A task force of the President's Private Sector Survey on Cost Control has recommended that "serious consideration" be given to eliminating the Veterans Administration and transferring its functions to other agencies, according to a six-page "working draft report" obtained this week by a subcommittee of the House Veterans' Affairs Committee.
The report, addressed to J. Peter Grace, head of the advisory panel and chairman of W.R. Grace & Co., said the government, "particularly in the absence of future wars," could divide all of the VA's programs except its hospitals among the Departments of Defense, Education, Housing and Urban Development and the Social Security Administration.
The nation's two largest veterans' groups immediately criticized the report, which was made public by Rep. Douglas Applegate (D-Ohio), chairman of the subcommittee on veterans' compensation, pension and insurance.
Meanwhile, Murray Sanders, a spokesman for the advisory panel, played down the signifigance of the report, calling it "an early draft paper." Anyone drawing conclusions from it might be making "assumptions that are not valid," Sanders said, "because it may well be heavily adjusted on route" to the executive committee of the panel.
VA Administrator Harry N. Walters also tried to quiet the fears of veterans' groups by saying "A draft report from a voluntary group is no basis for spectulating that serious consideration would be given to eliminating the VA."
President Reagan created the Grace committee last June as part of a pledge to bring businesslike management to the federal government. It includes 150 executives from some of the nation's largest corporations and financial institutions. The committee, in turn, supervises the activities of more than a thousand private businessmen in "task forces" assigned to look into the activities of specific agencies.
Democratic members of Congress said the draft report on the Veterans Administration proved that the private-sector committee has overstepped its role as a management efficiency advisor and is delving into policy matters.
The VA report was written by William C. Douce of Phillips Petroleum Co., Hans W. Wanders of Wachovia Bank and Trust Co. and William L. Wearly of Ingersoll-Rand Co.
The report's authors suggested that the Defense Department take over the VA's compensation program, that the Social Security Administration take over its pension and burial programs, that HUD take over its loan guarantees and that the Education Department take over all VA education programs. Responsibility for the VA's insurance programs, budgeted at $6.7 billion in fiscal 1983, should be turned over to private firms, they said.
The report said, "In line with the general theme of the president and the commission, we started conceptually with the premise that the VA could be disbanded."
But the authors said they had not tried to determine if such a breakup was feasible or advisable.
The VA's extensive hospital network is being examined by a separate task force. Its report has not been made public, but a copy was obtained by Rep. Robert W. Edgar (D-Penn.), who chairs a Veterans' subcommittee on VA hospitals.
A spokesman for Edgar said that report recommends consolidating the VA's 172 hospitals, where possible, with Defense Department hospitals. When that is not possible, they could be turned over to communities.
"The decision was made in 1930, when Herbert Hoover was in the White House, that veterans' programs should be pulled together so . . . veterans could receive one-stop service," said Robert Lyngh of the American Legion. "I can't see offhand why anyone would want to transfer the VA programs to already bloated agencies such as DOD and Social Security."
Among the task force's other recommendations were a reduction in the VA's field staff and using private debt collectors to recoup bad debts.
The Grace committee will hold six public meetings, beginning April 15, to consider reports from its various task forces before making a final recommendation to Reagan, Sanders said. He said leaks of draft reports were undermining the process.