A dispute over veterans health care funding is holding up bipartisan negotiations on the framework for an omnibus spending package that would avoid a partial government shutdown next month, according to sources familiar with the talks.
House Minority Leader Kevin McCarthy, R-Calif., is insisting that $12.5 billion for veterans' medical care should not be classified as emergency spending that is exempt from budget caps, these people said.
The White House has sent mixed signals, but administration officials don't appear ready to formally back the position of House Democratic and Senate GOP leaders that the veterans money should be exempt. These sources spoke on condition of anonymity to discuss private deliberations.
A two-year budget deal in 2019 imposed limits on discretionary spending, and exempting the veterans funding from those limits would free up more money for other nondefense programs. Overall nondefense accounts would see increases greater than 2% on average for the budget year that began Oct. 1, as opposed to a less than 0.5% boost without the veterans health care carve-out.
The snag over a funding classification dashed hopes of reaching a bipartisan agreement this week on spending allocations for the 12 appropriations bills needed for a year-end omnibus package. Current stopgap funding is set to expire on Dec. 11, and congressional leaders had hoped appropriators would be able to start hashing out compromises as soon as next week after receiving joint subcommittee allocations to work from.
Senate Republicans, who back the veterans health care exemption, thought they had resolved the matter last spring, after meeting with President Donald Trump. Senate Appropriations Chairman Richard C. Shelby, R-Alaska, said in May that Trump was "neutral" about allowing for an exemption.
But McCarthy has always opposed the move, according to sources, arguing it would bust the two-year budget agreement and allow appropriators to spend more money on nondefense programs. During his May meeting with Shelby, Trump called McCarthy for his views.
McCarthy aides weren't immediately available for comment Saturday on the renewed dispute, which was first reported by The Washington Post. Neither were White House Office of Management and Budget staff or aides to Treasury Secretary Steven Mnuchin, who has been involved, according to a person familiar with the discussions.
The administration expressed some unease about the veterans cap exemption in July.
In a Statement of Administration Policy on a House spending package (HR 7608), White House officials said treating the veterans' money as emergency spending raised "concerns about the programmatic rationale for this designation and impeding efficient budget execution." It also noted that the White House fiscal 2021 budget request "fully funds VA requirements without emergency funding by prioritizing funding within the non-defense cap."