Anthony J. Principi Department of Veterans Affairs Established: 1989 2003 Budget: $25.4 billion Full-time Employees: 209,000 Principi's Salary: $171,900 Web Site: www.va.gov Overall Grade: A- Back To Overview And Other Cabinet Grades

National Journal
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Friday, Jan. 24, 2003

You can call Anthony J. Principi the Secretary of Paradox. He runs the second-biggest Cabinet department: It has an annual budget of more than $60 billion and a workforce of more than 200,000 people. But last year his name made The Washington Post in just 17 articles -- and in nine of them, only in passing. Principi's department spends more than $20 billion a year on veterans' health care-but not a penny of that counts as an entitlement. Unlike Social Security or Medicare, VA health programs count as discretionary spending, which means that when the money runs out, the benefits stop, no matter how many qualified veterans are waiting in line.

Principi, 58, has faced these problems before, first as deputy and then as acting secretary under the first President Bush. But since then, things have gotten worse -- because they've gotten better. The VA has shifted many of its health care services from huge hospitals to outpatient clinics, and the department is leading the nation in its efforts to reduce medical errors. Congress has increased VA budgets while expanding the eligibility for benefits even more. And every improvement attracts more veterans, who end up on waiting lists hundreds of thousands of people long. The VA, admitted House Veterans' Affairs Committee Chairman Christopher H. Smith, R-N.J., "is a victim of our own success."

No White House wants to cut back on veterans' benefits. But no president likes to pour endless billions of dollars into the VA, either. Those political constraints, and the paradoxes they create, sharply limit any VA secretary's room to maneuver. But in the past two years -- and especially in recent weeks -- Principi has started to break his department out of that box.

Inside Influence Grade: A
Historically, VA health care served mainly disabled and impoverished veterans. But in 1996, Congress opened the system up to everyone who had served in uniform. Part of the plan was to let the VA charge Medicare for some of the care it provided to vets over age 65 -- but the complex negotiations among agencies and on the Hill fell through, and the VA entered an era of chronic shortfalls.

Principi, upon taking office in January 2001, immediately pushed for more money. He got Bush to add $1 billion in discretionary funds in the administration's first budget, for fiscal 2002, and he got Congress to add even more. But new patients poured in faster than new dollars. The result: de facto rationing. By early 2002, some 300,000 veterans were waiting an average of six months for their first VA appointment.

So Principi decided last year to use the 1996 law's safety valve: secretarial discretion to stop enrolling selected categories of non-indigent, nondisabled veterans. But the cutoff was politically too hot. "I was about to walk into that conference room ... to make the announcement," Principi recalled, "when I received a call from the White House." Keep enrollment open, came the order, and we'll get you more money: an emergency supplemental of $142 million. The increase in the VA's health budget was welcome, but it was too little and too late. Principi had neither enough money to increase supply nor enough leeway to decrease demand.

So he pushed for yet more money with the White House and the Office of Management and Budget. For fiscal 2003, he got $2 billion extra in discretionary funds. And then, just this month, Principi pulled off a trifecta. For fiscal 2004, he got the promise of another $1.9 billion more for health care alone. At the same time, he took a painful step that many said was needed -- Principi announced a hold on new enrollments of relatively well-to-do veterans, but he excluded a smaller, wealthier group than he had tried to bar before. Finally, Principi sealed a complex interagency deal to have Medicare pay for some VA care, a long-frustrated goal. Despite leading a back-burner department, Principi has pushed successfully, every year, for more money.

Hill Clout Grade: A
Congress's biggest complaint -- and there aren't many -- about Principi is that his budget requests aren't big enough. But the critics blame the Office of Management and Budget, not the secretary. "It's clearly not his fault," said Rep. Lane Evans, D-Ill., the top Democrat on the House Veterans' Affairs Committee. "He has used a lot of his political capital with the administration by fighting so hard for veterans."

And the Hill's usual response is to vote the VA more money, hardly a legislative defeat for the secretary. In his fiscal 2003 request, Principi proposed charging some wealthier veterans a $1,500 co-pay to cover budget shortfalls; both chambers threw that idea out and, instead, appropriated the necessary funds. Although key lawmakers cautiously criticized the cuts in eligibility that Principi announced this month, their suggested alternative was-more money.

Obviously, veterans are always popular on Capitol Hill, but today, so is their secretary, and that has not always been the case. "There's very few people other than Principi who have the credibility" to cut benefits, said House Chairman Smith.

Principi's reputation rests on the years he spent as a Senate staffer and his chairmanship of a landmark Clinton-era commission on reforming veterans' benefits. Some of Principi's key proposals from then are now law, notably a 46 percent increase in G.I. Bill education grants for veterans that Congress passed in 2001. Said Smith, "He was a tremendous asset in fighting that battle" and in others. "I had nine of my bills become law in the last two years," Smith said. "Every one of them had holds on them [in the Senate until] the secretary personally was involved."

Rep. Jerry Moran, R-Kan., chairman of the House subcommittee on veterans' health, agreed with Smith. Principi "has a reservoir of goodwill and respect from members." And the secretary keeps hauling new water for lawmakers. "He has visited our state on at least three occasions," Moran said. "He's done a good job at listening and taking care of staff on the Hill."

Most important, though, Principi takes care of constituents. The ratio of compliments to complaints among the messages veterans send to Moran's office has been steadily improving for years, said the chairman, "and even more so since the [last] two years."

Political Imperatives Grade: A
The Department of Veterans Affairs provides health care to more than 4 million Americans every year, and disability checks or pensions to more than 3 million. Those millions are well organized and vocal, and they vote. The first President Bush found out the hard way, when veterans' outrage forced him to oust his own appointee as VA secretary, Edward Derwinski, in 1992. The deputy who stood in as secretary was Anthony Principi.

Principi learned from that past, and he keeps his door open to activists. When he met with veterans' groups this month and announced the prospective budget increase, the Medicare deal, and the immediate cut in enrollments, the session was "surprisingly upbeat," said Ken Fuller, legislative director of the Paralyzed Veterans of America, which has toppled political appointees in the past. "He got applause," Fuller said. "Certainly, it was an easier pill to swallow being presented by Principi, because we know he is a true advocate."

Not everyone's clapping, however. The 3 million-member American Legion denounced the benefit-cut decision. The Legion has also threatened to sue the VA over backlogged benefits claims and has launched a nationwide publicity campaign about the waiting list for health care. But the Legion's national commander, Ronald Conley, is careful to spread the blame among Principi, VA bureaucrats, Bush, and Congress: "It's a combination of everybody. Right now, it's the Congress of the United States and the White House" more than anyone else, said Conley, that are responsible for shortchanging the VA budget.

Most veterans' groups, though, have more patience with Principi. Just ask Robert Wallace, who heads the D.C. office of the 2.7 million-member Veterans of Foreign Wars. "I view him as making a tough choice, [but] the right choice," said Wallace, who felt that some benefit cuts were inevitable. "We have a lot of respect for, and confidence in, the secretary."

Running The Department Grade: B
Principi took office promising results: In his confirmation hearings, he pledged to process veterans' disability claims faster and shrink the backlog of unresolved applications, then estimated at 500,000. After two years of cutting red tape and adding staff, the secretary has it down to about 330,000. So while Principi has not slain the claims-processing dragon, he has winged it.

But there is another, bigger dragon right behind it: the waiting list for VA health care, still 260,000 long. Until the White House let him restrict enrollment this month, Principi improvised. He banned local VA officials from advertising until they could treat the patients they had already attracted. And he sent his assistant secretary for legislative affairs, a wheelchair-bound, Bronze Star-wearing Vietnam veteran named Gordon Mansfield, out on an undercover mission to apply for care at eight VA clinics. ("Put on your oldest jeans," Principi told him.) Mansfield was wait-listed at six clinics. So Principi ordered severely disabled veterans to the head of the line-a controversial measure.

Now that the White House and Congress have given him the tools he asked for, the pressure is on Principi to fix the problem. That is especially true because, before he can implement his new deal with Medicare, the VA must meet Medicare's standard of less than a 30-day wait for appointments-a long way from the current wait of six months. Meanwhile, Principi is preparing a plan to shut down underused VA facilities in some regions and move the savings to overburdened ones elsewhere. The political and managerial battles these initiatives are likely to ignite will be the true test of his skills as secretary.

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