Democrats Want to Reverse $6B Veterans Benefits Cut, Pay for It Later

Democrats and Republicans have agreed: They made a horrible mistake when they jointly agreed to slash $6 billion in veterans' benefits as part of December's bipartisan budget deal.

But although they've agreed to roll back the cuts, they're still split on how to pay for their repentance without adding to the deficit—and that's where it gets really complicated.

After the Senate Armed Services Committee met Tuesday about the cuts, Sen. James Inhofe—the panel's top Republican—summed up Congress's predicament: "Each one of the 15, Democrats and Republicans, the chairman and myself included," want to restore the benefits, he said. "Not one person of the 15, including me, came out with a pay-for solution."

One Democrat's plan is to introduce a bill to restore the benefits as soon as possible, and worry later about how to pay for it.

Sen. Carl Levin, the committee's top Democrat, said he would like to bring a bill restoring the benefits to the Senate floor as soon as possible. The first version of the bill, however, would roll that spending into the budget deficit, Levin said. They would then open the floor to amendments, hoping that would yield a "pay-for" that 60 senators could go along with.

It's unclear if Majority Leader Harry Reid would allow an open amendment process, given that past episodes have turned into basically an open forum for legislative grievances. But even if he does, finding a compromise won't be easy: The Republican response, at this point, has ranged from proposals that will make Democrats uncomfortable to statements that will make them furious.

Republican Roger Wicker of Mississippi waded into the fray Tuesday, saying he wanted to be sure the spending was paid for, and that Republicans were the ones who were serious about getting it done. "Our colleagues on the other side of the aisle are not so worried about the spending," he said.

GOP Sen. Kelly Ayotte of New Hampshire wants to pay for the cuts by cracking down on the purported fraudulent use of a child tax credit—including among undocumented immigrants.

Ayotte's proposal was originally aimed at disqualifying the children of such immigrants entirely. But Ayotte said she has tweaked the plan into an antifraud measure, which would simply require that each child claimed for the credit has a valid Social Security number.

That tweak, Ayotte said, would still allow undocumented immigrants to claim the credit, but it would make it harder for anyone to claim the credit for nonexistent children, or for those who live overseas.

Ayotte said her plan was based on a Democratic proposal—but, thus far, it's not playing well across the aisle.

"I think there are better pay-fors than that," said Democrat Tim Kaine of Virginia. "I don't think you need to pay for this fix by harming programs that affect children. I think there are better pay-fors."

Asked about Ayotte's proposal, Levin said he preferred a plan that takes aim at Democrats' target of choice: corporations. Democrat Jeanne Shaheen of New Hampshire is pushing a proposal that would crack down on offshore tax havens—a de facto tax hike that Republicans are unlikely to get behind.

And perhaps it's all for naught.

The $6 billion in cuts comes from adjusting the way the military calculates veterans' cost of living. The January omnibus spending bill removed some reductions to medically retired veterans' retirement benefits, but that was a small part—less than one-tenth—of the cut in the December deal.

But while both parties struggle for a compromise solution on how to reverse the rest, it's possible they won't have to find one at all.

Sen. Roy Blunt, R-Mo., said that the repeal of the cuts might not have to be paid for, because the December budget deal actually cut more than Congress was required to cut under its own Budget Control Act.

"The budget agreement more than made up for the savings in the Budget Control Act. And, you know, I'm for saving everything we can, so if we can find an offset, I'm certainly for that," Blunt said. "But I don't think this is absolutely dependent on the offset."

Other senators, including Republican Jeff Flake of Arizona and Democrat Jack Reed of Rhode Island, have said that finding a bipartisan pay-for could prove very challenging. And Inhofe has said it is more important to reverse the cuts than it is to pay for them.

"The first thing is to do it; secondly, it should be paid for, but because it is a moral issue, I would just say it has to be done, either way," he said.