To amend title 10, United States Code, to ensure that the strength of the Armed Forces and the protections and benefits for members of the Armed Forces and their families are adequate for keeping the commitment of the people of the United States to support their servicemembers, and for other purposes.

January 24, 2005

Mr. LEVIN (for himself, Mr. REID, Ms. MIKULSKI, Ms. STABENOW, Mr. INOUYE, Mr. DORGAN, Mr. LAUTENBERG, Mr. LEAHY, Mr. SALAZAR, Mr. ROCKEFELLER, Mrs. MURRAY, Mr. BINGAMAN, Mrs. FEINSTEIN, Mr. DURBIN, Mr. KENNEDY, Mr. CORZINE, Mr. PRYOR, Mr. NELSON of Nebraska, Mr. REED, Mr. SCHUMER, and Mr. DAYTON) introduced the following bill; which was read twice and referred to the Committee on Finance

To amend title 10, United States Code, to ensure that the strength of the Armed Forces and the protections and benefits for members of the Armed Forces and their families are adequate for keeping the commitment of the people of the United States to support their servicemembers, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Standing With Our Troops Act of 2005'.

DIVISION A--FULFILLMENT OF OBLIGATIONS TO THE MEMBERS OF THE ARMED FORCES

TITLE I--STRENGTHS OF THE ARMY AND MARINE CORPS ACTIVE FORCES

SEC. 101. FINDINGS.

Congress makes the following findings:

(1) While the United States Armed Forces remain the premier fighting force in the world, the Defense Science Board, in a study carried out in the summer of 2004, found that `When we match the existing and projected force structure with the current and projected need for stabilization forces we see an enduring shortfall in both total numbers of people and their ability to sustain the continuity of stabilization efforts.'.

(2) Between 1989 and 2004, the military personnel end strength of the Army has been reduced by more than 34 percent, and the Department of the Army's civilian workforce has been reduced by more than 45 percent, while the mission rate of the Army has increased by 300 percent.

(3) Because of the personnel reductions, the Army National Guard and the Army Reserve are repeatedly being called to active duty to meet Army mission requirements that the active-duty force of the Army is no longer large enough to meet alone. Army National Guard and Army Reserve units have provided up to 40 percent of the military personnel engaged in Operation Iraqi Freedom while they have also been performing a dramatically increased role in homeland defense and continuing to respond to natural disasters, other domestic emergencies, and military contingencies. As a result, the reserve components of the Army have been pushed to the breaking point.

SEC. 102. ARMY.

(a) Strength for Fiscal Year 2006- Effective on October 1, 2005, section 691(b)(1) of title 10, United States Code, is amended by striking `502,400' and inserting `522,400'.

(b) Strength for Fiscal Years After Fiscal Year 2006- Effective on October 1, 2006, section 691(b)(1) of such title is amended by striking `522,400' and inserting `532,400'.

SEC. 103. MARINE CORPS.

(a) Strength for Fiscal Year 2006- Effective on October 1, 2005, section 691(b)(3) of title 10, United States Code, is amended by striking `178,000' and inserting `183,000'.

(b) Strength for Fiscal Years After Fiscal Year 2006- Effective on October 1, 2006, section 691(b)(3) of title 10, United States Code, is amended by striking `183,000' and inserting `188,000'.

TITLE II--FULL RECOGNITION OF SACRIFICE AND VALOR OF UNITED STATES SERVICEMEMBERS

Subtitle A--Findings

SEC 201. FINDINGS.

Congress makes the following findings:

(1) On November 21, 2004, the Columbia Broadcasting System television program 60 Minutes reported that the staff of that program had received from the Department of Defense a letter containing the assertion that `[m]ore than 15,000 troops with so-called `non-battle' injuries and diseases have been evacuated from Iraq.'.

(2) This report was a rare disclosure by the Department of Defense, as it is the policy of the Department of Defense not to disclose publicly the number of Armed Forces personnel that sustain non-combat injuries.

Subtitle B--Accounting for Casualties Incurred in the Prosecution of the Global War on Terrorism

SEC. 211. MONTHLY ACCOUNTING.

Not later than five days after the end of each month, the Secretary of Defense shall publish, for such month for each operation described in section 212, a full accounting of the casualties among the members of the Armed Forces that were incurred in such operation during that month.

SEC. 212. OPERATIONS COVERED.

The operations referred to in section 211 are as follows:

(1) Operation Iraqi Freedom.

(2) Operation Enduring Freedom.

(3) Each other operation undertaken by the Armed Forces in the prosecution of the Global War on Terrorism.

SEC. 213. COMPREHENSIVE CONTENT OF ACCOUNTING.

For the purpose of providing a full and complete accounting of casualties covered by a report under section 211, the Secretary of Defense shall include in the report the number of casualties in each casualty status in accordance with section 214.

SEC. 214. CASUALTY STATUS.

(a) STATUS TYPES- In a report under this title, each casualty among members of the Armed Forces shall be characterized by the most specific casualty status applicable to the member as follows:

(1) Killed in action.

(2) Killed in non-hostile duty.

(3) Killed, self-inflicted.

(4) Wounded in action, not returned to duty.

(5) Wounded in action, returned to duty (to the extent that data is available to support this characterization of casualty status).

(6) Evacuated for medical reasons.

(b) DEFINITIONS- In this section:

(1) KILLED IN ACTION- The term `killed in action', with respect to a member of the Armed Forces, means that the member incurred one or more mortal wounds while involved in an action against a hostile force, whether or not the wounds are inflicted by the hostile force.

(2) KILLED IN NON-HOSTILE DUTY- The term `killed in non-hostile duty', with respect to a member of the Armed Forces, means that the member incurred one or more mortal wounds that were not self-inflicted and not inflicted during an action against a hostile force.

(3) KILLED, SELF-INFLICTED- The term `killed, self-inflicted', with respect to a member of the Armed Forces, means a suicide of the member or the death of the member as a result of one or more self-inflicted injuries.

(4) WOUNDED IN ACTION, NOT RETURNED TO DUTY- The term `wounded in action, not returned to duty', with respect to a member of the Armed Forces, means that the member, while involved in an action against a hostile force, incurred one or more non-mortal injuries that required medical attention and that prevented the member from returning to duty within 72 hours after incurring the injury or injuries.

(5) WOUNDED IN ACTION, RETURNED TO DUTY- The term `wounded in action, returned to duty', with respect to a member of the Armed Forces, means that the member, while involved in an action against a hostile force, incurred one or more non-mortal injuries that required medical attention but did not prevent the member from returning to duty within 72 hours after incurring the injury or injuries.

(6) EVACUATED FOR MEDICAL REASONS- The term `evacuated for medical reasons', with respect to a member of the Armed Forces, means that the member was evacuated from a theater of operations for medical reasons.

SEC. 215. PUBLICATION AND RELEASE OF REPORT.

The Secretary of Defense shall--

(1) post the report under this title on the official website of the Department of Defense; and

(2) transmit a copy of the report to the chairmen and ranking members of the Committees on Armed Services of the Senate and the House of Representatives.

SEC. 216. SENSE OF CONGRESS.

It is the sense of Congress that the Secretary of Defense has an obligation to ensure full and accurate reporting of casualties among the members of the Armed Forces to Congress and the people of the United States.

Subtitle C--Advisory Panel on Military Awards and Decorations

SEC. 221. ESTABLISHMENT.

The Secretary of Defense shall establish within the Department of Defense an Advisory Panel on Military Awards and Decorations.

SEC. 222. DUTIES.

(a) COMPREHENSIVE REVIEW OF MILITARY DECORATIONS SYSTEM- The Advisory Panel shall conduct a comprehensive review of the standards and processes used in the Armed Forces to award medals and decorations to members of the Armed Forces. The review shall include the following matters:

(1) An examination and evaluation of the standards of each of the Armed Forces for awarding each medal and decoration.

(2) A comparison of the standards of each of the Armed Forces with the standards of each of the other Armed Forces for awarding comparable medals and decorations.

(3) An examination and evaluation of the speed with which--

(A) each of the Armed Forces identifies and considers members for the awarding of medals and decorations; and

(B) the medals and decorations are ultimately awarded.

(4) A review of the medals and decorations awarded by the Armed Forces during 2002, 2003, and 2004, together with a review of the ranks of the recipients and the mission-related and other circumstances that are associated with the awarding of the medals and decorations to those recipients.

(b) REPORT-

(1) REQUIREMENT FOR REPORT- Not later than 18 months after the date of the enactment of this Act, the Advisory Panel shall submit a report on the results of the review under this section to the Secretary of Defense and to Congress.

(2) CONTENT- The report under this subsection shall contain the findings and conclusions of the Advisory Panel together with any recommendations for action that the panel considers appropriate, and shall include the following matters:

(A) A discussion of the merits of maintaining for each of the Armed Forces separate policies for the awarding of comparable medals and decorations of the Armed Forces, together with a discussion of the merits of adopting uniform standards for awarding such medals and decorations.

(B) Measures that can be taken by each of the Armed Forces to expedite the process for timely identifying a member who deserves a medal of decoration, determining the appropriateness of awarding the medal or decoration to the member, and, in each appropriate case, awarding the medal or decoration to the member.

(C) Measures that can be taken to ensure that--

(i) members serving in combat are at least equally as likely to be considered for the awarding of medals and decorations as are personnel not exposed to combat; and

(ii) enlisted personnel are at least as likely to be considered for the awarding of medals and decorations as are officers.

(D) A recommendation regarding whether the Valor device awarded by each of the Armed Forces should be replaced by a separate class of medals honoring special bravery in combat.

(E) A determination of the desirability of adding a new class of medals, similar to the Purple Heart, to be awarded to military personnel who incur non-combat injuries in connection with performance of an official mission or duty during a combat operation in order to honor their sacrifice in service to the people of the United States.

(c) SCOPE LIMITED TO DEPARTMENT OF DEFENSE- The scope of the review and report under this section does not include the Coast Guard.

SEC. 223. COMPOSITION AND ADMINISTRATION.

(a) COMPOSITION-

(1) NUMBER; APPOINTMENT- The Advisory Panel shall be composed of not more than seven members appointed by the Secretary of Defense.

(2) GENERAL AND FLAG OFFICERS- The Secretary shall ensure that the membership of the task force includes a retired general or flag officer from each of the Army, Navy, Air Force, and Marine Corps who is familiar with the policies of the Armed Forces regarding military awards and decorations.

(3) VETERANS- The Secretary shall appoint at least one representative of a leading veterans' advocacy organization as a member of the Advisory Panel.

(b) TIME FOR APPOINTMENT- All members of the Advisory Panel shall be appointed within 60 days after the date of the enactment of this Act.

(c) CHAIRPERSON- The chairperson of the Advisory Panel shall be selected from among the members of the Advisory Panel by a majority vote of the members.

(d) COMPENSATION AND EXPENSES OF MEMBERS- Each member of the Advisory Panel shall serve without compensation, but shall be allowed travel expenses, including per diem in lieu of subsistence, at rates authorized for employees of agencies under subchapter I of chapter 57 of title 5, United States Code, while away from the member's home or regular places of business in the performance of services for the Advisory Panel.

(e) FEDERAL ADVISORY COMMITTEE ACT- The Federal Advisory Committee Act (5 U.S.C. App) shall not apply to the Advisory Panel.

SEC. 224. COOPERATION OF FEDERAL AGENCIES.

(a) INFORMATION- The Advisory Panel may obtain directly from the Department of Defense, the Department of Veterans Affairs, or any other department or agency of the United States any information of such department or agency that the panel considers necessary for the panel to carry out its duties.

(b) OTHER COOPERATION- The Secretary of Defense, the Secretary of Veterans Affairs, and any other official of the United States shall provide the Advisory Panel with full and timely cooperation requested by the panel in carrying out its duties under this section.

SEC. 225. TERMINATION.

The Advisory Panel on Military Awards and Decorations shall terminate 30 days after the submission of the report to Congress under section 222(b).

TITLE III--MILITARY EQUIPMENT AND MATERIEL

SEC. 301. FINDINGS.

Congress makes the following findings:

(1) United States military personnel serving in Operations Iraqi Freedom have experienced significant shortages of critical equipment, such as body armor, aircraft survivability equipment, and armored trucks, including up-armored High Mobility Multipurpose Wheeled Vehicles. In many cases the shortages have lasted several months. For example, the individual body armor needed for protecting every member of the Armed Forces and Department of Defense civilians in Iraq was not produced and fielded until February 2004, 11 months after Operation Iraqi Freedom was launched. Shortages of armor for Army trucks still existed as of the beginning of 2005.

(2) Operation Iraqi Freedom and Operation Enduring Freedom have taken a substantial toll on military equipment of the Armed Forces. The commanding general of the Army Material Command estimated in 2004 that the Army is wearing out its equipment in Iraq and Afghanistan at a rate that could be up to 10 times faster than the rate at which it wears out its equipment elsewhere during peacetime, and there are no significant reserve stocks of that equipment remaining.

(3) It is a solemn obligation of the United States Government to ensure that, whenever the Armed Forces are called into battle, the military personnel fighting or supporting the battle are provided with the safest, most effective technology and equipment.

SEC. 302. MOBILIZATION PLANNING AND PREPAREDNESS.

(a) DIRECTOR OF MOBILIZATION PLANNING AND PREPAREDNESS- Title I of the National Security Act of 1947 (50 U.S.C. 402 et seq.) is amended by striking section 107 and inserting the following new sections:

`DIRECTOR OF MOBILIZATION PLANNING AND PREPAREDNESS

`SEC. 107. (a) DEFINITIONS- In this section:

`(1) The term `Director' means the Director of Mobilization Planning and Preparedness referred to in subsection (b)(1), except where the context clearly indicates otherwise.

`(2) The term `national security emergency' means any occurrence, including a natural disaster, a military or terrorist attack against the territory of the United States, a military operation carried out by the Armed Forces abroad, a technological emergency, or any other emergency, that either seriously degrades or threatens the security of the United States or the Armed Forces.

`(3) The term `mobilization' means the act of assembling and organizing national resources, including military personnel and equipment, labor, transportation systems, industry, and financial resources, to support national objectives of the United States in time of a national security emergency.

`(4) The term `mobilization planning and preparedness' means all aspects of planning and preparing for a mobilization for a national security emergency, including the identification of functions that would have to be performed during a national security emergency, development of plans for performing such functions, development of the capability to execute such plans, and development of policies that maximize the speed and efficiency with which such plans can be executed during a national security emergency.

`(b) POSITION OF DIRECTOR-

`(1) ESTABLISHMENT- There is a Director of Mobilization Planning and Preparedness on the staff of the National Security Council.

`(2) APPOINTMENT- The Director is appointed by the Assistant to the President for National Security Affairs.

`(3) RELATIONSHIP TO NATIONAL SECURITY ADVISOR- The Director reports directly to the Assistant to the President for National Security Affairs.

`(c) DUTIES-

`(1) PRINCIPAL DUTY- The Director is the principal adviser to the Assistant to the President for National Security Affairs on matters of mobilization planning and preparedness.

`(2) SPECIFIC DUTIES- The duties of the Director include the following:

`(A) Identify which governmental and private sector functions must be performed on a sustained basis during a national security emergency.

`(B) Develop plans for the sustained performance of the identified functions.

`(C) Provide guidance on the development of the capability to execute the plans.

`(D) Recommend policies for the maximization of the speed and efficiency with which the plans can be executed during a national security emergency.

`(E) Recommend planning and policy guidance regarding involvement of the National Guard in 2 or more national security emergency operations concurrently.

`(F) Administer quarterly exercises simulating mobilization for various types of national security emergencies, including the following:

`(i) A major military operation carried out in and around 1 or more foreign countries.

`(ii) An occupation and reconstruction mission.

`(iii) A terrorist attack within the United States.

`(iv) A natural disaster within the United States.

`(v) A major humanitarian crisis in 1 or more foreign countries.

`(vi) A minor military intervention in a foreign country.

`(3) RELATED DUTIES-

`(A) MOBILIZATION PLANNING AND PREPAREDNESS POLICY COORDINATING COMMITTEE- The Director serves on the Mobilization Planning and Preparedness Policy Coordinating Committee as provided in section 107A.

`(B) DEPARTMENT OF DEFENSE PRIMARY ALLOCATION OF INDUSTRIAL RESOURCES TASK FORCE- The Director serves as a member of the Primary Allocation of Industrial Resources Task Force of the Department of Defense.

`(d) OFFICE OF MOBILIZATION PLANNING AND PREPAREDNESS-

`(1) ESTABLISHMENT- There is an Office of Mobilization Planning and Preparedness within the National Security Council. The Director is the head of the office.

`(2) COMPOSITION- The Office of Mobilization Planning and Preparedness is composed of the following personnel:

`(A) Thirty employees appointed by the Assistant to the President for National Security Affairs.

`(B) An employee of the Department of Defense, who shall be detailed to the Office by the Under Secretary of Defense for Acquisition, Technology, and Logistics to serve as liaison between the Department of Defense and the Director to ensure that comprehensive and accurate information on the needs of the Armed Forces for equipment and materiel in a national security emergency are timely communicated to the Director.

`(e) COORDINATION WITH NATIONAL COUNTERTERRORISM CENTER-

`(1) LIAISON OFFICER- The Director shall detail an employee of the Office to the National Counterterrorism Center to serve as a liaison officer between the Director of Mobilization Planning and Preparedness and the Director of the National Counterterrorism Center for collaboration on counterterrorism-related information and issues necessary for effective mobilization planning and preparedness.

`(2) RESPONSIBILITY OF DIRECTOR OF NATIONAL COUNTERTERRORISM CENTER- The Director of the National Counterterrorism Center shall ensure that the liaison officer is accorded such privileges at the Center as are necessary to ensure that the collaboration between the Director of the National Counterterrorism Center and the Director of Mobilization Planning and Preparedness on counterterrorism-related information and issues is effective.

`(f) ANNUAL REPORT-

`(1) REQUIREMENT FOR REPORT- The President, acting through the Director, shall submit to Congress each year a report on mobilization planning and preparedness.

`(2) CONTENT- The annual report under this subsection shall include the following information:

`(A) Funding needs for mobilization planning and preparedness.

`(B) An assessment of the state of mobilization planning and preparedness in the United States.

`(C) Any recommended policies on mobilization planning and preparedness that the President, in consultation with the Assistant to the President for National Security Affairs and the Director, considers appropriate.

`MOBILIZATION PLANNING AND PREPAREDNESS POLICY COORDINATING COMMITTEE

`SEC. 107A. (a) MOBILIZATION PLANNING AND PREPAREDNESS DEFINED- In this section, the term `mobilization planning and preparedness' has the meaning given that term in section 107(a).

`(b) ESTABLISHMENT- There is in the executive branch an interagency committee known as the `Mobilization Planning and Preparedness Policy Coordinating Committee'.

`(c) COMPOSITION- The Committee shall be composed of the following members:

`(1) The Director of Mobilization Planning and Preparedness of the National Security Council, who shall chair the committee.

`(2) The Under Secretary for Emergency Preparedness and Response of the Department of Homeland Security.

`(3) The Under Secretary of State for Economic, Business, and Agricultural Affairs.

`(4) The Under Secretary of Defense for Acquisition, Technology, and Logistics.

`(5) The Associate Attorney General.

`(6) The Assistant Secretary of the Interior for Land and Minerals Management.

`(7) The Under Secretary of Commerce for Industry and Security.

`(8) The Deputy Secretary of Labor.

`(9) The Assistant Secretary of Health and Human Services for Public Health Emergency Preparedness.

`(10) The Under Secretary of Transportation for Policy.

`(11) The Under Secretary of Energy for Energy, Science, and Environment.

`(12) One member designated by the Assistant to the President for National Security Affairs.

`(13) One member designated by the Director of National Intelligence.

`(d) DUTIES- The Committee has the following duties:

`(1) To review, at least once each year, the mobilization planning and preparedness policies of the United States.

`(2) To make any recommendations for action to improve mobilization planning and preparedness that the Committee determines appropriate.

`(3) To participate in the exercises conducted by the Director of Mobilization Planning and Preparedness of the Department under section 510(b)(2)(F).'.

(b) CLERICAL AMENDMENT- The table of contents in the first section of the National Security Act of 1947 is amended by striking the item relating to section 107 and inserting the following new items:

`Sec. 107. Director of Mobilization Planning and Preparedness.

`Sec. 107A. Mobilization Planning and Preparedness Policy Coordinating Committee.'.

SEC. 303. REPORT ON RECONSTITUTION NEEDS OF THE ARMED FORCES.

(a) REPORT REQUIRED-

(1) REQUIREMENT FOR REPORT- Not later than March 1, 2005, the Secretary of Defense shall submit to the congressional defense committees a report on the needs of the Armed Forces for reconstituting its stocks of military equipment and other materiel in view of the attrition of military equipment and other materiel experienced by the Armed Forces in Operation Iraqi Freedom and Operation Enduring Freedom.

(2) CONSULTATION- The Secretary shall consult with the Chief of Staff of the Army, the Chief of Staff of the Air Force, the Chief of Naval Operations, the Commandant of the Marine Corps, and the Inspector General of each of the Armed Forces in preparing the report under this section.

(b) CONTENT- The report shall include an assessment of each of the following matters:

(1) The extent of the damage and destruction of military equipment and other military materiel in Operation Iraqi Freedom and Operation Enduring Freedom.

(2) The amount of such equipment, if any, that has become ineffective or obsolete by age or other causes.

(3) The needs of each of the Armed Forces, including the reserve components as well as the regular components, for repair and replacement of equipment.

(4) The total cost of reconstituting the stocks of military equipment and other materiel of the Armed Forces to meet the needs of the Armed Forces.

(5) The time needed to reconstitute such stocks to meet those needs.

(c) FORM OF REPORT- The report shall be submitted in unclassified form, but may include a classified annex.

SEC. 304. AUTHORIZATIONS OF APPROPRIATIONS.

(a) ARMY- Funds are hereby authorized to be appropriated for fiscal year 2005 for the use of the Army for the repair, refurbishment, and replacement of equipment used by the Army in Operation Iraqi Freedom or Operation Enduring Freedom, as follows:

(1) OPERATION AND MAINTENANCE- For expenses, not otherwise provided for, for operation and maintenance, $6,000,000,000.

(2) PROCUREMENT- For procurement, $2,500,000,000.

(b) MARINE CORPS- Funds are hereby authorized to be appropriated for fiscal year 2005 for the use of the Marine Corps for the repair, refurbishment, and replacement of equipment used by the Marine Corps in Operation Iraqi Freedom or Operation Enduring Freedom, as follows:

(1) OPERATION AND MAINTENANCE- For expenses, not otherwise provided for, for operation and maintenance, $640,000,000.

(2) PROCUREMENT- For procurement, $1,500,000,000.

(c) AVAILABILITY THROUGH FISCAL YEAR 2006- Amounts authorized to be appropriated under this section shall remain available until September 30, 2006.

(d) LIMITATION- None of the funds appropriated pursuant to an authorization of appropriations in this section may be obligated or expended until the date that is 15 days after the date on which the Secretary of Defense transmits to the congressional defense committees a report on the specific use for which the funds are to be obligated or expended, respectively.

SEC. 305. CONGRESSIONAL DEFENSE COMMITTEES DEFINED.

In this title, the term `congressional defense committees' has the meaning given such term in section 101(a)(16) of title 10, United States Code.

TITLE IV--PERIODS OF OVERSEAS DEPLOYMENTS OF RESERVES

SEC. 401. FINDINGS.

Congress makes the following findings:

(1) The Department of Defense failed to establish an adequate troop deployment and rotation policy for Operation Iraqi Freedom until several months after the operation had begun. For several reserve component units involved in that operation before 2005, the demobilization date was rescheduled three or more times before the unit members were finally allowed to return home.

(2) Without an adequate deployment and rotation plan, the Department of Defense has relied on a series of stop-gap measures to retain a sufficient number of troops to carry out the United States missions in Operation Iraqi Freedom and Operation Enduring Freedom, including--

(A) institution of a so-called `stop-loss' policy that prevents personnel from leaving their units during deployment;

(B) extensions of deployments beyond scheduled demobilization dates; and

(C) activation of members of the Individual Ready Reserve.

(3) In September 2004, the Government Accountability Office reported that `Many of DOD's policies that affect mobilized reserve component personnel were implemented in a piecemeal manner and were not linked within the context of a strategic framework to meet the organizational goals. . . . Without a strategic framework, OSD and the services made several changes to their personnel policies to increase the availability of the reserve components for the longer-term requirements of the Global War on Terrorism, and predictability declined for reserve component members.'.

(4) Fairness to the men and women of the Armed Forces deployed overseas requires that the Department of Defense--

(A) have clear policies regarding lengths of deployment periods; and

(B) communicate these policies and other deployment-related information to them and their families.

SEC. 402. SENSE OF CONGRESS ON TWO-YEAR LIMIT ON MOBILIZATION.

It is the sense of Congress that the Secretary of Defense should continue the existing Department of Defense policy of limiting to a total of 24 months the period for which members of the reserve components serve on active duty to which called or ordered in support of a contingency operation.

SEC. 403. COMMUNICATION OF LENGTHS OF DEPLOYMENT PERIODS TO RESERVES IN OPERATION IRAQI FREEDOM.

(a) REPORT OF DEPARTMENT OF DEFENSE POLICIES-

(1) REQUIREMENT FOR REPORT- Not later than March 1, 2005, the Secretary of Defense shall submit to the Committees on Armed Services of the Senate and the House of Representatives a report on--

(A) Department of Defense policies governing the length of mobilization and deployment periods applicable to members of reserve components of the Armed Forces in connection with Operation Iraqi Freedom, and on the communication between the Department of Defense and reserve component personnel and their families regarding the lengths of the mobilization deployment periods; and

(B) Department of Defense stop-loss policies.

(2) CONSULTATION REQUIREMENT- In preparing the report, the Secretary shall consult with the Chairman and other members of the Joint Chiefs of Staff and with such other officials as the Secretary considers appropriate.

(b) CONTENT OF REPORT- The report under this section shall contain a discussion of the matters described in subsection (a)(1), including a discussion of the following matters:

(1) The process by which the Department of Defense determined its policy regarding the lengths of mobilization deployment periods.

(2) The reason that an adequate troop deployment policy was not in place before Operation Iraqi Freedom began.

(3) A comparison of the policies during Operation Iraqi Freedom with Department of Defense policies that applied to previous contingency operations.

(4) The timeliness of the process for notifying reserve component units for activation.

(5) The process for communicating with activated reserve component members and their families about demobilization schedules.

(6) The justification for delaying demobilization after members and their families have been notified of the anticipated demobilization schedule.

(7) The justification for current stop-loss policies, together with a statement of the period for which those policies are to remain in effect and the conditions under which management of personnel under those policies would terminate.

(8) The family support programs provided by the National Guard and other reserve components for families of activated Reserves.

(9) An assessment of lessons learned about how the increased operation tempos of the National Guard and other reserve components can be expected to affect readiness, recruitment and retention, civilian employers of Reserves, and equipment and supply resources of the National Guard and the other reserve components.

(c) MATTERS FOR PARTICULAR EMPHASIS- In the discussion of the matters included in the report under this section, the Secretary of Defense shall place particular emphasis on--

(1) lessons learned, including deficiencies identified; and

(2) near-term and long-term corrective actions to address the identified deficiencies.

(d) FORM OF REPORT- The report under this section shall be submitted in unclassified form, but may include a classified annex.

TITLE V--TIMELY COMPENSATION

SEC. 501. FINDINGS.

Congress makes the following findings:

(1) In November 2003, the General Accounting Office reported, in connection with a study conducted by that office, that among Army National Guard soldiers `450 of the 481 soldiers from our 6 case study units had at least 1 pay problem associated with their mobilization. These pay problems severely constrain the Army's and the Department of Defense's (DOD) ability to provide a most basic service to these personnel, many of whom were risking their lives in combat.'.

(2) In August 2004, a second study by that office (by then renamed the Government Accountability Office) found that among Army Reserve soldiers `332 of 348 soldiers (95 percent) we audited at 8 case study units that were mobilized, deployed, and demobilized at some time during the 18-month period from August 2002 through January 2004 had at least 1 pay problem.'.

(3) The August 2004 report concluded that `These pay problems often had a profound adverse impact on individual soldiers and their families. For example, soldiers were required to spend considerable time, sometimes while deployed in remote, hostile environments overseas, seeking help on pay inquiries or in correcting errors in their active duty pays, allowances, and related tax benefits.'.

SEC. 502. CORRECTION OF MILITARY PAY PROBLEMS FOR ACTIVATED RESERVE COMPONENT PERSONNEL.

The Secretary of the Army shall designate a senior level official of the Department of the Army to implement--

(1) the recommendations for executive action that are set forth in the report of the Comptroller General of the United States entitled `Military Pay, Army National Guard Personnel Mobilized to Active Duty Experienced Significant Pay Problems', dated November 2003; and

(2) the recommendations for executive action that are set forth in the report of the Comptroller General of the United States entitled `Military Pay, Army Reserve Soldiers Mobilized to Active Duty Experienced Significant Pay Problems', dated August 2004.

SEC. 503. SUPERVISION BY COMPTROLLER OF DEPARTMENT OF DEFENSE.

The official designated under section 502 shall report directly to, and be subject to the direction of, the Under Secretary of Defense (Comptroller) regarding performance of the duties that the official is designated to carry out under such section.

SEC. 504. TERMINATION OF REQUIREMENT.

The designation under section 502 shall terminate upon the submission of a certification of the Under Secretary of Defense (Comptroller) to Congress that all recommendations referred to in such section have been implemented.

TITLE VI--IMPROVED REPRESENTATION OF RESERVE PERSONNEL INTERESTS IN DEPARTMENT OF DEFENSE SECRETARIAT

SEC. 601. FINDINGS.

Congress makes the following findings:

(1) Since September 11, 2001, the National Guard and the other reserve components of the Armed Forces have experienced an expansion of their role in the total force structure of the Armed Forces to an unprecedented level. In 2004, the reserve components comprised 40 percent of the total force of the Armed Forces. Reservists are experiencing a dramatic increase in operation tempo and average length of deployment.

(2) While the extent of the role of the reserve component has changed so dramatically, the Department of Defense approach to management of the reserve components has remained much the same. No new senior leadership positions have been established to manage the reserve components more effectively in the expanded role.

SEC. 602. DEPUTY UNDER SECRETARY OF DEFENSE FOR PERSONNEL AND READINESS (RESERVE AFFAIRS).

(a) ESTABLISHMENT OF POSITION-

(1) POSITION AND DUTIES- Chapter 4 of title 10, United States Code, is amended by inserting after section 136a the following new section:

`Sec. 136b. Deputy Under Secretary of Defense for Personnel and Readiness (Reserve Affairs)

`(a) There is a Deputy Under Secretary of Defense for Personnel and Readiness (Reserve Affairs), appointed from civilian life by the President, by and with the advice and consent of the Senate.

`(b) The Deputy Under Secretary of Defense for Personnel and Readiness (Reserve Affairs) shall have as his principal duty the overall supervision of reserve component affairs of the Department of Defense.'.

(2) CLERICAL AMENDMENT- The table of sections at the beginning of such chapter is amended by inserting after the item relating to section 136a the following new item:

`136b. Deputy Under Secretary of Defense for Personnel and Readiness (Reserve Affairs).'.

(b) EXECUTIVE LEVEL IV- Section 5315 of title 5, United States Code, is amended by inserting after `Deputy Under Secretary of Defense for Personnel and Readiness.' the following:

`Deputy Under Secretary of Defense for Personnel and Readiness (Reserve Affairs).'.

SEC. 603. ELIMINATION OF POSITION OF ASSISTANT SECRETARY OF DEFENSE FOR RESERVE AFFAIRS.

(a) REPEAL OF REQUIREMENT FOR POSITION- Subsection (b) of section 138 of title 10, United States Code, is amended--

(1) by striking paragraph (2); and

(2) by redesignating paragraphs (3), (4), and (5), as paragraphs (2), (3), and (4), respectively.

(b) REDUCTION IN TOTAL NUMBER OF ASSISTANT SECRETARIES OF DEFENSE-

(1) AUTHORIZED NUMBER- Subsection (a) of such section is amended by striking `nine' and inserting `eight'.

(2) CONFORMING AMENDMENT- Section 5315 of title 5, United States Code, is amended by striking `(9)' after `Assistant Secretaries of Defense' and inserting `(8)'.

(c) EFFECTIVE DATE- The amendments made by subsections (a) and (b) shall take effect on the date on which a person is first appointed as Deputy Under Secretary of Defense for Personnel and Readiness (Reserve Affairs).

DIVISION B--MILITARY FAMILY PROTECTIONS

TITLE XXI--GUARDSMEN AND RESERVISTS FINANCIAL RELIEF

SEC. 2101. FINDINGS.

Congress makes the following findings:

(1) According to a Government Accountability Office report in November 2004, `The September 11, 2001, terrorist attacks and the global war on terrorism have triggered the largest activation of National Guard forces since World War II. As of June 2004, over one-half of the National Guard's 457,000 personnel had been activated for overseas warfighting or domestic homeland security missions in Federal and State active duty roles.'. In all, over 400,000 reservists have been mobilized between September 11, 2001, and the beginning of 2005.

(2) In March 2003, the General Accounting Office reported that among members of the National Guard and other reserve components of the Armed Forces `. . . data for past military operations show that 41 percent of drilling unit members reported income loss . . .'. The report further noted that senior officers in the reserve component reported average losses of $5,000 in income upon activation.

(3) Not only has operation tempo drastically increased for members of the reserve components, meaning that reservists are being called away from their civilian jobs more often, but also the durations of deployments have increased dramatically as well, meaning that reservists are being called away from their civilian jobs for longer periods. The Government Accountability Office reported in September 2004 that the average annual days of duty performed by members of the reserve components has risen from approximately 40 days in 1989 to approximately 120 days in 2003. A consequence of both increased operations tempo and increased duration of deployment has been a far greater loss of income for reservists answering their country's call to duty.

SEC. 2102. PENALTY-FREE WITHDRAWALS FROM RETIREMENT PLANS FOR INDIVIDUALS CALLED TO ACTIVE DUTY FOR AT LEAST 179 DAYS.

(a) IN GENERAL- Paragraph (2) of section 72(t) of the Internal Revenue Code of 1986 (relating to 10-percent additional tax on early distributions from qualified retirement plans) is amended by adding at the end the following new subparagraph:

`(G) DISTRIBUTIONS FROM RETIREMENT PLANS TO INDIVIDUALS CALLED TO ACTIVE DUTY-

`(i) IN GENERAL- Any qualified reservist distribution.

`(ii) QUALIFIED RESERVIST DISTRIBUTION- For purposes of this subparagraph, the term `qualified reservist distribution' means any distribution to an individual if--

`(I) such distribution is from any qualified retirement plan (as defined in section 4974(c)),

`(II) such individual was (by reason of being a member of a reserve component (as defined in section 101 of title 37, United States Code)), ordered or called to active duty for a period in excess of 179 days or for an indefinite period, and

`(III) such distribution is made during the period beginning on the

date of such order or call and ending at the close of the active duty period.

`(iii) APPLICATION OF SUBPARAGRAPH- This subparagraph applies to individuals ordered or called to active duty after September 11, 2001, and before September 12, 2005.'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to distributions after September 11, 2001.

SEC. 2103. INCOME TAX WITHHOLDING ON DIFFERENTIAL WAGE PAYMENTS.

(a) IN GENERAL- Section 3401 of the Internal Revenue Code of 1986 (relating to definitions) is amended by adding at the end the following new subsection:

`(i) DIFFERENTIAL WAGE PAYMENTS TO ACTIVE DUTY MEMBERS OF THE UNIFORMED SERVICES-

`(1) IN GENERAL- For purposes of subsection (a), any differential wage payment shall be treated as a payment of wages by the employer to the employee.

`(2) DIFFERENTIAL WAGE PAYMENT- For purposes of paragraph (1), the term `differential wage payment' means any payment which--

`(A) is made by an employer to an individual with respect to any period during which the individual is performing service in the uniformed services while on active duty for a period of more than 30 days, and

`(B) represents all or a portion of the wages the individual would have received from the employer if the individual were performing service for the employer.'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to remuneration paid after December 31, 2004.

SEC. 2104. TREATMENT OF DIFFERENTIAL WAGE PAYMENTS FOR RETIREMENT PLAN PURPOSES.

(a) PENSION PLANS-

(1) IN GENERAL- Section 414(u) of the Internal Revenue Code of 1986 (relating to special rules relating to veterans' reemployment rights under USERRA) is amended by adding at the end the following new paragraph:

`(11) TREATMENT OF DIFFERENTIAL WAGE PAYMENTS-

`(A) IN GENERAL- Except as provided in this paragraph, for purposes of applying this title to a retirement plan to which this subsection applies--

`(i) an individual receiving a differential wage payment shall be treated as an employee of the employer making the payment,

`(ii) the differential wage payment shall be treated as compensation, and

`(iii) the plan shall not be treated as failing to meet the requirements of any provision described in paragraph (1)(C) by reason of any contribution which is based on the differential wage payment.

`(B) SPECIAL RULE FOR DISTRIBUTIONS-

`(i) IN GENERAL- Notwithstanding subparagraph (A)(i), for purposes of section 401(k)(2)(B)(i)(I), 403(b)(7)(A)(ii), 403(b)(11)(A), or 457(d)(1)(A)(ii), an individual shall be treated as having been severed from employment during any period the individual is performing service in the uniformed services described in section 3401(i)(2)(A).

`(ii) LIMITATION- If an individual elects to receive a distribution by reason of clause (i), the plan shall provide that the individual may not make an elective deferral or employee contribution during the 6-month period beginning on the date of the distribution.

`(C) NONDISCRIMINATION REQUIREMENT- Subparagraph (A)(iii) shall apply only if all employees of an employer performing service in the uniformed services described in section 3401(i)(2)(A) are entitled to receive differential wage payments on reasonably equivalent terms and, if eligible to participate in a retirement plan maintained by the employer, to make contributions based on the payments. For purposes of applying this subparagraph, the provisions of paragraphs (3), (4), and (5), of section 410(b) shall apply.

`(D) DIFFERENTIAL WAGE PAYMENT- For purposes of this paragraph, the term `differential wage payment' has the meaning given such term by section 3401(i)(2).'.

(2) CONFORMING AMENDMENT- The heading for section 414(u) of such Code is amended by inserting `AND TO DIFFERENTIAL WAGE PAYMENTS TO MEMBERS ON ACTIVE DUTY' after `USERRA'.

(b) DIFFERENTIAL WAGE PAYMENTS TREATED AS COMPENSATION FOR INDIVIDUAL RETIREMENT PLANS- Section 219(f)(1) of the Internal Revenue Code of 1986 (defining compensation) is amended by adding at the end the following new sentence: `The term `compensation' includes any differential wage payment (as defined in section 3401(i)(2)).'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to plan years beginning after December 31, 2004.

(d) PROVISIONS RELATING TO PLAN AMENDMENTS-

(1) IN GENERAL- If this subsection applies to any plan or annuity contract amendment--

(A) such plan or contract shall be treated as being operated in accordance with the terms of the plan or contract during the period described in paragraph (2)(B)(i), and

(B) except as provided by the Secretary of the Treasury, such plan shall not fail to meet the requirements of the Internal Revenue Code of 1986 or the Employee Retirement Income

Security Act of 1974 by reason of such amendment.

(2) AMENDMENTS TO WHICH SECTION APPLIES-

(A) IN GENERAL- This subsection shall apply to any amendment to any plan or annuity contract which is made--

(i) pursuant to any amendment made by this section, and

(ii) on or before the last day of the first plan year beginning on or after January 1, 2007.

(B) CONDITIONS- This subsection shall not apply to any plan or annuity contract amendment unless--

(i) during the period beginning on the date the amendment described in subparagraph (A)(i) takes effect and ending on the date described in subparagraph (A)(ii) (or, if earlier, the date the plan or contract amendment is adopted), the plan or contract is operated as if such plan or contract amendment were in effect; and

(ii) such plan or contract amendment applies retroactively for such period.

SEC. 2105. READY RESERVE-NATIONAL GUARD EMPLOYEE CREDIT AND READY RESERVE-NATIONAL GUARD REPLACEMENT EMPLOYEE CREDIT.

(a) READY RESERVE-NATIONAL GUARD CREDIT-

(1) IN GENERAL- Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business-related credits) is amended by inserting after section 45I the following new section:

`SEC. 45J. READY RESERVE-NATIONAL GUARD EMPLOYEE CREDIT.

`(a) GENERAL RULE- For purposes of section 38, in the case of an eligible taxpayer, the Ready Reserve-National Guard employee credit determined under this section for any taxable year with respect to each Ready Reserve-National Guard employee of such taxpayer is an amount equal to 50 percent of the lesser of--

`(1) the actual compensation amount with respect to such employee for such taxable year, or

`(2) $30,000.

`(b) DEFINITION OF ACTUAL COMPENSATION AMOUNT- For purposes of this section, the term `actual compensation amount' means the amount of compensation paid or incurred by an eligible taxpayer with respect to a Ready Reserve-National Guard employee on any day when the employee was absent from employment for the purpose of performing qualified active duty.

`(c) LIMITATIONS- No credit shall be allowed with respect to any day that a Ready Reserve-National Guard employee who performs qualified active duty was not scheduled to work (for reason other than to participate in qualified active duty).

`(d) DEFINITIONS AND SPECIAL RULES- For purposes of this section--

`(1) ELIGIBLE TAXPAYER-

`(A) IN GENERAL- The term `eligible taxpayer' means a small business employer.

`(B) SMALL BUSINESS EMPLOYER-

`(i) IN GENERAL- The term `small business employer' means, with respect to any taxable year, any employer who employed an average of 50 or fewer employees on business days during such taxable year.

`(ii) CONTROLLED GROUPS- For purposes of clause (i), all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as a single employer.

`(2) QUALIFIED ACTIVE DUTY- The term `qualified active duty' means--

`(A) active duty under an order or call for a period in excess of 179 days or for an indefinite period, other than the training duty specified in section 10147 of title 10, United States Code (relating to training requirements for the Ready Reserve), or section 502(a) of title 32, United States Code (relating to required drills and field exercises for the National Guard), in connection with which an employee is entitled to reemployment rights and other benefits or to a leave of absence from employment under chapter 43 of title 38, United States Code, and

`(B) hospitalization incident to such duty.

`(3) COMPENSATION- The term `compensation' means any remuneration for employment, whether in cash or in kind, which is paid or incurred by a taxpayer and which is deductible from the taxpayer's gross income under section 162(a)(1).

`(4) READY RESERVE-NATIONAL GUARD EMPLOYEE- The term `Ready Reserve-National Guard employee' means an employee who is a member of the Ready Reserve of a reserve component of an Armed Force of the United States as described in sections 10142 and 10101 of title 10, United States Code.

`(5) CERTAIN RULES TO APPLY- Rules similar to the rules of section 52 shall apply.

`(e) TERMINATION- This section shall not apply to any amount paid or incurred after December 31, 2005.'.

(2) CREDIT TO BE PART OF GENERAL BUSINESS CREDIT- Subsection (b) of section 38 of the Internal Revenue Code of 1986 (relating to general business credit) is amended by striking `plus' at the end of paragraph (18), by striking the period at the end of paragraph (19) and inserting `, plus', and by adding at the end the following:

`(20) the Ready Reserve-National Guard employee credit determined under section 45J(a).'.

(3) DENIAL OF DOUBLE BENEFIT- Section 280C(a) of the Internal Revenue Code of 1986 (relating to rule for employment credits) is amended by inserting `45J(a),' after `45A(a),'.

(4) CONFORMING AMENDMENT- The table of sections for subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 45I the following:

`Sec. 45J. Ready Reserve-National Guard employee credit.'.

(5) EFFECTIVE DATE- The amendments made by this subsection shall apply to amounts paid or incurred after September 30, 2004, in taxable years ending after such date.

(b) READY RESERVE-NATIONAL GUARD REPLACEMENT EMPLOYEE CREDIT-

(1) IN GENERAL- Paragraph (1) of section 51(d) of the Internal Revenue Code of 1986 (relating to members of targeted groups) is amended by striking `or' at the end of subparagraph (G), by striking the period at the end of subparagraph (H) and inserting `, or' and by adding at the end the following new subparagraph:

`(I) a qualified replacement employee.'.

(2) QUALIFIED REPLACEMENT EMPLOYEE- Section 51(d) of the Internal Revenue Code of 1986 is amended by redesignating paragraphs (10), (11), and (12) as paragraphs (11), (12), and (13), respectively, and by inserting after paragraph (9) the following new paragraph:

`(10) QUALIFIED REPLACEMENT EMPLOYEE-

`(A) IN GENERAL- The term `qualified replacement employee' means an individual who is certified by the designated local agency as being hired by an eligible taxpayer to replace a Ready Reserve-National Guard employee of such taxpayer, but only with respect to the period during which such Ready Reserve-National Guard employee participates in qualified active duty, including time spent in travel status.

`(B) GENERAL DEFINITIONS AND SPECIAL RULES- For purposes of this paragraph--

`(i) ELIGIBLE TAXPAYER- The term `eligible taxpayer' means a small business employer.

`(ii) SMALL BUSINESS EMPLOYER-

`(I) IN GENERAL- The term `small business employer' means, with respect to any taxable year, any employer who employed an average of 50 or fewer employees on business days during such taxable year.

`(II) CONTROLLED GROUPS- For purposes of subclause (I), all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as a single employer.

`(iii) READY RESERVE-NATIONAL GUARD EMPLOYEE- The term `Ready Reserve-National Guard employee' has the meaning given such term by section 45J(d)(3).

`(iv) QUALIFIED ACTIVE DUTY- The term `qualified active duty' has the meaning given such term by section 45J(d)(1).

`(C) DISALLOWANCE FOR FAILURE TO COMPLY WITH EMPLOYMENT OR REEMPLOYMENT RIGHTS OF MEMBERS OF THE RESERVE COMPONENTS OF THE ARMED FORCES OF THE UNITED STATES- No credit shall be allowed under subsection (a) by reason of paragraph (1)(I) to a taxpayer for--

`(i) any taxable year, beginning after the date of the enactment of this section, in which the taxpayer is under a final order, judgment, or other process issued or required by a district court of the United States under section 4323 of title 38 of the United States Code with respect to a violation of chapter 43 of such title, and

`(ii) the 2 succeeding taxable years.'.

(3) EFFECTIVE DATE- The amendments made by this subsection shall apply to amounts paid or incurred to an individual who begins work for the employer after September 30, 2004.

(c) STUDY BY GAO-

(1) IN GENERAL- The Comptroller General of the United States shall study the following:

(A) What, if any, problems exist in recruiting individuals for a reserve component of an Armed Force of the United States.

(B) What, if any, problems exist as the result of providing differential wage payments (as defined in section 3401(i)(2) of the Internal Revenue Code of 1986 (as added by this Act)) to individuals described in subparagraph (A) in the recruitment and retention of individuals as regular members of the Armed Forces of the United States.

(C) Whether the credit allowed under section 45J of the Internal Revenue Code of 1986 (as added by this section) is an effective incentive for the hiring and retention of employees who are individuals described in subparagraph (A) and whether there exists any compliance problems in the administration of such credit.

(2) REPORT- The Comptroller General of the United States shall report on the results of the study required under paragraph (1) to the Committee of Finance of the Senate and the Committee on Ways and Means of the House of Representatives before July 1, 2005.

SEC. 2106. NONREDUCTION IN PAY WHILE FEDERAL EMPLOYEE IS PERFORMING ACTIVE SERVICE IN THE UNIFORMED SERVICES OR NATIONAL GUARD.

(a) PRESERVATION OF PAY LEVEL-

(1) REQUIREMENTS- Subchapter IV of chapter 55 of title 5, United States Code, is amended by adding at the end the following:

`Sec. 5538. Nonreduction in pay while serving in the uniformed services or National Guard

`(a) An employee who is absent from a position of employment with the Federal Government in order to perform active duty in the uniformed services pursuant to a call or order to active duty under a provision of law referred to in section 101(a)(13)(B) of title 10 shall be entitled, while serving on active duty, to receive, for each pay period described in subsection (b), an amount equal to the amount by which--

`(1) the amount of basic pay which would otherwise have been payable to such employee for such pay period if such employee's civilian employment with the Government had not been interrupted by that service, exceeds (if at all)

`(2) the amount of pay and allowances which (as determined under subsection (d))--

`(A) is payable to such employee for that service; and

`(B) is allocable to such pay period.

`(b)(1) Amounts under this section shall be payable with respect to each pay period (which would otherwise apply if the employee's civilian employment had not been interrupted)--

`(A) during which such employee is entitled to reemployment rights under chapter 43 of title 38 with respect to the position from which such employee is absent (as referred to in subsection (a)); and

`(B) for which such employee does not otherwise receive basic pay (including by taking any annual, military, or other paid leave) to which such employee is entitled by virtue of such employee's civilian employment with the Government.

`(2) For purposes of this section, the period during which an employee is entitled to reemployment rights under chapter 43 of title 38--

`(A) shall be determined disregarding the provisions of section 4312(d) of title 38; and

`(B) shall include any period of time specified in section 4312(e) of title 38 within which an employee may report or apply for employment or reemployment following completion of service on active duty to which called or ordered as described in subsection (a).

`(c) Any amount payable under this section to an employee shall be paid--

`(1) by such employee's employing agency;

`(2) from the appropriation or fund which would be used to pay the employee if such employee were in a pay status; and

`(3) to the extent practicable, at the same time and in the same manner as would basic pay if such employee's civilian employment had not been interrupted.

`(d) The Office of Personnel Management shall, in consultation with Secretary of Defense, prescribe any regulations necessary to carry out the preceding provisions of this section.

`(e)(1) The head of each agency referred to in section 2302(a)(2)(C)(ii) shall, in consultation with the Office, prescribe procedures to ensure that the rights under this section apply to the employees of such agency.

`(2) The Administrator of the Federal Aviation Administration shall, in consultation with the Office, prescribe procedures to ensure that the rights under this section apply to the employees of that agency.

`(f) For purposes of this section--

`(1) the terms `employee', `Federal Government', and `uniformed services' have the same respective meanings as given them in section 4303 of title 38;

`(2) the term `employing agency', as used with respect to an employee entitled to any payments under this section, means the agency or other entity of the Government (including an agency referred to in section 2302(a)(2)(C)(ii)) with respect to which such employee has reemployment rights under chapter 43 of title 38; and

`(3) the term `basic pay' includes any amount payable under section 5304.'.

(2) CLERICAL AMENDMENT- The table of sections for chapter 55 of title 5, United States Code, is amended by inserting after the item relating to section 5537 the following:

`5538. Nonreduction in pay while serving in the uniformed services or National Guard.'.

(b) EFFECTIVE DATE-

(1) IN GENERAL- Section 5538 of title 5, United States Code (as added by subsection (a)), shall apply with respect to pay periods (as described in subsection (b) of such section) beginning on or after the date of the enactment of this Act.

(2) CONDITIONAL RETROACTIVE APPLICATION-

(A) Section 5538 of title 5, United States Code (as added by subsection (a)), shall apply with respect to pay periods (as described in subsection (b) of such section) beginning on or after October 11, 2002 through the date of the enactment of this Act, subject to the availability of appropriations.

(B) There are authorized to be appropriated $100,000,000 for purposes of subparagraph (A).

TITLE XXII--NATIONAL GUARD AND RESERVE COMPREHENSIVE HEALTH BENEFITS

SEC. 2201. SHORT TITLE.

This title may be cited as the `National Guard and Reserve Comprehensive Health Benefits Act of 2005'.

SEC. 2202. FINDINGS.

Congress makes the following findings:

(1) According to the results of a Department of Defense survey conducted in 2000, 20 percent of members of the reserve components of the Armed Forces, including 40 percent of junior enlisted personnel, had no health care coverage while not on active duty.

(2) In 2004, Congress passed legislation authorizing reservists to obtain access to the military TRICARE health care program for one year for each 90-day period of active duty service. While the enactment of this law was an important step forward, the law only provides eligibility for health care after active duty has been completed and fails to provide the complete health care coverage necessary to ensure that reservists are medically ready to answer a future call to active duty.

(3) In September 2004, the Government Accountability Office, after reviewing pre-deployment health screenings of over 240,000 reservists, reported finding that nearly 7 percent of activated reservists were categorized as nondeployable for health reasons, including nearly 10 percent of the Army Reserve.

SEC. 2203. TRICARE COVERAGE FOR MEMBERS OF THE READY RESERVE.

(a) ELIGIBILITY- Section 1076b of title 10, United States Code, is amended to read as follows:

`Sec. 1076b. TRICARE program: coverage for members of the Ready Reserve

`(a) ELIGIBILITY- Members of the Selected Reserve of the Ready Reserve of a reserve component of the armed forces and members of the Individual Ready Reserve described in subsection 10144(b) of this title are eligible, subject to subsection (h)(1), to enroll in the following TRICARE program options:

`(1) TRICARE Prime.

`(2) TRICARE Standard.

`(b) TYPES OF COVERAGE- (1) A member eligible under subsection (a) may enroll for either of the following types of coverage:

`(A) Self alone coverage.

`(B) Self and family coverage.

`(2) An enrollment by a member for self and family covers the member and the dependents of the member who are described in subparagraph (A), (D), or (I) of section 1072(2) of this title.

`(c) OPEN ENROLLMENT PERIODS- The Secretary of Defense shall provide for at least one open enrollment period each year. During an open enrollment period, a member eligible under subsection (a) may enroll in the TRICARE program or change or terminate an enrollment in the TRICARE program.

`(d) SCOPE OF CARE- (1) A member and the dependents of a member enrolled in the TRICARE program under this section shall be entitled to the same benefits under this chapter as a member of the uniformed services on active duty or a dependent of such a member, respectively.

`(2) Section 1074(c) of this title shall apply with respect to a member enrolled in the TRICARE program under this section.

`(e) PREMIUMS- (1) The Secretary of Defense shall charge premiums for coverage pursuant to enrollments under this section. The Secretary shall prescribe for each of the TRICARE program options referred to in subsection (a) a premium for self alone coverage and a premium for self and family coverage.

`(2) The monthly amount of the premium in effect for a month for a type of coverage under this section shall be the amount equal to 28 percent of the total amount determined by the Secretary on an appropriate actuarial basis as being reasonable for the coverage.

`(3) The premiums payable by a member under this subsection may be deducted and withheld from basic pay payable to the member under section 204 of title 37 or from compensation payable to the member under section 206 of such title. The Secretary shall prescribe the requirements and procedures applicable to the payment of premiums by members not entitled to such basic pay or compensation.

`(4) Amounts collected as premiums under this subsection shall be credited to the appropriation available for the Defense Health Program Account under section 1100 of this title, shall be merged with sums in such Account that are available for the fiscal year in which collected, and shall be available under subsection (b) of such section for such fiscal year.

`(f) OTHER CHARGES- A person who receives health care pursuant to an enrollment in a TRICARE program option under this section, including a member who receives such health care, shall be subject to the same deductibles, copayments, and other nonpremium charges for health care as apply under this chapter for health care provided under the same TRICARE program option to

dependents described in subparagraph (A), (D), or (I) of section 1072(2) of this title.

`(g) TERMINATION OF ENROLLMENT- (1) A member enrolled in the TRICARE program under this section may terminate the enrollment only during an open enrollment period provided under subsection (c), except as provided in subsection (h)(2).

`(2) An enrollment of a member for self alone or for self and family under this section shall terminate on the first day of the first month beginning after the date on which the member ceases to be eligible under subsection (a).

`(3) The enrollment of a member under this section may be terminated on the basis of failure to pay the premium charged the member under this section.

`(h) RELATIONSHIP TO TRANSITION TRICARE COVERAGE UPON SEPARATION FROM ACTIVE DUTY- (1) A member may not enroll in the TRICARE program under this section while entitled to transitional health care under subsection (a) of section 1145 of this title or while authorized to receive health care under subsection (c) of such section.

`(2) A member who enrolls in the TRICARE program under this section within 90 days after the date of the termination of the member's entitlement or eligibility to receive health care under subsection (a) or (c) of section 1145 of this title may terminate the enrollment at any time within one year after the date of the enrollment.

`(i) REGULATIONS- The Secretary of Defense, in consultation with the other administering Secretaries, shall prescribe regulations for the administration of this section.'.

(b) DEFINITIONS-

(1) TRICARE OPTIONS- Section 1072 of title 10, United States Code, is amended by adding at the end the following new paragraphs:

`(10) The term `TRICARE Prime' means the managed care option of the TRICARE program.

`(11) The term `TRICARE Standard' means the Civilian Health and Medical Program of the Uniformed Services option under the TRICARE program.'.

(2) CONFORMING AMENDMENTS-

(A) Section 1076d(f) of such title is amended--

(i) by striking `(f) DEFINITIONS- ' and all that follows through `(1) The' and inserting `(f) IMMEDIATE FAMILY DEFINED- In this section, the'; and

(ii) by striking paragraph (2).

(B) Section 1097a(f) of such title is amended by striking `DEFINITIONS- In this section:' and all that follows through `(2) The term' and inserting `CATCHMENT AREA DEFINED- In this section, the term'.

(c) PERIOD FOR IMPLEMENTATION- Section 1076b of title 10, United States Code (as added by subsection (a)), shall apply with respect to months that begin on or after the date that is 180 days after the date of the enactment of this Act.

(d) COORDINATION WITH OVERLAPPING AUTHORITY-

(1) REPEAL- Effective one year after the date of the enactment of this Act--

(A) section 1076d of title 10, United States Code, is repealed; and

(B) the table of sections at the beginning of chapter 55 of such title is amended by striking the item relating to section 1076d.

(2) TRANSITION COVERAGE- The Secretary of Defense shall provide for an orderly transition to TRICARE coverage under section 1076b of title 10, United States Code (as amended by subsection (a)), for persons enrolled for TRICARE coverage under section 1076d of such title before the repeal of such section takes effect under paragraph (1)(A).

SEC. 2204. ALLOWANCE FOR CONTINUATION OF NON-TRICARE HEALTH BENEFITS COVERAGE FOR CERTAIN MOBILIZED RESERVES.

(a) PAYMENT OF PREMIUMS-

(1) REQUIREMENT TO PAY PREMIUMS- Chapter 55 of title 10, United States Code, is amended by inserting after section 1078a the following new section:

`Sec. 1078b. Continuation of non-TRICARE health benefits plan coverage for certain Reserves called or ordered to active duty and their dependents

`(a) PAYMENT OF PREMIUMS- The Secretary concerned shall pay the applicable premium to continue in force any qualified health benefits plan coverage for an eligible reserve component member for the benefits coverage continuation period if timely elected by the member in accordance with regulations prescribed under subsection (j).

`(b) ELIGIBLE MEMBER- A member of a reserve component is eligible for payment of the applicable premium for continuation of qualified health benefits plan coverage under subsection (a) while serving on active duty pursuant to a call or order issued under a provision of law referred to in section 101(a)(13)(B) of this title during a war or national emergency declared by the President or Congress.

`(c) QUALIFIED HEALTH BENEFITS PLAN COVERAGE- For the purposes of this section, health benefits plan coverage for a member called or ordered to active duty is qualified health benefits plan coverage if--

`(1) the coverage was in force on the date on which the Secretary notified the member that issuance of the call or order was pending or, if no such notification was provided, the date of the call or order;

`(2) on such date, the coverage applied to the member and dependents of the member described in subparagraph (A), (D), or (I) of section 1072(2) of this title; and

`(3) the coverage has not lapsed.

`(d) APPLICABLE PREMIUM- The applicable premium payable under this section for continuation of health benefits plan coverage in the case of a member is the amount of the premium payable by the member for the coverage of the member and dependents.

`(e) MAXIMUM AMOUNT- The total amount that may be paid for the applicable premium of a health benefits plan for a member under this section in a fiscal year may not exceed the amount determined by multiplying--

`(1) the sum of one plus the number of the member's dependents covered by the health benefits plan, by

`(2) the per capita cost of providing TRICARE coverage and benefits for dependents under this chapter for such fiscal year, as determined by the Secretary of Defense.

`(f) BENEFITS COVERAGE CONTINUATION PERIOD- The benefits coverage continuation period under this section for qualified health benefits plan coverage in the case of a member called or ordered to active duty is the period that--

`(1) begins on the date of the call or order; and

`(2) ends on the earlier of the date on which--

`(A) the member's eligibility for transitional health care under section 1145(a) of this title terminates under paragraph (3) of such section; or

`(B) the member elects to terminate the continued qualified health benefits plan coverage of the dependents of the member.

`(g) EXTENSION OF PERIOD OF COBRA COVERAGE- Notwithstanding any other provision of law--

`(1) any period of coverage under a COBRA continuation provision (as defined in section 9832(d)(1) of the Internal Revenue Code of 1986) for a member under this section shall be deemed to be equal to the benefits coverage continuation period for such member under this section; and

`(2) with respect to the election of any period of coverage under a COBRA continuation provision (as so defined), rules similar to the rules under section 4980B(f)(5)(C) of such Code shall apply.

`(h) NONDUPLICATION OF BENEFITS- A dependent of a member who is eligible for benefits under qualified health benefits plan coverage paid on behalf of a member by the Secretary concerned under this section is not eligible for benefits under the TRICARE program during a period of the coverage for which so paid.

`(i) REVOCABILITY OF ELECTION- A member who makes an election under subsection (a) may revoke the election. Upon such a revocation, the member's dependents shall become eligible for benefits under the TRICARE program as provided for under this chapter.

`(j) REGULATIONS- The Secretary of Defense shall prescribe regulations for carrying out this section. The regulations shall include such requirements for making an election of payment of applicable premiums as the Secretary considers appropriate.'.

(2) CLERICAL AMENDMENT- The table of sections at the beginning of such chapter is amended

by inserting after the item relating to section 1078a the following new item:

`1078b. Continuation of non-TRICARE health benefits plan coverage for certain Reserves called or ordered to active duty and their dependents.'.

(b) APPLICABILITY- Section 1078b of title 10, United States Code (as added by subsection (a)), shall apply with respect to calls or orders of members of reserve components of the Armed Forces to active duty as described in subsection (b) of such section, that are issued by the Secretary of a military department on or after the date of the enactment of this Act.

TITLE XXIII--IMPROVED DEATH GRATUITY AND OTHER SURVIVOR BENEFITS

SEC. 2301. FINDINGS.

Congress makes the following findings:

(1) No amount of money can make up for the loss of a loved one. But the United States can, and is obliged to, honor the service of lost servicemembers by ensuring that their families are financially supported at the time of great need occasioned by those losses.

(2) The Federal Government owes families of servicemembers dying on duty a death gratuity that is sufficient to help each family pay for costs associated with the death of the servicemember and to help the members of the family adjust to the financial instability that results from termination of the servicemember's income.

(3) Survivors of fallen military personnel who are eligible for both a Survivor Benefit Plan annuity and Dependency and Indemnity Compensation suffer a loss of income as a result of the law that requires a reduction in the Survivor Benefit Plan annuity by the amount of the Dependency and Indemnity Compensation. This unjust prohibition against concurrent receipt of two independent benefits prevents the United States from fulfilling its obligation to the survivors during the time of financial need that is occasioned by the deaths of the fallen servicemembers.

SEC. 2302. INCREASED AMOUNT OF DEATH GRATUITY.

(a) AMOUNT OF DEATH GRATUITY- Section 1478(a) of title 10, United States Code, is amended by striking `$12,000' in the first sentence and inserting `$100,000'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect as of September 11, 2001, and shall apply with respect to deaths occurring on or after that date.

SEC. 2303. DEATH GRATUITY EXCLUDABLE FROM FEDERAL INCOME TAXATION.

(a) IN GENERAL- Paragraph (1) of section 134(b) of the Internal Revenue Code of 1986 (relating to certain military benefits) is amended by adding at the end the following new flush sentence:

`Such term shall include any death gratuity to which the limitation in section 1478(a) of title 10, United States Code, applies.'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to amounts paid with respect to deaths occurring on or after September 11, 2001.

SEC. 2304. REPEAL OF REQUIREMENT OF REDUCTION OF SBP SURVIVOR ANNUITIES BY DEPENDENCY AND INDEMNITY COMPENSATION.

(a) Repeal- Subchapter II of chapter 73 of title 10, United States Code is amended--

(1) in section 1450(c)(1), by inserting after `to whom section 1448 of this title applies' the following: `(except in the case of a death as described in subsection (d) or (f) of such section)'; and

(2) in section 1451(c)--

(A) by striking paragraph (2); and

(B) by redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively.

(b) Prohibition on Retroactive Benefits- No benefits may be paid to any person for any period before the effective date provided under subsection (e) by reason of the amendments made by subsection (a).

(c) Prohibition on Recoupment of Certain Amounts Previously Refunded to SBP Recipients- A surviving spouse who is or has been in receipt of an annuity under the Survivor Benefit Plan under subchapter II of chapter 73 of title 10, United States Code, that is in effect before the effective date provided under subsection (e) and that is adjusted by reason of the amendments made by subsection (a) and who has received a refund of retired pay under section 1450(e) of title 10, United States Code, shall not be required to repay such refund to the United States.

(d) Reconsideration of Optional Annuity- Section 1448(d)(2) of title 10, United States Code, is amended by adding at the end the following new sentences: `The surviving spouse, however, may elect to terminate an annuity under this subparagraph in accordance with regulations prescribed by the Secretary concerned. Upon such an election, payment of an annuity to dependent children under this subparagraph shall terminate effective on the first day of the first month that begins after the date on which the Secretary concerned receives notice of the election, and, beginning on that day, an annuity shall be paid to the surviving spouse under paragraph (1) instead.'.

(e) Effective Date- The amendments made by this section shall take effect on the later of--

(1) the first day of the first month that begins after the date of the enactment of this Act; or

(2) the first day of the fiscal year that begins in the calendar year in which this Act is enacted.

SEC. 2305. EFFECTIVE DATE FOR PAID-UP COVERAGE UNDER SURVIVOR BENEFIT PLAN.

Section 1452(j) of title 10, United States Code, is amended by striking `October 1, 2008' and inserting `October 1, 2005'.

DIVISION C--TAXPAYER PROTECTION

TITLE XXXI--FUNDING OF RECONSTRUCTION IN IRAQ

SEC. 3101. FINDINGS.

Congress makes the following findings:

(1) The international community's support for Iraq's efforts to reconstruct the infrastructure of Iraq following the overthrow of Saddam Hussein's regime is critical to the achievement of regional and

international stability and to the protection of national security interests of the United States.

(2) United States taxpayers have borne a disproportionate burden in supporting the reconstruction of Iraq. The United States Government has committed to providing Iraq with grants of financial assistance worth more than 500 percent more than the grant assistance that has been committed by the governments of all of the rest of the countries of the world combined.

(3) The disproportionate contribution of the United States to the reconstruction of Iraq has resulted in a commitment of United States resources to reconstruction that otherwise would be available for supporting the efforts of United States military personnel to rid Iraq and Afghanistan of hostile insurgents.

(4) Iraq possesses the world's second largest reserve of crude oil, with 112,000,000,000 barrels, and administration officials have stated on several occasions that revenue from Iraq's oil industry could fund a significant portion of the costs of the reconstruction of Iraq.

SEC. 3102. REPORT ON ADDITIONAL NEEDS FOR FUNDING MILITARY AND RECONSTRUCTION EFFORTS.

(a) REQUIREMENT FOR REPORT- Whenever the President submits to Congress a request for a supplemental appropriation of funds for use in connection with United States military or reconstruction efforts in Iraq, the President shall submit to the chairmen and ranking members of the appropriate committees of Congress in accordance with this section a report on the status of United States financial commitments to the reconstruction of Iraq.

(b) CONTENT- The report under subsection (a) shall include the following information:

(1) An estimate of the amount of the United States Government funds spent for the reconstruction of Iraq between March 19, 2003, and the date of the report that is attributable to tax revenue collected from United States taxpayers.

(2) An assessment of the activities funded by that amount, together with a discussion of the results that such activities have achieved.

(3) An estimate of the amount of the funds that have been contributed by all other foreign governments for the reconstruction of Iraq and in relief of Iraq's national debt.

(4) The amount of the crude oil that has been extracted by Iraq since March 19, 2003, and the total value of that oil in United States dollars.

(c) TIME FOR REPORT- The President shall submit the report under this section not later than 24 hours after any proposed legislation to provide a supplemental appropriation of funds requested by the President for use in connection with United States military or reconstruction activities in Iraq is introduced in either the Senate or the House of Representatives.

(d) FORM- The report under this section shall be submitted in unclassified form.

SEC. 3103. LIMITATION ON USE OF FUNDS.

(a) LIMITATION- Funds appropriated or otherwise available for providing financial assistance for reconstruction activities in Iraq may not be obligated or expended for providing financial assistance for such activities other than in the form of a collateralized loan until the President submits to the chairmen and ranking members of the appropriate committees of Congress a report that contains the following matters:

(1) The President's plan for seeking increased financial support for reconstruction activities in Iraq from the international community.

(2) The President's statement that he has determined that--

(A) Iraq is incapable of producing sufficient revenues from its oil industry to pay for future reconstruction activities; and

(B) it is not in the national security interests of the United States for the United States to provide financial assistance for reconstruction activities in Iraq solely in the form of loans.

(b) WAIVER AUTHORITY- The President may waive the applicability of the limitation in subsection (a) to an obligation or expenditure of funds if the President determines that the applicability of the limitation to such obligation or expenditure would adversely affect the physical safety of United States Armed Forces personnel operating in Iraq, except that any such waiver shall not take effect before the President submits a written notification of the waiver and determination to the chairmen and ranking members of the appropriate committees of Congress.

SEC. 3104. APPROPRIATE COMMITTEES OF CONGRESS DEFINED.

In this title, the term `appropriate committees of Congress' mean the following committees:

(1) The Committee on Foreign Relations Committee, the Committee on Armed Services, and the Committee on Appropriations of the Senate.

(2) The Committee on International Relations, the Committee on Armed Services, and the Committee on Appropriations of the House of Representatives.

END