Survivor benefit cuts still in limbo

A quarter of a million surviving spouses of military retirees have moved closer to phasing out a dreaded offset in survivor benefits over the next decade.

As the House and Senate this week set spending ceilings for fiscal 2005, surviving spouses won a key vote in the Senate, lost a partisan showdown before the House Budget Committee, but then won a promise of cooperation from the committee’s powerful chairman.

Rep. Jim Nussle, R-Iowa, citing strong support among lawmakers for enhancing survivor benefits, vowed that he would work with the House Armed Services Committee "to arrive at a financial fix."

The problem is that survivor benefits typically fall at age 62 from 55 percent of the deceased member’s covered annuity down to 35 percent, a drop that catches many surviving spouses by surprise. The plan’s design assumes that beneficiaries can begin drawing Social Security benefits at 62.

Nussle’s commitment to survivor benefits was expected to deflect some of the political heat aimed at budget committee Republicans after a straight party vote on Wednesday that killed an amendment by Rep. Chet Edwards, D-Texas. The amendment would have paid for phasing out the survivor benefit offset by rolling back a fraction of recent tax cuts to Americans earning more than a $1 million a year.

"Let’s take a stand today that we are going to help military widows who sacrificed tremendously," Edwards said, urging the committee to tell "people making a million a year we’re going to take away $7,000 of their $126,000 tax cut."

All 23 Republicans present voted to reject Edwards’ amendment, yet 13 are co-sponsors of nearly identical legislation to phase out the offset. Edwards hoped a roll-call vote would highlight the hypocrisy. Republicans, however, stuck by their chairman and party. Nussle is under pressure from the White House to stop growth in federal entitlements. But his promise to work on a funding solution for the offset softened outside criticism.

"We’re taking him at his word," said Steve Strobridge, co-chairman of the Military Coalition, an umbrella organization for dozens of military associations and veterans groups. They are fighting hard this year for survivor benefit gains. Coalition representatives appeared at the hearing wearing buttons that urged an end to the "widows tax."

The coalition was "heartened" by Nussle’s commitment to find the money. Nussle said the House budget resolution would establish a reserve account for improvements, to be funded by budget savings identified by the House Armed Services Committee. Any gains, said Sean Spicer, spokesman for the committee, must be "deficit-neutral. We’re going to look for the money to help get this program off the ground."

The Senate gave military survivors a clearer victory on March 12, approving a floor amendment by Sen. Mary Landrieu, D-La., that earmarked $2 billion to phase out the age-62 offset over 10 years.

During debate, Landrieu said she expected her amendment to fail but insisted on a roll-call vote to identify those opposed to improving the benefit. She proposed paying for her amendment by raising taxes on U.S. companies that reincorporate in foreign tax havens and by ending tax breaks for individuals who forfeit their U.S. citizenship.

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