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[House Report 110-643]
[From the U.S. Government Publishing Office]

110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     110-643

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      VETERANS' COMPENSATION COST-OF-LIVING ADJUSTMENT ACT OF 2008

                                _______
                                

  May 15, 2008.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                        [To accompany H.R. 5826]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Veterans' Affairs, to whom was referred the 
bill (H.R. 5826) to increase, effective as of December 1, 2008, 
the rates of disability compensation for veterans with service-
connected disabilities and the rates of dependency and 
indemnity compensation for survivors of certain service-
connected disabled veterans, and for other purposes, having 
considered the same, report favorably thereon without amendment 
and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Discussion........................................     2
Hearings.........................................................     5
Committee Consideration..........................................     5
Committee Votes..................................................     5
Committee Oversight Findings.....................................     5
Statement of General Performance Goals and Objectives............     5
New Budget Authority, Entitlement Authority, and Tax Expenditures     5
Earmarks and Tax and Tariff Benefits.............................     6
Committee Cost Estimate..........................................     6
Congressional Budget Office Estimate.............................     6
Federal Mandates Statement.......................................     7
Advisory Committee Statement.....................................     7
Constitutional Authority Statement...............................     7
Applicability to Legislative Branch..............................     7
Section-by-Section Analysis of the Legislation...................     7

                          Purpose and Summary

    H.R. 5826 was introduced by Representative Ciro D. 
Rodriguez of Texas on April 16, 2007. This legislation would 
provide, effective December 1, 2008, a cost-of-living 
adjustment (COLA) to the rates of disability compensation (DIC) 
for veterans with service-connected disabilities and to the 
rates of DIC for survivors of certain service-connected 
disabled veterans. The percentage amount would be equal to the 
increase for benefits provided under the Social Security Act, 
which is calculated based upon changes in the Consumer Price 
Index.

                       Background and Discussion

    Congress has provided annual increases in these rates every 
fiscal year since 1976. For fiscal year 2008, the cost-of-
living increase for VA disability compensation and DIC, enacted 
in accordance with P.L. 110-111, was 2.3 percent.
    The COLA provided in H.R. 5826 would apply to:
          1. The basic compensation rates for veterans with 
        service-connected disabilities and the rates payable 
        for certain severe disabilities;
          2. The allowance for spouses, children, and dependent 
        parents paid to service-connected disabled veterans 
        rated 30 percent or more disabled;
          3. The annual clothing allowance paid to veterans 
        whose compensable disability requires the use of a 
        prosthetic or orthopedic appliance (including a 
        wheelchair) that tends to tear or wear out clothing, or 
        requires the use of a medication prescribed by a 
        physician for a service-connected skin condition if the 
        medication causes irreparable damage to the veteran's 
        outer garments; and
          4. The DIC rates paid to:
           Surviving spouses of veterans whose deaths 
        were service-connected;
           Surviving spouses for dependent children 
        below the age of eighteen;
           Surviving spouses who are so disabled that 
        they need aid and attendance or are permanently 
        housebound;
           Surviving spouses covered under section 1318 
        of title 38, United States Code; and,
           The children of veterans whose deaths were 
        service-connected if no surviving spouse is entitled to 
        DIC, the child is age 18 through 22 and attending an 
        approved educational institution, or the child is age 
        18 or over and became permanently incapable of self-
        support prior to reaching age 18.

                         DISABILTY COMPENSATION

    The service-connected disability compensation program under 
chapter 11 of title 38, United States Code, provides monthly 
cash benefits to veterans who have a disability or combination 
of disabilities incurred or aggravated during active duty in 
the Armed Forces. The purpose of the disability compensation 
program is to represent the average loss in earnings capacity. 
The amount of compensation paid depends on the nature and 
severity of the veteran's disability or combination of 
disabilities and an assessment of the extent to which the 
disability impairs earnings capacity. To be eligible to receive 
disability compensation, a veteran's disability must not be the 
result of willful misconduct, and the veteran must have been 
discharged under other than dishonorable conditions. The 
responsibility for determining a veteran's entitlement to 
service-connection for a disability and the amount of said 
compensation rests with the Department of Veterans Affairs 
(VA).
    Pursuant to section 1155 of title 38, United States Code, 
VA rates compensable disabilities according to its Schedule for 
Rating Disabilities on a graduated scale ranging from 10 to 100 
percent, in 10 percent increments. VA pays higher monthly rates 
(known as ``special monthly compensation'') to totally disabled 
veterans with certain specific, very severe disabilities or 
combinations of disabilities.
    As set forth in its fiscal year 2009 budget request, VA 
estimates that it will provide disability benefits compensation 
to 3,014,841 veterans with service-connected disabilities. 
Among the veterans estimated to receive compensation benefits 
are: two World War I and Prior veterans; 267,250 World War II 
veterans; 157,690 Korean-conflict veterans; 1,031,410 Vietnam-
era veterans; 956,090 veterans of the Persian Gulf War era; and 
602,399 veterans who served during peacetime.
    A veteran with a disability rated at 30 percent or more may 
receive additional compensation on behalf of the veteran's 
spouse, children, and dependent parents. These dependents' 
allowances are prorated according to the percentage of 
disability.

                 DEPENDENCY AND INDEMNITY COMPENSATION

    Surviving spouses and dependent children of veterans who 
died of disabilities determined by VA to be service-connected 
(including veterans who died while on active duty) or who had a 
service-connected disability rated at 100 percent for certain 
periods of time prior to death are entitled to receive monthly 
DIC benefits. VA pays DIC to the survivors of those 
servicemembers or veterans who died on or after January 1, 
1957. The purpose of DIC, authorized under chapter 13 of title 
38, United States Code, is to provide compensation to the 
appropriate survivors for the loss of financial support as a 
result of the service-connected death of the veteran.
    Survivors eligible for DIC include surviving spouses, 
unmarried children under the age of 18, children age 18 or 
older who are permanently incapable of self-support, children 
between the ages of 18 and 22 who are enrolled in school, and 
certain needy parents. Under section 5312 of title 38, United 
States Code, parents' DIC rates are adjusted automatically at 
the same time and by the same percentage as Social Security and 
VA pension benefits. Surviving spouses, children, and parents 
who are receiving death compensation based on deaths before 
January 1, 1957, may elect to receive DIC instead of death 
compensation. In its fiscal year 2009 budget, the VA estimates 
that it will provide compensation benefits to 341,502 
survivors.
    For deaths prior to January 1, 1993, surviving spouses 
received DIC at rates determined by the pay grade (service 
rank) of the deceased veteran. For deaths on or after January 
1, 1993, surviving spouses currently receive $1,067 per month 
and, if the deceased veteran was totally disabled for eight 
years prior to death, they receive an additional $228 per 
month. Surviving spouses who had been receiving benefits under 
the prior DIC program are paid under whichever program will pay 
the higher benefit.
    A surviving spouse who is so disabled as to be housebound 
or in need of regular aid and attendance is eligible to receive 
an additional amount. A surviving spouse also may receive 
additional allowances on behalf of the veteran's surviving 
children.
    Parents of deceased veterans whose incomes are below 
statutorily prescribed income thresholds are eligible for DIC 
under section 1315 of title 38, United States Code. As 
previously mentioned, parents' DIC rates are adjusted 
automatically at the same time, and by the same percentage, as 
Social Security and VA pension benefits.
    Under section 1318 of title 38, United States Code, VA pays 
benefits at DIC rates to the surviving spouses and children of 
veterans whose deaths are not service-connected if the veteran, 
immediately prior to his or her death, had been receiving (or 
had been entitled to receive) compensation at the 100 percent 
rate continuously for 10 or more years or for at least five 
years from the date of discharge or release from active duty. 
VA also pays DIC benefits to the surviving spouses and children 
of veterans who were former prisoners of war who die after 
September 30, 1999, and whose deaths were not service-connected 
if the veteran had been receiving (or had been entitled to 
receive) compensation at the 100 percent rate continuously for 
not less than one year preceding death. In its fiscal year 2009 
budget, the VA indicates that veteran termination data has 
demonstrated that survivors typically access compensation 
benefits within three years.

                             OTHER MATTERS

    Pursuant to section 8031 of the Balanced Budget Act of 1997 
(Public Law 105-33), increases in amounts of compensation made 
by H.R. 5826 that are not even multiples of $1 will be rounded 
down to the next lower whole dollar amount. This ``COLA-round-
down'' provision was extended until 2013 by section 706 of 
Public Law 108-183.
    The increases in DIC automatically would result in 
identical percentage increases in benefits paid at DIC rates 
under section 1318 of title 38, United States Code, to the 
surviving spouses and children of veterans who had a service-
connected disability at the time of death for which they 
continuously were rated totally disabled for at least (1) ten 
years, (2) five years from the date of discharge from active 
duty, or (3) one year if the veteran was a former prisoner of 
war who died after September 30, 1999, and whose death was not 
service-connected if the veteran had been receiving (or had 
been entitled to receive) compensation at the 100 percent rate 
continuously for not less than one year preceding death.
    Under section 156(e)(1)(A) of Public Law 97-377, the DIC 
increases also automatically would result in the same 
percentage increases in Social Security benefits that were 
terminated by section 2205 of the Omnibus Budget Reconciliation 
Act of 1981 (OBRA 1981), Public Law 97-35. Prior to OBRA 1981, 
those benefits had been paid to certain surviving spouses of 
those who died on active duty or from a service-connected 
disability on behalf of their children under 18 and children 
over age 19 who were secondary-school students; OBRA 1981 
reduced the eligibility cutoff age from 18 to 16 years old.
    Section 314 of Public Law 100-322 amended section 156(a)(1) 
of Public Law 97-377 to restore the benefits eliminated by OBRA 
1981 (effective December 1, 2000). The DIC increase provided by 
H.R. 5826 also would apply to these restored benefits.
    The Congressional Budget Office (CBO), in its most recent 
baseline, estimated that the Social Security COLA affecting 
fiscal year 2009 payments, and thus the COLA provided for by 
the Committee bill, will be 2.8 percent. The actual Social 
Security COLA could differ from this estimate. Rather than 
selecting any particular percentage adjustment at the time the 
Committee ordered the bill reported, the Committee followed its 
prior practice of setting the COLA by reference to the Social 
Security increase. The Committee believes this is the most 
equitable means of providing increases in these important 
service-connected benefits.

                                Hearings

    There were no hearings held in connection to the bill 
reported by the Committee.

                        Committee Consideration

    On April 30, 2008, the full Committee met in open markup 
session, a quorum being present, and ordered H.R. 5826 
favorably reported to the House of Representatives, by voice 
vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report the legislation and amendments thereto. 
There were no record votes taken on amendments or in connection 
with ordering H.R. 5826 reported to the House. A motion by Mr. 
Buyer of Indiana to order H.R. 5826 reported favorably to the 
House of Representatives was agreed to by voice vote.

                      Committee Oversight Findings

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

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goals and objectives are reflected in the descriptive portions 
of this report.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                  Earmarks and Tax and Tariff Benefits

    H.R. 5826 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9(d), 9(e), or 9(f) of rule XXI of the Rules of the 
House of Representatives.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate on H.R. 
5826 prepared by the Director of the Congressional Budget 
Office pursuant to section 402 of the Congressional Budget Act 
of 1974.

               Congressional Budget Office Cost Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
for H.R. 5826 provided by the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1974:
                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 12, 2008.
Hon. Bob Filner,
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5826, the 
Veterans' Compensation Cost-of-Living Adjustment Act of 2008.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Dwayne M. 
Wright.
            Sincerely,
                                         Robert A. Sunshine
                                   (For Peter R. Orszag, Director).
    Enclosure.

H.R. 5826--Veterans' Compensation Cost-of-Living Adjustment Act of 2008

    H.R. 5826 would increase the amounts paid to veterans for 
disability compensation and to their survivors for dependency 
and indemnity compensation by the same cost-of-living 
adjustment (COLA) payable to Social Security recipients. The 
increase would take effect on December 1, 2008, and the results 
of the adjustment would be rounded to the next lower dollar.
    The COLA that would be authorized by this bill is assumed 
in CBO's baseline, pursuant to section 257 of the Balanced 
Budget and Emergency Deficit Control Act, and savings from 
rounding it down were achieved by the Balanced Budget Act of 
1997 (Public Law 105-33) and extended to 2013 by the Veterans 
Benefits Act of 2003 (Public Law 108-183).
    Because the COLA is assumed in CBO's baseline, the COLA 
provision would have no budgetary effect relative to that 
baseline. Relative to current law, CBO estimates that enacting 
this bill would increase spending for those programs by $857 
million in 2009. (The annualized cost would be about $1.1 
billion in subsequent years.) This estimate assumes that the 
COLA effective on December 1, 2008, will be 2.8 percent.
    H.R. 5826 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    The CBO staff contact for this estimate is Dwayne M. 
Wright. This estimate was approved by Peter H. Fontaine, 
Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates regarding H.R. 5826 prepared by the Director of the 
Congressional Budget Office pursuant to section 423 of the 
Unfunded Mandates Reform Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act would be created by H.R. 
5826.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for H.R. 5826 is provided by Article 
I, section 8 of the Constitution of the United States.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation

Section 1. Short title

    This section would provide the short title of H.R. 5826 as 
the ``Veterans' Compensation Cost-of-Living Adjustment Act of 
2008.''

Section 2. Increase in rates of disability compensation and dependency 
        and indemnity compensation

    Section 2(a) of H.R. 5826 would require the Secretary of 
Veterans Affairs to increase, effective December 1, 2008, the 
dollar amounts for the payment of disability compensation and 
Dependency and Indemnity Compensation.
    Section 2(b) of the bill would specify the programs to 
receive increased dollar amounts: compensation in effect under 
section 1114 of title 38, United States Code; additional 
compensation for dependents in effect under sections 1115(1) of 
title 38, United States Code; clothing allowance in effect 
under section 1162 of title 38, United States Code; Dependency 
and Indemnity Compensation to Surviving Spouse under 
subsections (a) through (d) of sections 1311 of title 38, 
United States Code; and Dependency and Indemnity Compensation 
to Children--each of the dollar amounts under sections 1313(a) 
and 1314 of title 38, United States Code.
    Section 2(c)(1) of the bill would specify that each amount 
shall be increased by the same percentage by which benefits are 
increased under title II of the Social Security Act (42 U.S.C. 
401 et seq.).
    Section 2(c)(2) of the bill would round-down to the next 
lower dollar amount all compensation and DIC benefits, when the 
amount is not in the whole dollar amount.
    Section 2(d) of the bill would provide a special rule 
authorizing the Secretary of Veterans Affairs to adjust 
administratively, consistent with the increases made under 
subsection (a), the rates of disability compensation payable to 
persons under section 10 of Public Law 85-857 who are not in 
receipt of compensation payable pursuant to chapter 11 of title 
38, United States Code.

Section 3. Publication of adjusted rates

    Section 3 of the bill would require the Secretary of 
Veterans Affairs to publish in the Federal Register the amounts 
specified in subsection (b), as increased pursuant to that 
section.

                                  
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