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Veterans health accounting move a new headache for appropriators

Mandatory funding to aid veterans exposed to toxins emerges as flashpoint

House Military Construction-VA Appropriations Chairman John Carter, R-Texas.
House Military Construction-VA Appropriations Chairman John Carter, R-Texas. (Bill Clark/CQ Roll Call file photo)

On the surface, providing veterans the health care they need is one of the most bipartisan issues in Congress’ appropriations process. Even in a year where Republicans are pursuing major spending cuts, appropriators have signaled that veterans funding will be protected.

But a debate over how that funding should be provided, specifically relating to last year’s law establishing new aid to veterans exposed to toxins while serving overseas, is emerging as an early flashpoint in the fiscal 2024 process.

The Biden administration proposed a significant increase in the “Cost of War Toxic Exposures Fund,” which was created in last year’s law and is on the mandatory side of the ledger, in its fiscal 2024 budget request.

The law allows veterans health care appropriations “associated with exposure to environmental hazards” above the fiscal 2021 level to go into the new fund, effectively absolving appropriators from having to find room for it among other priorities.

Veterans Affairs Secretary Denis McDonough has said the toxic exposure-related funding, an increase to $20.3 billion this year compared to $5 billion appropriated in last year’s omnibus, is the amount allowed under last year’s law, which received wide bipartisan support.

Veterans Affairs Secretary Denis McDonough (Tom Williams/CQ Roll Call file photo)

But Republican appropriators are pushing back against this request, with House Military Construction-VA Appropriations Chairman John Carter, R-Texas, calling the move “not credible” during a subcommittee hearing last week.

“The administration is using veterans to increase spending not related to defense or other veterans programs, despite all of our serious problems with spending, inflation and the national debt,” Carter said. “So we all want to care for veterans exposed to environmental toxins. Let’s be honest about it, its costs and its approach, and be transparent about that approach.”

Democrats are defending the effort and see last year’s toxic exposure law as part of wider efforts to ease the strain that the skyrocketing cost of veterans health care is putting on the discretionary budget.

House Appropriations ranking member Rosa DeLauro, D-Conn., said Republicans who supported the toxic exposure law are now backing away from funding it.

DeLauro said that Republicans could face pushback from veterans advocates, including television host Jon Stewart, who lobbied hard for last year’s law, known as the Promise to Address Comprehensive Toxics Act, or simply the PACT Act.

House Appropriations ranking member Rosa DeLauro, D-Conn. (Bill Clark/CQ Roll Call file photo)

“They voted for this,” DeLauro said. “You want to renege once again. They did that the first time and got blasted, so they had to come around with regard to the PACT Act. They voted for mandatory spending. … Don’t come around now and say you want to shortchange.”

Funding shift

Last year’s toxic exposure law is expected to provide more than 3.5 million veterans easier access to health and disability benefits, making veterans with 23 conditions after being deployed to Iraq, Afghanistan and other combat zones eligible for VA benefits. The Congressional Budget Office estimated that the measure would cost nearly $280 billion over a decade.

After initial smooth sailing through the Senate, Republicans led by then-Sen. Patrick J. Toomey, R-Pa., pushed to keep new spending under the bill in the discretionary part of the budget. Toomey argued that the legislation would move $400 billion in VA spending from discretionary to mandatory accounts, which would free up money for Democrats to spend on unrelated programs.

Toomey’s amendment, considered under a 60-vote threshold, was rejected on a 47-48 vote, with all Republicans voting for it except Sen. Susan Collins, R-Maine, now the Senate’s top Republican appropriator. Collins said at the time veterans would “find it difficult to understand” why lawmakers would oppose mandatory spending for health care.

This argument is reigniting this year as the VA moves to implement the legislation. President Joe Biden’s budget shifts $7.1 billion of the $128.1 billion the VA received in advance appropriations in the fiscal 2023 omnibus into the Toxic Exposures Fund, bringing down the discretionary request for veterans health care to $121 billion.

Biden requested a total of $20.3 billion for the fund — $17.1 billion for medical care, $1.8 billion for disability benefits and $1.2 billion for information technology support. The fund included just $5 billion in the omnibus, $3.8 billion of which is for medical care.

During negotiations for the PACT Act, Republican and Democratic appropriators agreed that new spending for toxic exposure benefits would be mandatory but existing veterans health care spending would remain discretionary. Senate Military Construction-VA Appropriations Subcommittee ranking member John Boozman, R-Ark., called that a “good compromise.”

But Republicans, including Carter, are charging that the administration is going back on its agreement by proposing such a large increase for the fund.

Authorizers on both sides of the aisle also expressed concern. House Veterans’ Affairs Chairman Mike Bost, R-Ill., and ranking member Mark Takano, D-Calif., said during a hearing last month they are worried the VA is using the fund to replace the “second bite” — the traditional boost to health care appropriations from the amount provided in advance each fiscal year.

“I don’t believe anyone intended to use the Toxic Exposure Fund to replace that,” Bost said. “The more complex a budget is, the harder it is to manage and have transparency.”

McDonough said during the appropriations subcommittee hearing that he understood that legislators would have questions about the VA’s methodology in determining what belongs in the fund. But he said the new law requires the VA to do what it’s proposing.

“We believe strongly this is a revolutionary piece of law that you passed; it does really important things for our veterans,” he said. “It requires us to use this fund, and we’re using it fully consistent with what the statute envisions, I believe. And we will continue to hold ourselves to account and deal transparently with you guys on that.”

House Military Construction-VA Appropriations ranking member Debbie Wasserman Schultz, D-Fla., said the VA is using the fund exactly as intended. “There is no bait and switch here,” she said. “It’s very clear, and very straightforward, and very specific, and very narrow.”

Collins didn’t show her hand in a statement, saying Congress will continue to debate how to classify the PACT Act funding this Congress.

“Members of Congress on both sides of this issue, however, share a commitment to ensuring that the brave men and women who defended our nation receive the highest quality health care for any illnesses linked to their military service,” she said.

Senate Appropriations Chair Patty Murray, D-Wash., who also chairs the Military Construction-VA Subcommittee, similarly did not lay out her position. In a statement, Murray said she is “deeply committed” to building on the progress of last year’s toxic exposure law.

Wider conversations

The VA’s budget features mandatory spending that includes disability compensation; assistance for surviving spouses, children and parents of servicemembers who died in the line of duty; pensions; vocational and education programs; and other programs. Veterans health care, alongside construction, information technology and other accounts, is classified as discretionary spending.

Veterans spending has grown exponentially over time as health care costs have risen with veterans returning from Iraq and Afghanistan. Fiscal 1995 VA appropriations totaled $37.5 billion, rising to $303.3 billion in the fiscal 2023 spending package.

That eightfold funding increase is nearly double the average for all federal agencies, according to Office of Management and Budget data. Mandatory VA funds grew from $19.4 billion to $168.6 billion during this time, with discretionary appropriations growing from $18 billion to $134.7 billion.

Democrats fear that other nondefense domestic priorities funded in the discretionary part of the budget will be squeezed as veterans health care costs continue to increase.

Boozman said Democrats are right to think that there will be less money for other discretionary priorities with increasing costs for veterans health care.

“We have certain responsibilities that we have to meet, and I would say defense spending and veterans are two of those things,” he said. “There is a finite amount of money, and the more you spend on veterans the less you have to spend on other things.”

The administration and congressional Democrats are pushing for veterans health care to become a separate category under the discretionary budget — a move that Republicans have opposed and say they will continue to oppose.

Democrats tried to push even further last year. DeLauro said during last year’s omnibus negotiations, she and then-Senate Appropriations Chairman Patrick J. Leahy, D-Vt., pushed for veterans health care spending to be classified as defense spending. That was “flatly rejected” by then-ranking member Richard C. Shelby, R-Ala., DeLauro said.

DeLauro said pushing for the third category is a focus for House Democrats this year, and said Democratic votes will be needed to pass any appropriations bill in the House. “If you do not do that, veterans will be shortchanged in their care, because there are a lot of other competing interests,” she said.

However, Republicans see this effort as a chance for Democrats to attempt to spend more on other priorities.

While Carter did not address the effort during this year’s budget hearing, last year he said he was not convinced the third budget category was needed and asked if the third budget category would just allow more spending on other domestic issues.

“In a time where we’re spending trillions on other domestic programs outside of the appropriations process, we should be more able to take care of our nation’s veterans in the normal topline allocations,” Carter said at the time. “I am not yet convinced the new spending category is necessary or advisable.”

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