Obama's Turnabout On Vets Highlights Budgeting Nuances

"He kind of blew me away," said Randy L. Pleva Sr., president of Paralyzed Veterans of America.

They thanked Obama for proposing an 11 percent increase in the budget of the Department of Veterans Affairs and expanding health care to more veterans. But the leaders of veterans service organizations warned the president that their goodwill would vanish if he pursued a budget proposal to bill veterans' private insurance companies for treatment of amputations, post-traumatic stress disorder and other combat-related injuries.

One Vietnam veteran summoned his deep voice to address Obama, calling the change "a dumb move." An Iraq veteran said the move would be "a deal-breaker" because it would represent an abrogation of the government's responsibility to care for the wounded and could jeopardize veterans' insurance benefits.

After 45 minutes, the veterans posed with Obama for photographs in the Oval Office but left with no resolution. Within hours they set a media campaign in motion. A headline on Drudge Report said Obama was betraying veterans. A top Democratic senator called the proposal "dead on arrival." An American Legion spokesman railed against it in 42 interviews with conservative talk radio hosts.

On Wednesday, trying to gain control of the situation, Chief of Staff Rahm Emanuel summoned the same group of veterans back to the White House. "We said, 'Look, don't give [Republicans] an opportunity to slam you,' " said one veteran, who detailed the conversation only on the condition of anonymity. "I really don't think there was malicious intent there. I think it was more a matter of a bad political judgment."

In the Situation Room, with Emanuel seated in the president's chair, they reached an agreement that would take the issue off the table. Emanuel called Obama, who was on Air Force One bound for California, who signed off. The veterans hurried to meet with House Speaker Nancy Pelosi (D-Calif.) at the Capitol, where she stood and read a statement from Obama saying he would drop the third-party billing proposal. The veterans responded with a boisterous ovation.

The 48 hours between the Roosevelt Room meeting and Obama's reversal, described in interviews with leaders of veterans' groups and White House and congressional aides, illustrate the delicate dance required of a new president trying to change government and cut costs where efficiencies can be found without alienating key constituencies.

White House spokesman Nick Shapiro said Obama would continue soliciting feedback from key stakeholders as the administration considers policy changes.

"While it comes as a surprise to those still entrenched in the old ways of Washington, the president carefully listened to the veterans service organizations and military service organizations' concerns, and then he decided on a course of action," Shapiro said. "Such consultation and collaboration were all too rare over the last decade -- they won't be rare in this administration, particularly when it comes to our veterans."

The proposal would have authorized the VA to bill private insurance companies for the treatment of amputations, post-traumatic stress disorder and other battle wounds.

Norbert R. Ryan Jr., president of the Military Officers Association of America, said: "It was obvious [Obama] wanted to hear our concerns. He knew it was a hot issue with all of us. He made it clear from the very beginning that we were going to get to say what we wanted to and this was not a done deal."

This relatively small proposal -- third-party billing would have saved about $540 million, less than 1 percent of the overall VA budget -- was not even part of Obama's official budget but quickly threatened to undermine Obama's credibility with veterans.

Ultimately, however, Obama listened to the veterans, some of whom oppose his rhetoric on Iraq and voted for his opponent, Sen. John McCain (R-Ariz.), and sided with them rather than his budget staffers who proposed the change.

"When you do public policy behind closed doors, you throw a lot of things on a wall, and some things stick and some things don't stick," said Bob Wallace, executive director of Veterans of Foreign Wars. "I think the administration and the president handled this with class, bringing the veterans in to talk with them, listening to their positions and two days later the chief of staff saying, 'It's over.' "

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