Veterans Affairs: Historical Budget Authority, FY1940-FY2012
Released: 2012-06-13T00:00:00

Introduction

Because of the annual budget and appropriation process in Congress and the current conflicts involving U.S. servicemembers overseas, there is a strong interest in the levels of spending by the federal government for veterans' benefits and services among members of Congress and the public. For this report, veterans' benefits and services include direct spending on veterans (such as disability compensation or health care) and indirect spending (such as administration and construction of facilities). This report provides information on the historical budget authority for veterans' benefits and services for FY1940 through FY2012, and a brief discussion of major changes in budget authority over this period. Budget authority is presented in both current dollars and constant 2011 dollars (i.e., inflation-adjusted).

Budget Authority for Veterans' Programs, FY1940-Y2012

The budget authority for veterans' benefits and services over the FY1940-FY2012 period has generally shown a steady increase. As can be seen in Table 1 and Figure 1 , the FY2012 budget authority in current dollars was more than 20 0 times the FY1940 budget authority, reflecting an average annual growth rate for the period of 7.9%. In constant 2011 dollars, the FY2012 budget authority is 1 4 times the FY1940 budget authority and reflects a 3.8% average annual growth rate over the period.

World War II

A large number of Americans, 16.1 million, served in the military in World War II (WWII, December 7, 1941, through December 31, 1946), making WWII the largest conflict to date in terms of the number of servicemembers. Because the servicemembers volunteered (or were drafted) for "the duration," a large number of servicemembers were released in a relatively short period of time at the end of the war.

Before the end of the war, the Servicemen's Readjustment Act (P.L. 346 of the 78 th Congress), commonly known as the GI Bill, was signed into law in 1944, providing a major change in benefits for veterans. The GI Bill introduced education and training benefits that enabled millions of servicemembers who may have otherwise been unable to attend college or training schools to receive a college education or specific job skills training. In addition, the housing loan guarantee benefits provided by the GI Bill enabled WWII veterans to purchase homes for their families.

As shown in Table 1 , the combination of the large number of veterans being released in a relatively short period of time and the change in benefits resulted in the budget authority for veterans increasing from $561.1 million before the war in FY1940 to a peak in the post-war period in FY1947 of almost $8.4 billion.

In current dollars, the FY1947 budget authority was 14.9 times the FY1940 pre-war budget authority for veterans. In constant 2011 dollars, the FY1947 budget authority for veterans was $80.7 billion, or 9. 8 times the FY1940 pre-war budget authority for veterans.

The Vietnam Era

The Vietnam era (February 28, 1961 through May 7, 1975) was significantly longer than WWII, with a total of 8.7 million Americans who served in the military during the period. Until the end of 1972, a military draft was in place (the last drafted servicemembers began service in 1973), and drafted servicemembers were released through the period at the end of their military obligation. Also, while benefit changes or expansions were made during the period, no new large benefit programs were started during the period (unlike the WWII period). As a result of the regular release of servicemembers from the military over the period and the relatively stable levels of veterans' benefits and services, the large peak in budget authority at the end of WWII was not repeated at the end of the Vietnam era.

There was however a smaller peak in budget authority for the FY1975-FY1976 period that reflected an increase in the number of veterans at the end of the Vietnam conflict. While the current dollar budget authority for FY1975 and FY1976 was 2.0 and 2.3 times the FY1947 budget authority, in constant 2011 dollars (after adjusting for inflation) the budget authority for FY1975 and FY1976 was below that of FY1947. This reflects in large part the differences between the two conflicts in terms of the timing for release of servicemembers and veterans benefits and services (compared to the pre-conflict period).

Current Conflicts

During the current conflicts [Operation Enduring Freedom (OEF, which began October 2001), Operation Iraqi Freedom (OIF, March 2003 - August 2010), and Operation New Dawn (which began September 2010)], there is no military draft in place. Servicemembers generally leave at the end of their obligation, or at retirement. The somewhat steady increase in budget authority for veterans' benefits and administration each year since the late 1990s reflects the impact of the aging of the veteran population (with an accompanying increased demand for services) in addition to the impact of the returning OEF/OIF veterans. Also, increases in appropriations for disability compensation reflect changes to the conditions considered presumed to be service-connected for Vietnam veterans. In FY2000, of the 83,159 veterans who began receiving disability compensation that year, 19.8% were aged 55 or older. By FY2011, of the 272,509 veterans who began receiving disability compensation that year, 52.9% were aged 55 or older. The budget authority for FY2009 and later years also reflect the impact of the Post-9/11 Veterans Educational Assistance Program.

Over time, the increases in the budget authority for veterans' benefits and services have reflected the impact of increases in the number of veterans as the result of wars and other conflicts, the aging of the veteran population, and changes in the benefits and services provided for veterans. The most dramatic impact of the combination of an increase in the number of veterans and changes in veterans' benefits can be seen in the period shortly after World War II.