Report text available as:

  • TXT
  • PDF   (PDF provides a complete and accurate display of this text.) Tip ?

110th Congress                                            Rept. 110-652
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 2

======================================================================



 
 DUNCAN HUNTER NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2009

                                _______
                                

  May 20, 2008.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Skelton, from the Committee on Armed Services, submitted the 
                               following

                          SUPPLEMENTAL REPORT

                        [To accompany H.R. 5658]

    This supplemental report shows the cost estimate of the 
Congressional Budget Office with respect to the bill (H.R. 
5658), as reported, which was not included in part 1 of the 
report submitted by the Committee on Armed Services on May 16, 
2008 (H. Rept. 110-652, pt. 1).
                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 20, 2008.
Hon. Ike Skelton,
Chairman, Committee on Armed Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5658, the National 
Defense Authorization Act for Fiscal Year 2009.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kent 
Christensen.
            Sincerely,
                                         Robert A. Sunshine
                                   (For Peter R. Orszag, Director).
    Enclosure.

H.R. 5658--National Defense Authorization Act for Fiscal Year 2009

    Summary: H.R. 5658 would authorize appropriations totaling 
$602 billion for fiscal year 2009 for the military functions of 
the Department of Defense (DoD), for certain activities of the 
Department of Energy (DOE), and for other purposes. That total 
includes $70 billion for military operations in Iraq and 
Afghanistan. The bill also would authorize $1.6 billion in 2008 
supplemental appropriations, primarily for military 
construction projects. In addition, H.R. 5658 would prescribe 
personnel strengths for each active-duty and selected reserve 
component of the U.S. armed forces. CBO estimates that 
appropriation of the authorized amounts would result in 
additional outlays of $596 billion over the 2008-2013 period.
    Including outlays from funds previously appropriated, 
spending for defense programs authorized by the bill would 
total about $600 billion in 2009, CBO estimates. That figure, 
however, excludes outlays from the likely enactment of 
supplemental appropriations for 2008 that are not authorized by 
the bill. Including the effects of those additional 
supplemental appropriations for 2008 now being considered by 
the Congress, spending in 2009 would total more than $630 
billion.
    The bill also contains provisions that would both increase 
and decrease costs of discretionary defense programs in years 
after 2009. Most of those provisions would affect force 
structure, compensation, and benefits. In total, such 
provisions would raise costs by about $3 billion annually, 
assuming appropriation of the necessary amounts.
    The bill contains provisions that would both increase and 
decrease direct spending, primarily from changes in the TRICARE 
pharmacy benefit and retirement programs, and from the sale of 
assets from the National Defense Stockpile. We estimate that 
those provisions combined would increase direct spending by $2 
million in 2009, but would decrease such spending by $13 
million over the 2009-2013 period and $75 million over the 
2009-2018 period. Enacting the bill would not affect federal 
revenues.
    Section 4 of the Unfunded Mandates Reform Act (UMRA) 
excludes from the application of that act any legislative 
provisions that enforce the constitutional rights of 
individuals. CBO has determined that section 591 would fall 
within that exclusion because it would modify the authority of 
the President to employ the armed services to protect 
individuals' civil rights. Therefore, CBO has not reviewed that 
section of the bill for mandates.
    Other provisions of H.R. 5658 contain both 
intergovernmental and private-sector mandates, but CBO 
estimates that the annual cost of those mandates would not 
exceed the thresholds established in UMRA ($68 million for 
intergovernmental mandates in 2008 and $136 million for 
private-sector mandates in 2008, adjusted annually for 
inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 5658 is summarized in Table 1. Most of 
the costs of this legislation fall within budget function 050 
(national defense).
    Basis of estimate: For this estimate, CBO assumes that H.R. 
5658 will be enacted near the start of fiscal year 2009 and 
that the authorized amounts will be appropriated.

Spending subject to appropriation

    The bill would specifically authorize appropriations 
totaling $602 billion in 2009 (see Table 2). Almost all of 
those authorizations fall within budget function 050 (national 
defense); $70 billion would be for DoD's costs associated with 
continuing operations in Iraq and Afghanistan. The total also 
includes funds authorized for activities in other budget 
functions. They include: $63 million for the Armed Forces 
Retirement Home (function 600--income security); $19 million 
for the Naval Petroleum Reserves (function 270--energy); and 
$136 million for the Maritime Administration (function 400--
transportation).
    In addition, the bill would authorize such sums as may be 
necessary to the Department of State for activities that would 
include the creation of a response readiness corps and a 
civilian reserve corps, which would aid in reconstruction and 
stabilization operations. CBO estimates that authorization, 
plus additional foreign assistance that would be authorized by 
the bill, would require appropriations of about $650 million 
over the 2009-2010 period. Those costs would fall within budget 
function 150 (international affairs).
    For 2008, the bill would authorize $1.6 billion in 
supplemental appropriations, primarily for military 
construction programs. Assuming those appropriations will be 
provided near the end of 2008, CBO estimates outlays from that 
additional funding would begin in 2009. Estimated outlays from 
authorizations of regular appropriations for 2009 and 2010 are 
based on historical pending patterns.
    The bill also contains provisions that would both increase 
and decrease various costs, mostly for changes in end strength, 
military compensation, and health benefits, that would be 
covered by the fiscal year 2009 authorization and by 
authorizations in future years. Those estimated authorizations 
are shown in Table 3 and discussed below. The following 
discussion does not address the timing of outlays from those 
estimated authorizations.
    Force Structure. The bill would affect force structure by 
setting end-strength levels for the various military services.
    Title IV would authorize active and reserve end-strength 
levels for 2009 and would set the minimum end-strength 
authorization in permanent law.
    The bill would specifically authorize regular 
appropriations of $124.7 billion for the costs of military pay 
and allowances in 2009. For related costs due to operations in 
Iraq and Afghanistan, the bill would authorize an additional 
$1.2 billion for 2009.
    Under title IV, the authorized end strengths in 2009 for 
active-duty personnel and personnel in the selected reserves 
would total about 1,370,000 and 850,000, respectively. Of those 
selected reservists, about 79,600 would serve on active duty in 
support of the reserves. In total, active-duty end strength 
would decrease by about 3,300 and selected-reserve end strength 
would increase by about 100 when compared with levels 
authorized in 2008.
    Section 401 would authorize 7,000 additional active-duty 
personnel for the Army and 5,000 additional active-duty 
personnel for the Marine Corps--which CBO estimates would 
increase costs to DoD by about $2 billion in 2009 and about 
$11.5 billion over the 2009-2013 period. Those costs include 
the pay and benefits of the additional personnel, as well as 
costs for operation and maintenance, procurement, and 
construction.

      TABLE 1.--BUDGETARY IMPACT OF H.R. 5658, THE NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2009
----------------------------------------------------------------------------------------------------------------
                                                            By fiscal year, in millions of dollars--
                                               -----------------------------------------------------------------
                                                   2008       2009       2010       2011       2012       2013
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION

Spending Under Current Law for Programs
 Authorized by H.R. 5658:
    Budget Authority 1A\1\....................    581,460          0          0          0          0          0
    Estimated Outlays.........................    567,251    220,708     80,368     28,382     11,404      4,810
Proposed Changes:
    Authorization of Supplemental
     Appropriations for 2008 for DoD:
        Authorization Level...................      1,642          0          0          0          0          0
        Estimated Outlays.....................          0        109        678        496        172         94
    Authorization of Appropriations for 2009,
     primarily for the Departments of Defense
     and Energy:
        Authorization Level...................          0    531,651          0          0          0          0
        Estimated Outlays.....................          0    341,453    123,102     41,432     13,498      5,359
    Authorization of Appropriations for 2009
     for Military Operations in Iraq and
     Afghanistan:
        Authorization Level...................          0     70,000          0          0          0          0
        Estimated Outlays.....................          0     37,382     20,111      8,255      2,577        872
    Authorization of Appropriations for the
     Department of State:
        Estimated Authorization Level.........          0        350        302          0          0          0
        Estimated Outlays.....................          0        236        256         75         33         21
        Subtotal, Proposed Changes:
            Estimated Authorization Level.....      1,642    602,001        302          0          0          0
            Estimated Outlays.................          0    379,180    144,147     50,258     16,280      6,346
Total--Including Spending Authorized by H.R.
 5658:
    Estimated Authorization Level.............    583,102    602,001        302          0          0          0
    Estimated Outlays.........................    567,251    599,888    224,515     78,640     27,684     11,156

                                        CHANGES IN DIRECT SPENDING 1A\2\

Estimated Budget Authority....................          0        -38        155        -24        -52        -49
Estimated Outlays.............................          0          2        155        -24        -52       -94
----------------------------------------------------------------------------------------------------------------
\1\The 2008 level is the amount appropriated for programs authorized by the bill.
\2\In addition to the direct spending effects shown here, enacting the bill would have additional effects on
  direct spending after 2013 (see Table 4). In total, CBO estimates that enacting the bill would reduce direct
  spending by $75 million over the 2009-2018 period.
Notes.The President has requested $103 billion in supplemental defense appropriations for 2008, primarily for
  military operations in Iraq and Afghanistan. Aside from the $1.6 billion in additional 2008 funding that would
  be authorized for military construction and family housing projects, the bill would not authorize the
  supplemental funding requested by the President. If, however, the Congress ultimately provides the entire $103
  billion, CBO estimates that additional outlays from those appropriations would total $28 billion in 2008, $36
  billion in 2009, and smaller amounts in subsequent years.
For 2009, the authorization levels under ``Proposed Changes'' include amounts specifically authorized by the
  bill, as well as the effect of an indefinite (i.e., unspecified) authorization for the Department of State.
  For 2010, the amount also reflects the effect of that same indefinite authorization. The bill also implicitly
  authorizes some activities from 2010 through 2013; those authorizations are not included above (but are shown
  in Table 3) because funding for those activities would be covered by specific authorizations in future years.

    Section 401 also would decrease the Navy's active-duty end 
strength by 2,775 and decrease the Air Force's active-duty end 
strength by 12,513. CBO estimates that the decrease in end 
strength for the Navy and the Air Force combined would cut 
costs for salaries and other expenses by about $1 billion in 
the first year and about $2 billion annually in subsequent 
years.
    Sections 411 and 412 would authorize the end strengths for 
the reserve components, including those who serve on active 
duty in support of the reserves. Under this bill, the selected 
reserve would experience a net increase in end strength of 100, 
with the Navy Reserve and Air Force Reserve losing personnel 
while the Army National Guard would see an increase. The number 
of full-time reservists who serve on active duty in support of 
the reserves would increase by about 4,000. CBO estimates that 
the net result of implementing those provisions would be an 
increase in costs for salaries and other expenses for selected 
reservists of $241 million in 2009 and about $500 million a 
year thereafter as compared with the authorized end-strength 
levels for 2008.

                      TABLE 2.--SPECIFIED AUTHORIZATIONS IN H.R. 5658 FOR FISCAL YEAR 2009
----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal year, in millions of dollars--
                         Category                         ------------------------------------------------------
                                                              2009       2010       2011       2012       2013
----------------------------------------------------------------------------------------------------------------
Authorization of Regular Appropriations
    Department of Defense Military Personnel:\1\
        Authorization Level..............................    124,660          0          0          0          0
        Estimated Outlays................................    118,926      5,236        125         12          0
    Operation and Maintenance
        Authorization Level..............................    180,559          0          0          0          0
        Estimated Outlays................................    132,133     37,524      6,999      1,874        751
    Procurement
        Authorization Level..............................    104,198          0          0          0          0
        Estimated Outlays................................     28,629     38,593     21,737      7,977      3,173
    Research and Development
        Authorization Level..............................     79,725          0          0          0          0
        Estimated Outlays................................     43,636     28,730      4,801      1,149        363
    Military Construction and Family Housing:
        Authorization Level..............................     24,457          0          0          0          0
        Estimated Outlays................................      4,084      8,602      6,844      2,483      1,071
    Revolving Funds and Other:\2\
        Authorization Level..............................      1,613          0          0          0          0
        Estimated Outlays................................      2,806        126         16          3          1
            Subtotal, Department of Defense:\3\
                Authorization Level......................    515,212          0          0          0          0
                Estimated Outlays........................    330,214    118,811     40,522     13,498      5,359
    Atomic Energy Defense Activities:\4\
        Authorization Level..............................     16,221          0          0          0          0
        Estimated Outlays................................     11,066      4,256        899          0          0
    Other Programs:\5\
        Authorization Level..............................        218          0          0          0          0
        Estimated Outlays................................        173         35         11          0          0
            Subtotal, Authorization of Regular
             Appropriations:
                Authorization Level......................    531,651          0          0          0          0
                Estimated Outlays........................    341,453    123,102     41,432     13,498      5,359
Authorization of Appropriations for Military Operations
 in Iraq and Afghanistan:
    Military Personnel:
        Authorization Level..............................      1,194          0          0          0          0
        Estimated Outlays................................      1,189          0          0          0          0
    Operation and Maintenance:
        Authorization Level..............................     56,267          0          0          0          0
        Estimated Outlays................................     33,964     15,763      4,798      1,038        322
    Procurement:
        Authorization Level..............................     12,151          0          0          0          0
        Estimated Outlays................................      1,882      4,233      3,473      1,564        569
    Research and Development:
        Authorization Level..............................        388          0          0          0          0
        Estimated Outlays................................        207        145         24          5          1
    Special Transfer Authority:
        Authorization Level..............................          0          0          0          0          0
        Estimated Outlays................................        140        -30        -40        -30        -20
            Subtotal, Iraq and Afghanistan:
                Authorization Level......................     70,000          0          0          0          0
                Estimated Outlays........................     37,382     20,111      8,255      2,577        872
Total Specified Authorizations:
    Authorization Level..................................     601,65          1          0          0          0
    Estimated Outlays....................................    378,835    143,213     49,687     16,075     6,231
----------------------------------------------------------------------------------------------------------------
\1\For purposes of this estimate, CBO assumes that the authorization of appropriation in section 421 for
  military personnel includes $10,351 million for accrual payments for the TRICARE For Life program.
\2\This authorization includes the effect of section 1403, which would authorize the transfer of up to $1.3
  billion of unobligated balances from the National Defense Stockpile Transaction Fund to the Defense Health
  Program. That transfer from the stockpile, which would be subject to appropriation action, would lower the
  2009 authorization level for the revolving funds by an estimated $1.3 billion. However, the transfer would not
  affect outlays in the revolving funds over the 2009-2013 period because under current law those balances are
  unlikely to be spent.
\3\Estimated outlays for DoD reflect a $4 billion limit in general transfer authority, as stated in the
  committee's report for the bill.
\4\This authorization is primarily for atomic energy activities within the Department of Energy.
\5\These authorizations are for the Maritime Administration, the Armed Forces Retirement Home, and the Naval
  Petroleum Reserves.
Notes: This table summarizes the authorizations of appropriations explicitly stated in the bill--generally in
  specified amounts. The bill also would explicitly authorize the appropriation of unspecified amounts, such as
  the authorization in title XVI of ``such sums as may be necessary'' for activities of the Department of State.
  The latter authorizations, along with amounts implicitly authorized by the bill, are not shown here, but are
  included in Table 3.


            TABLE 3.--ESTIMATED AUTHORIZATIONS OF APPROPRIATIONS FOR SELECTED PROVISIONS IN H.R. 5658
----------------------------------------------------------------------------------------------------------------
                                                            By fiscal year, in millions of dollars--
                                               -----------------------------------------------------------------
                   Category                                                                              2009-
                                                   2009       2010       2011       2012       2013       2013
----------------------------------------------------------------------------------------------------------------
                                                 FORCE STRUCTURE

Army and Marine Corps Active-Duty End               2,046      2,516      2,529      2,273      2,172     11,536
 Strengths....................................
Navy and Air Force Active-Duty End Strengths..     -1,047     -1,939     -1,999     -2,065     -2,133     -9,183
Reserve Component End Strengths...............        241        481        496        513        528      2,259
Reserve Technicians...........................         33         68         70         72         74        317

                                         COMPENSATION AND BENEFITS (DoD)

Pay Raises....................................        324        778      1,260      1,770      2,316      6,448
Expiring Bonuses and Allowances...............         54         25          9          2          1         91
Housing Allowance for Senior Enlisted                  11         46         47         48         50        202
 Personnel....................................
Transportation Allowances.....................         79        126        128        129        130        592
Stabilization Pay.............................          1          4          7          9         11         32
Education for Military Spouses................         40         64         89        117        146        456
Foreign Language Pay..........................         24         48         49         51         52        224
Critical Wartime Health Specialties...........         14         12         11         11          2         50
Loan Repayment for Reserves...................         24          8          2          0          0         34

                                             DEFENSE HEALTH PROGRAM

Waiver of Cost Sharing for Preventive Services         67        130        130        134        142        603
Prohibition on Increase in Pharmacy Copayments         75        210          0          0          0        285
Smoking Cessation Program.....................         23         42         42         43         45        195
Prohibition on Increase in Enrollment Fee.....         47         87          0          0          0        134
TRICARE Reserve Select Premiums...............          3          9         15         22         29         78
Chiropractic Care.............................          2         11         11         12         13         49
Research Program on Extremity Injuries........          5          5          5          5          5         25
Center of Excellence for Auditory Injuries....          5         10         10         10         10         45
Preventive Health Allowance...................          3         12         12          9          0         36
Health Risk Management Demonstration..........          2          8          8          6          0         24

                                       MATTERS RELATING TO FOREIGN NATIONS

DoD Provisions................................        500        495         45         45         45      1,130
Department of State Provisions................        350        302          0          0          0       652
----------------------------------------------------------------------------------------------------------------
Notes:For every item in this table except for the authorizations for the Department of State, the 2009 levels
  are assumed to be included in the amount specifically authorized to be appropriated by the bill. Excluding the
  authorizations for the Department of State, amounts shown in this table for 2010 through 2013 are not included
  in Table 1, because authorizations for those amounts would be covered by specific authorizations in future
  years.
Figures shown here may not add to numbers in the text because of rounding.

    In addition, sections 413 and 414 would authorize the 
minimum end-strength levels for military technicians, who are 
federal civilian personnel required to maintain membership in a 
selected reserve component as a condition of their employment. 
Under this bill, the required number of technicians would 
increase by 847 relative to the levels currently authorized. 
CBO estimates the costs in civilian salaries and expenses that 
would result from additional military technicians would be 
about $33 million in 2009 and about $70 million annually 
thereafter, as compared with the minimum end-strength levels 
for technicians in 2008.
    The bill also would authorize an end strength of 10,000 
servicemembers in 2009 for the Coast Guard Reserve. Because 
this authorization is the same as that under current law, CBO 
does not estimate any additional costs for this provision.
    Compensation and Benefits. H.R. 5658 contains several 
provisions that would affect military compensation and benefits 
for uniformed personnel.
    Pay Raises. Section 601 would raise basic pay for all 
individuals in the uniformed services by 3.9 percent, effective 
January 1, 2009. CBO estimates the total cost of a 3.9 percent 
military pay raise in 2009 would be about $2.5 billion. 
Compared with current law (under which CBO estimates the 
across-the-board increase that would go into effect on January 
1 would be 3.4 percent), this section would increase the pay 
raise in 2009 by an additional 0.5 percent. CBO estimates the 
incremental cost of this larger raise would be $324 million in 
2009 and total about $2.2 billion over the 2009-2013 period.
    In addition, section 608 would guarantee pay raises that 
are one-half of one percentage point higher than amounts 
required by current law for fiscal years 2010 through 2013. CBO 
estimates that the incremental cost associated with those 
larger pay raises would be $337 million in 2010 and $4.3 
billion over the 2009-2013 period.
    Together, sections 601 and 608 would cost $324 million in 
2009 and about $6.4 billion over the 2009-2013 period.
    Expiring Bonuses and Allowances. Sections 611 through 615 
would extend DoD's authority to pay certain bonuses and 
allowances to military personnel for another year. Most of 
those bonuses and allowances have dual authorities, established 
in section 661 of the National Defense Authorization Act for 
Fiscal Year 2008 (Public Law 110-181), which already extend 
through December 2009. Several of the benefits, including some 
without dual authority, are scheduled to expire in December 
2008. Based on DoD's budget material, CBO estimates that 
extending those authorities through December 2009 would cost 
$54 million in 2009 and $91 million over the 2009-2013 period.
    Housing Allowance for Senior Enlisted Personnel. Section 
603 would increase the housing standard for enlisted members 
with dependents in the rank of E-8 to the higher standard in 
effect for E-9s with dependents. The basic allowance for 
housing (BAH) is calculated using the housing standard assigned 
to each rank. Based on information from DoD, CBO estimates that 
this section would increase monthly BAH rates by about $130 on 
average for the roughly 27,500 E-8s with dependents. The 
increase would not become effective until June 30, 2009, and 
CBO estimates the section would cost $202 million over the 
2009-2013 period.
    Transportation Allowances. Sections 604, 631, and 632 would 
increase various travel and relocation benefits for military 
servicemembers. Based on information from DoD, CBO estimates 
those sections would cost $592 million over the 2009-2013 
period.
    Stabilization Pay. Section 606 would extend stabilization 
pay to officers who are reassigned to lower grades. According 
to DoD, this authority would primarily be used to allow 
officers to maintain their existing level of pay should they 
leave their current field to enter medical school. Under 
current law, officers with several years in the service who 
leave their current career track to become medical 
professionals lose rank and pay when they enter medical school. 
Based on information from DoD, CBO estimates that under section 
606 about 100 additional officers would receive stabilization 
pay annually, with an average first-year benefit of about 
$27,000. That amount would gradually decline, as those officers 
earned promotions in their new career field. This section would 
cost about $1 million in 2009 and $32 million over the 2009-
2013 period, CBO estimates.
    Education for Military Spouses. Section 582 would give the 
Secretary of Defense the authority to establish a program to 
help military spouses acquire education and training, and to 
provide tuition assistance. According to DoD, this authority 
would be used narrowly to reimburse military spouses for the 
cost of obtaining an associates degree, or the necessary 
licenses or other credentials to support a one-time change to a 
career that can be readily transferred to a new location, such 
as nursing, bookkeeping, or teaching. In addition, DoD would 
limit the program to pay a maximum of $6,000 for two years of 
education or training. CBO estimates that about 16,500 military 
spouses would receive an average annual benefit of about $2,400 
in the program's first year and that the program would 
eventually grow to fund education benefits for over 60,000 
military spouses a year. This section would cost $40 million in 
2009 and $456 million over the 2009-2013 period, CBO estimates.
    Foreign Language Pay. Section 619 would authorize the 
Secretary of Defense to establish a pilot program to encourage 
members of the Senior Reserve Officer Training Corps (SROTC) to 
study certain critical foreign languages. Under this program, 
DoD could pay bonuses, subsistence allowances, and incentive 
pay to qualified students. Based on information from DoD, CBO 
estimates that about 15,000 SROTC students would participate in 
the program each year and earn about $200 each month in 
incentive pay. In addition, CBO estimates that DoD would pay 
bonuses averaging $2,000 to first-year students upon entering 
the foreign language program as well as monthly subsistence 
allowances of about $250 to a small portion of those first-year 
students. On that basis, CBO estimates that the pilot program 
would cost $24 million in 2009 and about $50 million a year 
until the program expires in 2013.
    Critical Wartime Health Specialties. Section 620 would 
designate registered nurses, psychologists, and other mental 
health professionals as possessing wartime specialties in 
critically short supply. Under current law, the Secretary of 
Defense may pay an annual bonus of up to $100,000 for each year 
an officer with such a specialty agrees to serve in the 
military. Based on information from DoD, CBO estimates that 
under section 620 DoD would pay lump-sum bonuses to about 50 
psychologists and 25 other mental health practitioners of 
$70,000 and $50,000, respectively. Also, about 300 nurses would 
receive $30,000 a year over four years for a four-year 
obligation to serve in the military. DoD's authority to enter 
into such agreements will expire on December 31, 2009. CBO 
estimates section 620 would cost $14 million in 2009 and $50 
million over the 2009-2013 period.
    Loan Repayment for Reserves. Section 546 would increase the 
amount of their education loans that DoD can repay for health 
care professionals in the reserves. This section would increase 
the current repayment amount of $20,000 up to the $60,000 that 
active-duty servicemembers may receive. Based on information 
from DoD, CBO estimates that under section 546 about 750 
reservists would receive an average increase in loan repayments 
equaling $32,400. The authority to pay this benefit would 
expire December 31, 2009, and CBO estimates the provision would 
cost $24 million in 2009 and total $34 million over the 2009-
2013 period.
    Defense Health Program. Title VII contains several 
provisions that would affect DoD's health care benefits.
    Waiver of Cost Sharing for Preventive Services. Section 711 
would authorize the Secretary of Defense to waive all 
copayments and deductibles for preventive health services. The 
waiver would apply to all active duty and retiree beneficiaries 
and their dependents who are not Medicare-eligible. In total, 
CBO estimates that section 711 would cost about $600 million 
over the 2009-2013 period.
    This waiver would primarily affect the out-of-pocket costs 
for beneficiaries covered by TRICARE Standard, a fee-for-
service plan. Beneficiaries enrolled in TRICARE Prime, an HMO 
option, would be unaffected, since they are not required to 
make copayments for preventive services.
    Based on data from DoD, CBO estimates that beneficiaries 
covered by TRICARE Standard make about 10 million visits to 
health care providers each year, with average out-of-pocket 
costs of about $75 per visit. Data from the Centers for Disease 
Control and Prevention (CDC) indicate that about 15 percent of 
all outpatient visits per year are for preventive services. 
Assuming this percentage applies to TRICARE beneficiaries, CBO 
estimates that waiving copayments and deductibles for 
preventive care services would shift $110 millionper year in 
costs from beneficiaries to DoD. Those costs would increase over time 
because of inflation, but would be lower in the first year (about $57 
million) because of the time needed to issue new regulations and 
negotiate new agreements with TRICARE contractors.
    Although Medicare-eligible beneficiaries would be excluded 
from the waiver, section 711 would allow the Secretary to 
reimburse those beneficiaries for any out-of-pocket costs they 
may incur for preventive health care services. That 
reimbursement authority would expire after fiscal year 2009. 
Medicare-eligible beneficiaries are already covered by the 
TRICARE For Life benefit, which generally pays the remainder of 
any costs not paid under parts A and B of Medicare, including 
amounts for preventive services. However, some preventive 
services covered by TRICARE are not covered by parts A and B of 
Medicare--most notably the shingles vaccine.\1\ In those cases, 
regular TRICARE Standard copayments and deductibles apply.
---------------------------------------------------------------------------
    \1\The shingles vaccine is covered by Medicare Part D. However, 
beneficiaries of TRICARE For Life generally do not participate in part 
D because they already have pharmacy benefits under TRICARE.
---------------------------------------------------------------------------
    Based on information from DoD, CBO estimates that as many 
as 100,000 beneficiaries per year would seek reimbursement for 
the shingles vaccine at an average cost of about $175 per 
beneficiary, or almost $18 million per year. In addition, 
TRICARE For Life beneficiaries may seek reimbursement for 
preventive care received overseas, preventive breast cancer 
MRIs, and other services not covered by Medicare. In total, CBO 
estimates reimbursements to TRICARE For Life beneficiaries for 
preventive services in 2009 would eventually total about $20 
million, although CBO estimates only half of the payments would 
be made in 2009 and that the rest would occur in 2010, because 
of the time needed to write regulations and process claims.
    Prohibition on Increase in Pharmacy Copayments. Section 702 
would prohibit DoD from increasing the cost-sharing amounts 
that beneficiaries pay for pharmaceutical drugs for one year, 
until 2010. For fiscal year 2009, the Administration is 
proposing to increase the copayment for drugs purchased at 
retail pharmacies from the current level of $3 to $15 for a 
one-month supply of generic drugs and from $9 to $25 for the 
same amount of brand-name drugs. The Administration is also 
proposing to increase copayments for brand-name drugs purchased 
through its mail order program from the current level of $9 to 
$15, and to decrease copayments for generic prescriptions 
purchased through the mail order program from $3 to zero. Those 
copayment amounts would apply to active-duty dependents and all 
retirees and their dependents.
    Health care costs for active-duty dependents and non-
Medicare eligible retirees and their dependents are 
discretionary costs and are covered under this part of the 
estimate. Health care costs for Medicare-eligible retirees and 
their dependents are covered by the TRICARE For Life benefit, 
which is classified in the budget as a mandatory (i.e., direct 
spending) program. CBO's evaluation of the pharmacy costs for 
that group of retirees is discussed in the ``Direct Spending'' 
section of the estimate.
    Based on data provided by DoD, CBO estimates that in 2009 
about 59 million prescriptions will be filled at retail, mail-
order, and DoD pharmacies by active-duty dependents and non-
Medicare eligible retirees. At the current level of copayments, 
those prescription drugs will cost DoD about $3.5 billion that 
year. If implemented, CBO estimates that the Administration's 
proposed new copayments would reduce that cost by almost $570 
million in the first full year. About three-quarters of this 
savings to DoD would occur because beneficiaries would bear a 
larger portion of the costs through higher copays. The 
remainder of the savings would result from reductions in 
overall demand and other behavioral changes--increased use of 
generic drugs, for example--brought about by the higher 
copayments.
    The Administration has the authority to implement the 
proposed copayment changes under current law. However, in each 
of the past several years, the Congress has prohibited DoD from 
making such changes. The current prohibition expires on 
September 30, 2008. Given this history, CBO assumes that there 
is a 50 percent probability that DoD will implement its 
proposed copayment structure in fiscal year 2009 absent any 
direction from the Congress. Therefore, we estimate that 
extending the prohibition through September 30, 2009, would 
increase costs relative to current law by $285 million--50 
percent of $570 million--over the 2009-2010 period. If DoD 
implemented its proposed changes, the full effect of the 
savings would not be realized until the second year, due to the 
time needed to inform beneficiaries of policy changes, time 
lags in the processing of claims, and gradual shifts in 
beneficiaries' behavior.
    Smoking Cessation Program. Section 713 would require the 
Secretary of Defense to create a smoking cessation program 
within TRICARE. The program would be available to all 
beneficiaries of the TRICARE system who are not eligible for 
Medicare. The program would provide a toll-free help line, 
Internet-based educational material, and access to nicotine 
replacement products and the prescription drug buproprion. CBO 
used budget data from a DoD demonstration program--TRICARE's 
TOBACCO-FREE ME--to estimate the cost of the help line and 
Internet materials, as well as program management. That program 
currently receives about $4 million per year and covers about 
15,000 beneficiaries. Thus, CBO estimates the cost of extending 
a toll-free help line, outreach, and management to all TRICARE 
beneficiaries would cost about $25 million per year.
    In addition, CBO estimates that the cost of providing 
nicotine replacement products and buproprion would be about $15 
million per year, based on data from the demonstration program, 
as well as an analysis of current consumer spending on products 
and pharmaceuticals related to smoking cessation. CBO also 
adjusted its estimates to account for the fact that military 
personnel have a higher propensity to smoke, relative to the 
national average.
    Although Medicare-eligible beneficiaries would be excluded 
from this program, section 713 would allow the Secretary of 
Defense to compensate those beneficiaries for any out-of-pocket 
costs related to smoking cessation in fiscal year 2009. 
Counseling for smoking cessation is currently covered under 
Medicare Part B. Therefore, Medicare-eligible retirees in the 
TRICARE system currently have their coinsurance for this 
service covered. However, pharmaceuticals such as buproprion 
are typically covered under Medicare Part D, which retirees in 
the TRICARE system typically do not participate in. Using the 
same methodology discussed above, CBO estimates the cost of 
refunding 2009 expenditures for buproprion and other products 
related to smoking cessation would be about $6 million, of 
which half would be reimbursed in fiscal year 2009 and the 
remainder in 2010. In total, CBO estimates the cost to 
implement section 713 would total about $195 million over the 
2009-2013 period.
    Prohibition on Increase in Enrollment Fee. Section 701 
would prohibit DoD from increasing fees or deductibles for 
military retirees enrolled in TRICARE Prime, an HMO option, for 
an additional year. (Section 701 of the National Defense 
Authorization Act for Fiscal Year 2008 prohibits any increases 
in fees or deductibles through fiscal year 2008.) Current 
annual enrollment fees for military retirees enrolled in 
TRICARE Prime are $230 for individuals and $460 for families. 
(Active-duty members and their families do not pay enrollment 
fees to participate in TRICARE Prime.) The Administration is 
proposing to increase enrollment fees for retirees enrolled in 
Prime to amounts ranging from $364 to $594 per year for 
individuals and $720 to $1,118 for families. The size of the 
fee would be based on the size of individuals' retirement 
annuities. The increase would apply to over 600,000 retiree 
households with almost 1.5 million beneficiaries. CBO estimates 
that the total savings to DoD from increasing those enrollment 
fees for one year would be about $264 million, and that the 
effect of the fee increase would be spread across two fiscal 
years due to the time needed to implement the changes.
    However, because the Congress has prohibited DoD from 
increasing TRICARE Prime enrollment fees for the last several 
years, it is not clear whether DoD would increase the fees 
absent any legislative action. Given this history, CBO assumes 
that the probability that DoD would increase the TRICARE Prime 
enrollment fees under current law is 50 percent. Therefore, we 
estimate the cost of prohibiting the Prime enrollment fee 
increase for another year would be about $132 million over the 
2009-2010 period.
    In addition, section 701 would extend by one year the 
current prohibition on increasing the amount of the cost-share 
that TRICARE beneficiaries pay for hospital stays. CBO 
estimates that extending the prohibition for another year would 
cost $2 million. In total, CBO estimates that section 701 would 
cost $134 million over the 2009-2010 period.
    TRICARE Reserve Select Premiums. Section 705 would prohibit 
DoD from increasing premiums for participation in the TRICARE 
Reserve Select (TRS) health benefit. This benefit provides 
health coverage to part-time reserve members. Current premiums 
are $972 per calendar year for individuals and $3,036 for 
family coverage, which are supposed to be set to cover 28 
percent of the total cost per beneficiary.\2\ Under current 
law, DoD has the authority to increase those premiums each year 
to reflect rising medical costs. Assuming that current premiums 
accurately reflect 28 percent of the total cost, CBO estimates 
that premiums would need to increase an average of 6 percent 
per year to maintain that same cost percentage, resulting in 
additional collections of about $160 million over the 2009-2013 
period.
---------------------------------------------------------------------------
    \2\Although 10 U.S.C. 1076d sets TRS premiums at 28 percent of the 
total estimated cost per beneficiary, there is some dispute about 
whether DoD has been accurately estimating those costs. See Government 
Accountability Office (GAO), Military Health Care: Cost Data Indicate 
That TRICARE Reserve Select Premiums Exceeded the Costs of Providing 
Program Benefits, GAO-08-104 (December 2007). DoD has not announced any 
major changes to TRS premiums as a result of this GAO report. For this 
cost estimate, CBO assumes there will be no major downward adjustment 
of the current premiums.
---------------------------------------------------------------------------
    However, in each of the last several years, the Congress 
has used the annual Defense Authorization Act to prohibit DoD 
from increasing TRS premiums. The current prohibition expires 
on September 30, 2008. Given this history, CBO assumes there is 
a 50 percent probability that DoD will increase TRS premiums in 
fiscal year 2009 absent any direction from the Congress. 
Therefore, we estimate that extending the prohibition 
indefinitely would increase costs relative to current law by 
almost $80 million 50 percent of $160 million over the 2009-
2013 period.
    Chiropractic Care. Section 704 would require DoD to provide 
chiropractic services to all current active-duty members. 
Currently, chiropractic care is only available to active-duty 
members at 49 military treatment facilities (MTFs). Based on an 
analysis of current military base population reports, CBO 
estimates that about 700,000, or roughly half, of the 1.4 
million active-duty members are currently able to receive 
chiropractic services.
    To estimate the cost of providing care to the rest of the 
active-duty population, CBO used information from the final 
report of DoD's chiropractic health care demonstration 
program,\3\ which took place between 1995 and 1999. Based on 
that information and adjusting for inflation since then in 
health care costs, CBO estimates that extending chiropractic 
care to the remainder of the active-duty population would 
result in 200,000 additional visits to chiropractors each year, 
at a cost of about $105 per visit, or just over $21 million per 
year.
---------------------------------------------------------------------------
    \3\ Birch and Davis Associates, Inc., Chiropractic Health Care 
Demonstration Program: Final Report (report submitted to the Office of 
the Assistant Secretary of Defense (Health Affairs), February 2000).
---------------------------------------------------------------------------
    However, evidence suggests that many individuals who seek 
out chiropractic care do so as a substitute for more 
traditional forms of care, such as visits to primary care 
physicians, and other forms of physical therapy. Based on 
information in the Final Report, the reduced usage of those 
other forms of care could offset the added cost of chiropractic 
care by about one-half. Therefore, CBO estimates the added cost 
of providing chiropractic care to the remainder of the active-
duty population would be about $11 million per year, or about 
$49 million over the 2009-2013 period. Costs would be lower in 
the first year because of the time needed to set up 
chiropractic clinics at other MTFs and the time needed to 
negotiate contracts with private-sector providers.
    Other Health Care Provisions. CBO estimates that other 
provisions in title VII would increase DoD health care costs by 
about $130 million over the 2009-2013 period. Those other 
provisions would:
           Establish a peer-reviewed research program 
        to study injuries to extremities,
           Create a center of excellence in the 
        prevention and treatment of auditory injuries,
           Authorize a demonstration program centered 
        around a monthly allowance to encourage servicemembers 
        to use preventive health services, and
           Require a three-year demonstration program 
        on health risk management.
    Matters Relating to Foreign Nations. The bill contains 
several provisions that would affect spending on matters 
relating to foreign nations.
    DoD Provisions. Several provisions in title XII would 
affect DoD's activities involving foreign nations. CBO 
estimates that the costs for those programs would total $500 
million in 2009 and about $1.1 billion over the 2009-2013 
period. Various sections of title XII would modify 
authorization levels for existing programs by:
           Extending by two years, through 2010, the 
        current authorization of $75 million a year to develop 
        the capacity of the Pakistan Frontier Corps,
           Extending by two years, through 2010, the 
        current authorization of $300 million a year to expand 
        the capacity of foreign military forces to conduct 
        counterterrorism operations,
           Extending by two years, through 2010, the 
        current authorization of $100 million a year for U.S. 
        efforts to secure and stabilize foreign countries,
           Increasing the authorization level to $35 
        million a year for U.S. efforts to provide special 
        operations forces to combat terrorism ($25 million is 
        currently authorized through 2010 for that purpose),
           Increasing the authorization level to $35 
        million a year for foreign officials to receive 
        training under the Regional Defense Counterterrorism 
        Fellowship Program ($25 million is currently authorized 
        for that purpose),
           Extending by one year, through 2009, the 
        current authorization of $5 million to participate in 
        multinational military centers of excellence meetings.
    Department of State Provisions. Title XVI would establish 
an Office of the Coordinator for Reconstruction and 
Stabilization within the Department of State to conduct 
reconstruction and stabilization operations. The bill would 
authorize the Secretary of State to establish and maintain a 
response readiness corps and a civilian reserve corps and would 
authorize the appropriation of such sums as may be necessary 
over the 2007-2010 period for personnel, education and 
training, equipment, travel, and deployment costs. The bill 
also would authorize the President to provide assistance of up 
to $100 million a year over the 2008-2010 period to stabilize 
and rebuild a country or region that is in, or emerging from, 
conflict or civil strife. CBO estimates that those programs 
would cost about $650 million over the 2009-2013 period.

Direct spending

    The bill contains provisions that would affect direct 
spending, and CBO estimates that those provisions combined 
would increase such spending by $2 million in 2009, but would 
decrease such spending by $13 million over the 2009-2013 period 
and $75 million over the 2009-2018 period (see Table 4). The 
largest budgetary effects would result from changes in the 
TRICARE pharmacy benefit and retirement programs, and the sale 
of assets from the National Defense Stockpile.
    Stockpile Sales. Enacting the bill would lead to increased 
receipts from the sale of material in the National Defense 
Stockpile. Section 1412 would increase by $410 million the 
target contained in the National Defense Authorization Act for 
Fiscal Year 1999 (Public Law 105-261, as most recently amended 
by Public Law 110-181) for continual sales of tungsten from the 
National Defense Stockpile, and it would extend sales through 
fiscal year 2016. CBO estimates that there would be sufficient 
quantities of tungsten in the stockpile to achieve additional 
receipts of $410 million over the 2009-2016 period.
    Section 1412 also would extend by one year the period to 
sell materials from the National Defense Stockpile as 
previously authorized in the National Defense Authorization Act 
for Fiscal Year 1998 (Public Law 105-85 and most recently 
revised by Public Law 107-107). These sales are set to expire 
on September 30, 2008, and CBO believes that all materials will 
be sold by that date. Thus, CBO estimates that no additional 
receipts would be achieved by extending the sales through 2009.
    Prohibition on Increase in Pharmacy Copayments. Section 702 
would prohibit DoD from increasing the cost-sharing amounts 
that beneficiaries pay for pharmaceutical drugs until 2010. For 
fiscal year 2009, the Administration is proposing to increase 
copayments for drugs purchased at retail pharmacies from the 
current level of $3 to $15 for a one-month supply of generic 
drugs and from $9 to $25 for the same amount of brand-name 
drugs. The Administration is also proposing to increase 
copayments for brand-name drugs purchased through its mail 
order program from the current level of $9 to $15, and to 
decrease copayments for generic prescriptions purchased through 
the mail order program from $3 to zero. Those copayment amounts 
would apply to active-duty dependents and all retirees and 
their dependents.
    Medicare-eligible retirees and their dependents are covered 
by DoD's TRICARE For Life benefit, which is classified in the 
budget as a mandatory (i.e., direct spending) program, and is 
covered under this part of the estimate. Health care costs for 
active-duty dependents and non-Medicare eligible retirees are 
discretionary costs. CBO's evaluation of the pharmacy costs for 
that group of beneficiaries is discussed in the ``Spending 
Subject to Appropriation'' section of the estimate.

                                               TABLE 4.--ESTIMATED IMPACT OF H.R. 5658 ON DIRECT SPENDING
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  By fiscal year, in millions of dollars--
                                                   -----------------------------------------------------------------------------------------------------
                                                                                                                                      Total      Total
                                                     2009    2010    2011    2012    2013    2014    2015    2016    2017    2018   2009-2013  2009-2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stockpile Sales:
    Estimated Budget Authority....................     -70     -70     -60     -50     -50     -50     -50     -10       0       0      -300       -410
    Estimated Outlays.............................     -70     -70     -60     -50     -50     -50     -50     -10       0       0      -300       -410
Prohibition on Increase in Pharmacy Copayments:
    Estimated Budget Authority....................      75     230      40       0       0       0       0       0       0       0       345        345
    Estimated Outlays.............................      75     230      40       0       0       0       0       0       0       0       345        345
Delayed Retirement for Military Technicians:
    Estimated Budget Authority....................      -5      -7      -7      -6      -6      -6      -5      -5      -5      -4       -31        -56
    Estimated Outlays.............................      -5      -7      -7      -6      -6      -6      -5      -5      -5      -4       -31        -56
Shift of Payments from the Military Retirement
 Fund:
    Estimated Budget Authority....................       0       0       0       0       0       0       0       0       0       0         0          0
    Estimated Outlays.............................       0       0       0       0     -45      45       0       0       0       0       -45          0
Transfer from the National Defense Stockpile Fund:
    Estimated Budget Authority....................     -40       0       0       0       0       0       0       0       0       0       -40        -40
    Estimated Outlays.............................       0       0       0       0       0       0       0       0       0       0         0          0
Survivor Allowance:
    Estimated Budget Authority....................       3       3       4       4       5       5       5       2       0       0        19         31
    Estimated Outlays.............................       3       3       4       4       5       5       5       2       0       0        19         31
Retired Pay for Reserve Members Wounded in Action:
    Estimated Budget Authority....................       *       1       2       2       3       3       3       4       4       5         8         27
    Estimated Outlays.............................       *       1       2       2       3       3       3       4       4       5         8         27
Retirement Age of Certain Reserve Officers:
    Estimated Budget Authority....................      -1      -2      -2      -1      -1      -1      -1      -1      -1      -1        -7        -12
    Estimated Outlays.............................      -1      -2      -2      -1      -1      -1      -1      -1      -1      -1        -7        -12
Education Benefits for Reserve Component Members:
    Estimated Budget Authority....................      -1      -1      -1      -1      -1      -1      -1      -1      -1      -1        -5        -10
    Estimated Outlays.............................      -1      -1      -1      -1      -1      -1      -1      -1      -1      -1        -5        -10
Retirement of Warrant Officers:
    Estimated Budget Authority....................       1       1       *       *       1       1       1       1       1       1         3          8
    Estimated Outlays.............................       1       1       *       *       1       1       1       1       1       1         3          8
Minimum Service for Retirement as an Officer:
    Estimated Budget Authority....................       0       0       0       0       0       1       1       *       *       *         0          2
    Estimated Outlays.............................       0       0       0       0       0       1       1       *       *       *         0          2
Correction of Military Records:
    Estimated Budget Authority....................       1       0       0       0       0       0       0       0       0       0         1          1
    Estimated Outlays.............................       1       0       0       0       0       0       0       0       0       0         1          1
Sale of Floating Drydock:
    Estimated Budget Authority....................      -1       0       0       0       0       0       0       0       0       0        -1         -1
    Estimated Outlays.............................      -1       0       0       0       0       0       0       0       0       0        -1         -1
    Total--Changes in Direct Spending:
        Estimated Budget Authority................     -38     155     -24     -52     -49     -48     -47     -10      -2       0        -8       -115
        Estimated Outlays.........................       2     155     -24     -52     -94      -3     -47     -10      -2       0       -13       -75
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: * = less than $500,000.

    Based on data provided by DoD, CBO estimates that by 2009 
about 58 million prescriptions will be filled at retail, mail-
order, and DoD pharmacies by TRICARE For Life beneficiaries. At 
the current level of copayments, those prescription drugs will 
cost DoD about $3.9 billion per year. If implemented, CBO 
estimates that the Administration's proposed copayment amounts 
would reduce that cost by almost $690 million in the first full 
year. About three-quarters of that savings would occur because 
the beneficiaries would bear a larger portion of the cost 
through higher copayments. The remainder of the savings would 
result from reductions in overall demand and other behavioral 
changes--increased use of generic drugs, for example--brought 
about by the higher copayments.
    CBO assumes there is a 50 percent probability that DoD will 
implement its proposed copayment structure in fiscal year 2009 
absent any direction from the Congress. Therefore, we estimate 
that extending the prohibition through September 30, 2009, 
would increase costs relative to current law by $345 million--
50 percent of $690 million--over the 2009-2011 period. If DoD 
implemented its proposed changes, the full effect of the 
savings would not be realized until the second year, due to the 
time needed to inform beneficiaries of policy changes, time 
lags in the processing of claims, and gradual shifts in 
beneficiaries' behavior. Therefore, the cost of an additional 
one-year prohibition would affect costs over several years.
    Delayed Retirement for Military Technicians. Dual-status 
military technicians are civilian employees of DoD who are 
required to hold concurrent positions in the reserves. Under 
current law, some technicians in the Air Force Reserve and Air 
National Guard are forced to retire from their civil service 
positions because they have both reached the maximum years-of-
service for officers in their grade and become eligible for an 
unreduced civil service retirement, usually at age 55.
    Section 511 would direct the Secretary of the Air Force to 
allow those technicians to remain in the reserves until they 
reach age 60, thus allowing them to continue in their civil 
service positions. Under this section, some technicians who 
would otherwise retire at age 55 would instead choose to delay 
their retirements by one or more years, reducing direct 
spending for civil service retirement and health care. (Because 
military retirement benefits for reservists do not begin until 
they reach age 60, there would not be a similar reduction in 
spending for military retirements.)
    Based on information from DoD, CBO estimates that in 2009, 
about 90 military technicians would delay their retirements by 
one or more years. Each year, a new cohort of technicians could 
choose to stay in the civilian workforce and delay retirement, 
eventually resulting in about 250 fewer retirements each year. 
CBO estimates that this section would result in a net reduction 
in direct spending for civil service retirement annuities and 
health care benefits of $56 million over the 2009-2018 period.
    Shift of Payments from the Military Retirement Fund. 
Section 1004 would reduce by 1 percent all payments scheduled 
to occur in September 2013 from the Military Retirement Fund. 
Annuitants would be reimbursed for this one-time reduction in 
October 2013. Based on the amounts of current outlays from the 
fund, and taking into account expected inflation and changes in 
the number of retirees, CBO estimates that this provision would 
shift about $45 million in outlays from fiscal year 2013 to 
2014, but would not affect total spending over the 2013-2018 
period.
    Transfer from the National Defense Stockpile Fund. Section 
1004 also would require the Secretary of Defense to transfer 
$40 million from the unobligated balances of the National 
Defense Stockpile Transaction Fund to the U.S. Treasury, where 
they would be deposited as miscellaneous receipts. CBO 
estimates that the transfer would not affect federal spending 
over the 2009-2018 period because under current law those 
balances are unlikely to be spent over the next 10 years.
    Survivor Allowance. The National Defense Authorization Act 
for Fiscal Year 2008 (Public Law 110-181) authorized a monthly 
allowance to be paid to those recipients of Survivor Benefit 
Plan (SBP) payments who have their annuities reduced dollar-
for-dollar by the amount of Dependency and Indemnity 
Compensation they receive from the Department of Veterans 
Affairs. The amount of that monthly allowance will be $50 in 
fiscal year 2009, increasing by $10 each year until it reaches 
$100 per month in 2014. The allowance is scheduled to be 
terminated five months into fiscal year 2016. As originally 
written, Public Law 110-181 excluded the survivors of members 
who died on active duty from receiving the allowance. Section 
643 would eliminate this exclusion. Based on data from DoD's 
Office of the Actuary, CBO estimates that almost 4,500 
additional survivors would receive the allowance under this 
section, which would increase direct spending for military 
retirement by $31 million over the 2009-2016 period.
    Retired Pay for Reserve Members Wounded in Action. Section 
641 would allow reserve members who retired from the military 
because of wounds received in combat to have their retirement 
annuities calculated as if their years of service had all been 
spent on full-time active duty. (Under current law, such 
annuities are based on a combination of active and part-time 
reserve duty.) Based on data from DoD's Office of the Actuary 
and the Defense Manpower Data Center, CBO estimates that such a 
change would increase the amount of annual compensation paid to 
those members by about 50 percent, from an average of $10,000 
per year to about $15,000 per year. Based on recent casualty 
statistics, CBO estimates that about 220 new disability 
retirees would benefit each year from that change in the 
annuity calculation. Direct spending for military retirements 
would increase by about $27 million over the 2009-2018 period, 
CBO estimates.
    Retirement Age of Certain Reserve Officers. Section 514 
would allow officers serving in the National Guard in state 
headquarters positions to remain in an active status until age 
62. Currently, they must retire at age 60. CBO estimates that 
this change would decrease spending from the Military 
Retirement Fund because some officers would begin receiving 
retirement annuities at a later date than they otherwise would 
have. Based on information from DoD, we estimate that, under 
section 514, about 25 officers each year would delay their 
retirements by one year and would forgo about $70,000 in 
annuities, reducing retirement expenditures by about $2 million 
annually. The annual savings would decrease over time however, 
as those officers would receive larger annuities when they do 
retire. In total, CBO estimates this section would reduce net 
direct spending for military retirements by $12 million over 
the 2009-2018 period.
    Education Benefits for Reserve Component Members. Section 
545 would limit the use of education benefits by members of the 
selected reserve who separate from the reserves after serving 
on active duty in support of a contingency operation. Those 
individuals would have to complete their service contract under 
honorable conditions to remain eligible to receive benefits 
after they separate. CBO estimates that this section would 
decrease the number of reservists receiving benefits by about 
200 per year, thereby reducing direct spending for veterans' 
education benefits by $10 million over the 2009-2018 period.
    Retirement of Warrant Officers. Section 501 would allow the 
Navy and Marine Corps to require warrant officers who have at 
least 30 years of active-duty service to retire. This provision 
would increase spending from the Military Retirement Fund in 
two ways. First, CBO estimates it would result in the 
retirement of an additional 30 warrant officers in 2009 who 
would otherwise not have retired, based on data from the 
Defense Manpower Data Center. Also, since most warrant officers 
with over 30 years of service are in the grade of W-5, it would 
open up the ranks and allow more officers in the grade of W-4 
to receive a promotion to W-5 before they retire. A retirement 
annuity for a member who retires at W-5 is about $15,000 per 
year higher than an annuity for a member that retires at W-4. 
In total, CBO estimates this section would increase outlays 
from the Military Retirement Fund by $8 million over the 2009-
2018 period.
    Minimum Service for Retirement as an Officer. Officers who 
began their military career as an enlisted servicemember must 
complete at least 10 years of commissioned service to retire as 
an officer. Those with less than 10 years commissioned service 
will have their retirement annuities based on the highest 
enlisted grade the member achieved. Section 503 would allow 
members to retire as officers with a minimum of eight years of 
commissioned service. This authority would apply to fiscal year 
2014 only. Based on information from the services, CBO 
estimates that about 35 officers would be allowed to retire 
under this authority in 2014. Because those officers would 
retire earlier than they otherwise would have, section 503 
would increase costs to the Military Retirement Fund by about 
$2 million over the 2014-2018 period.
    Correction of Military Records. Section 592 would authorize 
the Secretary of Defense to pay interest on certain financial 
awards arising from the correction of military records. That 
section provides retroactive authority to pay interest on 
claims for lost pay, allowances, and other pecuniary benefits 
awarded by a Correction Board ruling on or after October 1, 
2007, to set aside a prior court-martial conviction. According 
to DoD, four individuals have received such rulings since that 
date. Those cases were from a 1944 mass court-martial that 
resulted in 31 convictions.
    Section 592 also would specify the rate to use in 
calculating the interest payment for financial awards. Based on 
information from DoD, CBO assumes an interest rate of 10 
percent and estimates that each of these four veterans would 
receive roughly $350,000. Because these payments are mandatory, 
this section would increase direct spending by about $1 million 
in 2009.
    Drydock Sales. Section 1011 would allow the Navy to convey 
a floating drydock (known as AFDL-23), located in Aransas Pass, 
Texas, to Gulf Copper Ship Repair and would require Gulf Copper 
to pay the U.S. government an amount equal to the drydock's 
fair-market value.
    Based on information from the Navy, CBO estimates that the 
sale of this drydock would generate about $1 million in 
offsetting receipts in 2009.
    Other Provisions. The following provisions would have an 
insignificant effect on direct spending, primarily because they 
would affect few individuals or because they authorize both the 
collection and spending of funds so that the net budgetary 
impact is quite small:
           Sections 515 and 516 would delay some 
        retirements by allowing lieutenant generals in the 
        reserves to remain in an active status until age 66 and 
        by allowing medical officers and chaplains in the 
        Reserves to remain in an active status until age 68.
           Section 544 would increase--from 25 to 125--
        the number of defense industry employees who 
        participate in the Defense Product Development Program 
        at the Naval Postgraduate School. The Navy has the 
        authority to collect and spend any tuition they 
        collect.
           Section 642 would allow certain survivors 
        who previously transferred their SBP benefits to their 
        children to begin receiving their benefits again.
           Section 644 would allow certain active-duty 
        members who are eligible for retirement and who join 
        the selected reserves to have their retirement 
        annuities recalculated at age 60.
           Section 645 would allow reserve retirees to 
        have their annuities recalculated for any additional 
        time served in an active status after the age of 60.
           Section 646 would correct an inadvertent 
        reduction to the annuities of certain survivors that 
        resulted from the phase-out of Supplemental SBP.
           Section 647 would allow the survivors of 
        military retirees kidnapped in Iraq or Afghanistan to 
        continue to receive that retiree's full annuity for up 
        to seven years.
           Section 842 would expand the authority of 
        Secretaries of Defense and Homeland Security to retain 
        and spend fees received from trademark licensing.
           Section 911 would extend a pilot program 
        that allows DoD to provide satellite tracking services 
        to non-U.S. government entities. Under this program DoD 
        is allowed to charge fees to cover the costs of 
        providing such services and to spend such fees.
           Section 942 would permit the Secretary of 
        Defense to waive the reimbursement of costs associated 
        with personnel from nongovernmental and international 
        organizations attending DoD's Regional Centers for 
        Security Studies. DoD has the authority to retain and 
        spend such reimbursements.
           Title XVI would allow the Department of 
        State to designate volunteers for the civilian reserve 
        corps as temporary federal employees, which could 
        result in small costs or savings to federal retirement 
        programs.
           Section 3111 would allow the Secretary of 
        Energy to receive and spend contributions made to 
        assist in the disposition of excess weapons grade 
        plutonium in the Russian Federation. This authority 
        would expire on December 31, 2013.
    Intergovernmental and Private-sector Impact: Section 4 of 
the Unfunded Mandates Reform Act excludes from the application 
of that act any legislative provisions that enforce the 
constitutional rights of individuals. CBO has determined that 
section 591 would fall within that exclusion because it would 
amend the authority of the President to employ the armed 
services to protect individuals' civil rights. Therefore, CBO 
has not reviewed that section of the bill for mandates.
    Other provisions of H.R. 5658 contain both 
intergovernmental and private-sector mandates, but CBO 
estimates that the annual cost of those mandates would not 
exceed the thresholds established in UMRA ($68 million for 
intergovernmental mandates and $136 million for private-sector 
mandates in 2008, adjusted annually for inflation).

Increasing the end strength of the Armed Services

    Sections 401 and 412 combined would increase the costs of 
complying with existing intergovernmental and private-sector 
mandates as defined in UMRA by increasing the number of 
servicemembers and reservists on active-duty. Those additional 
servicemembers would be eligible for protection under the 
Servicemembers Civil Relief Act (SCRA), including the right to 
maintain a single state of residence for purposes of state and 
local personal income taxes and the right to request a deferral 
in the payment of certain state and local taxes and fees. SCRA 
also requires creditors to reduce the interest rate on 
servicemembers' obligations to 6 percent when such obligations 
predate active-duty service and allows courts to temporarily 
stay certain civil proceedings, such as evictions, 
foreclosures, and repossessions. Extending these existing 
protections would constitute intergovernmental and private-
sector mandates and could result in lost revenues to government 
and private-sector entities.
    The number of active-duty servicemembers covered by SCRA 
would increase by less than 1 percent. CBO expects that 
relatively few of these servicemembers would take advantage of 
the deferrals in certain state and local tax payments; the lost 
revenues to those governments would be insignificant.
    CBO does not have sufficient information to estimate 
precisely the increased costs of complying with the existing 
private-sector mandates in SCRA. Servicemembers' utilization of 
the various provisions of the SCRA depends on a number of 
uncertain factors, including how often and how long they are 
deployed. Nonetheless, because the increase in the number of 
active-duty servicemembers covered by SCRA would be so small, 
CBO expects that the increased costs also would be small.

Providing benefits to state and local governments

    This bill contains several provisions that would benefit 
state and local governments. Some of those provisions would 
authorize aid for certain local schools that serve dependents 
of defense personnel and convey certain parcels of land to 
state and local governments. Any costs to those governments 
would be incurred voluntarily as a condition of receiving 
federal assistance.
    Previous CBO estimates: On March 4, 2008, CBO transmitted a 
cost estimate for H.R. 1084, the Stabilization and 
Reconstruction Civilian Management Act of 2008, as ordered 
reported by the House Committee on Foreign Affairs on February 
27, 2008. Title XVI of H.R. 5658 contains provisions that are 
similar to those in H.R. 1084, and CBO's estimate of the costs 
for title XVI is identical to our estimate of the costs for 
H.R. 1084.
    Estimate prepared by: Federal costs: Defense Outlays--Kent 
Christensen; Military construction and multiyear procurement--
David Newman; Military and civilian personnel--Dawn Regan; 
Military retirement and health care--Matthew Schmit; Operation 
and maintenance--Jason Wheelock; Reserve education benefits--
Camille Woodland; Stockpile sales and foreign affairs--Raymond 
J. Hall.
    Impact on state, local, and tribal governments: Neil Hood.
    Impact on the private sector: Daniel Frisk.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

             Shipbuilding and Conversion, Navy (Correction)

    The budget request contained $920.0 million for procurement 
of two Littoral Combat Ships. The committee understands that 
the Navy owns residual materials procured under the cancelled 
contracts for LCS-3 and LCS-4, which could be provided as 
government furnished equipment for the construction of at least 
one of the ships to be procured in fiscal year 2009. The 
Shipbuilding and Conversion, Navy, tables in title I of part 1 
of the committee report (H. Rept. 110-652) accompanying the 
Duncan Hunter National Defense Authorization Act for Fiscal 
Year 2009 incorrectly indicated that the committee recommended 
a decrease of $80.0 million for one Littoral Combat Ship. The 
committee recommends $840.0 million, a decrease of $80.0 
million, for two Littoral Combat Ships. The corrected table 
follows:



        Research, Development, Test, and Evaluation (Correction)

    The Tactical Airborne Reconnaissance table in title II, 
Research, Development, Test and Evaluation, Navy of the 
committee report (H. Rpt. 110-652) accompanying the Duncan 
Hunter National Defense Authorization Act for Fiscal Year 2009 
incorrectly indicated that the committee recommended a $5.0 
million increase for the Peer-Reviewed Research Extremity War 
Injuries within this account. The Medical Advanced Technology 
table in title II, Research, Development, Test and Evaluation, 
Army, should be increased by $5.0 million to reflect the 
amendment passed by the committee on May 14, 2008. The 
corrected tables follow:



              Compliance With House Rule XXI (Correction)

    Pursuant to clause 9 of rule XXI of the Rules of the House 
of Representatives, the committee is required to include a list 
of congressional earmarks, limited tax benefits, or limited 
tariff benefits, as defined in clause 9(d), 9(e), or 9(f) of 
Rule XXI of the Rules of the House of Representatives, which 
are in the bill or the report.
    The following supplemental list represents those items 
omitted from the list contained in part 1 of the committee 
report (H. Rept. 110-652) accompanying the Duncan Hunter 
National Defense Authorization Act for Fiscal Year 2009 due to 
inadvertent clerical oversight. This list does not include any 
new programs or projects, but rather a list of member requests 
that duplicate a request for a program or project which was 
made by other members and disclosed in the original report. The 
committee notes that although the Rules of the House of 
Representative do not require that the list of congressional 
earmarks, limited tax benefits, or limited tariff benefits be 
comprehensive, in the interest of transparency, the committee 
strives to include all such member requests in its list.



                        Record Votes (Appended)

    Pursuant to Rule 17(d) of the Committee on Armed Services 
rules, the following pages contain four appended record votes 
contained in part 1 of the committee report (H. Rept. 110-652) 
accompanying the Duncan Hunter National Defense Authorization 
Act for Fiscal Year 2009 to reflect the members of the 
committee who were unable to vote during the committee markup 
because they were in attendance at other committee, 
subcommittee, or conference committee meetings. The members are 
noted by asterisks.