White House seeks $160 million in response to VA data breach

The White House is preparing to formally ask Congress as early as Tuesday for $160 million -- with offsets -- to fund the Veterans Affairs Department's initial response to last month's security breach that potentially exposed personal information of up to 26.5 million veterans.

The supplemental request, expected to cover the costs of one year of free credit monitoring for affected veterans, will be outlined by Veterans Affairs Secretary James Nicholson at a hearing before the House Military Quality of Life and Veterans Affairs Appropriations Subcommittee.

This is the second year in a row the VA has found itself before Congress in an embarrassing situation: Last summer the agency discovered it had underestimated veterans' healthcare costs by nearly $3 billion over the last two fiscal years. Lawmakers eventually provided $2.7 billion in emergency funds to fill the gap, as part of the fiscal 2006 Interior and Military Quality of Life measures.

The $160 million in question is a much smaller sum, but the theft of sensitive information, including Social Security numbers, carries similar political pitfalls with mid-term elections looming. Of the new request, OMB would offset up to $30 million from within VA accounts, congressional aides said.

Details were unavailable at presstime on what accounts would be affected, but healthcare funds were an unlikely target. The remaining $130 million would come from a smattering of other agencies across the government.

Democrats last week already were attacking the prospect of offsets coming from veterans' health care or other benefits. "It's not acceptable to tell veterans, 'We lost your personal information and by the way, we're going to cut your health care and benefits to pay for this mess,'" Sen. Patty Murray, D-Wash., said last week.

Murray successfully attached an amendment adding the full $160 million designated as "emergency" funds -- without offsets -- to the fiscal 2007 Agriculture spending bill in the Senate. The more likely vehicle is the Military Quality of Life bill, or Military Construction as it is known in the Senate, which has passed the House and will be marked up next month by the Senate Appropriations Committee.

The VA has been using existing carry-over balances from previous appropriations to get the credit monitoring program up and running, so the $160 million is not needed immediately, a GOP aide said. The VA last week began soliciting bids from credit companies to run the monitoring program, which it wants in place by mid-August, the agency said.

The House subcommittee will hear Tuesday from a panel of information security experts before Nicholson testifies. The department has instituted a series of personnel changes, and by the end of this week expects to have catalogued all positions that have access to sensitive data.