```

[Senate Hearing 109-519]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 109-519
 
                  THE LEGISLATIVE PRESENTATION OF THE
                    VETERANS OF FOREIGN WARS OF THE
                             UNITED STATES

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

                                HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 7, 2006

                               __________

       Printed for the use of the Committee on Veterans' Affairs

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 senate

                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
28-173                      WASHINGTON : 2006
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512�091800  
Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001

                     COMMITTEE ON VETERANS' AFFAIRS

                      Larry Craig, Idaho, Chairman
Arlen Specter, Pennsylvania          Daniel K. Akaka, Ranking Member, 
Kay Bailey Hutchison, Texas              Hawaii
Lindsey O. Graham, South Carolina    John D. Rockefeller IV, West 
Richard Burr, North Carolina             Virginia
John Ensign, Nevada                  James M. Jeffords, (I) Vermont
John Thune, South Dakota             Patty Murray, Washington
Johnny Isakson, Georgia              Barack Obama, Illinois
                                     Ken Salazar, Colorado
                  Lupe Wissel, Majority Staff Director
               D. Noelani Kalipi, Minority Staff Director

                            C O N T E N T S

                              ----------                              

                             March 7, 2006
                                SENATORS

                                                                   Page
Craig, Hon. Larry, Chairman, U.S. Senator from Idaho.............     1
Akaka, Hon. Daniel K., U.S. Senator from Hawaii..................     3
Isakson, Hon. Johnny, U.S. Senator from Georgia..................     5
Salazar, Hon. Ken, U.S. Senator from Colorado....................     6
Murray, Hon. Patty, Ranking Member, U.S. Senator from the State 
  of Washington..................................................     7
Jeffords, Hon. James M., U.S. Senator from Vermont...............    22
Thune, Hon. John, U.S. Senator from South Dakota.................    22

                               WITNESSES

Mueller, James R., Commander-in-Chief, Veterans of Foreign Wars 
  of the United States, accompanied by William Bradshaw, 
  Director, National Veterans Service; Robert E. Wallace, 
  Executive Director; Dennis Cullinan, Director, National 
  Legislative Service; and Dewey M. Riehn, Chairman, National 
  Legislative Service, Veterans of Foreign Wars of the United 
  States.........................................................    10
    Prepared statement...........................................    10

  THE LEGISLATIVE PRESENTATION OF THE VETERANS OF FOREIGN WARS OF THE 
                             UNITED STATES

                              ----------                              

                         TUESDAY, MARCH 7, 2006

                               U.S. Senate,
                    Committee on Veterans' Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:00 a.m., in 
room SR-216, Russell Senate Office Building, Hon. Larry E. 
Craig (Chairman of the Committee) presiding.
    Present: Senators Craig, Thune, Isakson, Akaka, Jeffords, 
Murray, and Salazar.

           OPENING STATEMENT OF HON. LARRY E. CRAIG, 
                    U.S. SENATOR FROM IDAHO

    Chairman Craig. Good morning, ladies and gentlemen, and 
welcome to the Veterans' Affairs Committee of the United States 
Senate. It is a pleasure to welcome all of you here, and 
Commander Mueller, a very special welcome to you, sir. You and 
your predecessors have been advocating for America's veterans 
of foreign wars for over a century now. I am very pleased that 
so many of you have traveled the distances you traveled to be 
here today to carry on the tradition.
    I would like to single out a few of your memberships from 
my home State of Idaho who have made that special trek. I am a 
weekend commuter and so there is a little sense in their body 
now of what I go through on a weekly basis. It is the nature of 
the job.
    Let me ask my Idaho friends to stand, and I'd like to 
introduce Pat Teague, our Idaho Department Commander. There you 
are. Good to see you, sir. Gary Ellis, Senior Vice Commander; 
John Crotinger, Junior Vice Commander; Bob Finney, an Adjutant; 
and Daniel Johnson, Quartermaster. Thank you all so much for 
being here.
    [Applause.]
    Chairman Craig. I would also like to recognize the National 
President of the VFW Ladies Auxiliary, Sandy Germany. Sandy? 
There you are. Thank you for being here.
    [Applause.]
    Chairman Craig. This past year has been an extremely 
gratifying one for me. First, as Chairman of the Veterans' 
Affairs Committee, I sincerely believe that this Committee and 
its Members, while sometimes differing in approach, are all 
united in a common mission, ensuring that the nations veterans, 
particularly veterans wounded in the line of duty, receive the 
highest quality of health care and benefits that they need.
    By any measure, we have had a busy and a very productive 
first year, convening 23 hearings here in Washington, 9 field 
hearings, and 5 mark-ups. More importantly, committee-related 
activity has led to several, I think very important, 
accomplishments. I'm going to single out one accomplishment in 
particular that deserves special attention because all of you 
were instrumental in securing its enactment.
    About a year ago I wandered into my office to meet with 
three veterans of Iraqi Freedom. One was missing a leg, another 
was missing two legs, and the third could no longer see. They 
asked that I push legislation to create a new insurance benefit 
for the traumatically injured such as themselves, although they 
did not want it for their personal benefit. Before that meeting 
was over, we had become good friends and they had convinced me 
that this would be critical legislation, as a whole, in the 
benefits structure that our country offers veterans from the 
moment they are wounded. I went on to visit and continued to 
visit with many of them rehabilitating at Walter Reed.
    The good news is that that is law now and probably set some 
kind of speed record. From the moment of idea through to its 
completion and now to its implementation, Congress made it 
retroactive for all service time from both Afghanistan and 
Iraq. I am pleased and impressed at their selflessness, and I 
and Senator Akaka on board, immediately took this proposal to 
the floor. It became what is known as the Wounded Warrior 
Legislation. With your support, it was signed into law 
literally a few weeks later, and here is the result of 
something we all can be proud of.
    Almost 1,500 traumatically injured servicemen from OIF and 
OEF are now being served. These are young men and women with 
amputations, severe burns, total blindness, total deafness, 
paralysis, and a host of other disabilities, all of them 
sustained in defense of America. Going forward, Wounded Warrior 
Insurance will meet the gap in the financial help that these 
heroes are facing during their convalescence. On behalf of all 
of them I want to salute all of you today for the support you 
offered this Committee and those wounded warriors as we worked 
to make that law.
    Before I close, let me touch on what has consumed much of 
our attention of late, and of course that is the Fiscal Year 
2007 VA Budget. I believe this record budget requested is 
extraordinary and shows that in this fiscally austere climate, 
the President has chosen to make veterans once again a top 
budget priority. That said, I am concerned that at present 
spending rates, VA budgets will double nearly every 6 years and 
will soon collide with the spending demands in all other areas 
of Government, and I can see how the mainstream media and 
others are now treating this proposed budget, it may be okay 
for 2007, but it is surely going to mean cuts in 2008. To 
prejudge any activity of the Congress is but a fool's game, I 
think you all know that, especially when it comes to this 
Congress' commitments to veterans. I want to, for just the next 
few moments, deal with a bit of a reality check, and that is 
something that we as veterans need to face along the way.
    The Congress and this President have continued to plus-up 
budgets progressively over the last 6 years. This President's 
proposal, while the largest ever, has a new approach in it. Not 
new in the sense that it is a new idea, but new in the sense 
that calculated into the budget is some revenue enhancement, 
and you know what I am talking about. He is asking Priority 7 
and 8 veterans with no service-related disabilities to 
contribute up to $21 a month to enroll in the VA Health Care 
System and to pay $15 for a 30-day supply of medicine. Although 
I personally find these proposals to be reasonable, I know your 
organization has voiced opposition. So I will reiterate my hope 
that the VFW and others will engage with this Committee in 
serious and candid discussions, if not about the President's 
proposal, then about other options. It is our collective 
responsibility to sustain this incredible VA Health Care System 
into the future. If we begin addressing these issues now, we 
can help ensure that future veterans will not be faced with 
even bigger challenges and more radical changes to meet these 
challenges. Personally, I do not want to pass this issue on to 
the next guy. It is not in my character. That is not the way I 
like to operate. I want to pass on to tomorrow's veterans what 
we have collectively created, a health care system that 
provides quality care that is accessible to those who need it 
and affordable to those who want it. I hope you will agree with 
my goals and are willing to work with me and my colleagues in 
this effort.
    Before I introduce Commander Mueller to all of us and to 
the Committee today, let me turn to my colleague Senator Akaka, 
and I'm been joined by several of my colleagues for any opening 
comments they would like to make.
    Danny.

          OPENING STATEMENT OF HON. DANIEL K. AKAKA, 
                    U.S. SENATOR FROM HAWAII

    Senator Akaka. Thank you very much, Mr. Chairman. It is 
certainly a pleasure for me to be here with you and our 
Committee to hear the legislative presentation of the Veterans 
of Foreign Wars, and it is a pleasure, Mr. Chairman, to be 
working with you to help the veterans of our country.
    I wanted to thank Commander James Mueller, his senior 
officials, as well as the veterans and their families who have 
made the journey to the nation's capital to express their 
concerns. This is truly democracy in action.
    Your organization has a long and proud tradition of public 
service. Your many charitable works and advocacy on behalf of 
veterans is truly exemplary. This Committee relies heavily on 
your concerns and your agendas for the coming year.
    At this time, I would like to recognize some members that 
traveled all the way from my home State of Hawaii to be here 
today. I'd like for you to stand, Richard Wong, Roy Machado, 
George Barlett, Vi Indie, Gerri Enos, Norbert Enos, John 
Chapman, Sam Araki, the Department Commander, George Harada, 
Ben Acohido and Mrs. Anita Acohido, and Nick Young. There you 
are. Thank you very much. Aloha. Aloha.
    [Applause.]
    Senator Akaka. Thank you for being here today. You all do 
fine work and the people of Hawaii owe you a great deal of 
gratitude, and so do the veterans.
    I would like to share some of my concerns and priorities. 
During this time last year, many of us here in Congress were 
sounding the alarm that the VA budget was facing a crisis 
situation. Many months later, the Administration acknowledged 
the fact and Congress took action to provide emergency funding. 
Chairman Craig kept his promise and was the driving force 
behind the emergency funding and, again, I applaud him for his 
efforts.
    When we started working together last year, we pledged to 
work in a bipartisan manner and we have done so. There are 
times, however, when we agree to disagree. We both agree that 
veterans deserve to have the best health care services and 
benefits, though we sometimes disagree on sometimes how to pay 
for it. I want to be clear, however, that we have the same goal 
and that is to ensure that the VA is provided with the 
resources to provide quality care and services to our nation's 
veterans. I remain dedicated to ensuring that the VA has the 
resources it needs to care for all veterans.
    We must learn a lesson from last year's budget crisis and 
do everything we can to ensure that veterans and their family 
members have access to the health care and benefits they have 
earned. The VA's budget has increased over the past 6 years as 
it should and has been mentioned by the Chairman. The cost of 
caring for our veterans is, in my opinion, a cost of war. If 
the Department of Defense's budget can grow exponentially and 
be funded yearly out of supplementals, it only makes sense that 
the VA's budget needs to grow exponentially as well. It is no 
secret that each service member that we so readily fund out of 
DOD will eventually be seeking services from the VA. It follows 
then that if the DOD's budget grows steadily, the VA's budget 
must grow steadily as well.
    For me it is a matter of priorities. We must stand by our 
veterans and ensure that they receive the care and services 
that they have earned through their service to our country, and 
we must ensure that we care for all veterans. We cannot fund 
the VA system out of the pocket of middle-income veterans, as 
many of these men and women make as little as $26,902 a year. 
Higher co-payments and enrollment fees are not justified. To 
date, over a quarter of a million veterans have been excluded 
from VA health care. Over 700 veterans in Hawaii have knocked 
on the doors of VA care only to be denied. We must work to 
overturn this Administration's decision and open the VA system 
up to those who need it.
    I also am concerned about the VA Research Program being 
slated for a cut under this budget. Since its inception, the VA 
Research Program has made landmark contributions to the welfare 
of not only veterans, but the entire nation, illustrating the 
unique importance of keeping it adequately funded. With 
thousands of military personnel engaged in conflict overseas, 
it is vital that Congress invest in research that could have a 
direct impact on their post-
deployment quality of life.
    With regard to the VBA budget, I am concerned whether or 
not this budget provides an adequate level of staffing for 
compensation claims rating. The VA must be ready to adjudicate 
claims in a timely and accurate manner. All veterans and their 
families deserve nothing less.
    I will continue to oppose efforts to reduce veterans' 
compensation as we saw with the ill-fated PTSD review. Now the 
Institute of Medicine and the Veterans Disability Benefits 
Commission are reviewing veterans' disability compensation. It 
is my hope that these groups will recommend new ways for 
Congress to improve benefits, not call for cuts in current 
benefits.
    My last priority is near and dear to my heart. As a veteran 
of World War II, I owe a great deal of where I am today due to 
the GI Bill educational benefits I used as a young man. With 
this in mind, I will continue to look for ways to enhance and 
modernize educational benefits to more adequately prepare 
veterans for the new challenges of our economy.
    In closing, I would like once again to thank Commander 
Mueller and all the VFW members here today. Your service and 
dedication to this nation and its veterans is unquestionable. I 
look forward to your presentation and working with you in the 
future. Thank you very much, Mr. Chairman.
    [Applause.]
    Chairman Craig. Senator Akaka, thank you very much for 
those opening comments. Now let me turn to Senator Johnny 
Isakson, State of Georgia.
    Senator.

           OPENING STATEMENT OF HON. JOHNNY ISAKSON, 
                   U.S. SENATOR FROM GEORGIA

    Senator Isakson. Thank you, Mr. Chairman, and welcome 
Commander Mueller. We're glad to have you and all the veterans 
here today. I came to hear you and not to hear me, so I am not 
going to make a speech which is probably a benefit to everybody 
here.
    However, I would like all the Georgia veterans that are 
here to please stand.
    [Applause.]
    Senator Isakson. Mr. Chairman, I would like to remark about 
two of those veterans who I know very well. One of them who had 
to leave earlier I found out, Joe T. Wood. I served with Joe T. 
Wood in the Georgia Legislature for some 15 years. He served 
his country in Korea, he served his country nobly, and he has 
been an advocate for the Veterans of Foreign Wars and veterans' 
issues since I have known him. I am delighted that he made the 
trip, although he had to go back early today.
    Ted Daywalt at the back of the room is a resident of my 
home County in Georgia and is a champion for employment 
placement for veterans of the United States of America's armed 
services. He has placed thousands of veterans in meaningful 
employment in Georgia and works every day as an advocate for 
them. It is not a surprise to me to see him today as we talk 
about this important subject.
    Lastly, Mr. Chairman, I thank you for taking the time to 
bring the veterans before us one at a time through the various 
service-related groups so that we can talk seriously and 
constructively about veterans' affairs and the budget not only 
for this year but in the years to come, and I thank you, Mr. 
Chairman.
    Chairman Craig. Senator, thank you.
    [Applause.]
    Chairman Craig. My staff says by order of entry or 
attendance. Let me turn to Senator Ken Salazar of the State of 
Colorado.

   OPENING STATEMENT OF HON. KEN SALAZAR, U.S. SENATOR FROM 
                            COLORADO

    Senator Salazar. Thank you very much, Chairman Craig and 
Ranking Member Akaka, and thank you to all of the members of 
the VFW who are here joining us this morning.
    I would like to also welcome the members of the Colorado 
VFW delegation who are here today led by Dr. Rudy Aguerro who 
is the Colorado State Commander of the VFW, and if I could see 
the Colorado vets stand up.
    [Applause.]
    Senator Salazar. Thank you to all of you for the service to 
our country. I have just a few comments to make.
    First and foremost, out of the VFW national membership, I 
know that in Colorado we have 135 posts and 21,000 members, and 
I'm very proud of all of the contributions that they continue 
to make to our State and the contributions that they make to 
veterans' issues in Colorado.
    Secondly, I want to make just a few comments about the work 
of this Committee. First, one of the great hallmarks I think of 
this Committee has been the work that we have been able to do 
on a bipartisan basis. I think the leadership of Senator Patty 
Murray and Senator Akaka and Senator Craig last year resulted 
in the restoration of significant dollars to health care that 
otherwise would have been cut under the miscalculations that 
had been made by the Veterans Administration, and we need to 
applaud their efforts and the efforts of the Congress in 
restoring their efforts for that last fiscal year.
    We, however, in looking at that significant issue that we 
had to deal with last year must also be cognizant of looking 
ahead and making sure that the budget process and the actuarial 
process that is used at the Veterans Administration is in fact 
working. Last year part of the explanation as to why we had 
such a reality of missing the mark on what the health care 
needs of veterans was had to do with a sense that they were 
using 2002 statistics to set the budgets for last year. We have 
asked, a number of us, GAO to take a look at how the VA sets 
its budget so that we do not make the same mistake in future 
years. We hope to have the report from the GAO out within 
several weeks so that we can share with Members of this 
Committee as well as with others.
    Let me also say I share Senator Akaka's concerns with 
respect to the proposed cuts that are set forth in the budget. 
Commander Wallace, I know that you share some of those same 
concerns with respect to funding for Priority 7 and 8 veterans 
and the co-payment fees that are included, as well as the 
enrollment fees. I think we ought not to move forward in that 
direction at a time when we as Americans ought to be standing 
up and saying that we are going to honor our nation's 
commitment to our veterans. There will be, I'm sure, a healthy 
debate about that issue and I can tell you that our presence 
here today is noted and your position on these issues is very 
much taken into account.
    I also am concerned about the out-year budgets. When you 
look at the upcoming fiscal year, the President's budget does 
include in there significant increases for health care for the 
VA. When you get beyond the next fiscal year, I do not want the 
veterans of America to be falling off the cliff, and certainly 
some of the projections that look out at the out years indicate 
that while we might treat veterans well for 1 year, it does not 
tell us where we are going to go in the following fiscal years, 
and for Commander Mueller and others there are I think some 
significant concerns that we ought to be looking at over the 
long term. I think that's why the independent budget which the 
veterans' organizations have come up with is something that we 
all need to pay attention to.
    The last point that I would make is that as a Member of 
this Committee and given the place that I come from in Colorado 
which is probably about as remote a place as anybody can think 
about down in the San Luis Valley, I am very concerned about 
what happens with veterans in rural communities. If you happen 
to live in the Denver metropolitan area in my State, you can 
get into the veteran's hospital maybe within 15 to 20 minutes. 
But if you happen to live in Craig, Colorado, or down in the 
San Luis Valley or other places, it can be an 8-hour journey 
back and forth simply to get some veteran's health care. One of 
the things that I want to make sure I am pushing with my 
Democratic and Republican colleagues on this Committee is 
additional attention to the particular need that veterans are 
facing in the rural parts of America.
    Mr. Chairman, thank you for the opportunity to make these 
opening remarks.
    Chairman Craig. Senator Salazar, thank you.
    [Applause.]
    Chairman Craig. Now from a neighboring State, the State of 
Washington, Senator Patty Murray.
    Senator.

 OPENING STATEMENT OF HON. PATTY MURRAY, U.S. SENATOR FROM THE 
                      STATE OF WASHINGTON

    Senator Murray. Thank you very much, Mr. Chairman and 
Senator Akaka for holding this hearing, and I wanted to join my 
colleagues in welcoming Commander-in-Chief Mueller and all of 
our VFW members, and I want to thank them for their sacrifices 
and work on behalf of veterans all across this country.
    I want to thank the veteran leaders who have traveled here 
from Washington State. If they could stand, John Beem, Doug 
Reed, Mike and Valerie Peterson, and John Rust are here with us 
today I believe in the room. Some of them might be out in the 
outer room.
    Chairman Craig. There's an anteroom.
    Senator Murray. I am delighted that they are here with us.
    [Applause.]
    Senator Murray. Not long ago, Doug Reed who is here today 
and I were at a Veterans' Round Table in Longview, Washington, 
a small, remote community in my State. We were meeting with 
veterans who had just come back from Iraq and Afghanistan, and 
Doug introduced me to a guardsman whose name was William who 
had just gotten back a few months earlier from Iraq. He had 
lost his job, he could not get unemployment benefits, and he 
was lost somewhere between DOD and the VA health care system. 
His doctors could not figure out what was wrong with him, and 
he had to feed his family on food stamps. It was an appalling 
story. I asked Doug a few weeks ago how William is doing, and 
he is still struggling.
    I know that William is not alone. Doug just like everybody 
in this room today could tell us a story about veterans who are 
falling through the cracks, whether they are struggling with 
employment, or mental-health issues, or drug and alcohol, or 
simply transitioning from Haifa Street to Main Street, there 
are many of our veterans who are struggling. As we begin this 
new budget year, I hope we can all join together to make sure 
that veterans like that Guard member in Longview that I met are 
getting the care and the benefits and the help that they need.
    I also recently heard from Court Fraley. He is a VFW 
service rep in Seattle and he outlined concerns with veterans 
trying to get their benefits from the VA. He told me about 
veterans going in to get their compensation and pension exam 
from QTC doctors and that veterans say it is kind of hit or 
miss right now depending on the doctor they see. That is not 
right.
    Court Fraley also shared that he is seeing increased rates 
of benefits that are being denied by the VA, only to have that 
decision reversed upon looking at the case a second time that 
wastes time of our staff and money. Mr. Chairman, I am 
concerned about the VA benefits backlog and I am concerned we 
do not have enough staff to take care of the needs that are out 
there, and I hope that Commander-in-Chief Mueller will talk 
about this today.
    As I have said many times, we have some big problems, we 
have some serious delays in veterans receiving care and 
benefits and this budget does not fix the funding problem. It 
is built around denying care instead of meeting real needs. 
There is no question that the VA provides the best medical care 
in the country, but now the VA is being asked to do more and 
more with less and less. We owe it to everyone in this room 
today to make this right, to make the system work for them, 
just as we owe it to veterans of every generation.
    [Applause.]
    Senator Murray. Perhaps most of all, we owe it to our men 
and women in the armed forces today, many of whom are deployed 
even as we sit here. Time and again the Department of Defense 
shares that VA health care and benefits is one of their best 
recruiting tools and we need to keep it that way. I have heard 
the Chairman's concerns about the budget about why we should 
consider increased enrollment fees and co-pays and about budget 
decisions have been made and that we need to find some new 
solutions for veterans' health care. I believe that we need to 
make it clear that we owe our veterans more than a budget line 
we are willing to sacrifice for other choices. I am tired of 
hearing that the choice is within the budget tax cuts for the 
wealthy rather than veterans' health care and benefits, and I 
am tired of hearing that because we have a multitrillion-dollar 
deficit that now when we have Vietnam veterans aging, Iraq and 
Afghanistan veterans coming back home and a health care crisis 
that is spiraling out of control, and that now we cannot find a 
way to take care of those who have served us. I think we can do 
a lot better than that.
    [Applause.]
    Senator Murray. I encourage all of you who are here today 
to not accept false choices. You are entitled to the thanks of 
a grateful nation and a commitment from this Government that 
was equal to your commitment. I look forward to hearing from 
you today, Commander. Thank you very much.
    [Applause.]
    Chairman Craig. Senator Murray, thank you very much. Before 
I introduce the Commander, you all are probably getting tired 
of us, but there needs to be a record reality so that we 
understand where we are.
    During the years of the Clinton administration, the Federal 
Government collected $1.789 trillion worth of revenue. In 2005, 
the Government collected $2.154 trillion worth of revenue. That 
is a revenue increase during a time of tax cuts of 20 percent. 
That is one side of the story.
    The other side of the story that is important to know is in 
that 5-year timeframe, Government programs have gone up 38 
percent, but veterans' increases have been 46 percent, and 
every Member of this Committee has defended that and fought for 
it right along with all of you. That is something to be proud 
of, not to be critical of.
    What I am suggesting today is that we look at this budget 
with a discerning eye, and future budgets with a discerning 
eye, but it is important that we set the record straight 
because those are the facts.
    With that, let me do something that is the privilege of 
this Chairman, and that is to introduce you, Commander. We 
thank you so much, Jim, for your life of service and sacrifice. 
Commander Mueller served in the U.S. Army from 1966 to 1968 and 
is a veteran of the Vietnam War for which he earned the 
Veterans Service Medal, excuse me, the Vietnam Service Medal, 
the Vietnam Campaign Medal, and the National Defense Service 
Medal.
    Jim began his service with the Veterans of Foreign Wars in 
1970 when he joined Post 5077 in O'Fallon, Missouri. It did not 
take long for him to ascend the leadership positions of his 
Local, State and National levels in the VFW. The list of 
National Committees Commander Mueller has served on attest to 
the breadth of his knowledge on issues of importance to 
veterans and service members. Those committees include Voice of 
Democracy, Homeless Veterans, National Security and Foreign 
Affairs for the POW/MIA. Recognizing Jim Mueller's knowledge, 
leadership and dedication and service to the country, his peers 
elected him Commander-in-Chief of the Veterans of Foreign Wars 
in August 2005. Jim and his wife Patricia have been married for 
40 years and have two children. They reside in O'Fallon, 
Missouri.
    Let me tell you, Commander, it is very much an honor for 
this Committee to have you and your colleagues here today, and 
I would ask you to introduce those who are with you at the head 
table. Thank you very much, Jim. Welcome.

STATEMENT OF JAMES R. MUELLER, COMMANDER-IN-CHIEF, VETERANS OF 
   FOREIGN WARS OF THE UNITED STATES, ACCOMPANIED BY WILLIAM 
   BRADSHAW, DIRECTOR, NATIONAL VETERANS SERVICE; ROBERT E. 
    WALLACE, EXECUTIVE DIRECTOR; DENNIS CULLINAN, DIRECTOR, 
  NATIONAL LEGISLATIVE SERVICE; AND DEWEY M. RIEHN, CHAIRMAN, 
 NATIONAL LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS OF THE 
                         UNITED STATES

    Commander Mueller. I would like to introduce our Executive 
Director, Mr. Bob Wallace; our Veterans Service Director, Mr. 
Bill Bradshaw; and Legislative Director Mr. Dennis Cullinan.
    Chairman Craig. Thank you very much, Commander, and the 
floor is yours.
    Commander Mueller. Thank you, sir. Chairman Craig, Ranking 
Member Akaka, distinguished Members of this Committee, honored 
guests and friends, before I begin I would like to express my 
sincere and deep appreciation of the invitation to appear here 
today. We are delighted that you recognize the importance of 
this tradition and that you continue to recognize the 
importance of veterans' voices. No other Committee in this 
Congress has such a clear constituency, a constituency you see 
before you. We thank you and your hard-working staff for their 
efforts.
    I would request that my full written statement be entered 
into the record.
    Chairman Craig. Commander, your full statement and any 
accompanying material will become a part of the record. Thank 
you.
    Commander Mueller. Thank you, sir.
    [The prepared statement of James R. Mueller follows:]

Prepared Statement of James R. Mueller, Commander-in-Chief, Veterans of 
                   Foreign Wars of the United States

    Mr. Chairman and Members of the Committee: It is a great honor to 
be before you representing the 2.4 million men and women of the 
Veterans of Foreign Wars of the U.S. and our Auxiliaries. Founded in 
1899, the VFW is this nation's largest organization of combat veterans. 
Our members come from across the country, and even the world.
    We thank you for the opportunity to testify today. With war 
dominating the news on a daily basis, it is right that this country's 
focus is on those who serve this nation in uniform, both past and 
present. We have long said that what this nation provides to its 
veterans is part of the ongoing costs of war, and is the price of 
peace. These costs do not end when the last shot is fired. They extend 
long into the future, as we strive to make those who have worn a 
uniform in defense of this great nation whole, to compensate them for 
the sweat and the blood they have lost.
    As you proceed throughout the year, an election year for some of 
you, I would ask that you keep these priorities in mind. In prior 
years, we have done what these brave men and women are doing in Iraq 
and Afghanistan. We understand the stresses and strains they must feel. 
We understand, too, the needs they will have as they return, 
transitioning back into productive society.

                          VA MEDICAL PROGRAMS

    The Veterans Health Administration (VHA) is the nation's largest 
integrated hospital system with over 160 medical centers and over 860 
outpatient clinics. In fiscal year (FY) 2005, VHA took care of more 
than 5.5 million veterans.
    The administration's request for medical programs in fiscal year 
2007 is a good first step. We were pleased to see that it appropriates 
a total of $35.7 billion in discretionary funding. This is a $2.7 
billion increase over fiscal year 2006, an 8 percent increase. While we 
are grateful for the extra funding, we must keep in mind that we will 
have many thousands of returning servicemembers, an aging veterans' 
population, and the ever-eroding pace of medical inflation chipping 
away at this amount.
    Given the difficulties that VA faced with respect to their budget 
modeling and projections for the future, we must be vigilant to ensure 
that proper funding is authorized and appropriated. You met the 
challenge last year when VA was on the verge of running out of funding. 
We are confident that you will be there in the future, but I certainly 
hope that it does not have to come to that in the coming fiscal years. 
We would urge this Committee and its counterpart in the House to use 
its oversight authority, and we applaud the steps you have taken thus 
far.

                          COPAYMENTS AND FEES

    Once again, the administration's request balances the budget on the 
backs of veterans. Instead of authorizing a complete level of funding, 
it forces veterans to subsidize further their healthcare, and fails to 
acknowledge that veterans have already paid for it with their service 
to this country.
    The request would increase the pharmaceutical co-payment from $8 to 
$15 for each 30-day supply. Category 7 and 8 veterans who pay these 
fees would have their medical bills nearly double, a completely 
unreasonable request. Pharmaceuticals are part of VA's standard 
benefits package, and this dramatic increase would, in effect, make 
them inaccessible to many veterans. Although you or I could probably 
afford the increase, those who scrimp for food and can barely pay their 
rent would have great difficulty paying these extra charges.
    The same can be said for the administration's proposed enrollment 
fee. This proposal would charge veterans in categories 7 and 8 $250 
each year. This is not a deductible, but a yearly fee. If a veteran 
goes just once a year, even for a preventive health exam, such as a 
physical, he would be charged. Like the co-payment, this would affect 
veterans making as little as $26,000.
    Together, they would place an unhealthy financial burden on a large 
number of veterans. For example, a veteran who receives just three 
prescriptions would face $502 in extra fees each year. VA has admitted 
that one of the intents of these fees is to drive veterans from the 
system, even though many of them might not have other forms of health 
insurance. This is unacceptable.
    We urge Congress to reject these fees, and to provide sufficient 
appropriations to cover for VA's projected collections for these 
proposals.

                              COLLECTIONS

    We remain concerned that the President's request relies on an 
assumption of $2.8 billion in collections. These collections directly 
offset appropriated funding.
    We feel that this amount is unreasonably high. Even if we take out 
the projected $544 million for the proposed co-payment and enrollment 
fee, that means that VA will need to take in nearly $2.3 billion. 
Numerous GAO reports have detailed the substantial problems with VA's 
billing process and the institutional problems, which prevent VA from 
recapturing these monies. While VA has made great strides, an over 
reliance on an unreachable goal could mean that VA will need to make do 
without proper funding once those goals aren't met. As it stands, VA 
would need to increase its collections by 11.4 percent over fiscal year 
2006's projected total. If that large increase isn't met, care for 
veterans could suffer.

                          MEDICARE SUBVENTION

    Although veterans pay into the Medicare system, they cannot use 
their Medicare benefits at VA. VA is not allowed to collect money from 
Medicare for services rendered. This, in effect, is a multi-billion 
dollar subsidy of Medicare. If even a portion of this money were 
allocated to the VA health care system, many of its funding problems 
would disappear. Studies have even shown that VA provides care at a 
per-patient rate below that of Medicare. We understand that there are 
institutional and bureaucratic difficulties with allowing Medicare 
subvention, but we would hope that they could be overcome.

                      ASSURED HEALTH CARE FUNDING

    The President's request is the exception to the rule. The last 
several years have seen administration requests far below what is 
needed, and while Congress has seen fit to increase them each year, VA 
funding has failed to keep pace with medical inflation and increased 
demand, as evidenced by the need for repeated emergency supplementals.
    Further, VA has made do with these inadequate budgets by rationing 
health care. The Secretary has prevented new category 8 veterans from 
enrolling in the health care system. Those that remain are forced to 
wait lengthy periods of time--in some cases, months--for needed 
services. Recent GAO reports have shown that past budgets were built on 
faulty methodology, including the assumption of savings through 
management efficiencies, which were never adequately explained, leading 
us to believe that there weren't really any savings, just cuts.
    Even when VA receives its budget, it never receives it on time. For 
the better part of a decade, VA's appropriation has been months late. 
How can VA properly plan for the future, let alone budget for the 
current year, when it is receiving its funding 6 months late? Even the 
best business minds in the country would be hard pressed to adequately 
manage and operate as large a system as VA with a late budget.
    Temporary measures, such as the supplemental appropriations, are 
certainly welcomed, but they do not fix the underlying problem. The 
discretionary process is broken.
    We must look to alternative means of funding VA health care. An 
assured funding system could make VA health care more dependable and 
stable, eliminating year-to-year uncertainty and allow for proper 
planning, best business practices, and assurances that VA will be able 
to adequately care for this nation's veterans.

                          SEAMLESS TRANSITION

    When our servicemen and women return from their battles around the 
globe, DOD, VA, and DOL should be adequately prepared to help these men 
and women transition to veteran status. Unnecessary delays force 
veterans to wait months for benefits and health care that they have 
earned by virtue of their service.
    To help smooth this process, VA and DOD must develop electronic 
medical records that are compatible with each other. As it is, the two 
departments are unable to synch up in any meaningful way, which delays 
how quickly VA is able to receive vital health care and deployment 
histories from DOD's records. Were VA to have this information, it 
could provide timely and accurate decisions on claims, as well as 
enhancing delivery and access to health care, while minimizing the time 
veterans must wait.
    We also believe that there should be an increased emphasis on 
separation physicals for active duty and the reserves. These physical 
exams conducted jointly with DOD and VA could highlight any potential 
health problems, but also serve as a future baseline for any symptoms 
or ailments that may pop up in later years. Additionally, the increased 
information would allow them to better handle new illnesses and have 
better data for conditions such as Gulf War syndrome and other 
undiagnosed illnesses.
    VFW seeks to enhance DOD's pre-separation counseling process and 
VA's and DOL's Transition Assistance Programs. We suggest that the 
programs ensure that counseling services are available during regular 
working hours and allow the inclusion of National Accredited Service 
Organizations to assist veterans preparing their claims for benefits 
prior to their discharge. We further seek that additional information 
be added to the scope and content of the programs pertaining to access 
to VA health care and benefits, and federal and private sector 
employment.
    These have been problems for several years. Despite progress, they 
still remain. We need strong, effective leadership to fix these 
problems. We have heard excuses. It is time for results.

                         MENTAL HEALTH SERVICES

    VA has a difficult balancing act with respect to mental health 
services for veterans. They must maintain and even improve services for 
current veterans, while adjusting to cope with the changing nature of 
conflict current servicemembers face and the new needs they have.
    Conflict for today's servicemembers is different than it was for 
those in past wars. Urban combat, suicide bombers, and roadside bombs 
create a situation with constant stress and constant tension. For those 
in the combat zone, there is frequently little relief.
    VA already is treating over 10,000 veterans of the current war for 
post-traumatic stress disorder (PTSD). As the number of returning 
veterans climbs, and as veterans come to terms with the depression and 
anxiety they may feel, many more will turn to VA and the excellent 
services it provides. We must be ready for them.
    We believe that VA must continue on its path to a system, which 
treats conditions, rather than just managing symptoms. This is the only 
way that veterans can be made whole, and will help them to become 
productive members of society. To that end, we believe that VA must 
continue to support its full continuum of care, which would include 
intensive case management, rehabilitation, integrated treatment, work 
therapy, and other support services to allow for a veteran's complete 
recovery.
    To accomplish this, we must be mindful of the impact of the CARES 
process. As it stands, mental health services were not a part of the 
original CARES model. VA's plans must adapt as needs change.
    We take great interest in VA's planned PTSD study with the 
Institute of Medicine. This study will impact both the treatment of 
PTSD in returning servicemembers and their eligibility for compensation 
to support themselves and their families. VA must meet the needs of 
these returning heroes.
    We hope that outreach programs will ensure that those returning 
service-members, as well as their families receive the treatment 
options they need to cope with a sometimes-difficult transition. To 
that end, we support pre- and post-deployment mental health screening 
process to serve as a baseline. The more information we have, the 
better will we be able to treat these conditions.

                             CARES PROCESS

    Over the last few years, VA's construction budget has been 
overshadowed by the Capital Assets Realignment for Enhanced Services 
(CARES) process. CARES, which aims to reorganize the VA health care 
system to properly plan for the future, and, in turn, realize improved 
health care service for veterans, has been a long and difficult 
process.
    We will continue to support CARES as long as VA returns to its 
primary emphasis and intent: the ``Enhanced Services'' portion of 
CARES. We accept that locations and missions of some VA facilities may 
need to change to improve veterans' access, to allow more resources to 
be devoted to medical care rather than to the maintenance of old 
buildings, and to accommodate more modern methods of health care 
delivery.
    Over the last few years, the funding for major construction has 
ebbed. This moratorium was caused by the planning of the CARES process. 
There was much political resistance to funding any projects before the 
planning process took place. Now that it has occurred, it is time to 
move forward, and advance this important plan.

                            VA CONSTRUCTION

    We call for a total investment of $1.447 billion for major 
construction, which includes funding for CARES. The President's request 
comes far below that, providing just $399 million for major 
construction
    Of particular importance is the funding for seismic corrections. 
Currently, 890 of VA's 5,300 buildings have been deemed at 
``significant'' seismic risk, and 73 VHA buildings are at 
``exceptionally high risk'' of catastrophic collapse or major damage. 
Accordingly, this will increase VA's need for construction funding. 
This is a chance to be proactive and fix a problem before the health 
and safety of VA's patients and workers is further compromised.
    We also call for funding for an architectural master plan. Without 
this plan, the benefits of CARES will be jeopardized by hasty and 
shortsighted construction planning. Currently, VA plans construction in 
a reactive manner--i.e., first funding the project then fitting it on 
the site. Furthermore, there is no planning process that addresses 
multiple projects; each project is planned individually. ``Big 
picture'' design is critical so that a succession of small projects 
don't ``paint'' the facility into the proverbial corner. As the cost of 
construction rises with inflation, the importance of optimal planning 
becomes paramount.
    We believe that architectural master planning will also provide a 
mechanism to address the three critical programs that the CARES study 
omitted. Specifically, these are long-term care, severe mental illness, 
and domiciliary care. These programs must be factored into any long-
term plans.
    With the reticence over the last few years to provide construction 
funding, the amount appropriated for maintenance has lagged far behind 
what has been needed. Price-Waterhouse, following standard industry 
practices, has recommended that VA spend at least 2 to 4 percent of the 
value of its buildings for nonrecurring maintenance. These small 
projects, such as replacing a roof or improving the fire alarm system, 
are necessary for the safety of patients, but also to maintain the 
integrity of the building so that it is viable for its entire lifespan. 
Accordingly, VA should spend no less than $1.6 billion for nonrecurring 
maintenance in fiscal year 2007. Unfortunately, the Administration has 
only allocated $514 million, which will only make the already 
backlogged maintenance lists grow.
    Further, because maintenance comes out of the medical care account, 
not the construction budget, much of the funding for the last few years 
has been used to provide medical care. Now, VA needs to cover deferred 
maintenance. In fact, according to VA's own assessment, which is 
conducted on three-year cycles, the investment necessary to bring all 
facilities currently rated ``D'' or ``F'' up to an acceptable level is 
$4.9 billion. There should not be a choice between fixing a roof and 
buying medical supplies. It is Congress' job to allocate properly 
funding for both.

                    VETERANS BENEFITS ADMINISTRATION

    VBA's primary mission is to deliver efficiently the compensation 
and benefits to which veterans, their survivors and dependents are 
entitled. These programs help make the veteran whole, allowing him or 
her to transition back into productive society. In the case of someone 
who is wounded in conflict, it helps provide income to overcome the 
loss of working productivity. In the case of a young man or woman fresh 
out of service, it helps them fulfill the American dream of home 
ownership. They are all worthy programs, and they recognize the 
disadvantages that service to this nation creates when our men and 
women in uniform interrupt their lives as civilians to defend our 
freedoms.

                             CLAIMS BACKLOG

    As of 2/24/2006, VA is sitting on 828,653 compensation, pension, 
and education claims and appeals. This massive backlog of unprocessed 
claims means that the average claim takes over 6 months for a decision. 
This is unacceptable.
    Nearly 600,000 of these claims are for disability compensation, 
which are intended to alleviate the economic hardships placed on 
veterans and their families. Delay in providing benefits forces these 
veterans to scramble to provide basic necessities for their families.
    Despite the effort and intention of VA management, this backlog has 
grown. As the number of pending claims increases, the difficulties with 
managing the backlog and finding acceptable solutions to the problems 
are compounded.
    VA claims that an increase in the complexities of these claims is 
the chief reason for the increase in the backlog. While we would agree 
that some claims have grown more complex, that explanation is just a 
symptom of the larger problem: a lack of resources.
    Despite the increased complexity of these claims, VA has proposed a 
149 FTE cut in compensation direct labor. How can VA be expected to 
make meaningful improvements in this backlog with a reduction in staff? 
The answer, we fear, is that they do not expect an improvement. VA 
predicts that backlogs and delays will continue to grow. We cannot 
accept this.
    VA leaders have been quick to explain that there is an offsetting 
increase in FTE for processing pension claims, which results in a net 
gain of 14 FTE for both programs. Even if VA's leaders are correct and 
no barriers exist to assigning these new employees wherever they are 
needed, the fact remains that a miniscule 14 FTEs will have almost no 
meaningful impact on a backlog that is 66,000 cases higher than it was 
last year.
    VBA's staffing requests must match the real-world demands placed on 
their system. The only way the department can make a meaningful dent in 
the number of claims is to devote adequate resources. The size of the 
backlog is proof positive that this has not been done.

                                ACCURACY

    The accuracy of the claims process is a significant problem that 
must be overcome. VA's own quality measurement system showed that VA 
made a significant error in 15 percent of all cases. Not only must a 
veteran wait 6 months for a decision, he or she has a pretty good 
chance of receiving an incorrect decision, too. That is unacceptable.
    As is the case with the claims backlog, this accuracy problem is a 
function of inadequate resources, but is also a result of management 
inaction. VBA has an aging workforce, many of whom are eligible or 
nearing eligibility for retirement. Claims adjudication is a difficult 
process, which improves greatly with experience. VBA is facing a crisis 
with inexperienced replacements for this aging workforce. This is a 
problem that will only grow worse in the coming decade.
    Poor quality decisions create several problems. In some cases, it 
forces the veteran to file an appeal, which further aggravates the 
backlog. If VA had decided the case correctly the first time, many of 
these appeals could have been prevented. More important to us, however, 
is the number of veterans who may just give up out of frustration. 
Although our network of national service officers helps many veterans, 
we can only assist those that seek us out. For a veteran without a 
service officer, navigating the highly complex bureaucracy that the VA 
claims process has become is a nightmare. Many of them receive an 
incorrect rating, unbeknownst to them, and then give up. Is this how we 
should treat our nation's heroes?
    VA must not only provide the right level of staffing, they must do 
more to train claims processors and develop measures to hold them 
accountable for their job performance.

                           GULF WAR ILLNESSES

    As thousands of men and women return from the Middle East, we must 
pay careful attention to their health needs, especially in light of 
what we learned in the aftermath of the Gulf War. A recent VHA study 
noted that around 29 percent of the veterans of Iraq and Afghanistan 
who sought care at VA were suffering from ``ill-defined conditions.'' 
There has rightly been much concern about the mental effects of the 
recent conflict, but this alarming statistic indicates that we cannot 
let this focus detract us from physical conditions, too. VA and DOD 
underestimated the effects of the first war. We must take what we know 
from the ailments these veterans suffer, and ensure that those who have 
unexplained illnesses are aware of and receive treatment and benefits 
they are eligible for through VA.

                       GI BILL EDUCATION BENEFITS

    The Montgomery GI Bill (MGIB) has been one of this nation's most 
effective programs, allowing veterans to better themselves through 
education. Giving these men and women financial assistance helps them 
to better themselves, which allows them to assume their rightful place 
as the leaders of the private and public sector.

                      GI BILL FOR THE 21ST CENTURY

    VFW's long-time goal has been a return to a WWII-like GI Bill. We 
envision a bill, which would pay for the full costs of attendance, to 
include tuition, books, fees, and living expenses, to any school at 
which a veteran is admitted. The Senate's own Education Committee did a 
study several years ago which noted that the original WWII GI Bill paid 
for itself many times over because of the additional tax revenue 
generated by the program. Further, many historians have noted that the 
GI Bill created the middle class as we know it.

                          TOTAL FORCE GI BILL

    As a step on the path, we support the idea of the Total Force GI 
Bill, which would acknowledge the changing contributions that our men 
and women in uniform make to the defense of this country. Our goal, 
which is shared with the Partnership for Veterans Education, would 
consolidate the current GI Bill program, and would improve its 
effectiveness.
    We envision a three-tiered approach. The first tier would be 
similar to the current active duty benefit. The second would be similar 
to the current Reserve, with the largest difference being that we would 
re-benchmark it with the historical rate of 47 percent of the active-
duty benefit. The third tier would be similar to the current Chapter 
1607 benefits, but would simplify them, and make them more commensurate 
with the contributions that our Guard and Reserve are making as part of 
the Total Force concept. After 90 days served on active status, we 
would give these men and women 1 month of education benefits at the 
active duty rate for each month they serve on active duty status.
    To foster retention, we envision allowing Reservists to control 
this enhanced benefit for as long as they remain active members of the 
selected reserve. Otherwise, all the other tiers would retain 10 years 
of eligibility.

                 PAY REDUCTION FOR GI BILL ELIGIBILITY

    The VFW strongly opposes the $1,200 buy-in that is required for GI 
Bill eligibility. No other form of federal student aid requires a 
recipient to pay into the program, and it is not fair that those who 
have given so much to this country be required to give up their pay for 
it.
    Currently, a service member has only one chance to declare 
eligibility. Upon joining the military, he or she is given the option 
to sign up. If they do, they have $100 taken out of their paycheck for 
each of the first 12 months. $1,200 is a significant burden on someone 
just starting out in the military, where an E-1, who has just joined, 
only makes $1,178 a month.
    Forcing a young man or woman to make that kind of decision at that 
point in their lives is not very productive either. Circumstances 
change, and people change. Perhaps the person that walks out of the 
military down the road isn't the same person who entered. The narrow 
rules for eligibility restrict these choices, and do not allow for 
veterans who, for example, mature and decide that an education is 
something that he or she will need to better themselves in the future. 
Just as we want a GI Bill that adapts with the changing nature of 
combat and service, we need a GI Bill that adapts with changing 
lifestyles.

                          VA HOME LOAN PROGRAM

    VA currently requires servicemen and women to pay fees to VA for 
the use of the home loan guarantee. These fees, which are a percentage 
of the total cost of the loan, can be an unnecessary burden. What is 
particularly distressing to us, however, is that recent years have seen 
fee increases used to subsidize other veterans' programs. Veterans, in 
effect, are forced to pay for other veterans benefits. This is not 
right. We would urge Congress to repeal these fee increases, and to 
ensure that no veteran subsidizes another.

                           CONCURRENT RECEIPT

    We thank Congress for their efforts in starting the process of 
ending the prohibition on a military retiree from receiving their full 
VA disability compensation and their full DOD retirement pension. While 
the programs in place to eliminate the offset do positively affect many 
thousands of military retirees, there are many thousands who still are 
drastically affected by the law's required offset. No military retiree, 
no matter how small their disability, should be forced to subsidize 
payment of that disability out of their earned retirement paycheck. We 
would urge an immediate end to the prohibition for all disabled 
military retirees, which would include those who were declared 
medically retired because of their service-connected disabilities, as 
well as for those who are deemed disabled and ``unemployable'' by VA.

                              TRICARE FEES

    We strongly oppose the administration's recent request to 
dramatically increase fees paid by retired service members. In some 
cases, TRICARE Prime premiums will double or triple, and in other 
cases, TRICARE standard users will face a quadrupling of the amount 
they pay for eligibility. While we can understand that health care 
costs are on the rise, there is no way that the increase in these fees 
could be considered reasonable.
    Further, we are distressed at attempts by some in the Pentagon to 
paint these increases as necessary because military readiness and 
weapons systems need the funding. These budget-driven tradeoffs are 
misguided political stunts, which we will not tolerate. These health 
care programs are part of the on-going costs of war, an acknowledgement 
of our gratitude for those who served this country for many years. If 
the Defense Department feels that there is not enough money for 
bullets, then let them request more money for bullets. They cannot take 
it from the wallets of those who have already dedicated their lives to 
this country. Also, at a time when recruitment and retention are an 
increased priority and goals are not being met, what kind of message 
does this send to those currently serving or those who are considering 
service? Certainly, it is not a good message.

                           ACTIVE DUTY ISSUES

Pay Comparability
    Over the last few years, Congress has made great strides to reduce 
the pay gap between what the military pay rates are and what is 
available in the private sector. In 1999, this gap was over 13 percent, 
and today it is just over 4 percent. We thank you for that. We must, 
however, remain vigilant and resist temptation to tie military pay to 
inflation, when what matters, in terms of recruitment and retention, 
are comparisons to the private sector.

Family Life
    Today's military is different than the one from years ago. Many 
servicemen and women have families, and their needs are quite 
different. When combined with frequent deployments, we must maintain 
family readiness and support structures. These include childcare, 
spousal employment, education, and community structures.
    One of the largest concerns is housing. We have supported Congress' 
efforts to eliminate the average out-of-pocket housing expense, but we 
must ensure that fair-priced, quality housing actually exists. As 
efforts to privatize housing ramp up, we would hope for oversight to 
ensure that the needs of those in uniform are adequately protected.

Guard and Reserve Issues
    Since September 11, 2001, over 500,000 members of the Guard and 
Reserve have been mobilized, and many thousands are currently fighting 
in Iraq. They were intended to supplement our Active Duty forces, not 
supplant them. As their role changes, we must be mindful of the 
particular needs that they and their families have.
    We support recent efforts to expand TRICARE coverage to them, but 
feel that the fees charged are prohibitive for many in uniform. For 
those without access to other forms of health insurance, these high 
charges are particularly unfair.
    With the changing nature of the reserve components, it is time that 
the retirement system adapts as well. Frequent call-ups can and do 
disrupt their careers, and can affect their own private-sector 
retirements because of lessened contributions to private retirement 
plans, fewer chances for promotions, or even time needed for civilian 
pension programs. We strongly support allowing members of the Guard and 
Reserve to begin drawing retirement pay at age 55.

                     SURVIVOR BENEFITS PLAN OFFSET

    Current law prevents a surviving spouse of a military retiree who 
dies from a service-connected illness from receiving the full amount of 
their Dependency Indemnity Compensation (DIC) and the full amount of 
their Survivor Benefit Plan (SBP). SBP is reduced dollar for dollar 
with respect to DIC. This is patently unfair, as each program is paid 
for different reasons. In the case of SBP, it is a program purchased by 
military retirees to continue a portion of their military pension for 
their spouse should they die. For DIC, it is a special disability 
compensation program, which is paid to a survivor, should the veteran 
die from a service-connected condition. This inequity must be fixed.

                    NATIONAL CEMETERY ADMINISTRATION

    The NCA is charged with meeting the burial needs of this nation's 
veterans and their dependents. They have a stated goal of having a 
national or state veteran's cemetery within 75 miles of 90 percent of 
all veterans. We have supported VA's cemetery expansion plans, and we 
would hope that Congress would be mindful of future funding needs of 
VA's plans. Additionally, we would urge increased funding for the 
National Shrine Commitment, which aims to restore older cemeteries and, 
by extension, honor those brave men and women interred therein.

                            BURIAL BENEFITS

    Unfortunately, too little attention has been paid to the burial 
needs of our veterans. Funeral expenses, even for a small service, can 
run many thousands of dollars. Benefits today have not kept pace with 
these rising costs, and they only pay a fraction of what they did in 
1973, when these payments were first made.
    Accordingly, we recommend that the plot allowance be increased to 
$745, and extend its eligibility to all veterans. Despite a recent 
increase in the allowance for service-connected deaths, for which we 
are thankful, we would still like to see an increase to $4,100. The 
non-service connected benefit has not been adjusted since 1978, and we 
would like to see it increased to $1,270. All three-dollar amounts 
would be commensurate with what was provided in 1973. We would also 
support adjusting these amounts automatically with inflation to prevent 
these benefits from eroding in the future.

                             POW/MIA ISSUES

    The VFW remains strongly supportive of the Joint POW/MIA Accounting 
Command (JPAC). Their goal, which is to provide the fullest possible 
accounting for all those still missing, is one of this nation's most 
sacred missions. None of our members will rest until we know the 
whereabouts of every one of our men and women who have served in 
uniform, even for those who have paid the ultimate price.
    This is why we are distressed to inform you that due to budgetary 
concerns, JPAC has been forced to scale back a number of missions and 
recovery operations. This is unacceptable. Currently, JPAC receives its 
funding through the U.S. Pacific Command. With a war going on, their 
priorities are different than JPAC's. We propose that a separate line 
item in the budget be used so that those in charge of the military do 
not have to make a choice between accounting for those who are missing 
and defending this country. They should not be competing priorities.

                              HOMELESSNESS

    VA estimates that there are over 200,000 homeless veterans in this 
country. If you add to that the number of veterans and their families 
who were made homeless by the Gulf Coast hurricanes, it is truly a 
national tragedy. We must do everything in our power to help these 
former warriors, and to offer them health care, education, training, 
and skills to become productive members of society. To accomplish this, 
we need more outreach. VA, in partnership with many state and local 
organizations, has excellent programs. They just do not reach enough 
people. With increased effort, and focused attention, we can make a 
meaningful impact in these veterans' lives.

                       VOCATIONAL REHABILITATION

    Advances in technology are creating a generation of wounded 
warriors who, in previous eras, would have died from their wounds. 
While we are thankful that they were spared, the influx in service-
disabled veterans creates new challenges, especially when it comes to 
vocational rehabilitation and employment.
    We applaud the efforts to focus this program on its end goal of 
employment for these veterans, but we need a program that looks to the 
future. We need to train these men and women, and help them receive the 
education and care they need to overcome and lessen the effects of 
disability, so that they will be employable for employment beyond the 
entry level. These skills and tools must look for the future and not 
just for the quick fix today.
    A truly effective program will be focused on a goal of avoiding 
disability-related unemployability later in life, and that will allow 
the disabled veteran to build a career to provide for him or her as 
well as the veterans' family. We envision a comprehensive program that 
truly meets our disabled veterans' needs, and we welcome the 
opportunity to work with you to make this a program that truly works.
    Mr. Chairman, I thank you again for the opportunity to testify, and 
I would be happy to answer any questions that you or the Committee may 
have.

    Commander Mueller. Today is a very special day for me both 
professionally and personally. Professionally, it is a true 
honor to be here before you today representing the 2.4 million 
men and women that make up this great organization, and our 
Ladies Auxiliary. Our members are from all over the country, 
and range from the oldest World War I veteran, to the youngest 
service member fighting in Iraq and Afghanistan. Today we share 
a bond as combat veterans. The honor I feel right now 
representing their combined voices is tremendous.
    Personally, this is a very meaningful day for me as well. 
When I took my office last August, I challenged all of our 
members to dedicate this year to a veteran who is no longer 
with us. I dedicated my year to Alan Gruber, an extraordinary 
young man with whom I had the honor of serving with in Vietnam. 
He was a great man, but he died way before his time, 38 years 
ago. Alan is someone I think of every day, but especially 
today. Today is the anniversary of the attack which took his 
life. The memory of Alan has guided me throughout the year, and 
that memory is with me today.
    Just as I have dedicated my life in my year as Commander-
in-Chief to Alan's memory, I would urge you all to do the same. 
Although the ranks of veterans serving in Congress is 
dwindling, I have no doubt that each of you have been touched 
as well, whether that's a friend from your younger days or a 
fine man or woman from your State who has paid the ultimate 
price for this great nation.
    These people are the reason that we do what we do.
    As I did with my fellow members, I challenge you to think 
about that one person who is no longer with us. Think of their 
face and think of what they would have wanted. Think of this 
face as you make these sometimes very difficult decisions. I 
have memories of Alan who is guiding me today.
    Chairman Craig, if I may be so bold, I suspect I can think 
of face or two that runs through your mind although they are 
thankful they are still with us, Heath Calhoun, Ryan Kelly, 
Jeremy Feldbusch, the wounded service members who came to you 
urging your support for the Traumatic Injury Insurance Program 
and your inspiration for that program which we were so pleased 
to support. With them in mind, you spearheaded that legislation 
through in near record time and we thank you, as well as the 
Members of this Committee who supported this worthwhile 
program.
    [Applause.]
    Commander Mueller. You proved that Congress cares deeply 
about those who go in harm's way to protect America and that 
Congress can act quickly and decisively in their interests. 
That is what we are asking, dedicate yourself to a personal 
memory. Put a face on the problems we are confronting.
    Turning to the issues, I would like to start with the VA 
budget. We were pleased to see the President's request. It is 
an excellent start. When the VA came to us last spring and said 
they were running out of money, you did not hesitate. You 
simply did the right thing. You knew that your actions were 
affecting actual veterans, it was not just an empty and 
meaningless number. We hope, however, that as you consider the 
budget that you will remove the prescription drug co-payment 
increase and the enrollment fee. A Category 7 veteran who makes 
$26,000 could be forced, for example, to pay many hundreds of 
dollars out of his or her own pocket. You and I could probably 
afford that, but many of our veterans cannot. As a result, the 
VA says that many thousands of veterans will be driven from the 
VA health care system. These are not just the registered 
veterans. Many of those lower-income veterans will be forced 
out, too, some who would likely have no other insurance to turn 
to. This is unacceptable. Keep these veterans in your mind as 
you shape policy.
    While we are appreciative of this initial budget request, 
we are also mindful that this is the exception to the rule. We 
would like to work with you to ensure that there is an assured 
funding source to provide the VA with a sufficient and timely 
budget. We cannot allow what happened in last year's funding 
problems to occur this year or any in the future, for the VA 
must have an on-time budget, something they have not had in 
nearly a decade.
    We would also like to work with you on two issues that we 
feel are underserved, mental-health care and long-term care. As 
the number of our older veterans grows, we need to place 
increased emphasis on the VA's ability to meet the growing 
demand for long-term care. The VA must simply live up to its 
obligation to our older veterans.
    With respect to mental health, it is obvious that veterans' 
needs are changing. We can see that every night on the TV 
screen as we watch the war unfold before our eyes. We strive to 
see that the VA adequately cares for returning service members. 
Programs and services must be in place and properly funded that 
will allow them and their families to resume their roles in 
productive society despite the strains being placed on them 
today. This is what the heart of the VA is all about.
    The VA's mission extends not only to health care, but to 
the delivery of its benefits. The Veterans Benefits 
Administration is charged with making a veteran whole, 
especially through the Disability Compensation Program. 
Disability compensation is essential. This compensation makes 
up for the economic loss that veterans face because of their 
service-related disabilities. On a very basic level, it helps 
veterans to lead productive lives. It allows them to care for 
their families, to provide shelter, and to put food on the 
table. It is a modest benefit, but one that has been accepted 
by many generations of veterans as fair.
    Unfortunately, the administration of the program needs 
improvement. We want accountability for the problems that it 
faces, and these problems are twofold. First, the length of 
time it takes for a veteran to wait for a claim decision is 
unacceptable. On average, it takes the VA 6 months to process a 
claim. That's 6 months without their earned compensation, and 
while assuming a proper decision that the veteran eventually 
receives the money he or she is due, it is awfully hard to put 
food on the table with money you're going to receive in the 
future. It creates a real hardship and unnecessary strain on 
veterans and their families.
    This is why we were upset to see a serious cut in the 
number of VBA employees who decide compensation claims. The 
budget calls for a decrease of 149 employees, with a backlog of 
claims that currently exceeds 800,000, and waiting time that 
the VA predicts will grow. With the number of men and women 
fighting around the globe, it makes no sense to cut back the 
number of these claim decision makers. The VA explains that 
part of the delay in these decisions is due to the increased 
complexity of these claims, yet the VA does not request the 
resources necessary to provide adequate service. This is most 
certainly not the way to welcome home our courageous warriors.
    Another issue that we are concerned with is the VBA's 
accuracy. When they decide a claim, they're wrong 15 percent of 
the time. Not only does the veteran have to wait 6 months, they 
stand a chance of being unjustly denied compensation. How many 
of them give up in frustration at this point? These men and 
women fought to protect our freedom. They should not have to 
fight a bureaucracy. We, through our service officers, do our 
best to ensure that veterans' claims are fully developed and 
ready to rate. Even then, the VA makes mistakes. While we file 
appeals when appropriate, we can only help those veterans who 
seek us out. What about those veterans who file claims without 
our assistance? What chance to they have? Is this error rate 
acceptable? The answer is clearly no.
    We need accountability. VBA must strive for more accuracy 
and better timeliness. We look to you to hold them accountable 
for these shortcomings. VBA is not adequately preparing for the 
future. What is their plan for dealing with the increase in 
combat-wounded veterans? How about the Administration's 
proposed cut in compensation staffing to help these brave men 
and women? How is VBA going to process these additional claims 
when there are already hundreds of thousands of cases in their 
piles? We want to work with you to improve the VBA and to help 
them develop a strategy and a plan. No veteran should be forced 
to wait months for an incorrect decision. Together we must fix 
this.
    Despite these problems with the VBA, we acknowledge that 
some improvement is being made under the leadership of Under 
Secretary Daniel Cooper. We hope to work with him to find 
positive solutions to these many issues. We look forward to 
working with you to address veterans' policies. Many brave men 
and women bravely served America and fell while in the service 
of this great nation. They now need our help. We will work with 
you to improve VBA programs so that these men and women can be 
successful and productive leaders for the future. We want the 
system to work. We want the programs to be in place that will 
enable all veterans who are unable to work to resume their 
places in productive society and make them whole. We welcome 
reasoned approaches to this and all other issues, but we must 
be part of this dialogue.
    Another important issue that we would like to see improved 
is the GI Bill. Our long-term goal is the creation of a World 
War II-like GI Bill which would pay for the full cost of 
attendance at any school. In the short-term, however, we would 
like to see some improvements made to the GI Bill benefit for 
Reservists and the Guard. They are taking an increased role 
fighting as active-duty forces but not qualifying for education 
benefits equal to their service. This must be improved, and we 
must acknowledge the burden we are placing upon them.
    Along the same lines, we welcome the opportunity to work 
with you on a seamless transition. Even after years of trying, 
VA and DOD are unable to adequately communicate with or work 
together at this pivotal time in service members' lives.
    We have all heard horror stories about how some veterans 
have fallen through the cracks. It is inexcusable. A service 
member should be able to go right to the VA without months of 
delay and endless bureaucracy full of paperwork. While I am not 
an IT expert, I do know that this is an issue that can only be 
solved with top-down leadership. This must be made a priority 
and the two departments must get the job done. We are passed 
the point of excuses. We need to see results. You are the 
Congress and you can make it happen. All of these problems have 
solutions even if they are not easy, and we want to work 
together having an honest and frank discussion, putting it all 
on the table to solve the problems for America's current and 
future veterans. When we have worked together in the past such 
as on Traumatic Disability Insurance Program, we have done 
amazing things.
    Before I conclude, I would be remiss if I did not say 
something about our POW/MIAs. This nation and everyone who has 
worn the uniform of this great country has a sacred mission to 
ensure the fullest possible accounting of all of those who are 
missing. Funding for the Joint POW/MIA Accounting Command is 
now competing for funding with the war, leading to the 
cancellation of some of the missions and investigations. It 
should not be this way. This mission is far too important, and 
I am sure you would agree. Please do what you can to ensure 
that these are properly funded.
    Mr. Chairman, in all of these issues I have spoken of 
today, it is important that we keep that individual veteran in 
mind. Our actions have real benefits to them and to the 
millions of men and women who have worn this uniform, all 
individuals, all with homes and dreams and futures, we owe them 
and we owe it to them. We must be mindful of this. It is a 
special and sacred role. We must make those veterans whole and 
help them and their families. As you hold your hearings and 
make critical votes and decisions throughout this year, please 
do as I have asked our members to do, think of that veteran, 
think of his or her family and loved ones. Ask yourself what he 
or she would want. Ask yourself how he or she would be 
impacted. Let them be your guide just as Alan Gruber is mine. 
Their memory can show you the way.
    Mr. Chairman, this concludes my testimony. I would be happy 
to answer any questions that you or the Members of this 
Committee may have.
    [Applause.]
    Chairman Craig. Commander, thank you very much for that 
marvelous statement, and your admonition that we think of a 
veteran is a good one and really one of the very best because 
we oftentimes look at large programs and numbers and dollars 
and cents. I think that you are right that when it comes to an 
individual veteran and his or her problems, it allows us to 
focus in a way that you normally do not focus when you deal 
with these kinds of issues. Let me thank you for that.
    We have had a couple of our colleagues join us. We also 
have a vote, we believe, starting around 10:45. We will work 
our timing accordingly. Senator Jim Jeffords of Vermont has 
joined us. Jim, welcome. Do you have any opening comment?
    Senator Jeffords. Just a little one.
    Chairman Craig. Please proceed.

         OPENING STATEMENT OF HON. JAMES M. JEFFORDS, 
                   U.S. SENATOR FROM VERMONT

    Senator Jeffords. Thank you, Mr. Chairman. I appreciate 
hearing your testimony today, all of you, and thank you for 
being here.
    I was pleased to meet with the Vermont representatives of 
the Veterans of Foreign Wars and so I am familiar with some of 
your agenda items and goals. I have enjoyed working with you in 
the past to serve our nation's veterans and I look forward to 
working with you again. You can count on me. Thank you.
    [Applause.]
    Chairman Craig. Jim, thank you. Senator John Thune lives in 
an area where spring has not yet sprung, in the Dakotas, South 
Dakota.
    Senator Thune. You and me both, Mr. Chairman.
    Chairman Craig. Right.

 OPENING STATEMENT OF HON. JOHN THUNE, U.S. SENATOR FROM SOUTH 
                             DAKOTA

    Senator Thune. I also want to thank you, Mr. Chairman, for 
holding this hearing to give our veteran organizations the 
opportunity to testify about their legislative priorities and 
want to extend our welcome to the national leadership of the 
VFW who are here today testifying, as well as the many in the 
audience here today. We want to thank you all very much for 
your distinguished service to our country.
    I would simply add, Mr. Chairman, that as I have noted 
before, budgets are an indication of a nation's priorities and 
I think it is awfully important, as we go through the budgeting 
process here in Washington, that we bear in mind the comments 
of the Commander that were just made about the importance of 
keeping in mind the individual veteran out there and the 
responsibility that this nation has to our veterans. Clearly 
this year the increase in funding that has been proposed 
already in the President's budget is significant and I think a 
reflection of the importance that we need to be placing on 
funding for veterans programs. The biggest room in the house is 
the room for improvement, and we are always looking for ways 
that we can do a better job of serving our veteran population.
    I look forward to working with you as well as with members 
of the service organization, the VFW that is represented here 
today and the members across the country and certainly in my 
State of South Dakota as we grapple with our best to serve the 
needs of our veteran community and try and accomplish that 
within the budgetary constraints that we face here in 
Washington every day, giving the appropriate and high priority 
that we need to veterans' programs.
    Thank you, Mr. Chairman. Thank all of you for your service 
and for your representation here today. It means a lot to us to 
see all of you here engage in this process and obviously 
lending your voice to what is a very important priority for our 
nation, and that is meeting the needs of America's veterans. 
Thank you.
    [Applause.]
    Chairman Craig. Tom, thank you. We will start our 
questioning from the Committee, and then if the bell rings and 
we have to vote, Commander, we will do that. We will all let 
you stand down for a bit and then we will be right back to you.
    Commander Mueller. Thank you, sir.
    Chairman Craig. One of the responsibilities I have is no 
different than yours in the sense that it is important that we 
not only look at today's needs, but we look at future 
responsibilities as it relates to funding a system that is so 
critical to veterans' care, not only for those who are now 
there, but for those who will be there in the future.
    Certainly, one thing that I think all of us can be proud of 
and certainly you can with your advocacy is that because of 
that advocacy, we have created a system that is now by most 
veterans' estimation a health care delivery system of first 
choice, not second choice or third choice or simply an 
alternative if you do not have any other place to go. As a 
result of our funding and your advocacy, it is now by most 
medical journals' analysis one of the best health care systems 
in the country, and I think that is something we can all be 
proud of.
    It is interesting that that whole effort started some years 
ago and it is a product of investment that has brought us to 
where we are today. In that commitment of money, I have 
mentioned that during these times, the VA budget while you have 
all been critical of it, has still grown at a rate faster than 
nearly any other budget in the Federal Government. As an 
example, as I mentioned that over that 5-year period, about a 
38 percent government-wide growth, yet the VA was at 46 
percent. That is not something to be critical of. That is 
something to be proud of. It shows where Congress and where you 
were and are today as it relates to priorities.
    Last year, Patty Murray, I and others became frustrated 
with where the budget was, so we marked it up dramatically 
because we knew it was the right thing to do. We also said to 
the VA we are not going to go through this again. You are going 
to start reporting to us on a quarterly basis your expenditures 
so that we can map it and track it, and, more importantly, so 
they can in a way that they had not done before. The Secretary, 
Secretary Nicholson, has honored that. We have had our first 
quarterly estimate of expenditures and revenues, and we are on 
track in relation to where we were with the budget, and we will 
continue that process and attempt to refine it.
    Commander, our priorities are our priorities from medical 
health care to long-term care, disability, the GI Bill. I want 
to tackle the GI Bill this year. I think we have a reality 
check there as it relates with Guardsmen and Reservists who now 
have served actively but may not be eligible under the current 
program and I think probably deserve that eligibility.
    Seamless transition should not be simply a flight of 
rhetoric. It needs to be a reality of the kind that we have not 
seen in the past, that we will stay with DOD and with VA until 
they get it right.
    [Applause.]
    Chairman Craig. I cannot imagine that a thorough 
examination by a doctor at DOD isn't good enough for VA. 
Somehow it just does not make sense that you run a veteran 
through these constant myriads to qualify because if you are 
not wearing the VA pin on your lapel it does not count. To me 
it does not count, it does not make sense in that regard. As a 
result of that and cost savings, and we will look for cost 
savings, that is a part of that analysis and seamless 
transition that is all I think going to be extremely important.
    Let me address the tough one, the tough one that most 
Members of this Committee reject and that I have had to look 
straight at that your organization rejects, and that is where 
we are today with revenues and services and programs, and not 
with some concept of simply going out and raising more taxes 
across America, because when you look at the reality of 
budgets, it is very difficult to say that VA has done badly 
under any of these scenarios or, in fact, that the Government 
is not raising more money. It is simply in what is now a very 
strong growth economy by most estimations.
    Ten years ago Congress enacted Eligibility Reform 
Legislation to expand access to VA health care for veterans 
according to a value-based priority system. At the time, major 
veterans' organizations including yours argued that eligibility 
reform would be budget-
neutral. We were in a deficit at that time. We corrected that 
deficit, we tightened our belts, the economy took off and we 
found ourselves in the late 1990s in a surplus. We went on to 
say that low-priority veterans would access VA care at their 
own expense. That is what most major veterans' organizations 
agreed to during this time of reform. Some would argue it was 
during a time of deficit and that was then, this is now. It is 
also true that Congress during the time of surpluses simply 
chose to walk away from that as did most veterans' 
organizations. Why? Because there was money out there, and a 
lot of it and we were funding at a higher level ever and so we 
didn't push the point of the reform.
    Fast-forward to 2006. We know that eligibility reform was 
not budget-neutral. In fact, the VA health care budget has 
doubled in 10 years since its enactment and many believe VA's 
budget is under funded still, and that is clearly what we are 
hearing from most of you and many of our colleagues.
    Given this set of circumstances, and I try to approach this 
as neutrally as I can, but recognizing that I have a job to do 
and it is a job not of falling to the rhetoric, but looking at 
all the numbers and working with all of you to try to resolve 
some of these critical problems and keep these levels of care 
where we want them to be.
    Is it unreasonable to ask that those with no service-
related disability and the means to afford it, and while it is 
arguable that some may not be able to, 90-plus percent of those 
7s and 8s have health care or access to health care today by 
their own admission, is it wrong to ask for $21 a month or just 
69 cents a day to gain access to the No. 1 health care system 
in the country? That is a phenomenal asset by any estimation. I 
could say less than the cost of a carton of cigarettes a month, 
but then again the argument is what can we do and what should 
we do, and where should our priorities lie.
    I sent a budget letter last week to the Chairman of the 
Budget Committee. It is part of the process we do here. Now the 
Chairman of the Budget Committee has all of the letters from 
the authorizing Committees as to levels of expenditure and what 
we are recommending. We took the President's budget, we looked 
it over a little bit. We changed some of it because we thought 
some of the priorities in research and mental health were not 
as good as they ought to be and we moved the numbers. But in 
that, I did move the issue of the co-pay as it relates to 7s 
and 8s, and drugs from 7 to 15.
    Here is why I did it. If we do not do that, then to keep 
this President's budget at this level or above, we have got to 
go find $795 million out of the General Fund. My colleagues on 
this side of the aisle have recommended substantially more than 
that. I think it was $1.6 billion more than the President's 
budget, and so on and so forth.
    The reason I walk you through this is that we really are 
focused and have to be and should be on your behalf. Instead of 
just simply saying, ``no,'' we are going to ignore it this year 
and move on, because within a year and a half or two if I am 
still Chairman of this Committee and you are back, we are going 
to be presiding over a $100 billion VA budget and it will be 
competing with every other budget of our Federal Government. I 
am not sure at that point we can sustain it because I do not 
agree with the rhetoric which is flowing out there now which is 
purely politics, that, ``oh well, 2007 is what it is, the 
President deserves a little credit, but gee look, in 2008 we 
are going to cut like heck.'' This Congress is not going to do 
that, period, end of statement. What we are going to have to 
do, I believe, and that is why I am approaching you as boldly 
as I can today, is to look at some alternatives for resources 
as it relates to those who are not disabled or service-
connected, who are less than needy, but who can gain access to 
the best health care system in the world, and to make sure that 
our funding gives us the sustainability of that quality health 
care system.
    For those of you who are members today of the VFW and those 
incoming who will be members tomorrow and 20 years from today, 
Commander, that is our challenge. Your organization and many 
organizations were once there at a different time, a different 
place, but we recognized the need to prioritize then. Today the 
arguments are different. The budgets are not much different as 
it relates to deficits and demands. We are at war. We were not 
10 years ago. Priorities have shaped a different kind of 
budget.
    Those are my concerns and I have spoken too long. There is 
a question within that. Possibly you, Commander or maybe Mr. 
Wallace, would like to respond, but it is a concern that I do 
not believe I can just pass go anymore for the sake of the 
politics of the issue. I think there is a responsibility I have 
to bear up under.
    Commander Mueller. Mr. Chairman, I would ask that Mr. 
Wallace answer this.
    Mr. Wallace. Mr. Chairman, to go back 10 years when 
eligibility reform became a reality, Dr. Ken Kaiser was the 
Under Secretary for Health, and there were two things that he 
said would happen. No. 1, the VA would collect insurance from 
those veterans for nonservice-connected aliments. The VA has 
been doing a better job of it. I think it is around $2 billion 
they got this year, but they are estimating $2.8, I believe, in 
the budget and I do not think they are going to get that. That 
is one thing, the VA has not been fast enough in beefing up 
insurance collections.
    The other thing that Dr. Kaiser emphasized was Medicare 
reimbursement, that the VA would be able to charge Medicare 
eligible veterans for their Medicare money. Congress has never 
moved on that, so that's hurt the problem. Someone who makes 
$26,000 a year is not a rich veteran, and $21 may affect them. 
Someone who makes a lot more money, that we can talk about, I 
would think. A lot of people in VA say there are 800,000 
veterans that are Category 8. Only 200,000 of those 800,000 
actually use the system from what VA reports, and they use it 
for prescription drugs only. If that is the case, why doesn't 
Congress look at a prescription drug plan for those people 
where they charge them a fee for admission, and charge them 
more money for their drugs if they make over X amount of 
dollars? The VFW has pushed that legislation for 2 years and we 
got absolutely nowhere, but I think that it is something you 
could look at. The two things that eligibility reform were 
predicated on was Medicare reimbursement and the third-party 
collections, and that has not come through.
    [Applause.]
    Chairman Craig. Thank you for that response. We are pushing 
VA to accelerate third-party reimbursement, and by our own 
admission, $2 billion is a lot better than where it was, and we 
hope it will become much better. You are right, it was Congress 
that chose not to go to the Medicare route. Why? Because some 
VSOs saw a conflict there and were very fearful that if money 
began to be replaced within the system by Medicare 
reimbursement, that the overall budget priorities of VA within 
the system would lessen because Congress would see an 
alternative form of revenue flowing in that they would not have 
to compensate. Those are very legitimate concerns, but in all 
fairness, Mr. Wallace, it is pleasing for me to hear that maybe 
there are some things that we can look at.
    Frankly, right now what I am hearing is, ``no, no,'' and I 
must tell you that the day that a fellow taps me on the 
shoulder in Boise, Idaho, who is a very successful retired 
doctor with by any estimation a fair amount of money in his 
pocket is frustrated because he cannot gain access to the 
system because he wants just exactly what you have said some 
show they want, they want access to the pharmaceutical program. 
He was eligible because he had served and he believed he was 
eligible and needed it. I will not go any further than that. 
There are savings to be made and realities here to deal with 
and that is why I am challenging all of us today not just to 
say, ``no, no, we will just pull it out of the budget.'' That 
will be even a more difficult task than last year. It is not an 
impossible, but it is a difficult task, and what I am looking 
at, I am trying to get out in front of the headlights just a 
little bit as it relates to the future.
    Mr. Wallace. I think the Commander's testimony was very 
clear, we want to work with you and we are not saying no to 
anything. We want to sit down and we want to have a real 
dialogue where everybody clears their brain of their 
preconceived notions and sits down and has a dialogue that is 
honest and open and frank to try to solve the problems. You 
cannot get $100 million of new money last year from the 
President's budget, and this year you get $2.675 billion in new 
money and anticipate the VA or any business to work in an 
efficient manner when they never get the money on time for the 
last 10 years. It cannot happen and so veterans are being 
affected by that also. We want to work with you in an open and 
frank dialogue.
    Chairman Craig. Thank you. Thank you very much. We will 
count this as a dialogue begun, all right?
    Mr. Wallace. Thank you, sir.
    [Applause.]
    Chairman Craig. Now let me turn to Senator Patty Murray.
    Senator.
    Senator Murray. Thank you, Mr. Chairman, and thank you so 
much for your testimony. I hear about the increased dollars for 
the VA and I say, ``yes, it is about time,'' and we also have 
to have part of the reality of why we have had to increase 
dollars and why we still are not there yet. We know that 
Vietnam veterans are now accessing the VA system. We have heard 
of a 46 percent increase in the budget of the last 5 years, but 
in some areas we have seen a 70 to 80 percent increase in the 
number of veterans accessing the VA system. No surprise here, a 
lot of companies are now not providing health care, so veterans 
who have a right to access the VA are now accessing their VA 
system there. It is part of the health care crisis here, and 
veterans have a right to do that.
    The overall cost of health care has increased dramatically 
in the last 5 years. That has affected the VA. We have to 
budget for that increased cost just like every business is 
having to do. We know that over 140,000 Iraq and Afghan 
veterans are now accessing the VA system. When we send our men 
and women to war we have to budget here in Congress for the 
cost of that war, and part of that cost of war and an important 
part of it is caring for those veterans when they return.
    We know that over 500,000 men and women have already served 
in Iraq and they now all are entitled to VA care, and it is our 
responsibility to budget for them. There are a number of 
increasing pressures on the VA system. That is why we saw the 
problem last year of being under funded by $1.5 billion. I am 
concerned we still do not have a real model to track the needs 
of veterans. I, for one, just am deeply concerned about a 
budget that relies on veterans themselves to now have out-of-
pocket expenses paid for when I know that none of them--when 
they signed the dotted line to serve our country, so no 
asterisk there--said if you make a lot of money you do not get 
care.
    [Applause.]
    Senator Murray. What I know is that they signed up to serve 
our country and our country signed up to serve them. I am just 
one of those who does not believe that that is what we need to 
do in order to balance our budget. We have a lot of things we 
need to do within our budget to balance it. We also need to 
call on all of our American citizens to help pay for the cost 
of war, and veterans are a part of that.
    Let me ask you, Commander, we have gone through all of this 
about the VA not having adequate funding. We are delighted that 
the President's budget has more funding. I am still very 
concerned. I hear about those long lines. I hear about our vets 
not getting the services they need. I hear about instead of 
producing a budget that has the dollars looking for ways to 
have veterans pay for it. That concerns me. I would like to 
find out from you how you think the VA should change its budget 
model so that we can better track the real needs of our 
veterans.
    Commander Mueller. Ms. Murray, I will call upon Mr. 
Cullinan to answer that.
    Mr. Cullinan. Thank you very much for the question, Senator 
Murray. One of the things that we have been looking at and 
promoting through the years is an assured funding method to 
make sure that VA not only gets enough money, but VA gets it in 
a timely basis, and that is also known as mandatory funding. 
The reason that we have supported mandatory funding through the 
years is because, as Mr. Wallace mentioned earlier, the budget 
has been late the last 10 years in a row and there has been 
terrific uncertainty as to not only when it is going to arrive, 
but how much it is going to be. This puts an awful strain on 
those who manage this nation's largest and best health care 
system.
    I think anyone who has run a business knows that if you do 
not know how much money you have to work with nor when you are 
going to get it, you simply cannot operate in an efficient 
manner. We assert that something along that line would not only 
provide the proper funding for VA, but it would increase 
efficiency as well. That is another advantage. The managers 
know when they are going to get the money and how much it is 
going to be, and that in itself increases efficiency and it 
allows them to bring on board the health care professionals 
that the system needs in a timely fashion. Thank you.
    Senator Murray. Thank you. Commander, you are a member of 
the Independent Budget Committee. I wanted to ask you what your 
impression is of the $1.1 billion in funding that the VA is 
supposed to find through management efficiencies.
    Commander Mueller. I think we would have a lot of work to 
do in that area to find that money in that.
    Senator Murray. Do you think there are management 
efficiencies?
    Commander Mueller. I believe in efficiency. Yes, I do.
    Senator Murray. Do you think there is $1.1 billion that we 
can find there?
    Commander Mueller. I do not.
    Senator Murray. How do we do that?
    Commander Mueller. I would ask Bob or anybody else who 
might want to comment on that.
    Mr. Wallace. Figures do not lie, but liars figure and 
management efficiencies so many times is just a plug figure to 
make it look good.
    Senator Murray. I think that really concerns me.
    Mr. Wallace. The reality of it is there are some 
efficiencies that can be made, but I think it is a little bit 
overoptimistic on the part of the Administration.
    Senator Murray. I have to agree. I go out to my veterans' 
hospitals and these are hard-working doctors. They are doing 
the best they can. They are really struggling. It is always so 
easy to say find a management efficiency and too often that 
means somebody has to wait in line longer, and I am just not 
going to support any kind of management efficiency that means 
that. I would like to hear more from you on that in the future 
if you could.
    I know our time is running out and I know we have a vote. I 
just wanted to ask you, in your testimony you outlined a need 
for over a billion dollars in construction funding to even meet 
the Enhanced Services Threshold that is promised as CARES 
Review that we have been through. What message does this lack 
of construction funding send to your members?
    Commander Mueller. I think if they do not have the interest 
to go ahead and do new building and construction for hospitals 
and make them available especially to the veterans who are in 
rural areas, as was addressed, where veterans can get to them 
without a lot of travel and inconvenience, it is the wrong 
priority in some ways.
    Senator Murray. I agree with that because many of our 
veterans are in very rural communities and have to travel 8 to 
10 to 12 hours. We are talking about World War II veterans, an 
aging Vietnam veteran population, often veterans with severe 
health care problems. We promised them these clinics through 
the CARES process but we have not budgeted for them. I am very 
concerned that this is a huge hole that we need to address.
    Commander Mueller. I will agree wholeheartedly.
    Senator Murray. Thank you. I know, Mr. Chairman, we have a 
vote so I will submit the rest of my questions if that is all 
right.
    Chairman Craig. Patty, thank you very much. We do have a 
vote underway. I am going to ask that the Committee stand in 
recess for a few moments. I will hustle over and vote and be 
back in probably about 10 minutes. I have a couple of more 
questions to ask, and some other of my colleagues may join us 
at that time. Again, thank you all very much, and the Committee 
will stand in recess for approximately 10 minutes.
    [Recess.]
    Commander Mueller. Mr. Chairman, we must always make our 
veterans a top priority. I do not know who the author of this 
is, but it was said that once a nation forgets about its 
warriors, that nation will soon fall from greatness, and I 
think we owe it to our veterans coming back to put them as one 
of our top priorities in this country.
    Chairman Craig. Thank you for that.
    Mr. Wallace. Mr. Chairman, I think we all agree the system 
is not working today. It can be called Craig Funding, Wallace 
Funding, Mueller Funding, VFW Funding, Akaka Funding, whatever, 
we have to fix it, I think that is where we have to have some 
serious dialogue, on how to fix it. Maybe some mandatory, maybe 
some assured, whatever you want to call it, for certain 
veterans, maybe for others, I do not know what the answer is, 
but we have to get in a room and start throwing things against 
the wall to see what can stick. We want this system to stay in 
place and we want it to be improved, and today's system is not 
working when we have to worry about whether we are going to 
make the payroll tomorrow or when they are going to get the 
money and how many staff they are going to be able to hire and 
so forth and so on.
    We welcome the opportunity, again, to sit down and talk 
about it in a very serious nature. We realize we are not going 
to win everything, and you realize you are not going to win 
everything. Politics is the art of the possible, and I think we 
can make the possible become a reality if we have a serious 
discussion.
    Chairman Craig. That is a marvelous challenge. We are in 
the process of taking you all up on it because I think the 
process itself, the budget process we are now in, offers us 
that challenge. Thank you.
    Let me turn to our Ranking Member, Senator Akaka.
    Danny.
    Senator Akaka. Thank you very much, Mr. Chairman. I thank 
you for this opportunity. As I said early in my statement, we 
have the same goals--the Chairman and I. We differ on how we 
pay for it. For me it is a matter of priorities. We must make 
some hard decisions and ensure that our veterans be our 
priority, as much as a priority as our national defense. Many 
of us feel that veterans deserve all they need, having served 
our country as you have.
    As we do this, I remain committed to ensuring that all 
veterans receive access to the VA's health care and services. 
You do understand that this Committee, the Chairman and I, have 
been looking for the funds needed to help veterans and will 
continue to do that. As I mentioned also in my statement, that 
I have been looking for justification for whatever our needs 
are and the costs of that and have been pinning it on what I 
call the cost of war, to put it on another level.
    I have been with this Committee now for 16 years and during 
that period of time this Committee has had difficulties and 
challenges in trying continually to get the kind of funding 
that is required for veterans' benefits. As I just mentioned 
this is a cost of war.
    I mentioned also in my opening statement the GI Bill and 
how it really helped me. Senator Inouye, Senator Matsunaga, and 
I, as well as many other leaders of the communities in Hawaii 
and in government, really got to these positions because of the 
GI Bill. I remember receiving $113 a month to help with my 
finances, and all of my tuition was paid. It was such a huge 
help. When I look back I will tell you that without the GI Bill 
I would not be here. That is how important it was for me, and 
it is important for our veterans today.
    I note, Commander, in your testimony that you believe it is 
unfair for young men and women to declare participation in what 
we call MGIB which is the Montgomery GI Bill Program so early 
in their careers. What do you think would be a better 
alternative to what we have now?
    Commander Mueller. I know how important education is to 
everybody if they are going to succeed in life, and I think a 
lot of our young men and women have joined the military to also 
further their education. I think we need to afford that chance 
to take up that education. I am not sure if I understand what 
you mean, and I will ask Dennis to help me on this.
    Mr. Cullinan. Thank you very much, Commander-in-Chief, and 
thank you for the question, Senator Akaka. One of the things 
that we are looking toward is the elimination of the $1,200 
contribution. That is right at the point when a service member 
is making the least amount of money. It is also the stage of 
their career in their youth where their priorities may not be 
such where they would opt to pay that kind of money.
    What we would most prefer is to see the $1,200 eliminated, 
and most certainly lacking that, that they should be able to 
make the election at some later point. They are first starting 
their military service, it is the lowest amount of money they 
make, and they may not then really understand how important an 
education is. I know myself when I went in the military, it 
took me a while to figure it out.
    I would add one other thing. We also think it is very 
important to look to our Guard and Reserve, and that was 
mentioned earlier on. There is the issue of proportionality. 
Right now the Guard and Reserve benefit simply has not kept 
pace with the regular active-duty force. Another issue is the 
fact that when they leave military service, they cannot use the 
benefit anymore. We think the benefit has to go up proportional 
with their service, and they have to be able to take it with 
them as well. They have to be able to use it when they leave 
the Guard or Reserve, similar to the way it is with the active-
duty MGI Bill.
    Senator Akaka. Thank you for your responses. Given that 
Congress rejected the enrollment fee and drug co-payment 
increase for the past 3 years consecutively, why do you think 
that the Administration has proposed that again? What options 
does your organization see as viable for ensuring that adequate 
capacity and resources remain available?
    Commander Mueller. I would think we would go back to the 
Medicare issue, accepting Medicare, to let them come in and use 
their Medicare and co-payments and that.
    Senator Akaka. As I mentioned, the Congress has rejected 
the enrollment fee and drug co-payment for the past 3 years 
consecutively, and we're proposing to do that again. It is 
something that maybe we need to continue to look at. I know my 
time has expired.
    Chairman Craig. Go ahead. If you have some more questions, 
I am through. Please proceed.
    Senator Akaka. Let me ask another one, and I'll have other 
ones that I will enter into the record.
    This question continues the dialogue we have begun to have 
with other veterans' groups. As we talk about narrowing 
eligibility, we must understand what the consequences will be 
to the entire VA health care system. The President is clear on 
who should be eligible for VA health care, only those with 
service-connected health needs. Do you think the system as we 
know it today can survive if eligibility is severely narrowed, 
could our teaching and research missions be continued, and 
would specialty programs survive?
    Mr. Cullinan. Thank you, Senator Akaka. Senator, we 
strongly believe as an organization for the world's best health 
care system to survive as a system, it would be absolute folly 
to limit the eligibility to that degree. Just to have a system 
this large operate efficiently, you need something along the 
lines of a critical mass of patient load, you need a diversity 
of patients with a diversity of health care problems. That has 
to do with the treatment modalities themselves, it has to do 
with what you yourself just mentioned, attracting the proper 
research mix into the system, drawing some of this nation's 
very best doctors and research scientists into the VA, because 
not only are they dealing with things associated with combat 
trauma, but aging and any number of other health care issues. 
Absolutely not, we think it would be disastrous if the 
eligibility were to be narrowed to that regard for that reason.
    Senator Akaka. Another mention I made in my opening 
statement was about research and its mission. What do you think 
about continuing these research missions?
    Mr. Cullinan. Research is incredibly valuable in and of 
itself. If it were not for the Department of Veterans Affairs 
with respect to such things as prosthetics, cardiology, hearing 
impairments, blindness, vision impairments, we would be in 
medical terms 100 years behind where we are today, so 
absolutely. These are essential things that the VA handles. A 
lot of these things are not commercially viable which is the 
reason that the VA had to take the lead. It was so important 
that they did it a number of years ago because they are money 
losers, but if the Department did not take a lead in this area, 
veterans would suffer as a consequence and the nation would 
suffer because it is this technology and the medical treatments 
that the VA has developed through the years that help not only 
veterans, but all of us, and the world as a whole.
    Senator Akaka. Thank you, Mr. Chairman. I know my time has 
expired. I want to tell you that we would like to continue to 
hear from you. You are very important to the veterans of our 
country and your thoughts are very important to us.
    Commander Mueller. It's good to work with you.
    Chairman Craig. Senator Akaka, thank you very much. The 
Committee record will remain open for any additional questions 
that Members may have for the appropriate period of time.
    Commander, again on behalf of the Committee we thank you 
and your colleagues at the table and certainly all assembled 
and those well beyond you that you represent for the kind of 
work that you do on behalf of America's veterans. I hope that 
the dialogue of today has been appropriate and enlightening and 
I hope challenging to all of us as we work our way through 
these difficulties and opportunities. I really am one who 
believes that sometimes problems can become opportunities if we 
are willing to look beyond the box a bit and try to resolve 
some of these questions because there is one goal that we all 
hold very common, and that of course is to sustain a system to 
continue to serve America's veterans and that is a challenge 
that we will meet.
    Again thank you all very much for your time here today, and 
with that the Committee will stand adjourned.
    Commander Mueller. Thank you, Mr. Chairman.
    [Applause.]
    [Whereupon, at 11:18 the Committee was adjourned.]
  

                                  

```