The largest federal agency measured by number of employees is the Defense Department, whose concern is war.

The second largest also has to do with war or at least its aftermath.

It is the Veterans Administration.

Its mission is proclaimed from the walls of its gray stone building in a passage from Abraham Lincoln's second inaugural address:

"To care for him who shall have borne the battle and for his widow, and his orphan."

But the VA does more than that. It runs the nation's largest hospital system, its largest program of aid to higher education, one of its largest life insurance programs and a set of income supplement programs so vast that critics claim they add up to a second welfare system.

Veterans' group look on these programs as an earned right, society's obligation to those who have served. But critics say that for many veterans the programs go on long after the obligation has ended, and that the programs should be cut back.

The VA expects to spend around $20 billion in fiscal 1978 to spread benefits across potentially 44 per cent of the U.S. population. That figure includes 29.6 million survivers of decreased veterans.

Many of those potential reclpients - the VA says no one knows for sure how many - are also eligible for Social Security, various kinds of welfare. Medicare, private hospitalization plans, workmen's compensation private pensions and other income supplement programs that have grown over the past 30 years to overlap many of the VA's programs.

Veterans' benefits tend to expand after a war, when the sacritices of returning soldiers are on everybody's mind. But now, with memories of Vietnam fading some of the VA's defenders see a gathering storm on the horizon. Critics have suggested that some of the VA's activities which overlap other programs should be cut back.

The cost of veterans' benefits has risen more than 150 per cent over the past 10 years.And according to a 1973 study, most of the support costs for the largest single group of living veterans, 13.2 million from World War II, are" . . . Still ahead of us and will dwarf outlays for veterans of earlier and more recent wars."

That study and several more recent ones ask whether the present system of overlapping benefits makes the best use of the government's money.

That question has provoked several major political flare-ups since the end of World War II. Each time, Congress, pushed by the powerful veterans organizations and the VA, crushed attempts to reorganize veterans benefits, sometimes overriding presidential vetoes.

By VA figures 49 per cent of the nation's adult males are veterans, and Congress has clearly been wary of angering the large block of voters made up of them and their dependents.

When the Senate tried to reorganize its Veterans Affair Committee out of axistence earlier the year the committee survived.

It and its House counterpart regularly invite their client - the American Region, the Veterans of Foreign Wars. Disabled American Veterans and others - to lay out their legislative goals in hearings each pear whether or not a bill is pending.

To administer the VA's programs Congress gives its 224,000 employees the third-highest budget of any federal agency - behind the $158 billion for Health, Education and Welfare with its 140,000 employees, and $120 billion for civilian and military personnel. This VA money buys:

The largest hospital system in the nation. Nearly $5 billion a year, more than 12 per cent of the entire $37.2 billion federal health care budget, goes to 329 hospitals, clinics, nursing homes and associated facilities treating more than 181,000 patients a day with 5,800 doctors nearly 25,000 nurses, and more than 150,000 other medical care employees.

The world's largest adult education program, spending $5.2 billion to educate and train veterans in fiscal 1976, and projecting expenses of $4.2 billion in the fiscal year just ended, and about $4 billion in fiscal 1978. By comparison the entire budget for the U.S. Office of Education if $8.6 billion.

The GI Bill in its various forms has helped educate and train more than 16 million veterans, including more than 6.5 million under the current law for Vietnam era veterans.

Compensation and pension programs expected to distribute $9.1 billion in fiscal 1978 to 5.5 million veterans and veterans' surviors. Compensation which goes to veterans injured in the service regardless of their in comes totals $5.7 billion. Pensions for needy aged or injured veterans whose problems have nothing to do with their time in the service total $3.2 billion.

One of the nation's largest life in suratice programs covering nearly 5 million veterans with policies valued at $35 billion.

More than 9 million direct or VA insured home loans amounting to more than $120 billion.

While the VA's programs don't quite provide assistance from the eradle to the grave they can come close. Under the right set of circumstances, it's possible for the child to a veteran who has died or is disabled to get VA help with general living expenses, as well as special education and medical benefits.

If that child grows up to enter military service, he or she becomes eligible for the whole spectrum of veterans' benefits programs. There are loans for cars and mobile homes preferential treatment for jobs in private industry, bonus points on Civil Service exams, preferential hiring for public service jobs, clothing and other special allowances for the disabled, alcohol and drug treatment programs, a special unemployment compensation program special help in finding jobs through state employment service offices, affirmative action hiring programs for federal contracts of more than $10,000 life insurance, pensions for the elderly and disabled, compensation for those disabled by their military service as well as death benefits and a free headstone which may be claimed whether needed or not.

THose who would like to see these programs stay the way they are look on them as an earned right, and angrily object to recurring suggestions that some - pensions for example - ought to be phased into similar programs for the general population.

The veterans organizations look primarily to Congress as the creator and protector of veterans benefits. There is a syolbol of this relationship in the lobby of the VFW building - a striking scale model of the U.S. Capitol nearly 5 feet long, exqutsite in detail, studded with 217,569 cultured pearls.

President Carter's position on the programs is not clear. His reorganization task force has yet studied the VA. During his campaign, he said he would "protect veterans benefits - pensions, VA hospitals and the GI Bill," and he promised a "square deal for those who gave a great deal."

He also said he would "vigorously" enforce laws requiring preferential hiring for Vietnam veterans.

But Alan K. Campbell, whom Carter named to head the Civil Service Commission, has been saying he wants to see veterans' prefernce sharply curtailed because it discriminates against women and minorities, and its rigid and repeated use has damaged the quality of the senior Civil Service.

And last spring HEW Secretary Joseph A. Califano Jr. proposed folding the pension and compensation programs into the welfare revision package. He changed his mind after after veterans' group protested to the chairmen of the House and Senate Veterans Committees, who in turn protested to the White House.

There are several time bombs ticking quietly away that will force the Carter administration to come to grips with the issue sooner rather than later.

One is those 13.2 million living veterans of World War II, who now average 56.8 years old very close to the automatic eligibility age for pensions of 65 - if their incomes are low enough.

In the next few years a great many of them and their survivors - nobody claims to have an accurate estimate - will join the 2.3 million veterans and survivors already receiving pensions, and the 2.6 million now receiving compensation, sending the costs of that $9.1 billion program skyrocketing.

The VA said it has no figures to indicate the wealth or poverty of veterans receiving compensation, which is given for service-connected injuries regardless of income, and is intended to compensate for potentially lost earnings.

A 50 per cent disability rates $203 a month for as long as the disability remains, and it's possible in severe disability cases to get up to $1,759 per month.

There are income limits to pensions which make single veterans with incomes of $3,540 a year ineligible (the figure is $4,760 for a veteran with dependents.

But those figures do not reflect actual incomes, because 10 per cent of Social Security or any other retirement income is disregarded, as are all Supplemental Security Income (SSI) payments. SSI payments are supposed to be reduced by the amount of the pension.

VA figures show the median income of single veterans receiving pensions is $1,675 a year. For veterans with dependents it's $2,700. The median pension is $113 a month and $116 a month, respectively.

Those figures also show that 215,530 veterans have before-pension incomes of $0 to $1,100 a year: 213,385 with incomes from $1,100 to $2,000; 311,828 with incomes from $2,100 to $3,000; and 215,374 with incomes from $3,100 to $4,000.

A major VA study of the pension system is due to go to Congress next month. Sources indicate it will urge redistribution of existing benefits to give more money to those who need it the most.

Those 13.2 million World War II veterans are also at the age when health costs soar. VA figures predict that by 1985, although the total veteran population will have decreased about 5 per cent, use of the VA hospital system will have increased more than 10 per cent.

By 1990, with the veteran population down almost 10 per cent, demand will be up almost 20 per cent.

Most of the increase in demand will be veterans over 65, the figures show. They predict that the number of veterans over 65 will jump from a little over 2 million in 1975 to almost 3 million by 1980, 4.5 million by 1985, and will peak in the mid 1990s at just under 8 million.

Veterans injured on active duty get free medical care for life for those injuries, regardless of their incomes. A 1974 study found, however, that 80 per cent of the patients in VA hospitals were being treated for ailments that were not service-connected.

The VA allows that it beds are available, and if the patients claim they cannot pay for medical servces elsewhere. However, a VA spokesman said patients who have some form of medical insurance are allowed to choose whether they want to enter a VA hospital or go elsewhere.

They may also simply sign an oath that they cannot affort other care. "By law and by regulation, the VA doesn't look beyond that oath," said Michael Burns, a staff member with the Senate Veterans Committee.

VA figures show that in March, 1975, almost 20 per cent of those admitted had some form of private medical insurance, more than 15 per cent were covered by Medicare, less than 5 per cent had Medicaid, and nearly 70 per cent had no insurance.

VA Administrator Max Cleland, a triple amputee from Vietnam who has spent considerable time in VA hospitals, said that even when criticizing the system he now runs. "It has never occurred to me that veterans could be better served outside that system . . .

"I don't see the private sector out there feeling a compelling need to relate to severak million war-wounded."