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"When vets come home from war they are going through a tremendous change in identity," said Eric Greitens, a former member of the Navy SEALs and founder of The Mission Continues, a nonprofit that encourages veterans to volunteer in their communities. "Then the V.A., and others, encourage them to view themselves as disabled. We meet a number of veterans who see themselves as charity cases and are not sure anymore what they have to contribute."

Colonel Gade sometimes uses his leg as an example of what needs updating in the system. A century ago, he says, he might have spent his life hobbling on crutches, dependent on government aid to provide for his three children. Today he has a lightweight aluminum and carbon fiber prosthesis guided by microprocessors that has allowed him to return to active duty. But the disability system still treats him as if he needs a crutch, he says.

He first noticed what he considers the misguided incentives of disability compensation while recuperating from his injuries at Walter Reed Army Medical Center in 2005. Many of the amputees in his ward, he said, had been there for years.

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He left the hospital after five months and spent another six months in daily physical therapy. A year later, when a scandal over poor treatment of soldiers at the hospital erupted in 2007, he saw some of the patients he knew testifying before Congress.

"I couldn't believe they were still there," he said. "These guys weren't bad guys a lot were straight-up heroes but there was no driving force to move them forward."

His main goal is to reach young veterans who initially get modest compensation for less severe injuries, then seek a greater payout a phenomenon critics call "the benefits escalator."

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He points in particular to a federal program known as Individual Unemployability, for which veterans become eligible when the government gives them a rating of 60 percent disabled or more. The program pays them as if they are 100 percent disabled, as long as they can show their disabilities keep them from maintaining "substantially gainful employment."

The bump in benefits is substantial: Veterans getting $1,200 per month can receive up to $3,100 per month, as long as they do not work.

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Iraq vet seeks to rein in disability pay