A $12 billion deficit at the Department of Veterans Affairs (VA) could further escalate the already heated partisan debate over how to fund the government for 2025.
There is already a gap between the spending levels in the appropriations bill drafted by House Republicans and the level of spending that Democrats say should be appropriate, including a side deal between Republican leadership and the White House last year.
And lawmakers point out that the VA’s budget deficit only adds to the worries.
“How this all gets resolved is super complicated,” said Zach Moller, a former Senate Democratic budget adviser who is now director of the economic program at the centrist think tank Third Way. “Is that $12 billion coming from other sources in VA?”
The VA asked Congress last month to provide about $3 billion in funding for mandatory benefits for the fiscal year ending in September, as well as about $12 billion in additional funding for health care in fiscal year 2025.
There is some bipartisan momentum in Congress to address the more pressing request, as officials warn that millions of veterans’ benefits are at risk in the coming weeks. If the VA does not receive those funds by Sept. 20, payments of veterans’ compensation and pensions, as well as their adjustment benefits, could be delayed in October, they say.
“If we don’t get this fixed in September, there will literally be no checks sent out,” Sen. John Boozman (R-Ark.), the ranking Republican on the subcommittee that drafts the annual VA funding bill, told The Hill, adding that members on both sides see the issue as “something that is going to get done, that needs to get done.”
An attempt to fix the $3 billion deficit in an emergency procedure was blocked in Congress last week because some Republicans questioned the VA’s management of the funds.
And both sides are already resisting the provision of freely available funds for the 2025 fiscal year.
The Fiscal Responsibility Act (FRA), the Law The outcome of the agreement between President Biden and then-Speaker Kevin McCarthy (R-Calif.) last year sets a funding cap of to $711 billion for nonmilitary programs for fiscal year 2025.
House Republicans drafted their budget bill at that level, but Democrats say it undermines a bipartisan handshake agreement to provide about $60 billion in additional funding for non-defense programs.
“There’s a budget cap on all non-defense spending, and VA health care has to be within that cap,” said Bobby Kogan, senior director for federal budget policy at the Center for American Progress. “So if everything else stays the same, whatever would happen next year, that means there’s $12 billion less room for everything else.”
The VA has cited the PACT Act, a landmark law passed in 2022 with bipartisan support, as a major cause of the budget deficit, pointing to an escalate in VA health care enrollment as well as appointments and application benefits.
Last year alone, according to a spokesman for the agency, “more than 410,000 veterans enrolled in VA care within the last 365 days, an increase of 27 percent over the previous year – and the highest number since 2017.”
“In total, more than 710,000 veterans have enrolled in VA health care since the PACT Act was passed, representing a more than 34 percent increase in the number of enrolled veterans compared to the corresponding period before the law was passed,” the representative added.
The Biden administration requested about $154 billion for the VA next year, including a proposal for $130 billion in discretionary funds. The VA has not said what adjustments it would need to make if Congress does not provide the additional funding for the next fiscal year.
Regarding the VA’s nearly $12 billion demand, Boozman said last week that “the discretionary portion has been far exceeded.”
“That’s the discussion that’s being had because there’s so much money involved that it’s eating up the available dollars,” Boozman said.
His comments also come after top Senate negotiators announced earlier this summer that they would add emergency funding to defense and non-defense programs in their fiscal 2025 budget bills – which will mean a wider rift between the two chambers as they negotiate an agreement on both chambers’ spending bills in the coming months.
“We continue to be in a situation where the 25 cap is not sustainable. It is not sustainable given the numbers set out in the law. It is also not sustainable given the verbal agreement,” Moller said, adding that the Senate Budget Committee “has made it very clear that it is not sustainable” given the recent bipartisan agreement.
“We’re piling up plates and trying to get them to the dishwasher,” he said. “I’m really scared someone will knock them over and we’ll get in trouble.”
