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[From the U.S. Government Publishing Office]


113th Congress                                                 Report
                   }   HOUSE OF REPRESENTATIVES  { 
 1st Session       }                             {             113-62
======================================================================
 
                        AMERICAN HEROES COLA ACT

                                _______
                                

  May 17, 2013.--Committed to the Committee of the Whole House on the 

              State of the Union and ordered to be printed

                                _______
                                

    Mr. Miller of Florida, from the Committee on Veterans' Affairs,

                        submitted the following


                              R E P O R T

                        [To accompany H.R. 570]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Veterans' Affairs, to whom was referred 
the bill (H.R. 570) to amend title 38, United States Code, to 
provide for annual cost-of-living adjustments to be made 
automatically by law each year in 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, 
having considered the same, report favorably thereon without 
amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     3
Subcommittee Consideration.......................................     3
Committee Consideration..........................................     3
Committee Votes..................................................     3
Committee Oversight Findings.....................................     4
Statement of General Performance Goals and Objectives............     4
New Budget Authority, Entitlement Authority, and Tax Expenditures     4
Earmarks and Tax and Tariff Benefits.............................     4
Committee Cost Estimate..........................................     4
Congressional Budget Office Estimate.............................     4
Federal Mandates Statement.......................................     6
Advisory Committee Statement.....................................     6
Constitutional Authority Statement...............................     6
Applicability to Legislative Branch..............................     6
Statement on Duplication of Federal Programs.....................     6
Disclosure of Directed Rulemaking................................     7
Section-by-Section Analysis of the Legislation...................     7
Changes in Existing Law Made by the Bill as Reported.............     7

                          Purpose and Summary

    H.R. 570, the American Heroes COLA Act, was introduced on 
February 6, 2013, by Representative Jon Runyan of New Jersey. 
H.R. 570 would provide for automatic annual cost-of-living 
increases in the rates of veterans' disability compensation and 
dependency and indemnity compensation. This is accomplished by 
indexing these veteran benefit increases to increases in 
benefit amounts payable under title II of the Social Security 
Act.

                  Background and Need for Legislation

    The basic purpose of the disability compensation program is 
to provide relief from the impaired earning capacity of 
veterans disabled as the result of their military service. The 
amount of compensation payable varies according to the degree 
of disability. This amount in turn is required by law to 
represent, to the extent practicable, the average impairment in 
earning capacity in civilian occupations resulting from such 
disability or combination of disabilities.
    To be eligible to receive disability compensation, a 
veteran must have a disability incurred or aggravated during 
military service, which is not the result of willful 
misconduct, and must have been discharged under other than 
dishonorable conditions. The responsibility for determining a 
veteran's entitlement to service-connection for a disability 
rests with VA.
    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. Additional amounts are paid to survivors who are 
housebound, in need of aid and attendance, or who have minor 
children. The purpose of DIC benefits authorized under chapter 
13 of title 38, United States Code, is to provide partial 
compensation to the appropriate survivors for the loss in 
financial support due to the service-connected death. Income 
and need are not factors in determining a surviving spouse's or 
child's entitlement because the Nation, in part, assumes the 
legal and moral obligation of the veteran to support the spouse 
and children.
    Each year, the Committee approves and reports legislation 
that sets the cost-of-living adjustment (COLA) by reference to 
the yet-to-be-determined Social Security increase. Although the 
Committee typically passes such legislation each year, veterans 
must wait for Congress to act before they are granted such an 
increase.
    In contrast, Social Security beneficiaries receive an 
automatic and annual COLA if there is an increase in the 
Consumer Price Index for Urban Wage Earners and Clerical 
Workers (CPI-W) from the third quarter of the last year a COLA 
was determined to the third quarter of the current year. 
Accordingly, service-disabled veterans who are receiving 
disability benefits from the Department of Veterans Affairs 
(VA) should also automatically see their benefits increase, 
particularly in light of the current economic climate. To right 
this inequity, rather than being subject to the uncertainty of 
an annual COLA bill, this section makes compensation to 
veterans and their dependents subject to the same COLA as 
Social Security recipients permanently. By making such an 
increase automatic, veterans would not have to wait for 
Congress to pass an annual COLA bill before receiving the COLA 
increase in benefits. Further, because a COLA is assumed in 
CBO's baseline, there is no projected increase in mandatory 
spending relative to the baseline projected for this provision.

                                Hearings

    On April 16, 2013, the Subcommittee on Disability 
Assistance and Memorial Affairs conducted a legislative hearing 
on various bills introduced during the 113th Congress, 
including H.R. 570. The following witnesses testified at the 
hearing:
    The Honorable Bill Johnson, U.S. House of Representatives; 
The Honorable Chellie Pingree, U.S. House of Representatives; 
The Honorable Timothy Walz, U.S. House of Representatives; Mr. 
Jeff Hall, Assistant National Legislative Director, Disabled 
American Veterans; Mr. Raymond Kelley, Director of National 
Legislative Service, Veterans of Foreign Wars; Colonel Robert 
F. Norton, USA (Ret.), Deputy Director of Government Relations, 
Military Officers Association of America; Heather Ansley, Esq., 
MSW, Vice President of Veterans Policy, VetsFirst, a program of 
United Spinal Association; Mr. Michael D. Murphy, Executive 
Director, National Association of County Veterans Service 
Officers; Mr. Richard Hipolit, Assistant General Counsel, U.S. 
Department of Veterans Affairs; Mr. David R. McLenachen, 
Director, Pension and Fiduciary Service, U.S. Department of 
Veterans Affairs, accompanied by Ms. Mary Ann Flynn, Deputy 
Director, Policy and Procedures, Compensation Service, U.S. 
Department of Veterans Affairs. The following groups submitted 
statements for the record: The American Legion; Iraq and 
Afghanistan Veterans of America; National Organization of 
Veterans Advocates; and Wounded Warrior Project.

                       Subcommittee Consideration

    On April 25, 2013, the Subcommittee on Disability 
Assistance and Memorial Affairs met in an open markup session, 
a quorum being present, and favorably forwarded to the full 
Committee H.R. 570 by voice vote.

                        Committee Consideration

    On May 8, 2013, the full Committee met in an open markup 
session, a quorum being present and ordered H.R. 570 reported 
favorably 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. 570 reported to the House. A motion by 
Ranking Member Michael H. Michaud of Maine to report H.R. 570 
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. 570 does not contain any Congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 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. 
570 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. 570, provided by the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1974:

                                                      May 14, 2013.
Hon. Jeff Miller,
Chairman, Committee on Veterans' Affairs, U.S. House of 
        Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 570, the American 
Heroes COLA Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Dwayne M. 
Wright.
            Sincerely,
                                    Douglas W. Elmendorf, Director.
    Enclosure.

H.R. 570--American Heroes COLA Act

    Summary: H.R. 570 would provide a permanent annual cost-of-
living adjustment (COLA) to the amounts paid to veterans for 
disability compensation and to their survivors for dependency 
and indemnity compensation, and would round down that 
adjustment to the next lower whole dollar. The effective date 
of those provisions would be December 1, 2014. CBO estimates 
that enacting H.R. 570 would decrease direct spending by $26 
million in 2015 and by about $1.4 billion over the 2015-2023 
period.
    Pay-as-you-go procedures apply because enacting the 
legislation would affect direct spending. Enacting H.R. 570 
would not affect revenues.
    H.R. 570 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the federal government: The estimated 
budgetary impact of H.R. 570 is shown in the following table. 
The costs of this legislation fall within budget function 700 
(veterans benefits and services).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               By fiscal year, in millions of dollars--
                                             -----------------------------------------------------------------------------------------------------------
                                               2014    2015    2016    2017     2018     2019     2020     2021     2022     2023   2014-2018  2014-2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Estimated Budget Authority..................       0     -26     -55     -84     -112     -144     -177     -212     -252     -290      -277      -1,351
Estimated Outlays...........................       0     -26     -55     -84     -112     -144     -177     -212     -252     -290      -277      -1,351
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Basis of estimate:

Automatic COLA

    Section 2 would provide a permanent annual COLA to the 
amounts paid to veterans for disability compensation and to 
their survivors for dependency and indemnity compensation. The 
COLA would equal the cost-of-living adjustment payable to 
Social Security recipients and would take effect on December 1 
of each year.
    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. Because the COLA is 
assumed in CBO's baseline, enacting this provision would have 
no budgetary impact relative to that baseline. CBO estimates 
that the projected COLA for 2015 (1.9 percent), which would 
take effect in the second quarter of fiscal year 2015, would 
equal $2.2 billion. The full-year cost of that increase would 
equal $2.8 billion. Over the 2015-2023 period, CBO estimates 
that the COLA would amount to $74.9 billion.

Permanent extension of provision to round-down COLA

    Section 2 also would require that increases in the monthly 
rates resulting from the COLA be rounded down to the next lower 
whole dollar. This provision would apply to both disability 
compensation and dependency and indemnity compensation 
payments. A similar provision exists under current law and will 
expire at the end of 2013. Based on projections of the number 
of beneficiaries and payments made each year, CBO estimates 
that this section would result in direct spending savings of 
about $1.4 billion over the 2015-2023 period.
    Pay-as-you-go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays that are subject to those 
pay-as-you-go procedures are shown in the following table.

           CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 570, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON VETERANS' AFFAIRS ON MAY 8, 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            By fiscal year, in millions of dollars--
                                       -----------------------------------------------------------------------------------------------------------------
                                         2013   2014   2015    2016    2017     2018     2019     2020     2021     2022     2023   2013-2018  2013-2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             NET DECREASE (-) IN THE DEFICIT
Statutory Pay-As-You-Go Impact........      0      0     -26     -55     -84     -112     -144     -177     -212     -252     -290      -277      -1,351
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: H.R. 570 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Estimate prepared by: Federal Costs: Dwayne M. Wright; 
Impact on State, Local, and Tribal Governments: Lisa Ramirez-
Branum; Impact on the Private Sector: Elizabeth Bass.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates regarding H.R. 570 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. 
570.

                 Statement of Constitutional Authority

    Pursuant to Article I, section 8 of the United States 
Constitution, the reported bill is authorized by Congress' 
power to ``provide for the common Defense and general Welfare 
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.

              Statement on Duplication of Federal Programs

    Pursuant to section 3(j) of H. Res. 5, 113th Cong. (2013), 
the Committee finds that no provision of H.R. 570, the 
``American Heroes COLA Act,'' establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(k) of H. Res. 5, 113th Cong. (2013), 
the Committee estimates that H.R. 570 does not require any 
directed rulemakings.

             Section-by-Section Analysis of the Legislation


Section 1--Short title

    This section provides the short title of H.R. 570 as the 
``American Heroes COLA Act of 2013.''

Section 2--Automatic annual increase in rates of disability 
        compensation and dependency and indemnity compensation

    Section 2(a) would make the cost-of-living adjustment for 
veterans' disability payments automatic whenever there is an 
increase in benefit amounts payable under title II of the 
Social Security Act. Section 2(a) would also require the 
Secretary to publish any such increase in the Federal Register, 
and would require that each dollar amount increased, if not a 
whole dollar amount, be rounded to the next lower whole dollar 
amount. This section would allow the Secretary of Veterans 
Affairs to adjust administratively the rates of disability 
compensation payable to persons under section 10 of Public Law 
85-857 (72 Stat. 1263) who have not received compensation under 
chapter 11 of title 38.
    Section 2(b) would make the automatic increase in cost-of-
living adjustments effective as of December 1, 2014.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

TITLE 38, UNITED STATES CODE

           *       *       *       *       *       *       *


PART IV--GENERAL ADMINISTRATIVE PROVISIONS

           *       *       *       *       *       *       *


CHAPTER 53--SPECIAL PROVISIONS RELATING TO BENEFITS

           *       *       *       *       *       *       *


Sec. 5312. Annual adjustment of certain benefit rates

  (a) * * *

           *       *       *       *       *       *       *

  (d)(1) Whenever there is an increase in benefit amounts 
payable under title II of the Social Security Act (42 U.S.C. 
401 et seq.) as a result of a determination made under section 
215(i) of such Act (42 U.S.C. 415(i)), the Secretary shall, 
effective on the date of such increase in benefit amounts, 
increase the dollar amounts in effect for the payment of 
disability compensation and dependency and indemnity 
compensation by the Secretary, as specified in paragraph (2), 
as such amounts were in effect immediately before the date of 
such increase in benefit amounts payable under title II of the 
Social Security Act, by the same percentage as the percentage 
by which such benefit amounts are increased.
  (2) The dollar amounts to be increased pursuant to paragraph 
(1) are the following:
          (A) Wartime disability compensation.--Each of the 
        dollar amounts in effect under section 1114 of this 
        title.
          (B) Additional compensation for dependents.--Each of 
        the dollar amounts in effect under section 1115(1) of 
        this title.
          (C) Clothing allowance.--The dollar amount in effect 
        under section 1162 of this title.
          (D) Dependency and indemnity compensation to 
        surviving spouse.--Each of the dollar amounts in effect 
        under subsections (a) through (d) of section 1311 of 
        such title.
          (E) Dependency and indemnity compensation to 
        children.--Each of the dollar amounts in effect under 
        sections 1313(a) and 1314 of such title.
  (3) Whenever there is an increase under paragraph (1) in 
amounts in effect for the payment of disability compensation 
and dependency and indemnity compensation, the Secretary shall 
publish such amounts, as increased pursuant to such paragraph, 
in the Federal Register at the same time as the material 
required by section 215(i)(2)(D) of the Social Security Act (42 
U.S.C. 415(i)(2)(D)) is published by reason of a determination 
under section 215(i) of such Act (42 U.S.C. 415(i)).
  (4) Each dollar amount increased under paragraph (1), if not 
a whole dollar amount, shall be rounded to the next lower whole 
dollar amount.
  (5) The Secretary of Veterans Affairs may 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 (72 Stat. 1263) 
who have not received compensation under chapter 11 of this 
title.

           *       *       *       *       *       *       *