Concern About 2% Cut

The failure of a bipartisan panel, the so-called Super Committee, to find $1.2 trillion in reductions to federal spending as part of a debt-reduction plan triggered sequestration and the automatic cuts.

Lawmakers have expressed concern that legislative language left VA medical care vulnerable to sequestration, should it occur. They pointed out that, while Section 255 of the Balanced Budget and Emergency Deficit Control Act of 1985 exempts all VA programs from sequestration, Section 256 allows a maximum 2% cut in VA medical-care spending.

Miller had warned that a 2% cut would potentially affect VA’s ability to hire and retain doctors and nurses and impact VA’s ability to acquire needed medical equipment and supplies, among other things. He and other members of Congress had sought a response about the issue from the administration.

While the OMB letter may have put the issue of how sequestration could impact VA to rest, DoD officials continue to wait for Congress to find a solution to avoid the impact of sequestration on the military. If the administration and Congress cannot agree by January on a way to avoid the automatic budget cuts, DoD’s budget could be sliced another $500 billion, in addition to reductions already proposed.

“There isn’t any member I’ve talked to that doesn’t think that sequester is a disaster,” Defense Secretary Leon Panetta said this spring. “There isn’t any member who has said to me, ‘You know, oh, it’ll be great.’ All of them understand that it’s the wrong way to go. And I just have to hope that, ultimately, they will find the courage and leadership to be able to address that issue, de-trigger sequester, deal with the other challenges that are out there and try to do it as soon as possible because, frankly, the longer this drags on, the more of an impact it has, in terms of the planning process and in terms of the budget process.”

Panetta said he remains “optimistic” that sequestration can be avoided but said it would take “Congress and all of us working together to find consensus and provide strong bipartisan leadership to protect our economy, our quality of life and our national security.”  

He also urged members of Congress to accept the budget proposal that DoD presented earlier this year. The FY 13 budget request for the DoD was the product of an intensive strategy review that was needed after a decade of war and substantial growth in the budget and as a result of the passage of the Budget Control Act of 2011 led to a reduction in the Defense budget of $487 billion over the next decade, Panetta said when it was proposed.

Under that plan, among the budget areas targeted to find savings was TRICARE. Some members of Congress have objected to those cuts amid extensive lobbying from military retiree groups.

“If Congress rejects all of the modest changes we’ve proposed in TRICARE fees and copays for retirees, then almost $13 billion in savings over the next five years will have to be found in other areas such as readiness. Or, we could be forced to further reduce our troop strength,” Panetta said.

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