To amend title 10, United States Code, to provide for the inclusion of hazardous duty pay and diving pay in the computation of military retired pay for members of the Armed Forces with extensive hazardous duty experience, to require a Comptroller General study on the need for a tax credit for businesses that employ members of the National Guard and Reserve, and to require a report by the Secretary of Defense on the expansion of the Junior ROTC and similar military programs for young people.

SECTION 1. INCLUSION OF HAZARDOUS DUTY PAY AND DIVING PAY IN 
              COMPUTATION OF MILITARY RETIRED PAY FOR MEMBERS OF THE 
              ARMED FORCES WITH EXTENSIVE HAZARDOUS DUTY EXPERIENCE.

    (a) In General.--Chapter 71 of title 10, United States Code, is 
amended by adding at the end the following new section:
``Sec. 1415. Members with extensive hazardous duty experience: increase 
              in retired pay
    ``(a) Increase in Retired Pay for Qualifying Members.--The retired 
pay of a member who performs qualifying hazardous duty and who retires 
on or after the date of the enactment of this section shall be 
increased by the amount determined under subsection (b).
    ``(b) Computation of Increase.--The amount of an increase in 
retired pay under this section shall be the sum of the following:
            ``(1) Hazardous duty special pay.--If the member received 
        special pay under section 301 of title 37, the amount equal to 
        the product of--
                    ``(A) the monthly amount of special pay under that 
                section as in effect for the final month for which the 
                member received that special pay; and
                    ``(B) the fraction in which the numerator is the 
                number of months for which the member received such 
                special pay and the denominator is the total number of 
                months for which the member received basic pay.
            ``(2) Diving duty special pay.--If the member received 
        special pay under section 304 of title 37, the amount equal to 
        the product of--
                    ``(A) the monthly amount of special pay under that 
                section as in effect for the final months for which the 
                member received that special pay; and
                    ``(B) the fraction in which the numerator is the 
                number of months for which the member received such 
                special pay and the denominator is the total number of 
                months for which the member received basic pay.
    ``(c) Qualifying Members.--A member shall be considered to have 
performed qualifying hazardous duty for purposes of this section if the 
member received special pay under section 301 of title 37 (relating to 
special pay for hazardous duty) or section 304 of title 37 (relating to 
special pay for diving duty), or both, for not less than 60 months 
(whether or not consecutive).
    ``(d) Treatment Under Other Provisions Relating to Retired Pay.--An 
amount by which retired pay is increased under this section shall not 
be considered to be retired pay for purposes of section 1408 of this 
title or for purposes of the Survivor Benefit Plan under subchapter II 
of chapter 73 of this title.
    ``(e) Retainer Pay.--In this section, the term `retired pay' 
includes retainer pay payable under section 6330 of this title.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by adding at the end the following new item:

``1415. Members with extensive hazardous duty experience: increase in 
                            retired pay.''.

SEC. 2. COMPTROLLER GENERAL STUDY OF TAX CREDITS AND SMALL BUSINESS 
              LOAN CHANGES TO ASSIST BUSINESSES THAT EMPLOY GUARD AND 
              RESERVE MEMBERS.

    (a) Study Required.--The Comptroller General shall conduct a study 
to determine--
            (1) whether members of the National Guard and Reserve 
        comprise a disproportionately large portion of the employees of 
        any size or type of business, including small business 
        concerns;
            (2) the amount of Federal tax benefit that would be 
        appropriate to compensate such a business for costs associated 
        with employing members of National Guard and Reserve units and 
        having such members called to active duty; and
            (3) whether changes can be made to the small business loan 
        program, such as a targeted level of loans, reduced interest 
        rates, and reduced paperwork burdens for loan applications, to 
        assist small business concerns to deal with the costs 
        associated with employing members of National Guard and Reserve 
        units and having such members called to active duty.
    (b) Report.--Not later than 180 days after the date of the 
enactment of this Act, the Comptroller General shall submit to Congress 
a report containing the results of the study. The report shall include 
legislative proposals--
            (1) to provide the recommended tax benefit identified in 
        the study; and
            (2) to modify the small business loan program to assist 
        small business concerns that employ members of National Guard 
        and Reserve units.

SEC. 3. SECRETARY OF DEFENSE REPORT ON EXPANSION OF JUNIOR ROTC AND 
              SIMILAR MILITARY PROGRAMS FOR YOUNG PEOPLE.

    (a) Findings.--Congress finds that--
            (1) the Junior Reserve Officers' Training Corps, the Civil 
        Air Patrol, the Naval Sea Cadet Corps, and the Young Marines of 
        the Marine Corps League provide significant benefits for the 
        Armed Forces, including significant public relations benefits; 
        and
            (2) there is substantial interest in expanding the scope of 
        those programs.
    (b) Report.--Not later than 180 days after the date of the 
enactment of this Act, the Secretary of Defense shall submit to 
Congress a report providing the Secretary's assessment of the 
feasibility and desirability of expanding the Junior Reserve Officers' 
Training Corps program of each of the military departments, the Civil 
Air Patrol, the Naval Sea Cadet Corps, and the Young Marines of the 
Marine Corps League. The report shall include such recommendations as 
the Secretary considers appropriate for expansion of those programs 
through an increase in the number of units or participants in those 
programs, increased funding for those programs, or such other means as 
the Secretary determines.

Summary: Includes hazardous duty pay and diving duty special pay received for at least 60 months as qualifying pay in the computation of military retired pay. Directs the Comptroller General to study the possibility of tax credits or small business loan incentives for businesses that employ National Guard and reserve personnel. Directs the Secretary of Defense to report to Congress on an assessment of the feasibility and desirability of expanding the Junior Reserve Officers' Training Corps (ROTC) program of each of the military departments, the Civil Air Patrol, the Naval Sea Cadet Corps, and the Young Marines of the Marine Corps League.