Saturday, November 7, 2015

History of Veterans' Benefits

Listen to this episode as a podcast.

As Veterans Day is upon us I thought it might be interesting to take a look at the way the US has treated its Veterans throughout history.

The American Revolution:

The Revolution began before we even had a government.  The brave volunteers were more concerned about being hanged as traitors if they lost, much less their treatment if they won.  But the Continental Congress created an army and navy and made promises to the men who served.

Picture of a Revolutionary War Soldier
from an 1820 Pension Payment Voucher
There were desperate times during the war when men considered leaving the army and Congress had nothing of value to offer.  So, in 1778, Congress voted to provide all American commissioned officers who agreed to continue in service until the close of the war, a continuation of half pay for another seven years. Enlisted men got a one time payment of eighty dollars (roughly $1000 in today's dollars).

Despite these promises, Congress continued to face threats of mass resignation as the war continued to drag on with no end.  At the same time, inflation was eating into the value of pay and promised pensions.  In 1780, Congress extended the offer to officers to receive half pay for life.

When the war finally ended, Congress had no money to provide back pay, let alone pensions.  Instead of back pay, Congress had to give all officers and men "commutation certificates" which might be redeemed for money at some later date.  But, there was no guarantee when they could be redeemed, nor any interest paid on them.  In the meantime, rampant inflation made the certificates virtually worthless.  Most veterans sold them to speculators before everything was lost.  If you held onto your certificate for a decade or so, you would have been able to redeem them.  After the Constitution was established and a new monetary system created, the Federal Government finally made good on these debts. But few veterans were able to wait that long or take that chance.  Final payment primarily benefited the speculators.

But good news! Congress finally kept its promise on the pensions.  The Congress passed a law granting full pay for life for all Revolutionary War veterans, both officers and enlisted men.  The problem was this law passed in 1826, about 50 years after the war.  So if you were an 80 year old veteran at a time when the average life span in this country was about 35 years, you finally got some pension money.  In 1864, Congress granted an additional stipend of $100/year to remaining veterans of the Revolution. As you may guess, there were not many left, more than 80 years after the war had ended.  The government made last pension payment from the Revolution in 1869.

There was also a Pension Act passed in 1818 which offered a pay of $20/month to former officers and $8/month to former enlisted men of the Revolution who served for at least nine months.  This law, however, only applied if the veteran was impoverished.  The Government examined income and property holdings and denied most claims.  Lest the veteran grow too fat and happy on that pension (about $300/month in today's dollars for an officer, $120 for enlisted), he was required to give up any disability or State pensions being received in exchange for the federal pension.

The pension laws did cover men who served in State militia units as well as the Continental Army and Navy.  But there were many women who traveled with the army in support roles.  They were denied any benefits.  Some African American veterans were granted freedom from slavery in exchange for enlistment.  Since it was decided that they had already received that benefit, there was no need to provide any pension benefit to them.

Many Revolutionary War soldiers had been promised land bounties as well.  The US had a great deal of western lands to make available to veterans after the war.  But the government found a way to screw the veterans on this promise as well.  To redeem a land bounty, one had to file a claim of at least 4000 acres.  Most bounties were for a few dozen or perhaps a few hundred acres depending on rank and term of service.  One could theoretically combine one's claim with those of others to make a joint claim.  But coordination like that between veterans was nearly impossible.  It did, however, benefit speculators who could buy up many claims and combine them together for redemption.

The War of 1812 and the Mexican War

The Pension act of 1818 applied to veterans of wars after the Revolution as well.  But again, these pensions only applied if the veteran demonstrated financial need or suffered a war wound that prevented them from working.  They were very difficult to get and to keep.  Since many Americans saw them as an early form of welfare, they did not want to apply for them.

Mexican War veterans were promised 160 acres of western land.  This was of benefit to some veterans interested in settling in the west were unclaimed land was still plentiful.  However, settlement of these lands was a real danger as many settlers were massacred by Indians. Many soldiers, however, sold their claims to speculators for a fraction of their true value.

Disabled veterans and windows of those killed in the war could apply for a half-pay pension.  For private, this amounted to $3.50/mo (roughly $100/mo in today's dollars).

Philadelphia Naval Asylum
In 1871, general pensions were made available for almost all veterans of the War of 1812.  Again, this was more than 50 years after the War, so most veterans were long dead.  Survivors could enjoy $8/month (about $160/month in today's dollars).  In 1887, veterans of the Mexican War were added to the rolls.  They only had to wait about 40 years!  To prevent any of the youngest soldiers from getting an early pension, a provision was added requiring recipients be at least 62 years old.  Of course, any veterans from either war that has professed even the slightest verbal support for the South during the Civil War were denied all benefits despite their loyal service in the earlier wars.

During this period, the government also began to consider the medical care of wounded veterans. The Naval Asylum, was established in Philadelphia in 1812. Two facilities were established in Washington, D.C. -- the Soldiers’ Home in 1853 and St. Elizabeth’s Hospital in 1855. Obviously, these were of limited use if you did not live near Philadelphia or DC.  But they did provide help to some.

Civil War

The Civil War was the first real broad based veterans benefits system available to most of those who fought in the war.  The first pension law was passed just after the war began, in 1862.  It granted pensions to any soldier, sailor, or certain civilian contractors a pension of $8-$32  per month (mostly dependent on rank) for any soldier suffering a disabling injury, or to the family of any soldier killed while in service.  A big change in this law was that deaths from disease as well as battle wounds were covered.  Prior to WWII, most soldiers died from the many diseases that spread through the armies, than from wounds in battle.  Still, this was not a lot of money.  $8 was about half the pay of a private and would be about $190 in current dollars.   Also, the veteran did not have to prove poverty.  Most disabled veterans would likely be impoverished anyway given that most jobs required able bodies for physical labor.
Civil War Pension Record
Book Cover

Congress also stopped all pensions for anyone living in a State that had seceded, even if the individual veteran remained loyal to the union.

Unlike earlier wars, post war laws actually became more generous.  In 1866, the minimum pension for disability went from $8 to $20, and increased again in 1872 to $24, or about $475 in today's dollars.  Imagine living today on less than $6000 per year.  It was not much, but better than had been provided to earlier veterans.  The subsequent laws also loosened up the definitions of disability, resolving many criticisms of benefit denials against wounded vets who were not quite wounded enough.  Soldiers on partial disability could receive some benefits, but had to be examined by a government certified doctor once or twice each year to prove the disability was continuing.

A more comprehensive pension act was proposed in 1887, but was vetoed by Democratic President Grover Cleveland.  Democrats received most support from the South, where virtually no veterans received federal benefits but would be obliged to pay for them through taxes. Passage would have to wait for the election of President Benjamin Harrison, a Republican and Union army veteran himself.

The Pension Act, finally passed in 1890, established benefits for disabled veterans as well as families of those deceased.  The big change in this law was that the death or disability need not have occurred during the war.  Any veteran who became disabled at any time for any reason could receive a payment.  Similarly, dependent family members could receive a pension for any veteran who died after the war, regardless of circumstances.

In 1906 old age alone was defined as a disability, allowing virtually all (Union) Civil War veterans still living to receive a pension.  Amazingly, in 1958, Congress decided to grant pensions to eligible Confederate veterans and their families.  Sure this was 93 years after the war ended, so far too late for almost everyone  But because the law included family members, there were a notable number of dependents, roughly 1000 southerners benefited from this change.  Also, because Civil War pensions granted lifetime aid to children of veterans who were disabled before becoming adults, there is still one Civil War pension being paid today (2015) more than 150 years after the end of the war.  The recipient is a daughter of a veteran who ironically served on both sides.  He started with the Confederacy, but deserted and moved to the Union Army just before Gettysburg.

Spanish-American War

Veterans of the Spanish American war benefited primarily from the same laws passed for Civil War veterans.  Most of the laws on the books by this time benefited any US military veteran, regardless of the war in which they served.  In 1912, the Sherwood Act guaranteed a pension to any veteran of any war beginning at the age of 62.

World War I

As the US entered WWI, the Government established the War Risk Insurance Act.  The essentially provided all members of the military with death or disability insurance, paying $4500 (roughly $82,000 in today's dollars).  This was in addition to existing death or disability benefits that remained in the law.   Soldiers could also purchase additional low cost insurance from the government if they wanted additional coverage.  Another law granted a one time discharge allowance of $60 (just under $1000 in today's dollars) when soldiers left service with an honorable discharge.

The Soldiers Rehabilitation Act of 1918 authorized vocational rehabilitation training.  Rather than simply handing out cash payments to wounded veterans, the government took an active role in helping them train for jobs that could accommodate their disability.

In 1919, veteran's medical care finally moved beyond a small number of military hospitals and was put under the responsibility of the Public Health Service.

In 1921, new legislation combined the War Risk Insurance, rehabilitation, and medical care under a single department called the Veterans Bureau.

Despite these reforms, benefits were still often hard to obtain and often considered too limited.  One major complaint for WWI veterans was the fact that inflation had wiped out the value of much of their military pay while in service.  Civilian government employees had received bonuses to compensate for loss due to inflation, but members of the military got nothing. President Harding vetoed the first bill arguing it was fiscally irresponsible.  President Coolidge also vetoed a second attempt saying  "patriotism...bought and paid for is not patriotism." This time, however, Congress overrode the veto and the bill became law in 1924.

The Bonus Bill, formally called the World War Adjustment Compensation Act did not actually give any money to the veterans.  Essentially it acted as a life insurance payment.  Each soldier was entitled to up to $625 (about $8600 today), depending on their length of service.  He received a certificate redeemable in 20 years for the cash amount.  If the soldier died before then, the certificate could be redeemed at the time of death.

US Army burns Veterans out of their Shantytown
in Washington DC, 1932
The Bonus Pay became a major political issue during the Great Depression.  In 1932, veterans demanded early payment of these bonuses because so many of them had lost their jobs and were on the streets.  When President Hoover refused to act, between 15,000 and 20,000 veterans marched on Washington to demand reform.  They became known as the Bonus Army and set up shanty town in DC, many left after a few weeks of inaction, but several thousand remained in Anacostia with their families having nowhere else to go.. Rather than assist the veterans, the military, on orders for President Hoover and led by Gen. Douglas MacArthur, rolled tanks through the camp with tanks, killing several veterans and burning down the shantytown.  The protesters were dispersed or arrested and no assistance was given. Shockingly, this action did not help President Hoover's reelection bid a few months later.

Despite his treatment of the Bonus marchers, President Hoover was not deaf to the needs of Veterans. In 1930, he established the Veterans Administration.  The new VA took over the responsibilities of the Veterans Bureau, as well as the Pensions Bureau and the national homes for soldiers.

In March 1933, President Roosevelt passed the Economy Act, which repealed all statutory benefits for all veterans of the Spanish American War and later wars (but leaving benefits for Civil War veterans intact).  The new law gave the President authority to establish benefits by executive order. The normally free spending Roosevelt slashed benefits.  In 1935, his authority was ended and Congress renewed most of the benefits as they existed before the 1933 law.

World War II

On the eve of war in 1940, Congress passed the National Service Life Insurance Act, which provided low cost life insurance to members of the military.  This is the basis for the law that exists to this day.

That same year, the Selective Training and Service Act, which authorized the nation’s first peacetime draft, guaranteed reemployment rights to all employees who left a job to volunteer or because they were drafted into the armed forces.  This legal guarantee also exists to this day.

Ad for GI Bill Benefits
The Disabled Veterans’ Rehabilitation Act of 1943 created a new vocational rehabilitation program for disabled World War II veterans. It was similar to the Soldiers Rehabilitation Act of WWI, but eventually grew much larger and broader in scope.

The biggest change, however, was passage of the Servicemen’s Readjustment Act of 1944, but more commonly known as the GI Bill. This law had three key provisions: There were three key provisions.
  1. Education: authorized the payment of up to $500 (which was enough to pay for school at the time) per school year for tuition, fees, books and supplies, plus a monthly subsistence allowance.
  2. Business loans: authorized federally guaranteed home, farm and business loans of up to $2,000, with no down payment and 50 percent guaranteed by the government.
  3. Unemployment: veterans who had served a minimum of 90 days were entitled to a weekly payment of $20 for a maximum of 52 weeks. 
Another law, the Veterans Preference Act of 1944 gave Veterans preference for government jobs, as well as mandating preferences for private employers receiving government contracts.  The post-WWII era saw a major expansion in VA hospitals to provide care the large number of veterans.

Korean War

Many of the assistance laws under the GI Bill had expired by the time of the Korean War.  To provide assistance to a new generation of veterans,  Congress passed the Vocational Rehabilitation Act of 1950, which created new job training for wounded veterans.  The new law was expanded to assist peacetime veterans who might also need the help.

Korean Veterans received fewer benefits
than their WWII counterparts, but they did 
get a memorial on the National Mall first.
The Veterans’ Readjustment Assistance Act of 1952, called the Korean GI Bill, provided unemployment, job placement, loans and other benefits similar to those provided to World War II veterans.   The education component was reduced, offering benefits or only three years rather than four.  It also did not pay for tuition directly.  Rather veterans received checks to cover whatever expenses they wanted. For the most part, payments did not completely cover all of the costs needed to complete college.

In 1958,  Congress passed the  Ex-Servicemen’s Unemployment Compensation Act.  This created a permanent system of unemployment insurance for all veterans, regardless of when they served. States managed the plan which was supported by federal funds.  Because States had some control over the details, amounts and duration of assistance varied.

Around this same time, the VA changed pension plans to take into account need, rather than a fixed amount per soldier.  Veterans with higher incomes and assets received less assistance, taking the program back to a welfare style program helping those who needed it most.

Vietnam War

The Vietnam era saw another major expansion of VA hospitals.  Combat medical care had improved so that many soldiers who might have died with similar wounds in earlier wars now survived.  This resulted in a much higher need for medical care for returning veterans.

In 1966, Congress passed the Veterans’ Readjustment Benefits Act, often called the Vietnam GI Bill, Veterans who had been on active duty for at least six months could receive one month of educational assistance for each month of service, later expanded to one and one-half months for each month of service.  During the Vietnam era, most draftees served 18 to 24 months, meaning at most three years of educational assistance unless one opted to stay in the military for a longer term.  No distinction was made between veterans who served in combat and those in non-combat deployments.

The military also created the Servicemen’s Group Life Insurance, which provided $10,000 in life insurance to veterans.  In 1971, Congress created the VA mortgage program to help disabled veterans pay for special accommodations to their homes.

Modern Era

Following the end of the draft in 1976, new veterans benefits were created with the goal of attracting new recruits to the military The Veterans’ Educational Assistance Act of 1977 limited eligibility to those entering military service after Dec. 31, 1976. This program permitted a service member to contribute up to $2,700 to a personal education fund.  The federal government would match the service member’s contribution with two dollars for each one contributed.  Unfortunately, most service members did not take advantage of this 401(k) style system and it never received wide adoption.

In 1978 Congress passed the Veterans’and Survivors’ Pension Improvement Act. This law must have been named ironically, because it did little to improve pensions.  Rather, the new law considered not only the veteran's income and assets, but also those of his or her spouse, meaning that veterans with working spouses typically lost pension income.  If a veteran or spouse received income from another source such as a job, a military pension would drop dollar for dollar to keep the income the same. This made work pointless for many veterans or spouses who might otherwise work at lower income jobs.

In 1986, Congress changed laws related to medical care to cut the number of Veterans eligible for free medical care.  Free benefits were limited to veterans with service-related disabilities and those with low incomes, as well as other specific groups of veterans, including former prisoners of war, veterans exposed to herbicides and ionizing radiation and veterans of World War I.  Higher income veterans with non-service related disabilities would have to pay for part of their treatment.

Realizing the failure of the 1976 education program, Congress replaced it with a new one that essentially forced service members to save.  The Veterans’ Educational Assistance Act of 1984 provided educational assistance benefits of $300 per month for up to 36 months, in exchange for completing three years of active duty or two years of active duty and four years in the reserve. To be eligible.  Part of this was paid for by requiring the service member (if he or she chose to participate) to have monthly pay reduced by $100 a month for the first 12 months of enlistment. The money was nonrefundable, so a recruit had to agree to it at the time of recruitment, and could not get the money back if they decided not to go to college after leaving service.

Although the VA continued to provide some vocational assistance, the Emergency Veterans’ Job Training Act of 1983 reimbursed employers up to 50% of an employee's wages (up to $10,000) for hiring any Korean or Vietnam era veterans.

President Reagan signs the law elevating 
the VA to Cabinet level, after  cutting
veterans' medical benefits. 
In 1990, Congress limited disability pensions, which had been granted automatically to any veteran over the age of 65.  Under the new law, veteran applicants of any age had to prove they had a permanent total disability in order to qualify for a pension.

Despite these cuts, the administration wanted to appear to care for Veterans.  In 1988 it elevated the VA to cabinet level status, meaning the Veterans Administration became the Department of Veterans Affairs.  So the head of the VA got to sit in on Cabinet meetings, but little else changed for veterans themselves.

In the 1990's the first Gulf War prompted some minor improvements to benefits, but no major changes to those eligible for benefits.

Today the VA receives around $170 billion per year.  With about 22 million veterans in the US, that means we spend amount $7700 per veteran per year.  About one-third of this goes to disability payments to disabled veterans.  The other major cost is medical care, mostly supporting the large network of VA hospitals and clinics around the country. There is also a wide array of other benefit programs for veterans covering education, training, housing, retirement, and burial.

Conclusion:

Over time, as the US has grown wealthier, it has done more for its veterans.  It also tends to be more generous after a large war that has produced a large number of veterans.  Of course, controversy continues to this day as to the cost and level of coverage provided to those who risked their lives to protect this country in times of danger.

Listen to this episode as a podcast.

Further Reading:

http://www.socialwelfarehistory.com/social-security/veterans-pensions-early-history/

http://www.nps.gov/revwar/unfinished_revolution/veteran_entitlements.htm

http://www.archives.gov/publications/prologue/2010/spring/civilwarpension.html

http://drbronsontours.com/pensionsunderstandingcivilwarpensions.html

http://www.nytimes.com/1862/08/12/news/army-pensions-instructions-forms-be-observed-applying-for-them-under-act-july-14.html?pagewanted=all

http://www.civilwarhome.com/pensions.html

http://www.va.gov/opa/publications/archives/docs/history_in_brief.pdf

http://www.navywarof1812.org/benefits-for-naval-veterans





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