Legislative Update

This is TROA’s legislative update for Friday, January 25, 2002.

Issue 1: Congress Faces New Landscape in 2002

No matter what your perspective, the legislative landscape looks entirely different in 2002 than it did a year ago.

Last year’s budget surplus is gone at least until 2005, and the budget the President will submit to Congress next month envisions running a deficit of almost $100 billion in FY2003. Given that Congress usually plusses up the President’s proposal, the actual projected deficit likely will end up somewhat larger.

Another potential consideration is that the budget rules Congress imposed on itself in the 1990s to limit the growth of so-called “entitlement” spending expire this year. If that happens, it would be easier to propose changes in federal retirement and survivor programs (such as concurrent receipt of military retired pay and VA disability compensation, or a Survivor Benefit Plan annuity increase). Current rules have made such changes extremely difficult for the Armed Services Committees, because they require committees to propose offsetting spending cuts or revenue (tax) increases to pay for any entitlement spending increase they recommend. But the only significant entitlement programs under Armed Services jurisdiction are retired pay and SBP, and they don’t want to rob Sergeant Peter to pay Petty Officer Paul. So they’ve had to ask the Budget Committees and congressional leadership for budget “headroom” to make such changes. They received that support to enact TRICARE For Life, but it hasn’t happened yet for concurrent receipt and SBP.

With the return of deficits, it seems unlikely Congress will drop the mandatory spending offset rules entirely. The Budget Committees likely will consider some form of extension, so the concurrent receipt and SBP challenges will remain significant.

Meanwhile, President Bush's 2003 budget request, scheduled to be delivered to Capitol Hill in early February, includes a 14% increase in defense spending – the largest in 20 years. The $379 billion defense request is $48 billion more than his 2002 submission, backing up his public statements that Defense is his number one priority. But most of the proposed increase will be targeted toward weapons, spares, and other operations needs. So another challenge we face is to ensure Congress gives adequate consideration to much-needed “people program” upgrades – for active duty, Guard and Reserve, retirees and survivors – in the competition for resources.

Finally, the wild card is that 2002 is an election year, when widely popular programs always seem to have a better chance of enactment. With 76% of senators and 86% of House members signed on as cosponsors of S. 170 and H.R. 303, our hope is that this will prove to be the case for the concurrent receipt initiative.

Issue 2: Stimulus Bill Raises Home Tax Hopes

Senators and representatives returned to work Wednesday for the start of the second session of the 107th Congress, and took up about where they left off in December.

The first item on Senate Majority Leader Tom Daschle’s (D-SD) agenda was to resume action on the economic stimulus package that previously ended in a stalemate before Christmas. Senate Democrats support one package, while Republicans have other ideas. But no plan yet has the 60 votes needed to overcome the objections certain to be raised on the Senate floor.

Sen. John McCain (R-AZ) has proposed an amendment to the Daschle package that would give military and foreign service (State Department) homeowners assigned overseas or away from their homes capital gains tax relief when they sell their homes.

But uncertainty remains over how many amendments will be allowed for consideration. The stimulus package is the best near-term vehicle available to fix the capital gains tax issue, which has been a problem for the military since 1997.

The Taxpayer Relief Act of 1997 brought significant tax relief to many American homeowners by exempting up to $500,000 in homeowner capital gains from federal income tax for homes occupied as a principal residence for at least two of the last five years. But the law inadvertently penalized service members assigned on orders away from their homes for more than three years. The Act repealed the previous capital gain “rollover” rules in these cases and made no provision for military orders.

McCain’s amendment would not count time spent away from home on military orders against the 2-of-5-year “clock”.

The Senate won’t be in session next week, so debate on the stimulus package will continue at least into the week of February 4.

Copyright © 2002, The Retired Officers Association (TROA), all rights reserved.

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President's Page

By Al Garcia

Our January General Membership Meeting was light in attendance but great in content. We did have two prospective members as guests. Those of you that could not make it missed a good dinner and a wonderful, energetic, enthusiastic guest speaker who told us about being in New York City after the 9-11 incident to help with the anthrax testing and evaluation in that locale. One could feel what went on better than what one heard on the news media. CMDR Anna Marie McCarthy, PHS, provided a short briefing on the organization and staffing of Public Health Service, one of the seven uniformed services in our country. She became a member of our chapter. You will enjoy having her and her husband, Steve, in our midst.

Our chapter is growing as we now have over 50 members on the roster. Some of you have not sent in your 2002 dues but that has probably been an oversight. We want to hear from you so we can complete our administrative responsibilities and submit the list to TROA and the New Mexico Council of Chapters.

Speaking of growth, Larry Johnson, a one-man Membership Committee, assisted by Peggy his "better half," is doing a great job. It is through his efforts that we had the two guests at our last meeting, one did not join right away but we hope he does. THANKS, Larry and Peggy. I would like to ask all of us to help with recruitment. We need to keep growing in numbers. If you know folks that meet the eligibility criteria, bring them as guests to our Chapter meetings, maybe they'll join.

I want to thank Major Terry Fredericks, USMC, past VP and Capt. Earl Mealer, USAF, past Sec/Tres. for their dedicated service to the Chapter during the past several years. Both of them worked hard to carry out their duties. "Muchas Gracias" on behalf of the Chapter membership.

Your new officers are looking forward to leading us to accomplish the goals and objectives we have set for ourselves. We need your continued enthusiastic pride in the Chapter. Let us look forward to a great future for this organization.