Part-time soldiers also battling `pay gap'

Number of proposals could help ease financial pinch

February 22, 2005|By Tom Bowman | Tom Bowman,SUN NATIONAL STAFF

Several weeks ago, Mark LaRose changed from his mechanic's work shirt to a soldier's desert fatigues, though he was determined that his Vermont service station remain open while he patrolled in Iraq. LaRose Texaco will be staffed by two mechanics and a bookkeeper who pumps gas in her spare time until LaRose's expected return to Enosburg Falls in the summer of 2006.

"What we're hoping is that with the business we can get enough to pay the bills and stay afloat," said LaRose's wife, Elise, a third-grade teacher who is caring for the couple's two children. "It's just hard. Some small businesses are folding."

As America enters the third year of the Iraq conflict, the deployment is taking a financial toll on part-time soldiers who make up about half of the 150,000 troops there. Forty-one percent of National Guard and Reserve soldiers are losing thousands of dollars through a "pay gap" between their civilian salary and military pay, officials said.

While part-time soldiers assume some risk of being called to active duty when they sign up, today they are serving tours far longer and more frequently than their counterparts in past wars.

"We've gone way over the top in the frequency and duration of deployments," said Robert F. Norton, a retired Army colonel and deputy director of government relations for the Military Officers Association of America. "Some of these units are on their second or third rotation."

Now members of Congress are stepping forward with a number of proposals to ease the financial pinch, including tax credits, loans and other benefits to close the income gap and reduce soldiers' personal economic risk.

"It's an enormous problem," said Rep. Tom Lantos, a California Democrat, who said he was prodded into action by the story of a part-time soldier in his district who had to move from a house into an apartment when he couldn't make ends meet. "When a country's at war, it should make an attempt to have the sacrifices shared. Most Americans are not affected."

There is some hope for limited relief this year, Norton said. Among proposals given some chance of congressional passage: tax credits for small businesses and penalty-free withdrawals from individual retirement accounts by soldiers.

Some companies, large and small, voluntarily make up the difference for their employees, as do some states, including Maryland, for government workers and some counties, such as Wicomico on the Eastern Shore, home to a number of soldiers from the 115th Military Police Battalion of the Maryland Army National Guard.

But there has been little help from the federal government for reservists facing income loss, and there are only limited prospects of relief in the foreseeable future.

The Pentagon set up a mobilization income insurance program in 1996, but Congress killed the program after only two years, citing low enrollments and high costs.

Six years ago, the Small Business Administration set up a program to provide low-interest loans of up to $1.5 million to businesses that suffer losses due to call-ups. But about 40 percent of applicants have been rejected, according to the SBA, which approved 213 loans totaling $19 million over the past four years.

Carol Chastang, an SBA spokeswoman, said credit issues or "a business about to go under" were among the reasons applicants were rejected.

"We have promoted the program vigorously," she said. "Not many people have applied."

Besides, only a tiny fraction of those who have been called up would qualify. Small-business owners account for about 6 percent of all reservists, according to one estimate.

Sen. Patrick J. Leahy, a Vermont Democrat and co-chairman of the Senate National Guard Caucus, said operations in Iraq and Afghanistan are producing the largest call-up of reservists since World War II.

"Those who run their own businesses are hit particularly hard. No one knows if enough is being done to help," said Leahy, who wants the Government Accountability Office to review the loan program and assess the overall impact of deployments on small businesses and reservists.

"The federal government should lead the way," said Lantos, whose bill would require U.S agencies to make up the pay gap for workers serving in the Guard or Reserves.

Sen. John Kerry is proposing small-business tax credits and penalty-free withdrawals from IRAs for all service members for deployment-related expenses, such as child care.

"Investing in military families isn't just an act of compassion - it's a smart investment in America's military," the Massachusetts Democrat told reporters last week. "We can help meet the increased expenses every military family faces when a loved one is deployed."

But the Pentagon has balked at requiring the federal government to fill the pay gap, and legislation addressing the problem was blocked by Republican leaders in Congress last year.

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