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BEING FAIR TO VETERANS
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| June 11th, 2003 |
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Mr. Speaker, I was hoping that my colleague would remain in the Chamber for the next hour while we talk a little bit about exactly what the Committee on Veterans Affairs has done and the discussion of the cuts that are being made to the veterans budget. We will get into that a little bit later. But tonight I want to talk about something called SBP, and we will discuss it in great length. But I want to introduce you to somebody first. Her name is Dottie Welch.
Dottie's story goes something like this: When Lt. Colonel Roger Welch of the United States Army retired and signed up for the military survivor benefit plan, better known now as SBP, years ago, he was told that in the event of his death, SBP would pay his wife, Dottie, 55 percent of his retirement pay for the rest of her life.
When he signed an irrevocable agreement to pay annually-increasing SBP premiums for the rest of his life, he did not know that his wife's future SBP benefit actually would be one-third less than what they were led to believe.
When Roger died in June of 2002, Dottie was dismayed to learn that there would be an offset, an offset based on her husband's Social Security-covered military earnings, that would reduce her benefits. With Social Security survivor benefits and the reduced SBP annuity, her total income is $384 a month less than she and Roger thought she would have to live on.
Dottie thinks the Social Security offset is just plain wrong. No one will tell her why it is there and why it is so large. Her husband, Roger, only had 5 years of military service covered by Social Security.
Dottie Welch's case highlights one significant inequity of the military SBP and the reason why so many retirees and survivors are upset about its current situation.
Unfortunately, this is only the first of several ways that Uniform Service Survivor Benefits relative to premiums being paid fall far short of what retirees and survivors were promised and what is afforded survivors of other Federal retirees.
Mr. Speaker, there are three major SBP inequities. One is that thousands of people who bought SBP coverage were not briefed that most survivors' SBP annuities would be reduced substantially after age 62; two, the 40 percent government subsidy envisioned by Congress and touted by the services to encourage retirees' participation has plunged to 17 percent; three, the government provides Federal civilian survivors a substantially higher share of retired pay for life with no benefit reduction at any age.
The impact of these inequities is, as Members can imagine, devastating to many survivors, because SBP is not exactly a king's ransom at 55 percent of retired pay. At 35 percent, SBP provides only a poverty level or lower annuity for most survivors, even those of relatively senior officers.
So I am here tonight to provide more specifics on how the military SBP program is not providing, is not providing the level of protection military survivors need and deserve and were expecting; and why my bill, H.R. 548, the Military Survivors Benefit Improvement Act of 2003, is what is needed now to fix the current problem.
The first issue that we need to discuss tonight is something that I call the benefit reduction shock. It is incredulous to many that such an important feature of SBP, the reduced age 62 annuity that applies to the vast majority of military survivors, was never explained to retirees being asked to sign up for the program in the seventies and in the early eighties, but it is true.
I have in my hand a copy of the actual SBP Election Form 5002 signed by a retired member in 1982 in two different places. It specifies that SBP will pay the survivor 55 percent of the member's retired pay. Nowhere, even in the fine print, does it mention any lower figure. We can only speculate about how or why this key fact was omitted, but it hardly matters now to those who were misled by the forms and by the briefings.
Certainly, the offset was extremely complicated for retirement counselors to explain, and it was almost impossible to tell any particular retiree at that point what SBP amount his or her survivor would actually receive after attaining the age of 62.
For members who attained retirement eligibility before 1985, the offset represented the amount of the survivors' Social Security benefit that was attributable to the Member's Social Security-covered military earnings, because the military only came under the Social Security system in 1957, and that amount varied widely for different retirees, and the rules for the calculation of Social Security benefits due to military versus civilian employment are arcane at best.
When they first learned of the age 62 benefit reduction, years, sometimes decades, after they purchased SBP, many older retirees and survivors expressed outrage in the mistaken belief that Congress had changed the law on them after the fact.
Not so. The age 62 reduction was part of the initial SBP law enacted in 1972, but this critical piece of information did not find its way into most military retirement briefings and SBP election forms until many years later after complaints, years after complaints started to roll in.
Large numbers of retirees and survivors feel betrayed by what they perceive as a bait-and-switch under which they were asked to sign irrevocable contracts to pay lifetime SBP premiums without being told what the annuity level they were actually buying was.
Dottie Welch is far from the only spouse who is very much aware of the impact of the Social Security offset. One survivor's husband was a Navy hard-hat diver during World War II, then an electronics technician on a nuclear submarine until his retirement in 1966. When he died in May of 2002, his widow had no idea she would be hit by the offset. ``I was shocked. I almost fell out of the chair, and wondered why God hadn't taken me too,'' she says today.
In the grief that followed her husband's death, this 78-year-old widow also faced numerous family bills and health problems. When her SBP annuity started, she was stunned to find out that it was one-third, one-third less than what she had expected. Now faced with $21,000 in bills, she was advised to declare bankruptcy, and feared
she would lose her home trying to pay her debts. Her financial struggles eventually led her to the Navy-Marine Corps Relief Society for a grant to help her get back on her feet financially.
Not one member of our greatest American generation should find themselves under this kind of stress while getting over the death of their spouse and trying to do something with the large bills that were facing them.
In an attempt to reduce this kind of confusion, in 1985 Congress established a two-tier system, not linked to Social Security, that actually provides an SBP survivor 55 percent of retired pay until age 62, and 35 percent after that age. But making the age 62 reduction clear for the post-1985 retirees did not make it any fairer, and it did not change the fact that thousands upon thousands of earlier participants had not been told of the age 62 annuity reduction.
Also in 1985, Congress shocked the survivor community by repealing the 1984 legislation that would have barred any SBP Social Security offset for survivors who earned their Social Security benefits from their own work history rather than the military retiree's, as assumed under the original offset law. This only further highlighted the unfairness of the offset to thousands of widows who had pursued their own military or civilian careers.
Now, the second issue, another broken promise. When SBP was enacted in 1972, Congress set the premium formula in law with the intent that retirees' monthly premium payments would cover 60 percent, 60 percent of the long-term costs of the survivor benefits, with the government paying the remaining 40 percent. The formula was based on the program cost assumptions prepared by the Department of Defense actuaries concerning future inflation rates, pay raises, longevity of retirees, and survivors' longevity, et cetera.
But actual experience in later years proved the actuaries' original estimates had been far too conservative, as inflation was lower than predicted and retirees lived and paid premiums longer than anticipated. Because retiree premiums were locked into law and covered a greater portion of the program costs than had been projected, the government reaped an economic windfall, and found its share of the cost for the SBP program was much lower than anticipated. By 1988, retiree premiums covered 77 percent of the SBP costs, and DOD's share had dropped to 23 percent.
To its credit, Congress acted in 1990 to restore the intended 60/40 balance by reducing retiree premiums to 6.5 percent of retired pay, but the overconservative actuarial assumptions have continued to work against, work against retirees for the last decade, with the result that the Federal subsidy for SBP has continued to decline. As of 2003, the government's share has dropped from 40 percent to 17 percent, leaving retirees once more paying a higher-than-intended share of the benefit.
The only fair way to restore the proper cost balance between the retirees and the government is to reduce the premium, or increase the SBP benefit. The former benefits primarily retirees, while the latter benefits the survivors. Since retiree premiums were reduced to restore the 60/40 balance in 1990, Congress should restore the government's intended 40 percent cost share by raising the benefit for survivors. My bill does exactly that.
Now, the third issue. It is the military-civilian inequity. No less compelling than the misleading of enrollees and the decline of the intended subsidy is the stunning disparity that exists between benefits and subsidy levels the government offers military versus Federal civilian survivors.
In contrast to the military SBP subsidy of, remember, 17 percent, currently, the SBP for Federal civilian employees under the post-1984 Federal Employee Retirement System provides a 33 percent subsidy. For those under the pre-1984 Civil Service Retirement System the subsidy is 48 percent, and at 48 percent, it is nearly three times as high as the military's.
Even more important, the Federal Employment Retirement System survivors receive 50 percent of retired pay, and the other survivors under the old Civil Service Retirement System receive 55 percent for life, with no benefit reduction, no benefit reduction, at age 62.
Although Federal civilian premiums are higher, military retirees pay SBP premiums for a far longer period of time than do most civilians because they are required to retire at a younger age. Because their mortality rates are not much different, this means that Federal civilian retirees have a far more advantageous benefit-to-premium ratio, as indicated on these charts.
Now, military retirees particularly pay SBP premiums about twice as long, twice as long as Federal civilians because they retire at younger ages, but their spouses' longevity is about the same. So military SBP enrollees see a lower return and a much lower government subsidy.
Remember Dottie? My bill is the needed fix for the three major inequities of the Survivor Benefit Plan. We must keep faith with the older retirees and with the survivors. We must restore the intended 40 percent Federal subsidy, and we must put SBP on an equal footing with its Federal civilian equivalent.
The Military Survivors Benefit Improvement Act of 2003, my bill, accomplishes these three things. For these reasons, the 33 military and veterans associations of the military coalition have endorsed my bill and have made its passage one of their top priorities in the 108th Congress.
H.R. 548 will balance equity and will balance cost considerations by phasing out the SBP age 62 benefit reduction over the next 5 years. And upon enactment, the age 62 benefit increase phase-in will begin at 40 percent on October 1 of 2004 and continually annually each year after through the year of 2007 until the benefits are restored to a full 55 percent as was the desire of Congress.
In order to offset part of the costs of the benefit increase, H.R. 548 authorizes an open season provision in the legislation that would allow more retirees to participate, generating SBP program savings, and significantly reducing the outlays.
Now, Congress has already acknowledged the need for this particular piece of legislation. The fiscal year 2001 Defense Authorization Act included a provision asserting the sense of Congress that there should be enacted legislation to reduce and eventually eliminate the different levels of SBP annuity for surviving spouses who are under age 62 and those who are 62 and older. But we have failed to follow through on that commitment for the last 2 years. It is time for us to fix this problem. Military widows and widowers have waited long enough in their fight for fairness. Now is the time for Congress to step up and enact relief for the aging survivors of our greatest generation. World War II and Korean War retirees, and the following generations of retirees and survivors, deserve no less than the SBP deal they were promised and the one the government already provides for other Federal survivors.
Now, a quick time line of H.R. 548. It was introduced on February 5 of 2003. And upon introduction, we had 118 bipartisan co-sponsors. That is 27 percent of the entire House of Representatives. On that day it was referred to the Committee on Armed Services. On February 28 of 2003, it was referred to the Total Force subcommittee, and on the same date executive comment was requested from DOD. Now, over 3 months later I urged DOD to act on this request.
On March 7 of 2003, a letter was sent to the gentleman from Iowa (Chairman Nussle) and the ranking member, the gentleman from South Carolina (Mr. Spratt), of the House Committee on the Budget urging support to include budget authority in fiscal year 2004 in our budget resolution. On the letter there were 36 bipartisan co-signers, including numerous members of the Committee on the Budget, the Committee on Armed Services, and the Committee on Veterans Affairs. Today this bill has 268 bipartisan co-sponsors. That equates to 62 percent of this House.
All Americans should urge their Representatives to co-sponsor H.R. 548 and their Senators to co-sponsor Senate bill 451, introduced by Senator OLYMPIA SNOWE of Maine.
Again, who supports H.R. 548? The number one legislative priority of the Military Officers Association of America and the 108th Congress. Additionally, the bill is strongly endorsed by the Military Coalition, a consortium of 33 nationally prominent military and veterans organizations representing more than 5.5 million members of uniformed services, active, reserved, retired, survivors, veterans and their families; and there are many, many others that have sent letters of support for this bill.
There are others that are tracking similar legislation in this body. I would note tonight that H.R. 1726, the Military Surviving Spouses Equity Act, sponsored by the gentleman from South Carolina (Mr. Brown), repeals the offset from surviving spouse annuities under the military Survivor Benefit Plan for amounts paid by the Secretary of Veterans Affair as dependency and indemnity compensation, or DIC. It provides for the recoupment of certain amounts previously paid SBP recipients in the form of retired pay refund. It was filed on April 10 of 2003. It has been referred to the Committee on Armed Services. It has 24 co-sponsors. And I want to commend my colleague, the gentleman from South Carolina (Mr. Brown), for his efforts to restore equity to this aspect of SBP; and I am proud to be an original co-sponsor of this legislation.
H.R. 1653, sponsored by the gentleman from New Jersey (Mr. Saxton), would change the effective date for the paid-up coverage under the military Survivor Benefit Plan from October 1 of 2008 to October 1 of 2003. It has 25 co-sponsors, and I am an original co-sponsor of this particular bill. It was filed on April 7, and it too has been referred to the House Committee on Armed Services.
A third piece of legislation, H.R. 1592, the Military Survivors Equity Act. It has been sponsored by my colleague, the gentleman from California (Mr. Filner), and it would repeal the two-tier annuity computation system applicable to annuities under the SBP plan for retired members of the Armed Forces so that there would be no reduction in such an annuity when the beneficiary becomes 62 years of age. It was filed on April 3 of this year, referred to the Committee on Armed Services; and it has 5 co-sponsors as this time. Both the Filner bill and my bill fulfill the 2001 sense of Congress resolution to reduce and eventually eliminate this SBP reduction. Again, both these bills go a long way to fulfilling the sense of Congress and that resolution to reduce and eventually eliminate this SBP reduction.
Let me talk a little bit about the VA budget for 2004. Our service men and women who continue to fight for our freedom and security around the world must know that Americans are united in their support for them and for their safe return. We in Congress, along with President Bush, support not only the troops in the field but also the scores of veterans who have already given so much to this country.
Unfortunately, there have been false reports, false reports circulating that Congress is actually cutting veterans benefits. Here are the facts of the congressional budget for fiscal year 2004 relating to veterans spending. This budget will allow us to fully meet our commitments to more than 2.6 million disabled veterans and widows who rely on VA benefit checks every month. It calls for $33.8 billion in mandatory spending. This is the highest spending ever in this area. It also calls for $30 billion, a 12.9 percent increase in discretionary spending. Nearly 90 percent of this funding is for veterans' medical care. These are the indisputable facts of this year's Federal budget for veterans.
House Members, particularly the Republicans, along with President Bush, are committed to ensuring that those who have served their country with pride, with valor and dignity receive the best of America's appreciation. Any suggestion otherwise is simply untrue, is not supported by the facts.
During January, I had the opportunity to visit with some of our men and women in uniform stationed in Germany, Italy, and France. And I was struck by their professionalism and commitment to their assigned duties. They were proud to serve. It is just as simple as that.
Two weeks ago, I visited North Korea where freedom is nowhere to be found and democratic thought is oppressed. We are truly blessed to live in a world of freedom and democracy and where life, liberty, and the pursuit of happiness are abundant and, I would submit, many times taken for granted.
Defense of the principles and values that we hold so dearly as a Nation leads our men and women into conflicts around the globe. Many return home after giving the ultimate sacrifice in defense of such values. But to those who do return, we can never say thanks enough.
Today, as we continue to rely on our Armed Forces in the war against terrorism, we look to our veterans for their example of courage and sacrifice. It is their selfless service that has made our Nation strong and our world a better place. America's veterans deserve our respect, our deepest respect, and enduring appreciation, as do their spouses who choose to marry members of our armed services and to share with them all the joys and sacrifices of their active duty careers.
The Survivor Benefit Plan is not to military spouses what Congress had intended or what enrollees were promised. The program is not providing the level of protection military survivors need and deserve.
Retirees and survivors deserve no less in the SBP deal than they were promised. This Congress needs to step up and deliver what the aging survivors of our greatest generation retirees were promised. And we need to provide at the proper level the protection necessary for future generations of retirees. Congress must act to fix this problem now.
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There are no Floor Speechess to be displayed for this month.
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