$10B veterans bill sparks $78B budget debate
A proposed veterans benefits bill that supporters believed would cost approximately $10 billion over ten years is now facing serious obstacles in Congress after the Congressional Budget Office released a new cost estimate of $78.1 billion for the same period. The dramatic increase stems from what appears to be a fundamental disconnect between how congressional staffers drafted revisions to the Major Richard Star Act and how the CBO interpreted the final legislative language of H.R. 2102, introduced in March 2025.
The legislation at the center of this controversy seeks to eliminate a longstanding policy that forces combat-injured veterans who are medically retired with fewer than 20 years of service to forfeit a portion of their military retirement pay for every dollar they receive in VA disability compensation. Advocates have called this the "Wounded Veteran Tax," arguing it unfairly penalizes service members for injuries sustained during their military service. The bill would extend Concurrent Retired and Disability Pay, or CRDP, to Chapter 61 medical retirees who currently lose part of their military pension when they receive VA disability benefits.
The affected population lies at the heart of the budget dispute. Congressional staffers working on the bill in Senator Blumenthal's office believed their revisions would expand eligibility from roughly 54,000 combat-injured Chapter 61 retirees to about 56,000, addressing a narrow gap affecting approximately 1,124 additional veterans who were excluded under the previous version. However, the CBO interpreted the revised statutory language much more broadly, concluding that approximately 255,000 Chapter 61 retirees with fewer than 20 years of service would become eligible for concurrent receipt under the new bill.
According to the CBO's analysis, two specific provisions account for the cost increase. The first would make Chapter 61 military retirees with fewer than 20 years of service eligible for CRDP, which CBO estimates would increase direct spending by approximately $63 billion over the 2026-2036 period. The second provision would remove an existing cap on CRDP payments for Chapter 61 retirees with at least 20 years of service, adding another estimated $2 billion. Together, these provisions account for roughly $65 billion of the $68 billion increase compared to the 2023 version of the legislation.
For disabled veterans, this budget controversy represents more than accounting disagreements. The Richard Star Act has been a priority for combat-injured retirees who believe they earned their military retirement pay through service and sacrifice, separate from compensation for service-connected disabilities. The late Tonya Star, widow of Major Richard Star for whom the bill is named, told Wounded Warrior Project before her death in 2024 that passage would affect veterans' day-to-day lives and help them provide for their families, calling it "their win." The substantially higher cost estimate fundamentally alters the bill's prospects in Congress, where budget scores heavily influence whether legislation advances.
The CBO has reaffirmed its estimate, stating it evaluated the statutory changes using population data from the Department of Defense's Office of the Actuary. What remains unresolved is why the gap exists between congressional intent and the CBO's interpretation of the legislative language, and whether the bill will be revised again to narrow its scope and reduce costs.
Veterans who are medically retired under Chapter 61 and currently subject to the retirement pay offset should monitor developments on this legislation through their veterans service organizations and congressional representatives. Understanding how proposed changes to concurrent receipt policies might affect individual circumstances requires reviewing specific retirement and disability status, and consulting with a VSO can help clarify eligibility under current law versus potential future changes if the legislation is revised and eventually passes.