The Budget Control Act signed by President Obama in August 2011 lumped the budgets for the Defense, Homeland Security and Veterans Affairs departments, along with the National Nuclear Security Administration, the intelligence community management account and portions of the State Department budget, into a new "security" category. If those entities fail to adhere to spending caps under the law, they would be subject to spending cuts spread equally across their budgets -- a process known as sequestration.
Steven Aitken, OMB's deputy general counsel, said the VA budget is protected from sequestration by provisions in the 1985 Balanced Budget and Emergency Deficit Control Act. Aitken told Julia Matta, assistant general counsel for appropriations and budget at GAO, that the 1985 law trumps the Budget Control Act and "the conclusion we have reached is that all programs administered by the VA, including veterans' medical care, are exempt from sequestration."
Raymond Kelley, legislative director for the VFW, said in a statement, "veterans can breathe a sigh of relief knowing that VA programs are exempt from sequestration. There was a real fear that returning funds to the Treasury would cause VA to ration services and extend wait times for appointments as more service members return home from war."