One federal department stands conspicuously protected from the automatic budget cuts falling across the government: the Department of Veterans Affairs with its 300,000 employees and $140 billion budget, a mammoth agency second in size only to the Defense Department.

The exemption, carved out in the legislation establishing the cuts, reflected rare bipartisan agreement in Washington that the VA should be spared the threatened budget turmoil.

But while the VA is protected from the budgetary ax known as sequestration, veterans are not.

Programs supporting veterans — on issues from housing to mental health — that are operated by agencies other than the VA are subject to the cuts.

They include the Labor Department’s VETS job-training program, which was being revamped and has been touted by the Obama administration as a key weapon in reducing high unemployment among veterans of the post-9/11 era. In February, that unemployment rate was 9.4 percent, higher than the overall rate of 7.7 percent.

How sequestration will impact federal departments

Acting Labor Secretary Seth D. Harris said last month that about 55,000 veterans and 44,000 service members would not receive employment and other transition assistance to help them find civilian jobs because of sequestration; Labor officials now says the exact numbers are unknown but will amount to “tens of thousands.” In addition, the department said, cuts to the Jobs for Veterans state grants program will mean an estimated 33,000 fewer veterans will be served.

A program using Housing and Urban Development vouchers that is credited with reducing the number of homeless veterans by 17 percent since 2009 will be harmed, officials warn. While the vouchers are exempt, administrative funding is being cut, which HUD fears will have a “serious effect” on the number of local housing authorities willing to accept the vouchers because they would have to make up the deficit, according to Sandra B. Henriquez, assistant secretary for public housing.

Moreover, many Defense Department programs that support veterans, wounded service members and their families are not exempt. The numbers of mental health counselors assisting service members returning from combat zones with issues such as post-traumatic stress disorder may be cut, Gen. Raymond Odierno, the Army chief of staff, told Congress last month.

Forty percent of the Defense Department’s medical providers working at military hospitals and clinics are civilians subject to furlough.

“This may mean a decrease in clinic appointment availability or longer wait times to see providers,” Jonathan Woodson, the Pentagon’s assistant secretary for health affairs, wrote Tuesday on the department’s military health system blog.

Even deceased veterans may face longer waits. The Army has warned that sequestration cuts will increase the waiting time, already a month or more, for burial at Arlington National Cemetery, with the number of daily interments expected to drop from 31 to 24.

Veterans make up 44 percent of the Defense Department’s 800,000 civilian employee workforce, which may face furloughs starting in April. About 27.3 percent of the approximately 2 million employees in the federal workforce are veterans, and more than a quarter of them are disabled, according to the Office of Personnel Management.

Despite the VA’s exemption, sequestration is a top concern for veterans groups presenting their legislative priorities to Congress last week.

“The VFW is deeply concerned about the impact sequestration will have on the departments of Veterans Affairs and Defense budgets,” John E. Hamilton, commander in chief of the Veterans of Foreign Wars, told a joint hearing of the House and Senate Veterans Affairs committees Tuesday, adding that the group fears cuts will hurt services for “our troops returning from Afghanistan, our veterans and their families.”

The groups are backing a bipartisan bill introduced by the House committee leadership last week to fully fund the VA one year in advance, giving the department predictable funding amidst the budget uncertainty.

Hamilton said the VFW is worried that sequestration will stunt the VA’s daunting, multibillion-dollar task of fixing its six-decade-old infrastructure around the country.

The White House and congressional Republicans are trading blame for the situation.

“Unfortunately, veterans services outside the VA are not exempt under the law, yet another reason why Republicans in Congress should come to the table and compromise to end the sequester,” said Jessica Santillo, spokeswoman for the White House’s Office of Management and Budget.

Rep. Jeff Miller (R-Fla.), chairman of the House Veterans’ Affairs Committee, accused the White House of trying to use veterans as a political football and noted that “the vast majority” of programs for veterans are protected from sequestration.

The bipartisan agreement to exempt the VA has been followed by more than a year of political maneuvering and uncertainty.

A 2010 budget bill exempted various programs and benefits across the government, among them Social Security, while certain “self-funding” agencies, such as the U.S. Postal Service, were not subject to cuts from sequestration. The legislation also exempted “all programs administered by the Department of Veterans Affairs,” a level of protection unique among federal agencies.

But it was not long before veterans groups noticed contradictory language in the law. The legislation amended the 1985 Gramm-Rudman-Hollings deficit reduction act, which included still-intact language specifying that funding for veterans’ medical care would be subject to cuts of up to 2 percent.

“We asked for clarification, and we didn’t get any,” recalled Raymond Kelley, the VFW’s legislative director.

At the behest of the veterans groups, Miller took up the issue.

At a hearing in November 2011, W. Todd Grams, the VA’s chief financial officer, told the committee the department was consulting with OMB, and the issue was unresolved. “We are researching those ambiguities,” Grams testified.

When no clarification followed, Miller sent the White House a letter in January 2012 asking the administration to resolve the issue. A response sent by the VA the next month left the question unanswered, noting only that the administration was opposed to sequestration.

“It appeared no one in the administration was willing to make a decision,” Miller said in an interview, accusing the administration of being deliberately vague. “They wanted political pressure to try to get sequestration off the front burner,” he said.

The veterans groups were unhappy, as well.

“Anytime you ask a direct question and get a vague answer, it makes you nervous,” Kelley said. “We didn’t want to be held hostage.”

Nonetheless, speaking of the administration Kelley added, “I think it was an honest attempt to make sure they were following the rule of law.”

OMB spokeswoman Santillo said a decision was reached “after careful examination of the law.”

In April, OMB issued a letter affirming that “all programs administered by the VA, including Veterans’ Medical Care, are exempt from sequestration.”

But this time the letter held open the possibility that VA’s administrative expenses could be subject to the automatic cuts.

“No sooner did OMB seemingly close the door on the sequester question and its impact on VA, it has now opened several others,” Miller complained in a letter sent in response. / when? /also in April 2012

VA Secretary Eric Shinseki reiterated the uncertainty in an appearance before Congress on July 25. “We have been informed that VA is exempt from sequestration except for administrative costs,” he testified. “I don’t have a definition of administrative costs right now.”

In September, OMB delivered a sequestration report to Congress that the administration said put the issue to rest.

“After even further analysis, OMB made clear that VA’s administrative costs are also exempt,” Santillo said.

But after Miller complained that the OMB report was not definitive, Shinseki sent a letter Dec. 14 reaffirming that all VA programs were exempt, “including administrative expenses.”

“This exemption acknowledges the nation’s obligation to provide care and benefits to our veterans who earned them, their eligible family members, and our survivors,” Shinseki told VA employees in a message Monday. “Even in a time of difficult economic choices, this obligation to veterans must endure.”

For veterans groups, there is relief that the VA is exempt from sequestration, but alarm at what may lie ahead for veterans.

“We apparently dodged a bullet in the short term, but the bullets are still flying,” the VFW’s Kelley said.

Eric Yoder contributed to this report.