Legislation | "Full concurrent receipt" amendment approved.

Senate Passes Defense Bill

On June 27, the Senate passed its version of the fy 2003 Defense Authorization Bill (S. 2514) by a vote of 97-2. The legislation included an amendment that would eliminate the Department of Veterans Affairs (VA) disability compensation offset to military retired pay for all disabled retirees with 20 or more years of service, effective Oct. 1, 2002.

The "full concurrent receipt" provision, offered as an amendment by Senate Armed Services Committee (sasc) Chairman Carl Levin (D-Mich.) and the rest of the sasc, was adopted on the Senate floor by voice vote June 16. The House bill (passed May 9) would phase out the disability offset over five years for retirees with at least 20 years of service and a 60 percent or higher disability rating.

Now the stage is set for the real test, when House and Senate leaders sit down to resolve their differences between the two versions of the bill - with the House's phaseout plan as the floor and the Senate's full concurrent receipt plan as the ceiling.

TROA is very grateful to many in the Senate for helping pave the way for adoption of the full concurrent receipt provision. Special thanks in particular go to Levin, ranking Republican John Warner (R-Va.), and Sens. Harry Reid (D-Nev.), Max Cleland (D-Ga.), Tim Hutchinson (R-Ark.), and John McCain (R-Ariz.).

Two other amendments added to the legislation during floor action would:

• increase service manpower ceilings for fy 2003 by 5,000 for the Army; 3,500 for the Navy; 3,500 for the Air Force; and 2,400 for the Marine Corps (offered by Cleland and McCain); and
• prohibit tricare from denying treatment to beneficiaries previously seen by the VA if the VA can't provide the needed care within tricare Prime timeliness standards (offered by Cleland).

Unfortunately, two key amendments we had hoped to secure proved unsuccessful. Sen. Strom Thurmond's (R-S.C.) proposal to raise the Survivor Benefit Plan (sbp) age-62 annuity and Sen. Bill Nelson's (D-Fla.) initiative to eliminate the sbp annuity reduction for recipients of VA survivor benefits were never brought to the floor. Senate leaders were reluctant to support both of these costly retirement/survivor improvements, having already incurred an administration veto threat over the concurrent receipt provision.

After being led to believe these amendments would be raised and generating more than 27,000 supportive messages to the Senate about them in a few days, we were very disappointed to not even have them considered. Perhaps we've been spoiled by more successful recent actions on tricare For Life, tricare Senior Pharmacy, military pay raises, and concurrent receipt. But there are hundreds of thousands of current and future survivors who need and deserve these changes, and we remain determined to mount a campaign that Congress won't be able to ignore.

Meanwhile, at press time, House and Senate Armed Services committee staffs were preparing for conference committee negotiations to resolve the many differences between the House- and Senate-passed defense bills. In all likelihood, these negotiations will carry on into September before they reach a final agreement.

Retired Pay | White House resists any concurrent receipt relief.

Administration Issues Veto Threat

TROA was extremely disappointed, to say the least, by the contents of a June 19 letter sent to Congress by the Office of Management and Budget, which threatened a possible veto of the fy 2003 Defense Authorization Act if that legislation proposes eliminating the Department of Veterans Affairs (VA) disability compensation offset to military retired pay.

The letter asserted that the president's advisors would recommend a presidential veto if the final Authorization Act includes either the Senate plan to eliminate the offset immediately or the House plan to phase in partial elimination for severely disabled military retirees.

The administration's opposition to this long-overdue initiative is nothing new. No administration of either party has ever supported providing any relief from the current unfair offset, in large measure because of the cost. But threatening to veto the defense bill if it provides any relief to disabled retirees is a new low.

TROA shares the view Sen. Harry Reid (D-Nev.) expressed on the Senate floor. "I know President Bush as well as most members of the Senate," Reid said, "and this wasn't written by the president. It doesn't say he would veto the bill over the concurrent receipt issue. It says his advisors would recommend a veto. This was written by staff bureaucrats. If the president were to veto this, he'd have to be a much different person than the George W. Bush I know. Here's what I'm doing with this staff letter..." and he folded it up and put it in a wastebasket.

When Sen. Thomas Carper (D-Del.) asked how Congress was expected to pay for this initiative, he was answered promptly by Sen. Carl Levin (D-Mich.) and Reid.

"We're going to pay for it the same way we pay for everything else Congress approves," said Levin. "Congress always has to make difficult decisions on spending priorities," Reid added. "But one of the priorities we must take care of is treating our disabled military retirees fairly."

It's precisely because the executive branch has failed to seek a fix for the current gross inequity that Congress has seized the leadership role.

At a time when the country has been particularly sensitized to the sacrifices of those who serve in uniform, TROA finds it difficult to conceive that the president would veto the defense bill for the express purpose of denying disabled military retirees their earned retired pay.

Should this actually occur, TROA and all other military and veterans' associations would expect the 83 percent of senators and 90 percent of House members who have signed their names as cosponsors of this important legislation to back up those signatures and override any such veto. But any possible need for that is likely at least a month away.

In the meantime, we urge TROA members and others to write the White House to let the president know how far wrong his advisors have gone on this issue. You can send a TROA-prepared message via TROA's Web site (www.capwiz.com/troa/home/). Just click on the "Don't Veto Concurrent Receipt" action alert link, then click the "Go" button.

Benefits | Subcommittee considers Arlington Cemetery rules.

House Panel Weighs Veterans' Bills

The House Subcommittee on Veterans Benefits heard testimony in June on several bills, including one that would codify the rules governing burial in Arlington National Cemetery (ANC).

In recent years, the House has overwhelmingly endorsed bills that would put in law the rules governing who may be buried in ANC. But the Senate has rejected those measures because they had no provision to allow for exceptions to the rules. Now a new draft House bill would permit ANC burial for a citizen whom the president determines had performed "extraordinary service, acts, or contributions to the Armed Forces." Some have associated this provision with entertainer Bob Hope.

The main purpose of the new ANC bill would be to establish in law rules governing who may be buried in the cemetery. These include: members of the armed forces who die on active duty; retired members of the armed forces, including retired National Guard and Reserve members who served on active duty; veterans awarded the Purple Heart, the Silver Star, or a higher decoration for valor; former prisoners of war; National Guard and Reserve members who served on active duty and have qualified for retirement but haven't yet attained age 60; the president or any former president; and certain family members of the above eligibles.

The House panel also heard testimony on other veterans' bills, including:

• H.R. 3173 (Rep. Luis Gutierrez, D-Ill.), a bill that would allow optional purchase of increased Servicemen's Group Life Insurance (sgli) up to $1 million and upgrade protections against eviction from a leased house or apartment for deployed servicemembers under the Soldiers' and Sailors' Civil Relief Act;
• H.R. 3771 (Rep. Joseph Crowley, D-N.Y.), a bill that would allow monetary benefits paid to veterans by states and municipalities to be excluded from income calculation for purposes of pension benefits paid by the Department of Veterans Affairs (VA).

The Benefits Subcommittee also reviewed H.R. 3735, which would improve the administration of overpayments to veterans, and H.R. 4042, which would prohibit the collection of additional charges for prepaid housing loans guaranteed by the VA.

The Senate also saw some action on veterans' legislation in June, including:

• S. 2237 (Sen. John D. Rockefeller, D-W.Va., chairman, Veterans Affairs Committee), a bill to improve VA benefits for service-connected hearing loss. A committee-approved amendment to the bill would increase the monthly stipend for Medal of Honor recipients from $600 to $1,000 a month and award a one-time retroactive payment of the stipend to the date of the act of valor. (Both of these provisions are TROA legislative goals.)
• S. 2602 (Sen. Hillary Clinton, D-N.Y.), a companion bill to Rep. Mike Bilirakis' (R-Fla.) H.R. 1108, which would allow retention of VA Dependency and Indemnity Compensation (dic) to otherwise eligible surviving spouses who remarry after age 55. (Last month, we reported on a similar measure, which would cover dic survivors who remarry after age 65, that cleared the House Veterans Affairs Committee.)

Taxes | Military capital gains equity remains elusive.

Home Tax Outlook Still Uncertain

Efforts continue to seek relief for uniformed servicemembers and foreign service employees who can face substantial tax bills if they sell their homes after being assigned away from home for more than three years immediately before the sale. Despite support from senior members of Congress, the Office of Management and Budget, the Department of State, and senior Department of Defense (DoD) and service leaders, the outlook for legislative change remains uncertain.

The Taxpayer Relief Act of 1997 let homeowners exempt up to $250,000 ($500,000 a couple) in capital gains from federal income taxes for a home occupied as a principal residence for at least two of the five years preceding the sale. But it inadvertently penalized servicemembers assigned on orders away from their homes for more than three years by repealing the previous capital gains rollover rules in these cases and making no new provision for military assignments.

There have been efforts ongoing since then to make a legislative fix. In 1999, Congress passed an omnibus tax bill containing relief for uniformed servicemembers and foreign service employees (among many other provisions), but it was vetoed by President Clinton for other reasons.

Sen. John McCain (R-Ariz.) introduced a bill (S. 1678) late last year, which, along with several other bills (including S. 1755 in the Senate and H.R. 1596 and H.R. 356 in the House), would amend Internal Revenue Service (irs) rules to exempt time away from home on military orders from counting against the "two-of-the-last-five-years" residency test. But Congress recently has resisted large omnibus tax bills in favor of more limited issue-specific bills. Unfortunately, the military homeowner tax issue has not made the cut for inclusion in the more recent legislation, such as the economic stimulus bill passed early this year.

Recently, TROA and foreign service representatives tried a different tack, meeting with Department of the Treasury and irs officials to explore the possibility of fixing the problem with an administrative change as part of an irs rules update expected later this summer. While irs and Treasury officials didn't completely rule it out, their initial response was not optimistic that this could be done without a law change. The deputy secretary of State has written to Treasury officials to express support for a rules change. We expect DoD officials to also weigh in with Treasury in support of the idea. If unsuccessful in this effort, we'll continue seeking to attach the military homeowner relief provision to any tax bill Congress considers.

CONCURRENT RECEIPT

Retirement | Retired pay makes up second-career pay gap.

QRMC Reports on Retiree Earnings

About 20,000 servicemembers retire each year (at the average age of 43). Most enter second careers, and, according to the report recently issued by the Ninth Quadrennial Review of Military Compensation (9th QRMC), they're relatively happy with their lot in life.

The 9th QRMC examined, among many other issues, how military retirees' post-service earnings compared with those of civilians with like backgrounds and work experience and whether or not retirees were satisfied with their military experiences and post-service lives.

The QRMC found that retirees' earnings in their first jobs following retirement were lower than what they made in their final military position and lower than the earnings of civilians with similar experience and education. They also observed that "more recent retirees earn civilian wages that are considerably lower than those of retirees who separated from the military in the 1970s." Officers retiring in 1990–94 earned 30 percent less than their civilian peers, and enlisted members retiring in the same period earned 37 percent less. About 30 percent of 1990–94 retirees believed their military career hindered their chance of earning comparable civilian wages, while only 17 percent of 1971–74 retirees felt that was true. The report speculated on a variety of additional reasons for the difference, including limited transferability of some military skills to private employment; general economic conditions; a tendency to retire in lower-cost (and lower-paying) areas of the country; and retirees opting for more satisfying work, more flexible work schedules, or better fits with their spouses' vs. better-paying jobs.

While their post-service earnings were less, the QRMC reported that military retirees' total earnings rise above the average of civilian peers when military retired pay is added to the equation.

It also found that the overwhelming majority of retirees were satisfied with their military careers and post-retirement lives, that most felt they were better off than when they were in the military, and that they believed they were doing as well as or better than their civilian peers.

The report recommended further study of the reasons for the apparent decline in second-career earnings.

ARE YOU DOING YOUR PART?

Health Care | Some want federal plans under universal health care.

State Plans Bear Watching

As the cost of health care rises, some interest groups at the state level are urging state legislatures to adopt initiatives to pool all available health funding, regardless of source - including state income and payroll taxes, employer-funded plans, Medicaid, Medicare, tricare, the Federal Employees Health Benefits Program, and the Department of Veterans Affairs.

Plans such as Washington's Health Care 2000 initiative envision a central, state-operated health care fund that would pay for all health care services received by all state residents, including military and federal civilian beneficiaries. Similar initiatives enjoy some level of support in California, Oregon, Vermont, and Maryland. Reportedly, some state legislatures hope to secure demonstration projects to assess the feasibility of their respective initiatives.

TROA believes strongly that state "single payer" plans must not be allowed to override or subordinate existing plans for federal beneficiaries who happen to reside in one of those states. Such initiatives could seriously compromise tricare coverage and reduce health benefits below the standards Congress has reaffirmed recently for military beneficiaries, consistent with their service and sacrifice in the nation's behalf.

As Congress continues to assess ways to address national health care challenges, TROA has urged the House and Senate Armed Services committees to be particularly alert to possible state efforts to supplant federal beneficiaries' health coverage with a common, state-managed program.

Military beneficiaries must be guaranteed the federal health coverage they earned and deserve in return for accepting an arduous career in uniformed service. Allowing their hard-earned coverage to be subordinated to a "lowest common denominator" plan that ignores their unique contributions would abrogate long-standing commitments and undermine much of the committees' recent work on this most important issue.