 payments, and
thus the COLA provided for by the Committee bill, will be 1.5
percent. The actual Social Security COLA could differ from this
estimate. Rather than selecting any particular percentage
adjustment at the time the Committee ordered the bill reported,
the Committee followed its prior practice of setting the COLA
by reference to the Social Security increase. The Committee
believes this is the most equitable means of providing
increases in these important service-connected benefits.
COST ESTIMATE
In compliance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate, the Committee, based on
information supplied by the CBO, estimates that enactment of
the Committee bill would, relative to current law, increase
spending by $373 million in 2008 and by $500 million annually
in subsequent years, but that such increases in spending are
assumed in the budget resolution baseline and thus will have no
budgetary effect relative to the baseline. Enactment of the
Committee bill would not affect the budget of state, local, or
tribal governments.
The cost estimate provided by CBO, setting forth a detailed
breakdown of costs, follows:
U.S. Congress,
Congressional Budget Office,
Washington, DC 20515, July 2, 2007.
Hon. Daniel K. Akaka,
Chairman,
Committee on Veterans' Affairs,
U.S. Senate, Washington, DC 20510.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 423, the Veterans'
Compensation Cost-of-Living Adjustment Act of 2007.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Dwayne M.
Wright, who can be reached at 226-2840.
Sincerely,
Peter R. Orszag,
Director.
Enclosure
cc: Honorable Larry E. Craig, Ranking Member.
S. 423 would increase the amounts paid to veterans for
disability compensation and to their survivors for dependency
and indemnity compensation by the same cost-of-living
adjustment (COLA) payable to Social Security recipients. The
increase would take effect on December 1, 2007, and the results
of the adjustment would be rounded to the next lower dollar.
The COLA that would be authorized by this bill is assumed
in CBO's baseline, pursuant to section 257 of the Balanced
Budget and Emergency Deficit Control Act, and savings from
rounding it down were achieved by the Balanced Budget Act of
1997 (Public Law 105-33) and extended to 2013 by the Veterans
Benefits Act of 2003 (Public Law 108-183).
Because the COLA is assumed in CBO's baseline, the COLA
provision would have no budgetary effect relative to that
baseline. Relative to current law, CBO estimates that enacting
this bill would increase spending for those programs by $373
million in 2008. (The annualized cost would be about $500
million in subsequent years.) This estimate assumes that the
COLA effective on December 1, 2007, will be 1.5 percent.
S. 423 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
On March 16, 2007, CBO transmitted a cost estimate for H.R.
1284, the Veterans' Compensation Cost-of-Living Adjustment Act
of 2007, as ordered reported by the House Committee on
Veterans' Affairs on March 15, 2007. The two versions of the
legislation are identical, as are the two estimates.
The CBO staff contact for this estimate is Dwayne M.
Wright, who can be reached at 226-2840. This estimate was
approved by Peter H. Fontaine, Deputy Assistant Director for
Budget Analysis.
REGULATORY IMPACT STATEMENT
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee on Veterans'
Affairs has made an evaluation of the regulatory impact that
would be incurred in carrying out the Committee bill. The
Committee finds that S. 423 would not entail any regulation of
individuals or businesses or result in any impact on the
personal privacy of any individuals and that the paperwork
resulting from enactment would be minimal.
TABULATION OF VOTES CAST IN COMMITTEE
In compliance with paragraph 7 of rule XXVI of the Standing
Rules of the Senate, the following is a tabulation of votes
cast in person or by proxy by members of the Committee on
Veterans' Affairs at its June 27, 2007, meeting. On that date,
the Committee, by voice vote, ordered to report S. 423, a bill
to increase, effective as of December 1, 2007, the rates of
compensation for veterans with service-connected disabilities
and the rates of dependency and indemnity compensation for the
survivors of certain disabled
veterans.
AGENCY REPORT
On May 9, 2007, VA Under Secretary for Benefits, Mr. Daniel
Cooper, appeared before the Committee on Veterans' Affairs and
submitted testimony on, among other things, S. 423. Excerpts
from this statement are reprinted below:
STATEMENT OF THE VIEWS OF THE ADMINISTRATION
Daniel L. Cooper, Under Secretary for Benefits,
Department of Veterans' Affairs
Mr. Chairman and Members of the Committee, thank you for
the opportunity to testify today on several bills of great
interest to veterans. I will comment today only on the
provisions of the bills that affect the Department of Veterans
Affairs (VA).
* * * * * * *
S. 423
S. 423, the ``Veterans' Compensation Cost-of-Living
Adjustment Act of 2007,'' would mandate a cost-of-living
adjustment (COLA) in the rates of disability compensation and
dependency and indemnity compensation (DIC) payable for periods
beginning on or after December 1, 2007. The COLA would be the
same as the COLA that will be provided under current law to
Social Security benefit recipients, which is currently
estimated to be an increase of 1.4 percent. This proposal is
identical to that proposed in the President's Fiscal Year 2008
budget request to protect the affected benefits from the
eroding effects of inflation. VA supports this proposal and
believes that the worthy beneficiaries of these benefits
deserve no less.
VA estimates that enactment would result in benefit costs
of $348.4 million for FY 2008 and $4.7 billion over the period
FY 2008-2017.
* * * * * * *
CHANGES IN EXISTING LAW MADE BY THE COMMITTEE BILL
AS REPORTED
Since the Committee bill would not repeal or amend any
provisions of current law, this report does not contain the
material described in clauses (a) and (b) of paragraph 12 of
rule XXVI of the Standing Rules of the Senate.