An amendment increasing pay and benefits for active and reserve military personnel, including increases in Imminent Danger pay by $25 per month and Hardship Duty Pay by up to $300 per month; fund prepaid telephone cards to personnel in combat zones; fund free travel all the way to a servicemember's home and provide $25 million for loans for reservists who small businesses have been disrupted by their mobilization.

In chapter 1 of title I of the bill--

(1) after the heading “GENERAL PROVISIONS--THIS CHAPTER”, insert the following heading:

“Part A”;

(2) strike section 1104; and

(3) add at the end of the chapter the following:

Part B SEC. 1121. INCREASED RATES FOR HOSTILE FIRE AND IMMINENT DANGER SPECIAL PAY AND FOR FAMILY SEPARATION ALLOWANCE.

(a) Hostile Fire and Imminent Danger Pay.--Section 310(a) of title 37, United States Code, is amended by striking “$150” and inserting “$250”.

(b) Family Separation Allowance.--Section 427(a)(1) of such title is amended by striking “$100” and inserting “$250”.

(c) Effective Date.--The amendments made by subsections (a) and (b) shall take effect on November 1, 2003.

(d) Funding.--In addition to other amounts provided in this chapter, there is hereby appropriated $40,000,000 to carry out the amendments made by subsections (a) and (b) during the current fiscal year, of which --

(1) $34,000,000 is for “Military Personnel, Army”;

(2) $4,000,000 is for “Military Personnel, Marine Corps”; and

(3) $2,000,000 is for “Military Personnel, Air Force”.

SEC. 1122. INCREASE FOR FISCAL YEAR 2004 IN RATE FOR HARDSHIP DUTY PAY.

(a) Increase.--For duty performed during the period beginning on the first day of the first month beginning after the date of the enactment of this Act and ending on September 30, 2004, section 305(a) of title 37, United States Code, shall be applied by substituting “$600” for “$300”.

(b) Funding.--In addition to other amounts provided in this chapter, there is hereby appropriated $275,000,000 to carry out subsection (a), of which --

(1) $233,800,000 is for “Military Personnel, Army”;

(2) $27,500,000 is for “Military Personnel, Marine Corps”; and

(3) $13,800,000 is for “Military Personnel, Air Force”.

SEC. 1123. USE OF BASIC ALLOWANCE FOR HOUSING TO ELIMINATE OUT-OF-POCKET HOUSING COSTS FOR MEMBERS.

(a) Policy.--Section 403(b)(1) of title 37, United States Code, is amended by adding at the end the following new sentence: “In prescribing the rates of the basic allowance for housing under this subsection, the Secretary of Defense shall ensure that the rates are sufficient to eliminate, not later than January 1, 2004, out-of-pocket housing costs for members entitled to the allowance to obtain adequate housing in that military housing area.”.

(b) Funding.--In addition to other amounts provided in this chapter, there is hereby appropriated $190,000,000 to carry out the amendment made by subsection (a) during the current fiscal year, of which --

(1) $55,100,000 is for “Military Personnel, Army”;

(2) $57,000,000 is for “Military Personnel, Navy”;

(3) $17,100,000 is for “Military Personnel, Marine Corps”; and

(4) $60,800,000 is for “Military Personnel, Air Force”.

SEC. 1124. INCREASE IN SUPPORT FOR RESERVE AND NATIONAL GUARD FAMILY ASSISTANCE CENTERS.

(a) Funding.--In addition to other amounts provided in this chapter, there is hereby appropriated--

(1) for “Operation and Maintenance, Army Reserve”, $3,900,000;

(2) for “Operation and Maintenance, Army National Guard”, $42,000,000; and

(3) for “Operation and Maintenance, Air National Guard”, $2,000,000.

(b) Purpose.--Amounts appropriated by subsection (a) are available only for Department of Defense family assistance centers.

SEC. 1125. PERMANENT ELIMINATION OF SUBSISTENCE FEE FOR MEMBERS HOSPITALIZED FOR WOUNDS RECEIVED WHILE IN COMBAT OR TRAINING.

Subsection (c) of section 1075 of title 10, United States Code (as added by section 8146(a)(2) of the Department of Defense Appropriations Act, 2004 (Public Law 108-87)), is repealed.

SEC. 1126. FREE TELEPHONE AND INTERNET SERVICE FOR MEMBERS DEPLOYED TO A COMBAT ZONE.

(a) Prepaid Phone Cards.--Beginning on the first day of the first month following the date of the enactment of this Act, the Secretary of Defense shall establish and carry out a program to provide prepaid phone cards to members of the Armed Forces stationed outside the United States who are directly supporting military operations in a combat zone. The value of the benefit shall be at least $50 per month per person.

(b) Telephone and Internet Service.--To the maximum extent practicable, the Secretary should seek to provide free telephone and internet access to members of the Armed Forces stationed outside the United States who are directly supporting military operations in a combat zone

(c) Funding.--In addition to other amounts provided in this chapter, there is hereby appropriated for fiscal year 2004 an additional amount of $63,800,000 to be available for the purposes of this section, of which--

(1) $54,200,000 is for “Operation and Maintenance, Army”;

(2) $6,400,000 is for “Operation and Maintenance, Marine Corps”; and

(3) $3,200,000 is for “Operation and Maintenance, Air Force”.

SEC. 1127. GOVERNMENT-PAID TRAVEL UNDER REST AND RECUPERATION LEAVE PROGRAM FOR MEMBERS SERVING ONE YEAR OR MORE IN-THEATRE.

(a) Travel Allowances Authorized.--In the case of a member of the Armed Forces serving outside of the United States for a period of one year or more who is granted rest and recuperative leave, and provided the travel and transportation allowances authorized by section 411c(a) of title 37, United States Code, in connection with that leave, the Secretary of Defense shall also pay the member for transportation, or provide transportation for the member, between--

(1) the locations specified in paragraph (1) or (2) of such section; and

(2) the permanent duty station of the member, the home of record of the member, or other location in the United States or overseas approved by the Secretary.

(b) Effective Date.--Subsection (a) shall apply with respect travel commenced on or after the date of the enactment of this Act in connection with rest and recuperative leave described in subsection (a).

(c) Funding.--In addition to other amounts provided in this chapter, there is hereby appropriated for fiscal year 2004 an additional amount of $50,000,000 to be available for the purposes of this section, of which--

(1) $42,500,000 is for “Operation and Maintenance, Army”;

(2) $5,000,000 is for “Operation and Maintenance, Marine Corps”; and

(3) $2,500,000 is for “Operation and Maintenance, Air Force”.

SEC. 1128. MILITARY CAMPAIGN MEDALS TO RECOGNIZE SERVICE IN OPERATION ENDURING FREEDOM AND OPERATION IRAQI FREEDOM.

(a) Requirement.--The President shall establish a campaign medal specifically to recognize service by members of the Armed Forces in Operation Enduring Freedom and a separate campaign medal specifically to recognize service by members of the Armed Forces in Operation Iraqi Freedom.

(b) Eligibility.--Subject to such limitations as may be prescribed by the President, eligibility for a campaign medal established pursuant to subsection (a) shall be set forth in uniform regulations to be prescribed by the Secretaries of the military departments and approved by the Secretary of Defense or in regulations to be prescribed by the Secretary of Homeland Security with respect to the Coast Guard when it is not operating as a service in the Navy.

SEC. 1129. ENHANCED TRANSITION ASSISTANCE FOR DISABLED SERVICEMEMBERS RETURNING TO CIVILIAN LIFE.

(a) Appropriations.--In addition to other amounts provided in this chapter, there is hereby appropriated for fiscal year 2004 an additional amount of $50,000,000 for “Defense Health Program” to be available for transition assistance for disabled members of the Armed Forces, as provided in subsection (b).

(b) Purpose.--The amount appropriated by subsection (a) shall be used

(1) to increase the number of personnel within the Department of Veterans Affairs and the Department of Defense assigned as case managers and discharge planners with responsibility for managing the case of a member of the Armed Forces who is considered to be very seriously ill, seriously ill, or in a Special Category; and

(2) to provide additional funds to assist service members who are in transition.

SEC. 1130. POLICY ON NOTIFICATION OF UPCOMING MOBILIZATION TO BE PROVIDED TO RESERVE COMPONENT MEMBERS.

(a) Policy Required.--The Secretary of Defense shall establish a policy and process that provides the maximum amount of notice for members of the reserve components who are being mobilized. The Secretary shall ensure that such notification of mobilization provided to a reserve component member include information on the timing and duration of the mobilization of that member.

(b) Notification to Congress.--The Secretary shall submit to the congressional defense committees a copy of the policy established pursuant to subsection (a).

SEC. 1131. ABOVE-THE-LINE INCOME TAX DEDUCTION FOR OVERNIGHT TRAVEL EXPENSES OF NATIONAL GUARD AND RESERVE MEMBERS.

(a) Deduction Allowed.--Section 162 of the Internal Revenue Code of 1986 (relating to certain trade or business expenses) is amended--

(1) by redesignating subsection (p) as subsection (q); and

(2) by inserting after subsection (o) the following new subsection:

“(p) Treatment of Expenses of Members of Reserve Component of Armed Forces of the United States.--For purposes of subsection (a)(2), in the case of an individual who performs services as a member of a reserve component of the Armed Forces of the United States at any time during the taxable year, such individual shall be deemed to be away from home in the pursuit of a trade or business for any period during which such individual is away from home in connection with such service.”.

(b) Deduction Allowed Whether or not Taxpayer Elects to Itemize.--Section 62(a)(2) of the Internal Revenue Code of 1986 (relating to certain trade and business deductions of employees) is amended by adding at the end the following new subparagraph:

“(E) Certain expenses of members of reserve components of the armed forces of the united states.--The deductions allowed by section 162 which consist of expenses, determined at a rate not in excess of the rates for travel expenses (including per diem in lieu of subsistence) authorized for employees of agencies under subchapter I of chapter 57 of title 5, United States Code, paid or incurred by the taxpayer in connection with the performance of services by such taxpayer as a member of a reserve component of the Armed Forces of the United States for any period during which such individual is more than 100 miles away from home in connection with such services.”.

(c) Effective Date.--The amendments made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2002.

SEC. 1132. EXCLUSION FROM GROSS INCOME OF CERTAIN DEATH GRATUITY PAYMENTS TO MEMBERS OF UNIFORMED SERVICES.

(a) In General.--Paragraph (3) 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 subparagraph:

“(C) Exception for death gratuity increase.--Subparagraph (A) shall be applied by substituting ‘December 31, 1991' for ‘September 9, 1986' in the case of a death gratuity payable under chapter 75 of title 10, United States Code, with respect to a death occurring after September 10, 2001.”.

(b) Conforming Amendment.--Subparagraph (A) of section 134(b)(3) of such Code is amended by striking “subparagraph (B)” and inserting “subparagraphs (B) and (C)”.

(c) Effective Date.--The amendments made by this section shall apply to amounts paid with respect to deaths occurring after September 10, 2001.

SEC. 1133. LOANS FOR SMALL BUSINESS CONCERNS OWNED AND CONTROLLED BY QUALIFIED RESERVISTS.

(a) In General.--The Administrator of the Small Business Administration may make loans under section 7(a) of the Small Business Act (15 U.S.C. 636(a)) to small business concerns owned and controlled by qualified reservists.

(b) Special Rules.--Notwithstanding the requirements of section 7 of the Small Business Act (15 U.S.C. 636), the following special rules apply to loans described in subsection (a):

(1) Purpose of loans.--The Administrator may make such loans for any business purpose, including the refinancing of any outstanding business debt.

(2) Deferral of payments without interest.--No payment of principal on any such loan shall be due or payable before December 31, 2004. Any interest payable with respect to such loan for any period ending before January 1, 2005, shall be paid by the Administration.

(3) Amount of loans.--Any such loan may be made if the total amount outstanding and committed to the borrower under section 7(a) of the Small Business Act (15 U.S.C. 636(a)) would not exceed $3,000,000.

(4) Guaranteed loans.--In the case of an agreement to participate on a deferred basis in any such loan--

(A) Participation.--Such participation by the Administration shall be equal to 50 percent of the balance of the financing outstanding at the time of disbursement of the loan.

(B) Guarantee fees.--The Administrator shall collect (except in the case of a loan that is repayable in 1 year or less) a guarantee fee, which shall be payable by the participating lender, and may be charged to the borrower as follows:

(i) A guarantee fee equal to 0.5 percent of the deferred participation share of a total loan amount that is not more than $150,000.

(ii) A guarantee fee equal to 1.5 percent of the deferred participation share of a total loan amount that is more than $150,000, but not more than $700,000.

(iii) A guarantee fee equal to 2 percent of the deferred participation share of a total loan amount that is more than $700,000.

(C) Annual fees.--The annual fee assessed and collected on any such loan shall not exceed an amount equal to 0.15 percent of the outstanding balance of the deferred participation share of the loan.

(5) Credit elsewhere.--The Administrator may make such loans without regard to the ability of a small business concern to obtain credit elsewhere.

(6) Collateral.--The Administrator may make such loans without regard to the adequacy or availability of collateral to secure such loans.

(7) Loan forgiveness.--Upon application by a borrower suffering severe economic hardship, the Administrator may undertake all or part of the small business concern's obligation to make the required payments under such loan, or may forgive all or part of such obligation if the loan was a direct loan made by the Administrator, if, and to the extent that, the Administrator finds that the inability of the qualified reservist to repay such loan is due to his service on active duty.

(c) Small Business Concerns Owned and Controlled by Qualified Reservists.--For purposes of this section:

(1) In general.--The term “small business concern owned and controlled by qualified reservists” means any small business concern if--

(A) at least 51 percent of the concern is owned by one or more qualified reservists or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more qualified reservists; and

(B) the management and daily business operations of the business are controlled by one or more qualified reservists.

(2) Qualified reservist.--The term “qualified reservist” means any member of a reserve component of the Armed Forces who has, at any time, been ordered to report for a period of active duty which is 179 days or longer.

(3) Small business concern.--The term “small business concern” has the meaning given such term under section 3 of the Small Business Act (15 U.S.C. 632) and relevant regulations promulgated thereunder, except that if the Administrator determines it to be necessary or appropriate, the Administrator may waive any size standard established under such section with respect to a business concern that does not exceed 150 percent of each size standard applicable to such concern.

(d) Other Definitions.--For purpose of this section, the terms “Administrator”, “Administration”, and “credit elsewhere” have the meanings given such terms in section 3 of the Small Business Act (15 U.S.C. 632).

(e) Funding.--There is hereby appropriated to carry out this section $25,000,000 for fiscal year 2004.

SEC. 1134. VOCATIONAL DEVELOPMENT PROGRAM FOR QUALIFIED RESERVISTS.

(a) Establishment.--In accordance with this section, the Administrator of the Small Business Administration shall make grants to small business development centers to enable such centers to provide to qualified reservists a program of assistance that includes training in a vocational or technical trade and entrepreneurial assistance in establishing and operating a small business concern that provides services in such trade.

(b) Minimum Grant.--The Administrator shall not make a grant under this section for an amount less than $500,000.

(c) Application and Award.--Each small business development center seeking a grant under this section shall submit to the Administrator an application in such form as the Administrator may require. The application shall include information regarding the applicant's goals and objectives for the program of assistance described in subsection (a). In awarding the grants, the Administrator shall consider the needs of the area served by the small business development center, including whether the small business development center is located in the proximity of a United States military installation.

(d) Qualified Reservist.--For purposes of this section, the term “qualified reservist” means any member of a reserve component of the Armed Forces who has, at any time, been ordered to report for a period of active duty which is 179 days or longer.

(e) Coordination With Small Business Act.--Grants made under this section shall not be taken into account for purposes of section 21 of the Small Business Act (15 U.S.C. 648).

(f) Other Definitions.--For purposes of this section:

(1) Administrator.--The term “Administrator” means the Administrator of the Small Business Administration.

(2) Small business development center.--The term “small business development center” means a small business development center described in section 21 of the Small Business Act (15 U.S.C. 648).

(g) Funding.--There is hereby appropriated to carry out this section $25,000,000 for fiscal year 2004, to remain available until expended.

In chapter 2 of title II, in the text under the heading “Iraq Relief and Reconstruction Fund”, insert “(reduced by $820,000,000)” after the aggregate dollar amount and after the dollar amount specifying funds for the electric sector.