The Omnibus Bill Shamelessly Uses a Budget Gimmick Recently Highlighted by NTUF

In October, NTUF reported on a budget gimmick used to paper over spending increases in various veterans-related legislation over the years. That gimmick crops up yet again in the $1.7 trillion omnibus Consolidated Appropriations, 2023 bill. The offset comes from extending a fee rate that is currently in effect through January 14, 2031. The omnibus extends the fee through November 14, 2031. Based on Congressional Budget Office (CBO) scores for recent fee extensions, this will net an estimated $669 million offset on paper, even though the offset has been used repeatedly in the past.

There are two elements to the gimmick. First, the spending in the legislation is frontloaded and the "pay for" shows up at the end of the ten-year budget window used to score the bills. Second, the fee is charged to participants in the Department of Veterans Affairs home loan guarantee program. This benefit program was established in the post-World War II GI Bill to help veterans obtain favorable mortgage rates. The fee was put in place in 1982 to cover the subsidy costs when a borrower is unable to pay back all or a portion of the loan. In other words, it is intended to cover program costs, not pay for unrelated spending.

The guarantee program has grown significantly. As NTUF reported recently, data from the Office of Management and Budget shows that the principal backed by the program skyrocketed from $87 million in 2000 to $394 billion today — with the vast majority of that spike occurring in the last few years. The fees assessed to the beneficiaries should be solely dedicated to covering the subsidy costs. This would help to protect taxpayers from the risk of defaults through the program.

Since the fees were first put in place, the rates have been set with expiration dates. Over the past decade, Congress has been increasing them further and further out in time in legislation that increases other veterans spending programs.  For example, the original law set the fees for three years through 1985. The Restoring GI Bill Fairness Act of 2011 extended them five years out, and a subsequent law, the Veterans Access, Choice, and Accountability Act of 2014 was the first to extend them ten years out.

In a review of the legislative history and cost estimates from CBO, NTUF estimates that this user fee was used to offset at least $5.9 billion in other veterans spending dating back to the Vow to Hire Act of 2011. The figure is approximate because CBO did not always break out the portion of the score of each of the enacted laws that were attributable to the loan fees.

H.R. 5545, the Responsible Education Mitigating Options and Technical Extensions Act, became law in December 2021 and extended the fees to their current expiration date of January 14, 2031. Two other bills earlier in 2021 also included language to extend the fees further after October 1, 2030.

  • H.R. 2878, the Native VetSuccess at Tribal Colleges and Universities Pilot Program Act, passed by the House on May 18, 2021, would have extended the fees through December 9, 2030.

  • H.R. 5509, the Student Veteran COVID-19 Protection Act of 2021, introduced on October 8, 2021, would have extended the fees through January 14, 2031.

NTUF's previous report on this gimmick covered H.R. 6376, the Student Veteran Work Study Modernization Act, passed by the House this May. The bill increases spending by $17 million through 2027 and "offsets" that by  extending the fee for nine additional days. The same gimmick was actually used in seven additional bills passed by the House so far this year. In most of the cases, the offset was added to the bill by the Committee on Veterans' Affairs before consideration on the House floor. They did not even bother using different dates, so in effect all use overlapping offsets. Moreover, none of the spending in the bills are related to the VA loan guarantee program. Based on CBO data, each day the fees are extended generates $2.2 million in offsetting receipts.

  • H.R. 1836, the Guard and Reserve GI Bill Parity Act of 2021, passed by the House on January 12, 2022, extends the fees through October 1, 2031.

  • H.R. 3304, the Advancing Uniform Transportation Opportunities for Veterans Act, passed by the House on September 29, 2022, extends the fees through May 16, 2031.

  • H.R. 4601, the Commitment to Veteran Support and Outreach Act, passed by the House on December 1, 2022, extends the fees through February 10, 2031.

  • H.R. 4772, the Mark O’Brien VA Clothing Allowance Improvement Act, passed by the House on December 1, 2022, extends the fees through January 15, 2031.

  • H.R. 5918, to ensure that the Secretary of Veterans Affairs repays members of the Armed Forces for certain contributions made by such members towards Post-9/11 Educational Assistance, passed by the House on September 28, 2022, extends the fees through January 28, 2031

  • H.R. 7158, the Long-Term Care Veterans Choice Act, passed by the House on December 1, 2022, extends the fees through February 15, 2031.

  • H.R. 7939, the Student Veteran Emergency Relief Act of 2022, passed by the House on September 14, 2022, extends the fees through January 19, 2031.

The fees extension is also included in the omnibus bill and stretches the rates for 304 days through November 14, 2031. It is tucked in at the end of a section pertaining to three veterans' benefits programs. The first two are unrelated to the loan guarantee program:

  • Text similar to the VA Clothing Allowance Improvement Act, which would increase outlays by $2 million in 2023.

  • Text similar to S. 89, the Ensuring Survivor Benefits during COVID–19 Act, which would increase outlays by $19 million over the decade.

The third program actually increases the costs of the VA loan program. The text is related to H.R. 4657, the Veteran Home Energy Saving Act and would permit lenders to consider expected cost savings from energy efficiency from a home when determining the applicant’s income eligibility for the loan. CBO estimates that the "average subsidy rate for those new loans would be about 1 percent, increasing direct spending by $9 million over the 2021-2031 period."

It is bad enough that the House has used the same offset in multiple pieces of legislation it has passed, but it is worse considering that the fee is already intended to defray the risk to taxpayers from the VA loan guarantee program. The bloated omnibus bill doubles down on this gimmick while also increasing the subsidy risks of the program.