ernment provides retirement pay for length of service and disability compensation for injuries which occurred during that service. I strongly believe it is unjust that military retirees must forfeit a dollar for dollar amount of the retirement pay in order to receive tax exempt VA disability compensation. I also firmly believe that receipt of disability compensation and retirement pay is not what is commonly referred to as double dipping.

To add to this inequity a retired civil service employee receiving VA disability compensation actually ends up with more disposable income than a disabled 20-year military retiree with the same injuries. Why? Because the military retiree must pay for disability benefits from his or her retirement check. This is wrong and it must be corrected.

My home State of Florida has been disproportionately affected by the current law. We have the third largest veterans population and the second largest number of military retirees. The loss of disposable income due to the current offset has hurt our State economy.

Most importantly, however, it has hurt some of Florida's most vulnerable citizens who are most in need of income, the disabled. In order to cut the cost of this bill we have proposed an inverse ratio compromise based upon the percentage of disability rather than the current dollar for dollar offset.

I believe this inverse ratio provides a logical yet cost effective means by which to end much of the disparity which currently exists. Mr. Chairman, again I go back to the key word to remember, which is equity. The current law is not equitable. It actually penalizes military retirees for their years of service. Congress must take action to end this inequity because I believe our veterans deserve better.

I strongly urge the members of this subcommittee to support S. 1381. I thank you, Mr. Chairman, and if it is all right with you, in order to make that meeting, I am going to have to leave at this point.

[The prepared statement of Senator Mack follows:]

PREPARED STATEMENT OF SENATOR CONNIE MACK

Mr. Chairman, I would like to express my thanks to you and the members of the Manpower and Personnel Subcommittee for holding this hearing. As the Chairman will recall, my colleague from Florida, Senator Graham, and I wrote you last September to request a hearing on S. 1381, the "Military Retirement Equity Act of 1991." I appreciate the prompt attention of the Chairman on this matter. While today's hearing is to receive testimony on the personnel programs of the military services associated with the Armed Defense Authorization Request for Fiscal Year 1993, I will limit my remarks today to the provisions of S. 1381.

In discussing the "Military Retirement Equity Act of 1991," I believe it is essential to underscore the unique distinction between the military disability retirement and Veterans disability compensation programs. While both provide benefits for disabilities, they are granted for entirely different circumstances.

Military disability retirement benefits are granted in relation to the percentage of an individual's incapacity to perform full duty. The disability must be rated at 30 percent or greater, and must be permanent in nature before one may qualify. In addition, the laws covering military disability retirement benefits do not take into consideration the amount of earnings the beneficiary will lose during his or her lifetime as a direct result of the disability incurred during service in the American military.

Service-connected disability compensation is paid to Veterans who are disabled by injury or disease incurred or aggravated during active military service in the line of ity not caused by willful misconduct, or through the abuse of alcohol or drugs.

You will no doubt note that neither of these descriptions mentions length of military service. Mr. Chairman, therein lies the inequity.

The Federal Government provides retirement pay for length of service, and disability compensation for injuries incurred during that service. I strongly believe it is unjust that military retirees, who have devoted 20 or more years of their life to the defense of freedom and democracy both at home and abroad, must forfeit a dollarfor-dollar amount of their retirement pay in order to receive tax-exempt VA disability compensation. I also firmly believe that receipt of disability compensation and retirement pay is not what is commonly referred to as "double-dipping."

To add to this inequity, a retired civil service employee receiving VA disability compensation actually ends up with more disposable income than a disabled 20-year military retiree with the same injuries. Why? Because the military retiree must pay for disability benefits from his or her retirement check. The civil service retiree receives full disability and retirement compensation despite the fact that military service is calculated into the 20 years of service required in order to receive retirement benefits. In other words, an individual who served 3 years in the military and 17 years in another area of the government may keep his entire disability compensation and his retirement check. But, a Veteran with the same disabilities and 20 years of military service loses some or all of his of her retirement check. This is wrong, and it must be corrected.

It is also wrong that a Veteran who served 5 years and is 100 percent serviceconnected disabled receives full benefits, while a 100 percent service-connected disabled career Veteran must forfeit his part or all of his or her retirement pay.

My home State of Florida has been disproportionately affected by the current law. We have the third largest Veterans population and the second largest number of military retirees. Many of these people have moved to Florida for reasons of health. Yet, they must pay among the highest costs for basic needs such as housing, food, insurance, and utilities. The loss of disposable income due to the current offset has hurt our State economy. Most importantly, it has hurt some of Florida's most vulnerable citizens who are most in need of income-the disabled.

Since I was first elected to the Senate, I have received thousands of letters, telephone calls, and telegrams from disabled retired military personnel asking Congress to change this unfair law. Many have a wife or husband in poor health. With the ever-rising cost of health care, they need this additional income in order to provide for their spouse. The current law, established in the 19th century, clearly doesn't meet 20th century economic realities.

While many might argue the offset should be eliminated entirely, 20th century economic realities also dictate that Congress must be extremely prudent in its spending. In order to cut the costs of this bill, we have proposed an "inverse ratio" compromise based upon the percentage of disability rather than the current dollarfor-dollar offset. A 100 percent service-connected disabled Veteran would not be required to waive any retirement pay. A 90 percent disabled Veteran would receive full VA disability compensation plus military retirement pay less an amount equal to 10 percent of the disability compensation. This would mean that a 90 percent disabled Veteran who receives $900 per month in disability compensation would have $90 deducted from the retirement pay, not the current $900. Similarly, a 40 percent disabled Veteran would receive both VA compensation and military retirement pay less an amount equal to 60 percent of the disability compensation.

I believe this "inverse ratio" provides a logical, yet cost-effective, means by which to end the disparity which currently exists.

Mr. Chairman, this bill is entitled the "Military Retirement Equity Act of 1991." I would like to underscore the word equity. By passing this bill, Congress would not be providing additional benefits for some obscure reason. These are benefits which Veterans have earned for devoting 20 years service to the United States military. The current law is not equitable, it actually penalizes them for this service. Congress must take action to end this inequity because, I believe, our Veterans deserve better. This bill has the support of 17 national Veterans organizations and military coalitions representing more than 3 million Veterans. I strongly urge the members of this subcommittee to vote in favor of S. 1381.

Senator GLENN. Fine. Congressman Bilirakis, I understand you are going to the same meeting.

STATEMENT OF HON. MICHAEL BILIRAKIS, A U.S. CONGRESSMAN FROM THE STATE OF FLORIDA

Mr. BILIRAKIS. I am not sure what meeting Senator Mack is going to, sir. He has not dropped the name of the White House yet. Thank you very much, Mr. Chairman.

Senator GLENN. One thing, is the bill you put in over there exactly the same as the one that was introduced over here by Senator Graham?

Mr. BILIRAKIS. Yes, sir. I just want to thank you, sir, for holding this hearing, for squeezing us in between what you have been doing here with all these fine gentlemen, on my left, which is so very, very important, but what we are also talking about is consistent with that, but on behalf of myself and the approximately 300,000 disabled military retirees out there who are affected by the current 1,800 legislation offset I am very pleased and grateful.

Mr. Chairman, I said earlier that this is appropriate because as you have gone through all of these discussions on manpower and personnel it is critical that we also understand that this type of legislation adversely affects having qualified and retaining and recruiting qualified military personnel, particularly career personnel. When they see how we are treating their brothers and sisters who have basically gotten out of the service I just wonder if some of these gentlemen to my left, if they are familiar with this particular problem.

But let me give you a couple of examples, if I may, please sir. Two men in the military, in the same battle, received the same service-connected disability in that particular battle. One of them decides to stay in the service and put in his 20-plus years retirement, the other one gets out after 2 years, 3 years, whatever the case may be, less time if you will.

He has now this 100 percent disability, he is receiving his pension for that period of time and he gets a job in the Federal Government whether it be at the post office or working for a member of Congress, whatever the case may be. In the meantime he is receiving a disability during all this period of time, earning I dare say, more money than his brother who is remaining in the military with all the sacrifices of separations and everything of that nature. Fair? I think not. When that person decides to ultimately retire, the one who has stayed in the service, then he has the right to start drawing his 100 percent disability and he also earned the right to draw his retirement pay. However he now has to have an offset. He cannot draw both. So he has to give up one or the other and ordinarily they choose to give up the retirement pay for a couple of good reasons.

In another case you have a couple of veterans who may both be rated 100 percent service-connected disabled. Both receive the same amount of VA disability, even though one may have served, for 2 years and one served for 20. It is just so very, very unfair that that person who has given of himself, and more particularly the family that has given of itself during all that period of time and sacrificed

now gets basically what could be 50 percent or a heck of a lot less, in any case, than the person who got out right away.

Those are basically the examples that we are faced with, sir. You asked me if this, if my legislation in the House is similar to Senator Graham's. It is, but initially I introduced what we have always called H.R. 303. It has become sort of a famous three-digit number in that particular community which basically would eliminate the offset.

The current offset legislature goes back to the years shortly after the Civil War. There may have been good reasons for it at that time, but certainly those reasons do not exist today. But that legislation would have eliminated the offset and I have always had well over 300 cosponsors to that legislation, but because we could not get it moved at all, we decided to reintroduce this other piece of companion legislation, if you will, which is the inverse ratio which is a heck of a lot less expensive.

I do not think it is fair, obviously, but it at least treats those people with a higher percentage disability a heck of a lot better than they are treated right now. As Senator Mack said the elimination of the offset is long overdue. Career military retired veterans are the only group of Federal retirees who are required to waive their retirement pay in order to receive VA disability.

The military retiree is unjustly penalized by the fact, that he chose the military service as his career, and that is not what we want to do. In effect the military retiree is singled out, solely because of his career choice. It is disturbing that this group of people who have been willing to make all these sacrifices are the ones who are being penalized.

H.R. 3164 has received widespread bipartisan support including 26 members of the House Armed Services Committee. It is backed by all the Nation's veterans organizations and giving this overwhelming support in Congress and in the veterans' community Congress should be compelled I think, Mr. Chairman if I may be so bold as to say so, to take action on this matter.

After all, we call ourselves a republic and it is just important that we at least give this type of legislation the opportunity for markups and for votes on the floor of the House. Senator Mack has talked about it being a matter of equity and cainly it is that. I think even more important than that is the fact that if we want to retain a good military force, we have got to treat those people the way they certainly should be treated.

FORFEITURE OF COMPENSATION

Senator Nunn, I believe, asked the question about the SSB, something new in our military lives, if you will. But the disability offset also affects not only the military retirees, but will also have an adverse impact on service members who take advantage of this Voluntary Separation Incentive or the Special Separation Benefit.

Any service member who qualifies for VA disability compensation will be required to forfeit that compensation out of his or her separation benefit. So a service member who might receive a special separation benefit and SSB or $35,000 and has a 10 percent VA

disability rating will have to forfeit his $83 per month compensation check until he has repaid his entire separation benefit.

In other words we are requiring him to forego his disability compensation for 35 years and obviously if the disability rating is higher than 10 percent it would be that much more that would have to be forfeited.

So it is another example of the inequitable nature of the current offset and it is important that we let these people know who are now having to choose between the SSB or whatever other separation benefit there might be, that they would have to forfeit that benefit and it is not something that they can really look forward to.

So it is ironic that we are penalizing a service member who is really facing the biggest challenge and will have the most difficulty adjusting to civilian life. In my opinion, the current offset further handicaps those service members and retirees who are already disabled and who are already handicapped who maybe cannot get the type of work that a nondisabled person is able to get.

So military personnel cannot protect themselves from loss of income, through the purchase of private disability insurance. Why? Because they have a disability, or seek redress through legal action against the United States Government. Congress should carefully review, Mr. Chairman, this matter with regard to the offset's effect on our Nation's ability to recruit and retrain as I said earlier qualified military career personnel.

Mr. Chairman, it is just critical that this subcommittee markup this legislation, that it get through the full committee, get through the Senate, come over to the House. We have had problems over there. I do not mind shouting it from the rooftops because of claims of the finances and things of that nature, and I am a fiscal conservative as much as the next man.

But all of a sudden we have been spending all of this money on all sorts of programs and all of a sudden we are drawing the line and say we are drawing the line on these people who so very much deserve better equity and better treatment from the Congress of the United States. Thank you very much, Mr. Chairman.

[The prepared statement of Representative Bilirakis follows:] STATEMENT OF HONORABLE MICHAEL BILIRAKIS, A U.S. REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA

Mr. Chairman, I am pleased the Senate Subcommittee on Manpower and Personnel has included S. 1381, which was introduced by my friend, Senator Bob Graham, on its agenda today. I am certain that the more 300,000 disabled military retirees who are affected by the current offset are pleased that this subcommittee is conducting a hearing on S. 1381.

As the House sponsor of H.R. 3164, which is a companion bill to S. 1381, I am requesting your assistance in this effort to eliminate the fundamental inequity in current law that requires military retirees to pay for their V.A. disability compensation out of their military retirement.

S. 1381 is a fair compromise in that it establishes the right of disabled military retirees to receive both V.A. disability compensation and military retirement inversely related to the severity of their disability. As you know, a 19th century law requires military retirees to waive dollar for dollar amount of their military retirement equal to amount of their V.A. disability compensation.

The elimination of the offset is long overdue. Career military retired veterans are the only group of Federal retirees who are required to waive their retire pay in order to receive V.A. disability. The military retiree is unjustly penalized by the fact