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Scope of COVID-19 funding cuts emerges as debt limit flashpoint

Veterans health care funding clawback becomes a top Democratic talking point; GOP denies plan to cut benefits

House Appropriations Chairwoman Kay Granger, R-Texas, leaves a meeting of committee chairs in the speaker's office on Tuesday.
House Appropriations Chairwoman Kay Granger, R-Texas, leaves a meeting of committee chairs in the speaker's office on Tuesday. (Bill Clark/CQ Roll Call)

​Democrats are jumping on the House GOP plan to recoup unspent pandemic aid in their debt limit bill, charging that the move will harm agencies counting on that funding, including the Department of Veterans Affairs. 

The bill, which Speaker Kevin McCarthy, R-Calif., is hoping to get on the floor this week, would rescind $72 billion in unobligated pandemic relief aid.

A new analysis compiled by House Appropriations Committee Democrats tallied up the major sources of untapped COVID-19 cash.

Nearly $17 billion is sitting in Department of Health and Human Services coffers for things like research and testing of vaccines and therapeutics, payments to hospitals and nursing homes, and genomic sequencing of COVID-19 samples to identify variants. Almost $6 billion would come out of unspent Transportation Department funds for highway, aviation and transit agencies.

“Rescinding this funding would eliminate critical resources for mayors and governors to keep their airports open, trains running, and buses operating to get their essential workers to and from their jobs to keep our economy and people alive,” the Democrats’ memo states. 

But few issues carry the political resonance as potential cuts to veterans benefits, and Democrats have been aiming their fire particularly at over $2 billion sitting in VA health accounts that the debt limit bill would cancel.

Rescinding that money would “dramatically limit the ability for VA to provide healthcare services both within and outside of VA by clawing back needed funding for medical care,” according to the Democrats’ memo.

“I do not understand what my House Republican colleagues are doing, and I am not sure they do either,” House Appropriations ranking member Rosa DeLauro, D-Conn., said in a statement.

Rep. Marie Gluesenkamp Perez, D-Wash., introduced an amendment to the debt limit bill Tuesday that would exempt VA funds from the rescission. Under her amendment, the funding would remain available through September 2024.

Rep. Marie Gluesenkamp Perez, D-Wash., arrives at the Capitol on April 20, 2023. (Tom Williams/CQ Roll Call)

Perez is a freshman who flipped a GOP-held seat last November, winning the heavily contested race by less than 1 percentage point in a district former President Donald Trump carried by about 4 points two years earlier. Inside Elections with Nathan L. Gonzales rates her 2024 reelection bid a “Toss-up.”

Republicans, however, see recouping the money as a layup opportunity to cut spending.

House Appropriations Chairwoman Kay Granger, R-Texas, said during the Rules Committee’s consideration of the debt limit bill that the pandemic spending is not needed and should be directed to other priorities.

“Now that the national emergency is officially over, we should be able to take back those resources,” Granger said.

‘Serious questions’

Republicans are pushing back, vowing that veterans health care will be protected in the appropriations process despite the bill’s tight spending caps. They say they already had concerns about the VA’s handling of remaining pandemic funds, which were appropriated in 2020 and 2021. 

House Republicans “have serious questions about VA’s spending of this money in the first place,” House Veterans’ Affairs GOP spokeswoman Kathleen McCarthy said. 

Veterans’ Affairs Chairman Mike Bost, R-Ill. wrote a letter in March to VA Secretary Denis McDonough asking for information about how the remaining pandemic funding would be used. The VA did not provide sufficient supporting documentation to its inspector general to verify the agency used its funding under the first of the Trump-era pandemic relief laws as planned, Bost wrote. 

Bost has not yet received a reply from McDonough, his spokeswoman said. 

The VA received $36.7 billion in funding outside of the regular appropriations process during the pandemic, Bost wrote in his letter to McDonough. Two laws enacted during the Trump administration provided $19.6 billion to the VA, while the Biden administration’s 2021 pandemic aid package provided $17.1 billion, he wrote. 

Democrats are pouncing on the rescission of veterans spending, along with the spending caps they say could lead to cuts to veterans health care programs. 

The debt limit bill would cap discretionary spending at the fiscal 2022 level of $1.47 trillion for a decade, allowing for 1 percent growth. This is an overall cut of $131 billion in discretionary spending from the current fiscal year. 

“I think taking another $2 billion out of funding for veterans is a terrible decision,” Rep. Chris Deluzio, D-Pa., who serves on the Veterans’ Affairs Committee, said. “I don’t think we should be doing that; we shouldn’t be clawing back money from the VA that goes to health care. But it’s just one piece of this.”

Cutting the VA to the fiscal 2022 level would cost some veterans their health care and cause longer wait times, McDonough wrote in a March letter to DeLauro. 

Veterans groups are expressing concerns about the debt limit bill’s spending caps.

Ryan Gallucci, executive director of Veterans of Foreign Wars’ Washington office, wrote to McCarthy on Tuesday that his group is worried spending caps at the fiscal 2022 level will jeopardize the implementation of last year’s toxic exposure bill. He asked McCarthy for explicit assurances that Congress will continue to invest in the VA. 

“Bills aiming to return to [fiscal 2022] funding levels, without explicitly securing care and benefit programs for veterans are intolerable to our organization,” Gallucci wrote. 

Biden charged on Twitter that the debt limit bill would lead to drastic cuts to health care, housing, food assistance and job training programs for veterans. 

“MAGA House Republicans would make cuts to VA health care so that the super-wealthy can cheat on taxes,” Biden tweeted Tuesday. “That’s not how we honor veterans’ service and sacrifice.” 

Bost’s House Veterans’ Affairs Committee responded by calling Biden’s comment “dangerous and untrue.”

McCarthy and Bost “could not have been clearer over the past few months that the services Americans rely on — including veterans’ healthcare and benefits — will not be cut,” says a message posted on the panel’s Twitter feed.

Similarly, Bost released a statement Friday following release of the debt limit bill that said Democrats alleging that the bill would hurt veterans “should find new talking points.” 

“Republicans have always prioritized veterans in our spending to ensure veterans have access to the care, benefits and services they have earned, and as the chairman of this committee, that is my number one priority,” Bost said.

Despite the Republican pledge, Deluzio pointed out that the spending caps instituted under the bill do not explicitly protect veterans health care spending. 

“They should read their own bill,” he said. “There’s not a single carve-out for veterans and this part of the VA budget in that bill.” 

Other rescissions

The House Appropriations Democrats’ memo highlights around $35 billion in unobligated pandemic funding the the bill would claw back, or less than half of the money that’s still available.

In addition to the HHS and Transportation funds that would be rescinded, the Department of Housing and Urban Development would lose over $3 billion that could be allocated to local governments and housing providers to address rent payment losses and increase services for the homeless. 

The rescissions would also claw back $1 billion set aside to address the long-term impacts of COVID-19 among Native Americans, the memo states. 

Further, the bill would rescind $1 billion in disaster relief funding at a time when the White House is soon expected to request a $12 billion supplemental appropriations package to alleviate a cash crunch at the Federal Emergency Management Agency.

Of the money that the Congressional Budget Office estimates is still available, the agency believes $16 billion will be committed before any debt limit package becomes law, bringing the total cuts down to $56 billion. It wasn’t clear from the CBO analysis which agencies or accounts would get the money out the door in time.

Further, some of that money seems unlikely to get spent any time soon, even if the rescissions package never becomes law. The CBO estimates only $30 billion in actual budgetary savings from recouping the unobligated COVID-19 funds over the next decade.

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