For self-employed, Guard duty has a price

NEVADA, Iowa -- Michael Tate, a sun-browned farmer's son, picks his way among 6-foot-high stalks of corn that stretch to the horizon in this flat, fertile country 35 miles north of Des Moines. His seasonal contract has come to a close, and Tate has just said goodbye to 200 employees whom he recruited to work the field.

After returning from Afghanistan in June after a year's deployment with the Iowa National Guard, Tate expects only about $17,000 from the job, a far cry from his pre-deployment projection of $50,000. The Monsanto Co., one of two agribusinesses that contracted with Tate in the past, cut his acreage in 2004 during his overseas tour and then did not offer him a contract for 2005, Tate said.

Tate, a sergeant who led dangerous patrols near Kandahar, suspects that his military obligation prompted Monsanto to sever their relationship. Monsanto officials declined to comment, but Tate described the unexpected loss of business as ''a hard pill to swallow."

Tate, 33 and the father of three, is a self-employed member of the National Guard, along with thousands of other Guardsmen nationwide. As such, he does not enjoy the job protection that businesses are required by federal law to extend to their workers.

''There's really not a whole lot to help somebody who's self-employed," said Major Rob Palmer, a Defense Department spokesman. ''It's a major shortcoming of the law."

Tate is more blunt. ''I feel I made a sacrifice to go over there," said the former high-school wrestling star, who joined the National Guard in 1993 for college-tuition assistance. ''I knew there was a chance I would have to do something like that, but I guess I expected better back here."

Senator John F. Kerry, who has proposed a Military Family Bill of Rights to offer financial help to the self-employed, assailed the Bush administration for speaking publicly about the need to support the troops, but failing to enact an economic safety net for all vulnerable National Guard members and reservists.

''It's a serious problem. There's a real hidden cost of the war for these guys," Kerry said. ''The bottom line is they're getting hurt, and nobody is paying attention."

Palmer estimates 10 percent of Army National Guard soldiers who have been deployed overseas are either self-employed or work in small businesses. According to the most recent data from the National Guard Bureau, 126,488 Army National Guard troops have served in Iraq or Afghanistan since Sept. 11, 2001. Currently, 54,444 Army National Guard soldiers are deployed in those countries.

A package of proposed tax credits, grants, and emergency loans to help self-employed Guardsmen remains in legislative limbo on Capitol Hill. The bill's proposal to provide small-business grants of $25,000 for companies hurt by National Guard deployments would have allowed Big Daddy Taxi to survive, said its former owner, James Maddix Jr., 30, a National Guard sergeant who filed for bankruptcy when he returned to Lansing, Mich., from a yearlong deployment to Iraq.

''Small businesses are what the United States is all about, the last time I checked," said Maddix, who is married with two children. ''My dreams and goals have been scaled way back. They have to be."

Now, Maddix said, he is $103,000 in debt after his wife and former business partner struggled to keep Big Daddy Taxi afloat.

As he trained in Wisconsin, Maddix decided to shut down the company, selling off its 10 vans and dismissing 32 full-time employees. ''It was awful," recalled his wife, Jill. Meanwhile, in Iraq, Maddix was a platoon sergeant who drove vulnerable supply convoys through tense terrain all over Iraq, including the insurgent-dense Sunni Triangle.

The need to eliminate business worries at home is critical for soldiers in a war zone, said John Goheen, spokesman for the National Guard Association of the United States, a Washington-based lobbying group. Among the self-employed, Goheen said, ''there's a level of personal stress that's probably the toughest of all the people who leave."

Since his return in February, Maddix has jump-started a new business, also named Big Daddy Taxi, with three 15-passenger vans, but he predicted he will need two years to match his pre-deployment level of $177,000 in annual revenue. ''I was at the point where I was just able to pay my bills," he said of his life before Iraq.

''I never thought I'd get deployed," said Maddix, who joined the Guard in 1993. ''We'd go train for the weekend, play with the trucks, and play military. But no matter how upset I get, I was the one who signed."

Maddix said he asked his superiors at home and in Iraq where to turn for help for his business, but that he never received specific answers. ''Every time I heard, 'We're working on something right now, but it's not set up yet.' It's the famous thing the military does. They talk about doing something, but they never do."

While overseas, National Guard troops do not pay taxes on their pay, which totaled more than $40,000 for Tate and Maddix. Still, they said the net result was a loss of income. Tate's wife ended her day-care business to provide full-time care for her children, and Jill Maddix moved in with Maddix's parents.

Under federal law, employees returning from military service must be reemployed in the job they would have held if they had not been deployed. They also are entitled to the same seniority, status, and pay. Although this protection applies to businesses of any size, said Lieutenant Colonel Paul G. Smith of the Massachusetts National Guard, the self-employed do not enjoy such job security.

''The ones who own their own business are the ones we are most concerned about," Smith said. ''They're in a tough spot."

Since 2001, the Small Business Administration has offered low-interest loans for self-employed members of the National Guard to help cover operating costs during deployments. Maddix, however, said he had never heard about the program, which originally was cosponsored by Kerry to aid soldiers activated during the Kosovo crisis.

This year, the program is running far behind the pace of loans issued in the last two fiscal years. As of July 27, the SBA had approved 36 loans for a total of $2.7 million. In fiscal 2004, which ended Sept. 30, the figures were 73 loans for $7 million; in fiscal 2003, 77 loans totaling $6.59 million were issued.

The decline is not because of cuts in the SBA budget, insisted William Elmore, SBA associate administrator for veterans business development. One reason, Elmore said, is that the agency does not extend loans to companies already struggling with debt. In the next few weeks, he added, the SBA will distribute its first pre-mobilization guide for businesses and employees across the nation.

Kerry's legislative package has been pending since February in the Senate Finance Committee, where a spokeswoman for the Republican committee chairman, Senator Chuck Grassley of Iowa, said the bill is ''under review."

Under the Military Family Bill of Rights, the federal government also would distribute low-interest loans up to $100,000 to help veterans start new small businesses. Kerry also is pushing for tax credits up to $10,000 per person for small businesses that make up the difference in pay for employees deployed with the Guard or reserves. And the senator has proposed a $6,000-per-person tax credit for small businesses that hire temporary employees during these deployments.

The current SBA loan program does not apply to National Guard members whose businesses have failed during deployment, said Carol Chastang, an SBA spokeswoman. Lawyer Blaine Hudnall, 36, of Des Moines, has found himself rebuilding his one-lawyer practice from the ground up since he returned from Iraq in January.

''I had 40 open files at any time when I was deployed. Now, I have 10," Hudnall said in his one-room rented office, squeezed between a coin laundromat and an auto-parts store. ''I had a secretary then. Now, I do all my own typing. I do all my own filing. I'm working 16-hour days."

Hudnall, who is single, said he grossed $50,000 in 2003. This year, he expects to make no more than $25,000.

''They're spending tens of thousands of dollars on bonuses and tuition assistance, but there's not really anything for the small businessperson," said Hudnall, a National Guard captain. ''You get a lot of lip service to small businesses. But when it comes to tax breaks, they always seem to be aimed at big business."

Like Tate and Maddix, however, Hudnall said he has no regrets about joining the Guard and serving his country overseas.

''If someone said, 'I really need you to go over again,' I'd go back over in a minute," Hudnall said. ''I want the mission to succeed. If we do not succeed, it will have been for naught."