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110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     110-56

======================================================================



 
      VETERANS' COMPENSATION COST-OF-LIVING ADJUSTMENT ACT OF 2007

                                _______
                                

 March 20, 2007.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Filner, from the Committee on Veterans' Affairs, submitted the 
                               following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 1284]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Veterans' Affairs, to whom was referred the 
bill (H.R. 1284) 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, report favorably thereon without 
amendment and recommend that the bill do pass.

                              INTRODUCTION

    On March 1, 2007, the Honorable John Hall introduced H.R. 
1284, 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. 
H.R. 1284 was referred to the Committee on Veterans' Affairs. 
The Chairman of the Veterans' Affairs Committee, the Honorable 
Bob Filner, is an original co-sponsor of H.R. 1284.
    On March 13, 2007, the Subcommittee on Disability 
Assistance and Memorial Affairs met in open markup session to 
consider legislation pending before the Subcommittee. Among the 
measures so considered was H.R. 1284. The Subcommittee 
subsequently favorably recommended H.R. 1284 to the full 
Committee on Veterans' Affairs. The Committee on Veterans' 
Affairs met on March 15, 2007, and voted to favorably report 
H.R. 1284 to the House of Representatives. The Committee held 
no roll call votes on this bill.

                                SUMMARY

    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.

                       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. 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 totally 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 3,220,031 veterans with service-
connected disabilities in fiscal year 2008. Among the veterans 
estimated to receive such compensation are 778 World War I and 
Prior; 391,454 World War II veterans; 192,982 Korean-conflict 
veterans; 1,142,568 Vietnam-era veterans; 862,975 veterans of 
the Persian Gulf War era; and 629,982 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 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, surviving spouses currently receive $1,033 per month 
and, if the deceased veteran was totally disabled for 8 years 
prior to death, an additional $221 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 mentioned, 
parents' DIC rates are adjusted automatically at the same time 
and by the same percentage as Social Security and VA pension 
benefits.
    Under Section 1318 of title 38, 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 5 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.

C. History of cost-of-living increases

    The Committee periodically reviews the service-connected 
disability compensation and DIC programs to ensure that the 
benefits provide reasonable and adequate compensation for 
disabled veterans and their families. Based on this review, the 
Congress acts periodically to provide a cost-of-living 
adjustment in compensation and DIC benefits. In fact, the 
Congress has provided annual increases in these rates for every 
fiscal year since 1976. The following table shows the 
percentage increases since 1975.

 HISTORY OF SERVICE-CONNECTED DISABILITY COMPENSATION INCREASES, 1975 TO
                                 PRESENT
------------------------------------------------------------------------
                                                              Cumulative
          Fiscal year            Effective date    Increase    (1969 =
                                                  (percent)     $100)
------------------------------------------------------------------------
1976..........................  August 1975.....       11.8       158.55
1977..........................  October 1976....        8.0       171.23
1978..........................  October 1977....        6.6       182.53
1979..........................  October 1978....        7.3       195.86
1980..........................  October 1979....        9.9       215.25
1981..........................  October 1980....       14.3       246.03
1982..........................  October 1981....       11.2       273.58
1983..........................  October 1982....        7.4       293.82
1984..........................  April 1983......        3.5       304.11
1985..........................  December 1984...        3.2       313.84
1986..........................  December 1985...        3.1       323.57
1987..........................  December 1986...        1.5       328.42
1988..........................  December 1987...        4.2       342.22
1989..........................  December 1988...        4.1       356.25
1990..........................  December 1989...        4.7       372.99
1991..........................  December 1990  1        5.4       393.13
1992..........................  December 1991...        3.7       407.68
1993..........................  December 1992...        3.0       419.91
1994..........................  December 1993...        2.6       430.83
1995..........................  December 1994  2        2.8       442.89
1996..........................  December 1995  2        2.6       454.41
1997..........................  December 1996...        2.9       467.59
1998..........................  December 1997  2        2.1       477.41
1999..........................  December 1998  2        1.3       483.62
2000..........................  December 1999  2        2.4       495.23
2001..........................  December 2000  2        3.5       512.56
2002..........................  December 2001  2        2.6       525.89
2003..........................  December 2002  2        1.4       535.88
2004..........................  December 2003  2        2.1       547.13
2005..........................  December 2004  2        2.7       561.90
2006..........................  December 2005  2        4.1       584.94
2007..........................  December 2006  2     3  2.2    3  597.82
2008..........................  December 2007  2        1.5       606.78
------------------------------------------------------------------------

Additional Information

    H.R. 1284 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 automatically would 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) 5 years from the date of discharge from active duty, 
or (3) 1 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 1 year preceding death.
    Under Section 156(e)(1)(A) of Public Law 97-377, the DIC 
increases also automatically would 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 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 to restore the benefits eliminated by OBRA 
1981. The DIC increase also would apply to these restored 
benefits, effective December 1, 2000.
    The Congressional Budget Office (hereinafter, ``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.

                      SECTION-BY-SECTION ANALYSIS

    Section 1 of the bill would provide that this Act may be 
cited as the ``Veterans Compensation Act of 2007.''
    Section 2(a) of the bill would require the Secretary of 
Veterans Affairs to increase, effective December 1, 2007, the 
dollar amounts in effect for the payment of disability 
compensation and dependency and indemnity compensation.
    Section 2(b) of the bill would specify the programs to 
receive increased dollar amounts: compensation in effect under 
section 114 of title 38, United States Code; additional 
compensation for dependents in effect under sections 1115(1) of 
title 38, United States Code; clothing allowance in effect 
under Section 1162 of title 38, United States Code; Dependency 
and Indemnity Compensation to Surviving Spouse under 
subsections (a) through (d) of sections 1311 of title 38, 
United States Code; and Dependency and Indemnity Compensation 
to Children--each of the dollar amounts under sections 1313(a) 
and 1314 of title 38, United States Code.
    Section 2(c)(1) of the bill would specify that each amount 
shall be increased by the same percentage by which benefits are 
increased under title II of the Social Security Act (42 U.S.C. 
401 et seq.).
    Section 2(c)(2) of the bill would round down to the next 
lower dollar amount all compensation and DIC benefits, when the 
amount is not in the whole dollar amount.
    Section 2(d) of the bill would provide a special rule 
authorizing the Secretary of Veterans Affairs to adjust 
administratively, consistent with the increases made under 
subsection (a), the rates of disability compensation payable to 
persons under section 10 of Public Law 85-857 (72 Stat. 1263), 
who are not in receipt of compensation payable pursuant to 
Chapter 11 of Title 38, United States Code.
    Section 3 of the bill would require the Secretary of 
Veterans Affairs to publish in the Federal Register the amounts 
specified in subsection (b), as increased pursuant to that 
section.

              APPLICATION OF LAW TO THE LEGISLATIVE BRANCH

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch where the bill relates to the terms and conditions of 
employment or access to public services and accommodations. 
This bill provides a cost of living increase for specific 
veterans benefits. As such, this bill does not relate to 
employment or access to public services and accommodations.

  STATEMENT OF OVERSIGHT FINDINGS AND RECOMMENDATIONS OF THE COMMITTEE

    In compliance with clause 3(c)(1) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report.

         STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goals and objectives, which include improving the quality of 
life for veterans and their dependents, are reflected in the 
descriptive portions of this report.

                        CONSTITUTIONAL AUTHORITY

    Under clause 3(d)(1) of rule XIII of the Rules of the House 
of Representatives, the Committee must include a statement 
citing the specific powers granted to Congress to enact the law 
proposed by H.R. 1284. Article I, Section 8 of the Constitution 
of the United States grants the Congress the power to enact 
this law.

                     FEDERAL ADVISORY COMMITTEE ACT

    The Committee finds that the legislation does not establish 
or authorize the establishment of an advisory committee within 
the definition of 5 U.S.C. App., Section 5(b).

                       UNFUNDED MANDATE STATEMENT

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandate Reform Act, P.L. 104-4) requires a statement whether 
the provisions of the reported bill include unfunded mandates. 
In compliance with this requirement, the Committee has received 
a letter from the Congressional Budget Office that is included 
herein.

                         EARMARK IDENTIFICATION

    H.R. 1284 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9(d), 9(e), or 9(f) of rule XXI.

                           COMMITTEE ESTIMATE

    Clause 3(d)(2) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
H.R. 1284. However, clause 3(d)(3)(B) of that rule provides 
that this requirement does not apply when the Committee has 
included in its report a timely submitted cost estimate of the 
bill prepared by the Director of the Congressional Budget 
Office under Section 402 of the Congressional Budget Act.

     BUDGET AUTHORITY AND CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and Section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause (3)(c)(3) of rule XIII of the Rules 
of the House of Representatives and Section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following cost estimate for H.R. 1284 from the Director of 
Congressional Budget Office:

                                     U.S. Congress,
                                Congessional Budget Office,
                                    Washington, DC, March 16, 2007.
Hon. Bob Filner,
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1284, 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.
            Sincerely,
                                           Peter R. Orszag,
                                                          Director.
    Enclosure.

H.R. 1284--Veterans' Compensation Cost-of-Living Adjustment Act of 2007

    H.R. 1284 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.
    H.R. 1284 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.
    The CBO staff contact for this estimate is Dwayne M. 
Wright. This estimate was approved by Peter H. Fontaine, Deputy 
Assistant Director for Budget Analysis.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    H.R. 1284 is a freestanding provision and as such does not 
change positive law.

                  ADDITIONAL VIEWS OF HON. STEVE BUYER

    In my letter of March 8, 2007, objecting to the markup on 
the bills, including H.R. 327, H.R. 612, H.R. 797, and H.R. 
1284 (letter attached), I strongly urged legislative hearings 
on these bills before the markup.
    Had the Committee followed regular order in holding a 
legislative hearing on H.R. 1284, the Veterans Compensation 
Cost-of-Living Adjustment Act of 2007, the Committee would have 
heard testimony from veterans' service organizations and other 
interested parties on matters and concerns relating to the 
authorization of a cost of living adjustment (COLA) for 
disability compensation, and dependency and indemnity 
compensation. The veterans service organizations and other 
interested parties should have had the opportunity to testify 
on H.R. 1284 before the committee reports it. This important 
annual authorization should not be treated as legislation that 
is so routine as to no longer merit a hearing. I support H.R. 
1284.
                                                       Steve Buyer.