that he chose military service as career. In effect, military retiree is singled out solely because of his career choice.

I find it deeply disturbing that this brave group of disabled retired veterans are the only group of Federal retirees who cannot collect their retirement for having served their country for 20 years or more and also receive their V.A. disability for a service-connected injury.

In the House of Representatives, H.R. 3164 has received widespread bipartisan support, including 26 members of the House Armed Services Committee. Moreover, this legislation is backed by the Nation's veterans organizations. Given this overwhelming support in Congress and in the veterans community, Congress should be compelled to take action on this matter.

I would like all of my colleagues to just remember one thing: S. 1381 is simply a matter of equity. It is our duty as Members of Congress to eliminate inequitable laws, such as the offset in current law. S. 1381 is a fair bill and it will help us fulfill this duty to treat all Federal retirees in a fair and evenhanded manner.

Probably the most frustrating fact to me is that we have asked these brave men and women to serve during a time of need, under tremendous duress and danger, and yet the Government fails to abide by its commitment to provide full military retirement. How can we possibly expect to maintain a viable national defense if servicemembers realize that if they experience a service-connected disability they cannot receive V.A. disability compensation and military retired pay?

It has also come to my attention that the disability offset affects not only military retirees but will also save an adverse impact on servicemembers who take advantage of the voluntary separation incentive or the special separation benefit. Any servicemember who qualifies for V.A. disability compensation will be required to forfeit that compensation out of his or her separation benefit.

For example, a servicemember who receives a special separation benefit of $35,000 and has a 10 percent V.A. 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.

This is just another example of the inequitable nature of the current offset. it is ironic that we are penalizing the servicemember who is facing the biggest challenge and will have the most difficulty adjusting to civilian life. In my opinion, the current offset further handicaps those servicemembers and retirees who are already disabled.

Military personnel cannot protect themselves from loss of income through the purchase of private disability insurance or seek redress through legal action against the U.S. Government. Congress should carefully review this matter with regard to the offset's effect on our Nation's ability to recruit and retain qualified, military career personnel.

The time has come to make sure that we keep our promises to those who have shouldered the burden of our Nation's defense. Therefore, before we start dishing out pieces of the "Peace Dividend" pie, we must first look toward helping those brave men and women who sacrificed so much to bring about the end of the Cold War.

These veterans and those before them are the reasons that the United States is the mightiest, wealthiest, most secure nation on earth today. They are the reasons that the United States has been and will continue to be the bastion of support and solace for those in a world searching for freedom and rights.

Nothing could be more devastating to the security of this or any nation than for it to deny its defenders the care and treatment they earned and deserve. . . or worse to forget them altogether.

Mr. Chairman, this committee review of S.1381 presents a tremendous opportunity for Congress to address this inequity in current law. I urge the favorable consideration of this matter so that the retired veterans who should be rewarded rather than penalized for having served their country for 20 plus years can receive the compensation they have earned.

Thank you.

Senator GLENN. Thank you very much. We appreciate your being here today and your views on this issue. Senator Graham introduced this in the Senate and I can vouch personally for his personal interest in this, the several conversations and the several times he has approached me about getting this to a hearing. So we can hopefully get it out and get it to the floor.

I know of his very personal interest in it and so we are glad we could schedule this as part of this hearing today, Bob, and we look forward to your comments on it.

DISABILITY PAY INEQUITIES

Senator GRAHAM. Mr. Chairman, I appreciate your generosity today and your kind remarks and in deference to those and what I hope is the momentum behind this legislation that you have just expressed, I will file for the record my opening statement.

Senator GLENN. Without objection it will be included in the record.

Senator GRAHAM. Much of which is redundant to what has already been so eloquently said by my two colleagues. I would like to underscore the essential issue of equity and fairness, the idea that two individuals in similar circumstances who have sacrificed their bodies in the same manner to the defense of our Nation would be treated so differently because one chose to continue his or her career in the military until retirement and the other left the military and went into a civilian Federal employment position defies all logic and sense of fair play.

Why do we do this? Basically it is for two reasons. One, tradition. This has been the policy now for over 100 years. I think it is time to reexamine that history and tradition, particularly as we undergo a major change in our defense posture. This is the time to ask the question should we not bring our practices as it relates to our disabled servicemen up to modern standards of what we would consider to be fair play for any American.

Second is cost. This is not an insignificant issue we are facing in terms of this expense. Our departed colleague Senator Sparky Matsunaga of Hawaii had been for many years advocating this military retirement equity concept. Just before he left us he had suggested the inverse ratio approach that Congressman Bilirakis has described which essentially says that the higher your level of disability the less will be subtracted.

This is not frankly a totally rational approach and it is not consistent with the total fairness that we would like to see achieved, but it does address the issue of cost. Even with that it leaves this legislation with an estimate by the Congressional Budget Office of a cost in this next fiscal year of approximately $450 million. With 300,000 persons affected by this, this would indicate that the average cost per affected military retiree would be in the range of $1,500 a year.

That is the kind of people that we are dealing with, that is the kind of economic impact on the individual. I would also point out that the reality is that many of these individuals are of the World War II era which indicates that as time passes the cost of this to the Federal Government is likely to stabilize and decline.

COMPENSATION EQUITY

We would hope that we would not be adding new persons to the list of those disabled Americans, but that comes to the final point that I want to make and that is that we do need to continue a high

focus on the human dimension of our military forces, particularly with our commitment to a voluntary military.

As Congressman Bilirakis said it would not be something that as a recruiting officer I would like to put at the high list of my reasons why a young person should consider a career in the military to tell that young potential recruit that you are going to be entering into a profession where the Federal Government has had a century-long policy of treating you in a negative, discriminatory

manner.

I believe that we need to be able to tell our voluntary military that we regard them highly, we respect them, and we will be going to treat them with the same standards of equity that we would apply to any other American.

Mr. Chairman, I would hope that those rationales were persuasive and that as part of the Department of Defense authorization for this year that this subcommittee would consider recommending inclusion of the Military Retirement Equity Act so that we can end this century of discrimination, move towards fairness for all Americans, and create the kind of positive employment incentives that we will need in order to maintain the quality of Americans serving America through the military.

[The prepared statement of Senator Graham follows:]

Prepared Statement of Senator BOB GRAHAM

THE MILITARY RETIREMENT EQUITY ACT

I appreciate the opportunity to appear before the subcommittee to discuss the Military Retirement Equity Act.

Who among us would have predicted a few years ago that this subcommittee would be discussing a military drawdown, reduction in forces and the effects of these actions on military personnel.

We have the men and women of the United States Armed Services to thank for having the dedication, skill and courage to keep America safe and free during decades of international instability and conflict.

Because of the reduced threats to the United States, we now have an opportunity to show our thanks to those individuals.

It is time for Congress to reverse the century-old law that prohibits career military who are wounded during their service from receiving earned retirement benefits.

I encourage the subcommittee to remember the importance of human resources for our national security when they begin work on the Department of Defense Authorization Act for Fiscal Year 1993.

As we learned in the Persian Gulf war, our human resources are our most valuable asset. You can't win a war just on firepower. You can have all the weapons in the world, but if you don't have skilled, experienced individuals using them, you are out of luck.

We must make every effort to recruit and retain fine individuals to the armed services. But what do we say to the 20-year-old today who we are trying to recruit for a career in the military who says, "Well, this is the way you treated my father, so I don't think this is a career that I want to pursue."

I can't think of a more fitting way for Congress to appropriate some of the "Peace Dividend" than to correct the policy of requiring American veterans injured in service to waive their earned retirement benefits in order to receive disability benefits. I strongly encourage the committee to include the provisions of the Military Retirement Equity Act in the Defense Authorization bill.

Senator GLENN. Thank you, Senator. Mr. Jehn, does the administration support this?

Mr. JEHN. The administration does not support it, Mr. Chairman. Senator GLENN. Why not?

ADMINISTRATION POSITION ON RETIREMENT EQUITY

Mr. JEHN. The best description of this is to first observe that this is not something we have done all of a sudden. This has, as the Senators and the Congressman have noted, been a policy that has been in place for over 100 years. Our differences with the sponsors of this bill largely derive from a different view, almost a different philosophy if you will, about the matters of pay here, so let me just make a couple of observations that I think are important.

First, military retirees are not penalized in the sense of a reduction in retired total compensation as a result of going on disability pay. They receive the larger of the two, and then of course there is a tax advantage accruing to disability pay so disposable income always rises for retired military personnel as they move into the disability role. And second, these comparisons between supposedly equally situated civilians and military are never quite as closely parallel as they may seem to be.

One notable difference, of course, is military personnel begin drawing retired pay on average at much, much younger ages than do civilian retirees, so the situation is not nearly so simple, but we have in past years and will continue this year to provide for the record detailed discussions of the basis for our opposition.

Senator GLENN. One of the things that supporters of S. 1381 indicate, though, is that there is a very serious inequity in current law when military retired pay is offset by VA disability pay while Federal civil service retired pay is not offset by VA disability pay. Now, I think that is a rather potent argument.

Would you propose to make this more even then, that Federal civil service retired pay should be offset by VA and we reduce the benefits if you have, for those who are in civil service, as opposed to military?

Mr. JEHN. We have never addressed that issue, Senator, and I would note that the basis for the civil service retired pay is quite different-namely largely civilian service-from the basis for either the VA disability pay or the retired pay.

Senator GLENN. How about the rest of you? General Carney, do you favor this?

General CARNEY. Well, I would not be an unbiased witness sir. I want the retired pay to be as high as it could be. I have nothing to add.

Senator GLENN. Whether you are disabled or not. Well, you would favor S. 1381 then, is that correct?

General CARNEY. I have no idea what the costs are, Mr. Chairman, so I am like the Secretary. I think we would have to provide it for the record.

Senator GLENN. Would you do that? We would appreciate your views on this.

General CARNEY. Yes, sir. [The information follows:]

Retirement/Disability CompensATION

The Army would not support a change in current law which would allow receipt of full military retirement and VA disability compensation. VA disability is awarded as a result of an injury, illness or disease that was the result of active military service. VA disability cannot be received concurrent with active duty pay. We do

not feel that it is discriminatory to offset military retired pay by the amount of military disability received and that it is a sound financial management decision. Other programs which provide for an offset as a result of receipt of disability pay include Social Security disability_and Social Security retirement; military disability and military retirement; and Federal civil service disability and Federal civil service retirement. VA disability compensation does not reduce Federal civil service retirement because the disability was incurred while in the military service. Payment of full military retirement and VA disability compensation would increase the DOD's retirement fund costs by $1 billion to $2 billion annually.

Senator GLENN. Admiral Zlatoper what you do think of this? Admiral ZLATOPER. Senator, one of my long-time sayings is that anything that puts a dollar in a sailor's pocket is money well spent. Accordingly it would be enticing to jump and answer yes except as we reduce bonuses and look at them, I know that this is something that would have to be paid for in a time of diminishing resources and competing demands. I think I would like to take the out that General Carney begged for and say can I provide for the record a definitive response?

[The information follows:]

The Navy does not support S. 1381. VA disability compensation is a benefit based on the circumstances of a veteran's military service, as is military retirement pay. Allowing VA disability compensation payments to be paid in addition to military retirement payments based upon the same period of service would be equivalent to permitting dual longevity-based and disability-based military retirement. The law now appropriately requires waiver of one to receive the other.

It is the Navy's position that a person who is eligible for military retirement and VA disability compensation should not receive both benefits without an offset. This has been a long standing position of the Department of Defense and of Congress. An individual on active duty in the military who incurs a career ending disability has the choice of electing disability retirement pay or waiving such benefits to receive VA disability compensation. This allows a military retiree to choose whichever benefit is to his or her advantage. Such an option to increase retirement compensation is not afforded the military retiree who retires for age or length of service. An inequity develops with enactment of this proposed bill in that some retirees, those receiving retirement pay and VA disability compensation, would receive more compensation than other members, those retired for age or length of service, for the same amount of time served. Additionally, those members who receive military disability retirement pay will not have the same advantage as those members who receive VA disability compensation and military retirement pay. There are no reasons that would justify the duplication of benefits in the manner that this bill would allow.

The cost of this bill must also be addressed. While I do not know what the total cost would be if this bill were enacted, in this budget environment, I must state that Navy does not support cutting other veterans' benefits to offset the cost of this bill.

Senator GLENN. We would like for you to give us your opinion on this, obviously there is the party line at the Pentagon, but you also have personal feelings on this, too, and I would hope you would express those so we get your personal views on this, General.

General COOPER. Sir, I would like to provide my comments for the record.

[The information follows:]

The Marine Corps does not support Senate bill 1381, Military Retirement Equity Act of 1991. We believe that the long standing philosophy dealing with the level of retired pay a member receives, whether it is received as VA disability compensation or military retired pay, should be maintained and not be additive in nature. We consider retired pay, in either form, income replacement. We are of the opinion that the member should continue to be subject to offset regulations and elect the retired/ disability pay that is most advantageous to him or her.