we did report it by May 15, we will have to get a waiver from the Budget Committee; is that correct?

Senator MUSKIE. If the committee reported legislation which authorizes appropriations for fiscal year 1979, it would require a section 402(a) waiver. I could not, of course, prejudge what the Budget Committee might do on it. I will say that one of the tasks that the Budget Committee applies, as you know as a former member of the Budget Committee, is whether or not a good faith effort was made by the committee to get the legislation out before the May 15 reporting deadline. This as well as other pertinent considerations would be judged by the committee in its consideration of a waiver request.

Senator NUNN. What is the effect of not getting a budget waiver if the Budget Committee were to turn down our recommendations? Assuming we get a bill out for a waiver, what would be the effect on the floor of the Senate if we brought the bill out without a waiver?

Senator MUSKIE. Well, the waiver resolution is reported to the Budget Committee and we act on it favorably or unfavorably, but we must report the waiver resolution to the Senate floor.

In other words, an unfavorable vote in the Budget Committee does not mean the resolution does not go to the floor. It simply means it goes to the floor without our approval and the Senate considers the waiver resolution and whether or not it agrees with that unfavorable report and it can upset that unfavorable report by a majority vote, of

course.

Senator NUNN. Would there be a point of order made?

Snator MUSKIE. It would not be a point of order. It would simply be a question of the Senate agreeing or not agreeing with the Budget Committee's judgment that the bill was not reported in a timely manner under the budget resolution and that there would be no circumstances justifying its consideration.

is

That is a legitimate issue for the Senate as a whole to consider. It is a difficult part of the Budget Act to administer. The purpose to apply pressure on committees to get legislation that has an impact on the budget to the floor and acted upon before May 15 so that appropriations bills may accurately reflect the spending decisions, which the Senate is making.

I think we have been very generous or very liberal, at least, in permitting legislation to move to the floor that does not meet the May 15 deadline because most committees there have been one or two exceptions-have made a tremendous effort to meet the May 15 deadline. We understand the difficulty of meeting it, especially in the first session of a Congress. It is very difficult for committees to meet that May 15 deadline and so we try to be realistic in applying it, and we approve far more waiver resolutions than we disapprove.

Since this subject was already considered by the subcommittee, whatever you might do here may be simply a modification of what we have already considered. I suspect that might be taken into account by the Budget Committee in considering the waiver resolution.

There is one other point I would like to make in connection with the time factor. The Democratic Policy Committee met yesterday to go over the workload of must legislation that must be taken care of before October 14. I guess we have already slipped the October 7 target date, at least in the leadership's thinking.

By the time we reviewed the must legislation, which took us 111⁄2 or 2 hours, it is apparent that it is going to be very difficult to meet an October 14 adjournment date, from my judgment.

I am not reflecting anybody's judgment but my own, but any addition to the legislation that is already on the calendar, or already on the must list, and that includes a lot of authorizations that are running out, is going to be very difficult to add to the Senate's workload.

So, we should take that into account not only in connection with this legislation but other legislation that all of us are interested in.

Senator NUNN. Our subcommittee has had some deliberations on whether we should try to pass out the Defense Office Personnel Management Act. That is extremely complex legislation which has been pending for a couple of years. We decided, because of the legislative backlog, that we would not try to take it up until next year.

It would be my strong hope that we could come up with a package on these survivor benefit bills that would be able to get a waiver from the Budget Committee that we could go to the floor with and have it passed without a lot of dissent and a lot of debate.

If we can do that, then I think we can cure some of the worst inequities this year and perhaps delay some of the more expensive items until we consider the retirement bill in the full committee next year, to see if we can find some offsetting savings to pay for some of these inequities.

My personal view is every one of these changes that has been recommended by various Members of the Congress and passed by the House are indeed equitable and need to be done. I think we really do have to face reality as to what can be done and what can be done this

year.

Senator MUSKIE. I want to assure you, if I may say, before I yield to questions, that the staff of the Budget Committee will work in as positive a way as possible to try to move toward that objective. We are not stonewalling this. We are just trying-we want to make sure the Senate understands the long-term cost. We try to make tradeoffs to take care of these costs.

Senator NUNN. Does any other member of the committee have any questions?

I was going to see if anyone has a question for Senator Muskie, and I appreciate his time constraints. If anyone wants to question him at this stage, let us have the questions, and we will get into other statements by the subcommittee.

Senator Tower.

STATEMENT OF HON. JOHN TOWER, A U.S. SENATOR FROM

THE STATE OF TEXAS

Senator TOWER. Could you yield to me just a few minutes to put my statement in the record?

Senator THURMOND. Certainly.

Senator TOWER. I would like to enter my statement, Mr. Chairman, on behalf of this bill which incorporates the provisions of my bill, S. 520. The provisions relate to the Retired Serviceman's Family Protection Plan and would authorize cost-of-living adjustments to the annuities of a limited number of widows, approximately 9,500 receiv

ing pensions under that plan. It would also allow their annuities to continue if they remarry after age 60. These changes correct serious inequities that now exist between those receiving annuities under the RSPP and the survivor benefits plan.

Mr. Chairman, I am informed that the fiscal year 1979 cost would be $7.8 million and is supported by the DOD, which included it in the fiscal year 1979 budget.

Senator NUNN. I have personally supported that change. But the figure we have on 1979 costs would be $12 million, and I do not know what the difference is in that. We have between now and the year 2000, $272 million at that time, and while that is a considerable sum of money, it is not one of the large items that comprise the $12 billion estimate that Senator Muskie gave.

Senator TOWER. The 1982 figure is $9.2 million. That is the figure that I have.

Senator NUNN. We will try to get together and try to work out the differences between the $12 million and the $9.2 million figure. Senator TOWER. Thank you very much, Mr. Chairman. [The statement follows:]

PREPARED STATEMENT BY SENATOR JOHN TOWER

Mr. Chairman, I very much appreciate the opportunity to present a statement to the subcommittee on behalf of S. 520, a bill introduced by myself and Senator Harry F. Byrd, Jr.

S. 520 is a bill to amend title 10 of the United States Code to authorize cost of living adjustments of annuities under the retired serviceman's family protection plan and to provide that remarriage of a spouse at or after age 60 shall not result in termination of annuity. The bill would serve to rectify a serious omission of existing law affecting the widows of certain retired members of our Nation's Armed Forces.

The retired serviceman's family protection plan-RSFPP-was established by law in 1953. This plan served to enable a retired member of the uniform services to share his retired pay with his wife and children if he predeceased them. The plan was established on actuarial-equivalent basis such that the deductions taken from the retired pay of participants, plus interest, funded for the authorized benefits. These annuities, however, have been drastically reduced in value in recent years because of the impact of inflation.

The RSFPP was replaced by the so-called survivor benefit plan-SBPestablished by Public Law 92-425 on September 21, 1972. Servicemen who retired after that date could not participate in the RSFPP. Persons who were already retired on that date could elect to participate in the new survivor benefit plan up until March 20, 1974.

Benefits provided under the SBP are automatically adjusted in the same manner as is military retired pay, that is, annuities are adjusted for increases in the cost of living. While living retired members who had enrolled in the RSFPP were given an 18-month option during which they could elect to participate in the SBP, those retired members who died before enactment of the SBP did not have this opportunity. Thus they were precluded from taking steps to provide their survivors with an annuity that would take into consideration increases in the cost of living.

Mr. Chairman, this bill, if passed, would provide cost of living adjustments to about 9500 widows. In relative terms, that is a small number but, nevertheless, the inequity is large and should be corrected. The fiscal year 1979 costs to support this bill are estimated at $7.8 million and for fiscal year 1982 the cost is estimated at $9.2 million. So it is not a large amount that is required to assist this particular group of widows. Also, it is my understanding that $7.8 million was included in the fiscal year 1979 budget by DOD for this purpose but, of course, the necessary authorization would be required.

Mr. Chairman, I thank the subcommittee for the opportunity to speak on this bill, and I hope the subcommittee will see fit to favorably report this legislation to the full committee.

Senator THURMOND. If I could take a minute, I have some questions here to propound to General Umstead, and he can answer these for the record, if that is agreeable, and it will save that time.

Now, I hold in my hand a chart provided by the Department of Defense which shows costs in the year 2035, even if H.R. 3702 is passed by Congress.

I thought that was an interesting chart because when you take this over the long period, I think it explains itself.

Now, the other thing, Mr. Chairman, I want to say is about the inequities here, and after all, I think that the inequities ought to be corrected. If we have to change the plan or whatever is necessary, it should be done.

I think inequities must be corrected for this Government to be just, and our Government ought to be just to all people.

For instance, the plan is not working well as only 53 percent of the eligible retirees are participating because of the inequities. Only 46 percent of the enlisted men are participating.

Second, the enlisted men now pay into the plan and their widows may get very little or nothing back due to the offset.

Third, the average military participant pays $13 more per month than the civil service employees for the same benefit.

Fourth, an enlisted man under the present plan could serve for 20 years and still lose 92 percent of his contributions of the amount to which his widow would be entitled ordinarily because of the 100-percent offset.

Fifth, RSFPP widows have never received the cost-of-living benefits.

Sixth, the House recognized these inequities and they passed similar bills twice by huge majorities. In 1976, the House passed this bill 379 to 6, and in 1977, they passed this bill, 391 to 0. Surely, there must be a great merit in this bill or the House would not have been misled to such a degree.

I think it is a complex matter and some Members of the Senate did not understand it probably when we brought it up and, since a hearing has been held, although I have been trying to get a hearing for 3 years and it was sent back here.

This is an important matter and I wish to thank you for your consideration and the fact that you are holding a hearing now on this important question.

Senator NUNN. Thank you very much.

If there are no questions, I assured Senator Morgan he would go next; he has sponsored one of the bills.

STATEMENT OF HON. ROBERT MORGAN, A U.S. SENATOR FROM THE STATE OF NORTH CAROLINA

Senator MORGAN. Mr. Chairman, we know the problem and S. 2856, which 22 of us in the Senate cosponsored, I think is a bill that is actuarially sound and one that we could pass and put in operation now without further study or delay. I do think that this is important because anything that we can do now to offer some incentive for men and women to stay in the Guard and Reserves is worthwhile.

35-281-79- -3

But, as you know, under the present system, there is one survivor benefit option that a reservist has. He can elect the survivor benefit plan but, if he does and should die before he reaches age 60, his widow does not receive any benefits at all. This seems to me to be very unfair inasmuch as the wives and families of the reservists and the Guard members make quite a bit of sacrifice for 1 weekend a month and 2 weeks a year and all of the things that go along with it.

What my bill does is offer two additional options to the reservist, to protect his survivors under the survivor benefit plan. First, when a reservist reaches 20 years, he can elect a plan where his survivor or survivors will receive an annuity from the time that he would have reached 60, if he dies before reaching that age.

The second additional option is that he can elect immediate annuity coverage for the survivors if he dies prior to the age of 60. So in effect this bill would give him two aditional options.

The retired pay of those reservists who start drawing pay is reduced in increasing amounts from the present plan up through the two options in my bill, and in other words, their pay would be less according to the option that they choose.

This reduction, Mr. Chairman, is actuarially computed to amortize the cost of the protection, over time, and to make it self supporting. I think you will hear further testimony in this respect.

As you know, Congressman Nichols of Alabama and others introduced a similar bill which was passed by a voice vote in the House as H.R. 11797 in June of this year.

There are some differences in H.R. 797 and I understand from the House Members that they are willing for us to work out these differences and will accept a reasonable bill without any difficulty.

Let me identify three of the most significant differences. Under the Nichols bill, the member who has elected a reduced annuity in order to provide a survivor benefit has his full retired pay restored if the beneficiary predeceases him. In other words, there is no lock-in in the bill in the House. The lock-in provision in the survivor benefits plan as first enacted discouraged some from making the election, and thereby served to defeat the purpose of the legislation. My bill does have a lock-in for all reservists covered by the bill.

Under the Nichols bill, CHAMPUS benefits would vest concurrently with the entitlement to the survivor benefit plan annuity as it does today immediately upon the death of the retiree who has elected to provide an annuity. Under my plan, CHAMPUS will be deferred in every case until the date the deceased reservist would have attained 60 years of age had he lived.

Under the Nichols bill, reservists who have completed 20 or more years of qualifying service but who have not reached the age of 60 before the effective date of the legislation would have 1 year in which to make their elections. Under my bill they have 90 days from the date of enactment, or of official notification, whichever is later, to make their election.

Now, Mr. Chairman, I have looked at these three differences and I would have no objection if the final bill to come out of this committee were changed to conform to these three different provisions in the Nichols bill. I think it would still be actuarially sound.

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