[Congressional Record (Bound Edition), Volume 151 (2005), Part 2]
[Extensions of Remarks]
[Pages 2627-2629]
[From the U.S. Government Publishing Office, www.gpo.gov]




             INTRODUCTION OF H.R. 838--THE HOPE AT HOME ACT

                                 ______
                                 

                            HON. TOM LANTOS

                             of california

                    in the house of representatives

                      Wednesday, February 16, 2005

  Mr. LANTOS. Mr. Speaker, it is clear that the role of the National 
Guard and Reserve in our military forces has changed. The days of these 
forces simply providing replacement manpower for active duty personnel 
in the event of a conflict are no more. Since September 11, 2001 more 
than 400,000 members of the Reserve Component have been activated for 
either homeland security or overseas missions. As of January 5, 2005 
there are 180,000 citizen soldiers currently on active duty and it is 
well documented that the Guard and Reserve comprise more than 40 
percent of the American forces in Iraq.
  The Guard and Reserve have performed their patriotic services 
admirably. However, as these forces were utilized more there was an 
initial concern that increased mobilizations would lead to a fall off 
in recruitment and retention. Now, after 3 years, these fears are 
coming true. This past January the Army National Guard failed to 
achieve its recruiting

[[Page 2628]]

goal by falling shy of its target by 44 percent and last year the Army 
Reserves fell about 10% short of its recruiting goal. Equally 
distressing was a memo written in early January 2005 by Lt. General 
James Hemly, Chief of the Army Reserves, that stated his belief that 
the United States Army Reserve was degenerating into a broken force 
because of dysfunctional military policies.
  While the problems that are causing these drops in recruitment and 
retention are varied, one complaint that has been voiced is that the 
activations are occurring more frequently and for longer periods of 
time, and that the resulting stress on the soldier's family is causing 
him or her to leave the force. In particular, it is the lost income 
that many citizen soldiers encounter as a result of their activation 
that places significant stress on families.
  Mr. Speaker, as you are aware, our citizen soldiers are asked to make 
many sacrifices; sometimes they make the ultimate sacrifice in defense 
of freedom. In addition for each National Guardsman and Reservist 
serving abroad, there is also a family at home who is also making 
sacrifices for their country. Husbands and wives, sons and daughters, 
mothers and fathers, sisters and brothers--all are asked to endure the 
temporary absence of a loved one and the fear that they may not return.
  Unfortunately, many of these families also suffer from a loss of 
income. This is because when a National Guardsman or Reservist is 
called to active duty, their civilian job--and civilian salary--is 
placed on hiatus and they begin receiving military pay for their 
service, an amount that is often significantly less than their civilian 
salary. According to the General Accountability Office (GAO) more than 
40 percent of the Guard and Reserves suffer from a loss in income as a 
result of their activation.
  This ``pay gap'' forces National Guard and Reservists' families to 
pinch to make ends meet. Grocery budgets are trimmed, rent or mortgage 
payments are paid late, credit cards are run up, and other important 
purchases are postponed. Many family members of Reservists are forced 
to work overtime, dip into savings, borrow, or even go on welfare to 
pay the bills.
  Mr. Speaker, too many members of our reserve components are faced 
with the difficult choice of defending their country or providing for 
their family, a choice that I am certain you will agree with me is 
unconscionable.
  This pay gap, which is causing so much unnecessary stress, can be 
easily mitigated if the employer of the activated soldier suffering 
from a pay gap contributes differential payments to their employee. 
Already there are over 500 conscientious employers who have taken it 
upon themselves to commence these payments and Secretary of Defense 
Rumsfeld was correct in applauding them in an open letter dated 
September 11, 2002, a copy of which I am placing in the Congressional 
Record. Unfortunately, it was recently reported that many of these 
employers are now being forced to scale back or even to cease making 
these payments to their activated employees. Mr. Speaker, in order to 
help those employers, to encourage others, and to protect the financial 
security of more than 40 percent of our citizen soldiers, I am pleased 
to be joined by my distinguished colleagues, Sam Graves, Jim McGovern 
and Chris Shays in introducing bipartisan common-sense legislation to 
fix the problem of the pay gap.
  Our legislation, H.R. 838, entitled the Help Our Patriotic Employers 
at Helping our Military Employees, or HOPE at HOME Act provides 
numerous incentives to all of the employers in our country to make it 
financially attractive to make up any pay gaps that their citizen 
soldier employee faces as a result of his or her activation. 
Furthermore, by eliminating the pay gap and protecting the financial 
security of the families of activated Reservists and National Guard our 
legislation will reduce the stress of activation and ensure that our 
nation's military reserve components are able to maintain appropriate 
retention and recruitment levels.
  Mr. Speaker, H.R 838 is designed to provide hope for the citizen 
soldier that is suffering from a pay gap. The hope is that his home 
will remain financially secure in his absence. In order to accomplish 
this, the legislation provides numerous tax incentives to non-federal 
employers. As I previously mentioned, there are numerous private 
employers that have taken the conscientious initiative of paying their 
employees the difference between their civilian and military salary. In 
fact, according to the Employee Support for Guard and Reserve--an 
outreach organization run by the Office of Secretary of Defense--there 
are currently over 500 private employers, state governments and 
municipal jurisdictions that have undertaken differential payments for 
their employees. As a reward for these conscientious employers and as 
an incentive for others to join them, The HOPE at HOME Act creates a 
tax credit equal to 50 percent of the amount the employer pays to the 
Reservist, capped at $30,000 per employee.
  H.R. 838 also recognizes that smaller companies are 
disproportionately adversely affected by an employee's activation, 
since losing two people of 10-person business is akin to losing 100 
people at a 500-person plant. In addition smaller companies often 
encounter greater difficulty in distributing an activated employees' 
responsibilities amongst the remaining employees and may need to hire 
temporary replacement workers. In order to provide relief to these 
small businesses, which H.R. 838 defines as those with 50 or fewer 
employees, as well as to ensure that the small business employers can 
make differential payments for their activated employees the 
legislation provides an additional tax credit of $12,000 for the costs 
associated with hiring/training the temporary replacement worker 
contingent on the small business employer making pay differential 
payments to their activated employee.
  The HOPE at HOME act also recognized the difficulties that those 
reservists who are self employed face when they are activated. These 
soldiers often face the most grievous setbacks as their carefully built 
companies lose business, struggle to survive or are forced to close due 
to their prolonged absence. Mr. Speaker, our legislation creates an 
important tax incentive designed to assist the self-employed citizen 
soldier in defraying the costs of hiring someone to keep their business 
running in their absence.
  The HOPE at HOME Act also recognizes that because the Federal 
government is the single largest employer of citizen soldiers it should 
lead by example. Mr. Speaker, as you are aware, the Federal government 
is the civilian employer for more than 13 percent of the Reserve 
Component. That is why the HOPE at HOME act requires the Federal 
government to eliminate the pay gap for its employees.
  Mr. Speaker, the bill also makes some technical changes about how 
these differential pay payments are to be recorded. Currently the 
Internal Revenue Service (IRS) treats these payments as benefits 
requiring reporting on the 1099 form. This is a burden for the employee 
and the employer, as it requires quarterly filing of estimated tax 
burdens. Our legislation requires the IRS to treat these payments as 
wages, which means that employers would be able to use the more 
accessible W2 form, thereby reducing a possible burden that may have 
prevented employers from making these types of payments in the past.
  Finally the HOPE at HOME Act makes it easier for employers to 
contribute to their activated employees retirement plans while the 
employee is serving our country. As our colleagues are aware, under The 
Uniformed Services Employment and Reemployment Rights Act (USERRA) the 
law that governs the activations and deactivations of Guard and 
Reserves, an employee who is activated to serve is ``separated'' from 
his civilian employer and therefore, if that employer wanted to 
contribute to its activated employees' retirement fund (IRA, 401(k) 
etc.) the employer would not receive the tax benefit anymore because of 
the fiction of the employees separation. The HOPE at HOME act removes 
this barrier and allows employers to continue to contribute to the 
retirement funds of their activated citizen soldier employee's.
  Mr. Speaker, our citizen soldiers are a valuable and essential 
component of our military and we can ill afford to continue down this 
path of overextending these brave men and women. Clearly, those 
citizens who enlist in the Guard or Reserve do so because of an 
admirable sense of patriotism to our country. However, we cannot ask 
these citizen soldiers to sacrifice their families' financial security 
in order to carry out their patriotic duty. I urge all of our 
colleagues to join Mr. Graves, Mr. Shays, Mr. McGovern and myself in 
supporting this bipartisan effort and join us in working for its 
expedited passage.

                                             Secretary of Defense,


                                        1000 Defense Pentagon,

                               Washington, DC, September 11, 2003.
       An Open Letter to America's Employers: Since the tragic 
     events of September 11, 2001, the Department of Defense has 
     mobilized more than 295,000 Reservists and National Guardsmen 
     in response to the ongoing Global War on Terrorism. These 
     dedicated men and women--citizen Soldiers, Sailors, Airmen, 
     Marines and Coast Guardsmen--have been engaged in and around 
     the conflicts in Afghanistan and Iraq, as well as providing 
     security here at home and in other critical locations around 
     the world.
       This would not have been possible without the strong 
     backing of America's employers. I want to express my 
     gratitude to all employers who have demonstrated support for 
     this national crisis by swiftly releasing your valuable 
     employees for military service. It is equally gratifying to 
     see how you are welcoming back these returning warriors and

[[Page 2629]]

     reinstating them in their jobs. During the period of 
     mobilization, many of you did more than was required by law 
     by voluntarily offering continued benefits, pay 
     differentials, and additional, creative forms of family 
     support which made the period of separation so much easier to 
     bear. I know of no other time in our nation's history when so 
     many employers have voluntarily offered this level of support 
     and benefits.
       I recognize that these generous actions have not been 
     without sacrifice. Each of you has earned the deepest 
     appreciation of this Department and the United States 
     Government for your unswerving support of our nation's 
     military. Without this continued support, we could not 
     maintain a strong military or sustain the current effort to 
     overcome the international terrorist threat directed at our 
     country, our citizens, and all who love freedom.
       You have my deepest thanks. Your direct contributions and 
     support are another illustration of America's greatness as a 
     nation.
           Sincerely,
                                                  Donald Rumsfeld,
     Secretary of Defense.

                          ____________________