The $12 billion shortfall facing the Department of Veterans Affairs (VA) could further complicate an already heated partisan fight over how to fund the government’s 2025 budget.
There is already a gap between the spending amounts in the budget drafted by House Republicans and what Democrats say should be spent, taking into account a side deal reached last year between GOP leaders and the White House.
And lawmakers suggest the VA budget shortfall will only create more headaches.
“How we resolve all of this is incredibly complicated,” said Zach Mueller, a former Senate Democratic budget aide who is now economic program director at the centrist think tank Third Way. “Is that $12 billion going to come from the rest of Virginia?”
The VA last month asked Congress for roughly $3 billion in mandatory benefits for the fiscal year that ends in September, and about $12 billion in additional funding for health care costs in fiscal 2025.
There is growing bipartisan momentum in Congress to address the more pressing demands, and officials have warned that benefits for millions of veterans could be at risk in the coming weeks. If the VA doesn’t receive the funds by Sept. 20, payments of veterans’ compensation, pensions and job reinstatement benefits could be delayed into October, the VA has said.
“If we don’t fix this by September, the checks literally aren’t going out,” Sen. John Boozman (R-Arkansas), the top Republican on the subcommittee that writes the VA’s annual budget, told The Hill, adding that lawmakers from both parties see the issue as “a problem that needs to be solved and a problem that needs to be solved.”
Efforts to quickly resolve the $3 billion shortfall were blocked before Congress left last week after some Republican lawmakers sharply scrutinized the VA’s management of funds.
And both sides have already taken hard lines about fiscal year 2025 discretionary budgets.
The Fiscal Responsibility Act (FRA) Law The bill, agreed to last year by President Biden and then-Speaker Kevin McCarthy (R-Calif.), would raise the budget cap. About $711 billion for non-defense programs in fiscal year 2025.
House Republicans have drafted a comparable spending bill, but Democrats say it would undermine a bipartisan handshake agreement to allocate about $60 billion in additional funding for non-defense programs.
“There’s a cap on the entire non-defense discretionary budget, and VA health care has to operate within that cap,” said Bobby Cogan, senior director of federal budget policy at the Center for American Progress. “So, all else being equal, whatever happens next year, there’s going to be $12 billion less headroom for other things.”
The VA cited the PACT Act, a landmark law passed with bipartisan support in 2022, as a major factor in the budget shortfall, and pointed to an increase in the number of people enrolled in VA health insurance, appointment and claims benefits.
A spokesperson for the department said that in the past year alone, more than 410,000 veterans “enrolled in VA care in the past 365 days, up 27 percent from the previous year and the highest number since 2017.”
“A total of more than 710,000 veterans have enrolled in VA health care since the PACT Act was passed, representing an increase of more than 34 percent in veteran enrollment compared to the same period before the bill was signed,” the representative added.
The Biden administration has requested about $154 billion for the VA next fiscal year, including a proposal for $130 billion in discretionary budget authority. The VA has not said what adjustments it would need to make if Congress does not provide additional funding for next fiscal year.
Boozman said last week that the VA’s request for about $12 billion “is substantially over and above discretionary.”
“This is something that’s being debated because it’s too much money and it eats into discretionary budgets,” Boozman said.
His comments also came after the Senate’s top negotiator announced this summer that he would use emergency funds to bolster funding for defense and non-defense programs in the fiscal 2025 bill, further widening the gulf between the two chambers as they try to reach an agreement on spending bills in the coming months.
“We continue to find ourselves in a situation where the 25-year cap is unsustainable. It was unsustainable with the numbers that were put into the law. It was unsustainable with the handshake agreement,” Mueller said, adding that the Senate Appropriations Committee “has been very clear that it is unsustainable” in light of the recent bipartisan agreement.
“I’m stacking dishes and trying to get them to the dishwasher,” he said. “I’m so worried someone’s going to tip over and cause a big mess.”
