VA errors in benefits payouts down, but still total more than $1.3B
'I think they're heading in the right direction,' Brent Arronte, the department's deputy assistant inspector general, told lawmakers Wednesday. 'They are correcting effective date tool builders. They are consolidating their policies and procedures. They're working this in the right way.'
The benefits mistakes — both overpayments and underpayments — represent less than 1% of the more than $161 billion in payouts processed by VA in 2024. According to VA data, improper and unknown payments are actually down nearly 85% since fiscal 2018, thanks to new processing procedures and tracking.
Still, Arronte and lawmakers noted during a House Veterans' Affairs Committee oversight hearing Wednesday that the totals do represent a significant financial headache for the department and taxpayers, especially at a time when White House officials are emphasizing efficiency and waste reduction in the federal bureaucracy.
Collins, Dems spar over whether VA needs key fixes or full overhaul
'We're looking at massive programs here, complicated, imperfect programs,' said Rep. Morgan McGarvey, D-Ky. 'I know we need to work to make them better. We have to push for real efficiencies and improvements, and we absolutely need to make sure strong payment controls are in place.'
Nina Tann, executive director of compensation service at the Veterans Benefits Administration, said officials hope to push the improper benefits figure down even further in the coming years with increased automation of department systems.
But she acknowledged that some mistakes are difficult to avoid because of the size and scope of the department's benefits responsibilities.
A significant portion of the errors come from delayed reports of beneficiary status, either through death, divorce or other life changes. If those are not promptly reported to VA, checks will continue to be sent out even if an individual is no longer eligible for all of the funds.
Department officials said problems with pension payouts in particular are more likely to be overpayments than underpayments. But lawmakers said those mistakes can be just as harmful to veterans' finances.
'The worst thing you can do is overpay a veteran and then tell them they have to give it back,' said Rep. Morgan Luttrell, R-Texas, chairman of the committee's panel on disability assistance.
'Many of our veterans live paycheck to paycheck. If you're trying to take something back from them, something the United States government gave to them, that's our fault. We have to fix that problem.'
VA officials do have the authority to waive repayments in certain circumstances, and Tann said officials are still working to finalize new rules regarding those procedures. The department currently recovers about half of its overpayment mistakes, according to department data.
But she said VA leaders are also working to improve communication with veterans on how to update their records to ensure that payment mistakes don't occur in the first place.
Arronte said establishing the effective date of benefits remains a challenge for VA processors, especially in cases involving toxic exposure claims, which have only become eligible for disability benefits in the last few years.
He said more work needs to be done in that area to ensure that overpayments and underpayments are kept to a minimum.
Lutrell acknowledged the challenge of correctly accounting for vast numbers of benefits checks, but noted that VA officials have been hesitant in asking for new help or authorities to deal with the problem in recent years.
'We must ensure that VA is a responsible steward of the taxpayers' investment,' he said. 'This means paying every veteran the correct amount of benefits they have earned, the first time.'
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Full Transcript This transcript was prepared by a transcription service. This version may not be in its final form and may be updated. Speaker 1: From the opinion pages of the Wall Street Journal, this is Potomac Watch. Kyle Peterson: The Trump administration cancels public employee union contracts covering thousands of federal workers, including at the Department of Veterans Affairs and the Environmental Protection Agency, arguing that they have missions that touch on national security, which makes them exempt from union collective bargaining. Welcome. I'm Kyle Peterson with the Wall Street Journal. We are joined today by my colleagues, editorial board member Mene Ukueberuwa and columnist Allysia Finley. President Trump is making efforts on several fronts to exert control over the federal workforce, including with his legal challenges to fire the heads of so-called independent agencies. And now comes an effort to reach deeper into that federal org chart. President Trump signed an order some months ago citing the Civil Service Reform Act of 1978 to end employee union bargaining at a range of federal agencies citing a national security exemption. After some initial court wrangling, those government bodies have now begun canceling these contracts. It began earlier this month with the Department of Veterans Affairs, which said it had terminated agreements with five unions, including the American Federation of Government Employees or AFGE, which covers more than 300,000 workers at the VA. Here is part of what VA Secretary Doug Collins said at the time. "Too often unions that represent VA employees fight against the best interests of veterans while protecting and rewarding bad workers. We're making sure VA resources and employees are singularly focused on the job we were sent here to do, provide top-notch care and service to those who wore the uniform." Here responding a day or so later is the AFGE's National President, Everett Kelley. Everett Kelley: Hello, AFGE brothers and sisters. This is your national president, Everett Kelley. Yesterday, VA Secretary, Doug Collins sent AFGE a letter notifying us that he'll be terminating our union contract, which covers over 320,000 employees at the VA. This is another blatant act of retaliation by the Trump administration against AFGE for speaking out against their anti-worker, anti-veteran policies to dismantle the VA. He wants to get AFGE out of the VA because we are standing up for the rights of veterans and what's best for the veterans. Doug Collins says he's putting the veterans first by ripping up our contract and violating the first amendment of hundreds of thousands of his employees, a third of whom are veterans themselves. But we know who he's really putting first, millionaires and billionaires whose team is to dismantle the VA and privatize veteran care so that they can make themselves even richer. Kyle Peterson: Mene, what do you make of this as a political and legal fight for President Trump and the Trump administration to pick? Mene Ukueberuwa: Well, I think it's a political and legal winner for the Trump administration, and it seems as if the courts are getting closer to bearing out the legal side of that. We'll have to wait until the midterms, et cetera, to see whether there's any political benefit to it. But I do think that the problem of federal government employee unions is a largely overlooked one. There's a lot more attention paid to state level unions, I think, because those employees are much closer to your ordinary voter. They interact with public schools and they interact with police departments, fire departments, and so they have a sense of the massive pensions that a lot of these employees sometimes are collecting, the ways that union contracts can make these agencies really inefficient. But I think at the federal level it's much more remote and so people don't really have a sense of the scale of some of these unions and the really Byzantine details of a lot of the contracts if you dig into them. The biggest of those unions, as you mentioned, is AFGE, represents over 300,000 federal workers, and they are not only in the business of creating rules that protect employment. I think that's what a lot of people think of when they think of these union rules, basically making it harder to fire workers. And that's in keeping with statutory civil service protections. And so people think that's a legitimate purpose of these unions. It does create a lot of problems, obviously, if you can't dismiss someone for being incompetent, but they basically say these unions exist to make sure that a new president can't come in and just fire an entire agency and restaff it with their own political cronies. But in practice, unions like AFGE do a lot more than that and they have a lot of details in the types of collective bargaining agreements that they're striking at places like the Veterans Affairs Department that are basically designed to make the agencies as inefficient as possible. There are really, really restrictive rules on what types of duties, for example, a given employee can be assigned to take on. There are rules saying they have to get a certain amount of break time for every amount of time that they work, and it's often very generous, much more generous than you'd see in any kind of private sector equivalent, even in white collar work. There are rules governing just about every single aspect of the work that they do and particularly gumming up the disciplinary process so that it's impossible to correct employees who are really failing in their duties. And so it makes it so that these agencies, which already are really weak positioned in terms of delivering on the promises that politicians are making, the VA itself is famous for really poorly serving veterans who have to wait days, weeks, months to get responses for basic things like healthcare or mental health services, et cetera. And then you have these unions coming in and basically saying, "We want to protect our employees from having to actually execute their jobs. We're going to make it impossible for a reformist leader of this agency to actually change things and deliver better outcomes." And so I think the Trump administration is pursuing a legal avenue in claiming the relationship to national security with some of these agencies duties that allow them to abrogate some of these contracts in the hope that not only are they going to be able to downsize these agencies, but they're actually going to be able to change some of the internal rules to make them more efficient so they can actually serve the public instead of just serving the employees. Kyle Peterson: Hang tight. We'll be right back in a moment. Welcome back. I took a deep dive into the VA's contract with this AFGE union and it's about 300 pages. And to underline some of the points that Mene was making, let me just read some of the lines from this contract. Here's one: "Where an employee uses a visual display terminal or other keying device for at least one hour, the employee shall receive a 10-minute break for every hour of utilization. Such breaks will be in addition to regularly scheduled rest periods." Here's one from another section. "Any proposed changes in the current style, color, texture, or design of uniforms currently in existence shall be forwarded to the union at the affected level for bargaining." Here's a section about a sick out, which is when employees who are upset about something call in sick and take sick leave. It says that the VA may require employees to furnish evidence of illness to support approval of sick leave. If it has reasonable evidence that a sick out has occurred before the department requires the employee's evidence, the union will be provided with a reasonable evidence for the department's allegations. Allysia, there's pages and pages and pages of that kind of stuff, which I think would be shocking to many people who work in the private sector, to many managers in the private sector who would, if they suspected employees were taking sick leave without actually being sick, would say, "The next hour, I would like to see some evidence that you were actually sick," not thinking that this would be some kind of sclerotic bureaucratic procedure. The contract has six pages on the grievance policy. Before anybody gets demoted or suspended, the VA has to give that staffer under this contract 30 days of notice, 14 days to answer that, except when the crime provisions have been invoked, is what the contract says. So I'm glad there's some crime provisions there. It does require the government to collect the union dues to do the withholding on that. It says employees can leave the union, but they can only revoke their dues withholding once per year. The period is not the same period every year. It depends on the employee. It's the 10 calendar days ending on the anniversary date of the employee's original allotment. Another thing that the VA cited in canceling this contract is what is called official time, and that is when workers at a government agency are doing union activities such as handling grievances and so forth, but they're doing it while they are on the clock. The VA says that in 2024, there were about 1900 VA bargaining unit employees who spent 750,000 hours of work on taxpayer funded union time, including some who are paid more than $200,000 a year. Allysia, I'll get off my soapbox now, but I think many people if they went and they read through some of these union contracts would be really amazed at the kind of bureaucratic procedures that government agency heads, cabinet heads, management is under in these agencies. Allysia Finley: You're right about that. Though, I'd also point out that some of these kinds of is, you said kind of sclerotic processes required by these contracts are also present in some union contracts in the private sector, which is why you're seeing a lot of unionized companies are becoming less competitive because they are able to efficiently manage their workforces. And that's true of the UAW, United Steelworkers and such. The reason why, especially the big three automakers, Stellantis, Ford and GM have such high labor costs is because of all these. It's not just because of the retirement benefits and higher wages, which has historically been true, but now the other non-unionized workers or non-unionized plants are starting to catch up. It's because of a lot of these required break rules and they're just not as efficient as non-unionized plants. Now in the private industry, in private sector, if a company becomes uncompetitive, is inefficient to all these processes, well loses market share and eventually could go out of business and fail. The problem with the government is that's not the case. Essentially, government cannot fail. It just becomes inefficient and really impedes the delivery of public services. In this case with the VA, it means that maybe the government is not only spending more on veteran care and hospitals and other aspects, but it also means that the care may be inferior to what these veterans might be able to get actually in the private sector. Now, there's been a fight in Congress going back more than a decade to what extent should the government privatize care and allow veterans seek care in places other than VA hospitals. And that's because there have been huge wait times to get certain procedures and such at VA hospitals and Congress has tried to expand coverage and allow veterans to get care in other places. Now, this has obviously faced a lot of resistance from the unions because as a result, when you have more competition, it means that while maybe the government doesn't have to hire as many workers, and therefore it could hurt the number of union-paying dues members that they have. So ultimately I think the solution is to provide more competition. So these unions do have something at stake when they're at bargaining table. Kyle Peterson: The point about competition I think is a good one, Mene, because I think that is a real difference between the private sector and the public sector. If there is a union at a private company that goes too far, that overreaches in its demands, that company is not the only company selling its product generally, unless it's some kind of a real bona fide monopoly. There's competition in the market, and so a union that goes too far might end up bargaining its own workers out of a job or out of a raise. And sometimes we actually see that happen in the private sector, those of us who are watching the economy closely. Unlike the government where the person who is on the other side of the bargaining table is a politician that the union often has helped elect with its organizing and its campaign contributions. The latest figures, just for the record, this is from the Bureau of Labor Statistics in January of this year, the private sector is now only 5.9% unionized as of 2024. That is down from about 9% in the year 2000. And what that means basically is out of every a hundred workers in the private economy, 94 of them are not in a union. And on the public side it is much higher. In 2024, 32.2% of public workers were in a union. And this difference I think is also a matter of historical note because for a long time, even many democratic politicians did not think that public sector unions were a good idea. The classic case being cited often that you hear is FDR, President Roosevelt, in a 1937 letter to a union leader, he wrote this, "All government employees should realize that the process of collective bargaining is usually understood, cannot be transplanted into the public service." FDR was particularly against the idea that public workers might go on strike or engage in militant labor action as he put it. Here again is a piece of this FDR letter. He says, "A strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of government until their demands are satisfied. Such action looking toward the paralysis of government by those who have sworn to support it, is unthinkable and intolerable." And that really changed in the federal government, at least in the '60s, Mene, when JFK signed an executive order allowing federal workers to collectively bargain. So it's notable a little bit of an effort by Trump to push back on that and at least some of these agencies. But I think that FDR made a good point there that when you have politicians that are elected with help from unions on one side of the bargaining table and the union itself on the other side of the bargaining table, as happens in many blue states, who is there speaking up for taxpayers? Mene Ukueberuwa: Yeah, absolutely. I think FDR made a great point there, and I think JFK frankly made a horrible and cowardly self-serving decision in 1962 when he authorized unionization in the federal workforce, which he did flatly as a return of favor for union support in the 1960 election. And so with that, he allowed the beginning of a creeping into the federal government of these labor unions, which were already starting to become a problem at the state level. It would've been entirely clear to him what direction this was going to go, and yet for political reasons, he initiated that beautiful friendship which lasts to today between the Democratic Party and these government unions. The point you made about the competition and how in the private sector unionized companies are restrained by having to earn a profit which will allow them to survive and compete with their peers. I think nothing demonstrates that better than school choice, which of course concerns state, government and teachers' unions trying to restrict the entrance of competition into their field. The teacher's unions know that when parents have an alternative and can send their students to other schools, namely charter schools or private schools which aren't unionized, that is going to potentially decrease the amount of revenue that's coming into the public schools. And all of a sudden, a lot of the provisions that these teachers unions have protecting the work hours of their teachers, giving them lavish benefits and things like that, they can't really sustain them because that means that the revenue is going to start to dry up and they'll face some competitive pressure. So the unions are extremely aware of that competitive dynamic, and they respond to it by organizing to try to keep it out. And there is a way by which they try to essentially elect their own managers. So as you mentioned, they're on both sides of the table effectively. If you look at the donations of a lot of these government unions, they go often nine-to-one or more to democratic officials, and they have created this well-oiled machine that essentially is able to return them to office fairly regularly and make sure that there isn't anyone really scrutinizing or changing these generous contracts that they're able to get. And so that's why someone like President Trump and the people within his administration have to think inventively about what legal avenue can we pursue to basically interject into this machine and break it up and see if there's a way that we can dislodge the entrenched unions from this position that they've managed to secure both at the state and federal level. Kyle Peterson: Hang tight. We'll be right back after one more break. Don't forget, you can reach the latest episode of Potomac Watch anytime. Just ask your smart speaker, "Play the Opinion Potomac Watch podcast." Speaker 1: From the opinion pages of the Wall Street Journal, this is Potomac Watch. Kyle Peterson: Welcome back. What about that legal fight, Allysia, because this already had some initial skirmishes in the federal courts. Surely now that these contracts are being canceled, there will be more. And there is an exclusion in this civil service collective bargaining law for agencies that have national security missions. Some of those that have acted in addition to the VA this month include the US Citizenship and Immigration Services, the Federal Emergency Management Agency, the Environmental Protection Agency. And President Trump's order designating which departments and agencies he thinks should be covered by that collective bargaining exemption is pretty broad. Here is a piece of a White House fact sheet explaining his view of this. So it includes the National Science Foundation. Now the White House says NSF-funded research supports military and cybersecurity breakthroughs. Includes the Department of State, the US International Trade Commission. Again, the White House President Trump has demonstrated how trade policy is a national security tool. The Department of Energy, the EPA is covered under a bullet point for energy security here, the White House saying that energy insecurity threatens national security. HHS is covered under pandemic preparation. There's cybersecurity agencies, the Department of Treasury under Economic Defense. And Allysia, I wonder what you make of that? I mean, some of those agencies, it seems like the case is stronger than others. FEMA, for example, relates to the federal government's responses to national emergencies. And so maybe there's a more direct national security line there. The Trade Commission though, the EPA, I mean, I wonder if the federal courts would cut at that fine and say, "We buy your national security argument for some of these agencies or not others." On the other hand, judges are pretty deferential. They tend to be pretty deferential when the President of the United States elected by the people says that something is an issue of national security. Allysia Finley: Right. So when the unions challenged the order and it went up to the Ninth Circuit, and you had a panel ruling with two Trump judges and Obama appointee who held that the president has broad discretion in the arena of national security and the judges shouldn't second guess his judgments on which unions or which departments should or be allowed to be exempt from this collective bargaining. Their other ruling was on a challenge by the unions that claimed the order was First Amendment retaliation against them, that the president was essentially punishing his political opponents, the unions. Now, the judge has basically held that, "Well, we don't see any evidence of that. We think that the president would've taken the same actions even regardless of his animus toward the unions." And so that there's really a high standard to prove that this was a First Amendment retaliation. So the Ninth Circuit upheld this order, and it could eventually, this challenge of whether the president has broad national security powers under this Civil Service Reform Act could eventually go up to the Supreme Court. Though I don't think that the Supreme Court is inclined to take up this case. Kyle Peterson: Mene, the legal issue will have to wait and see how the federal courts eventually settle it for good, pass these initial rulings that we've been discussing. But as a political matter, it strikes me as a great issue for President Trump to talk about, because the swamp can be overused as a cliche. But this is a pretty good example of what I think would strike many Americans as the swamp. You have a long, convoluted union contract with a government workforce that is making things cost more for taxpayers and is making it harder for those agencies and departments to deliver efficient services. And Trump could go out on one of his famous rallies and talk about some federal employees who are protected by these contracts, who have done things that would strike most people as misconduct. And that in the private sector, private companies would probably lead to pretty quick dismissal. And you can go through all the grievance procedures. I can just imagine that kind of a bit being worked into one of President Trump's rallies in the next few years as this issue plays out in the courts and in the political arena. Mene Ukueberuwa: I agree. I think it's a political winner from a bunch of different vantage points. There's the fairness argument about the benefits and the work rules and things like that that a lot of government employees have secured for themselves through union advocacy that a lot of people in the private sector would love to have but can't get because they are working for private businesses that have to actually compete. There's also the vantage point of the burden on the federal taxpayer. These union rules end up bloating the staffs of these agencies in a way that creates an ever-growing drain on the federal revenue that then has to be backfilled by taxpayers. And then there's the efficiency angle, as we talked about with the VA. You could extend that to a whole bunch of different agencies. Anyone who has interacted with the IRS for example, knows how long it can take to get a response and how hostile and inefficient these agencies can really be. And a lot of that is coming from, again, the work rules that these unions have put in place that essentially limit the amount of hours that employees are working and are almost designed to make the agencies inefficient. And so I think that President Trump and his surrogates making some of those arguments is something that's going to resonate a lot with the public. And frankly, when we saw the Democrats try to push back against these kinds of reforms of federal agencies, it seemed to fall flat. A lot of listeners will remember the beginnings of DOGE in the early months, the Department of Government Efficiency of the Trump administration, where they were laying off federal workers and trying to reform these agencies. Democrats thought that they would have a huge response by coming out and saying, "They're attacking our public servants. How dare they challenge these agencies?" And that didn't really seem to catch on in the way that they thought. I think that a lot of the public was very comfortable and very supportive of President Trump trying to finally do something to shake up and reform these agencies. And so if they can do it in a smart way, if it can be sustained in court, I do think it can be part of a mix of a story that Trump and Republicans will be able to tell in 2026 about trying to finally reform a government that's been broken for as long as anyone can remember. Kyle Peterson: Thank you, Mene and Allysia. Thank you all for listening. You can email us at pwpodcast@ If you like the show, please hit that Subscribe button and we'll be back tomorrow with another edition of Potomac Watch.
