How Veteran Affairs Department Secretary David Shulkin fell from grace

Key Points
  • President Donald Trump will replace Veteran Affairs Department Secretary David Shulkin with White House physician Ronny Jackson.
  • Shulkin is the sole holdover from the Obama administration to serve in President Donald Trump's Cabinet.
  • Controversies include a watchdog report that found Shulkin misused taxpayer funds and findings of waste within the VA.
Veterans Affairs Secretary David Shulkin testifies before the House Veterans' Affairs Committee on Capitol Hill on February 15, 2018 in Washington, DC.
Getty Images

In a pair of tweets, President Donald Trump named White House physician Ronny Jackson as his pick to replace Veterans Affairs secretary David Shulkin.

By all accounts, Shulkin, once popular with Trump, had fallen from grace.

Earlier this month Shulkin — the only holdover from the Obama administration to serve in President Donald Trump's Cabinet — told lawmakers at a budget hearing that he was battling "politics and distractions" so that he could "focus on vets."

"Let's discuss the proverbial elephant in the room — some reports even mentioned you have an armed guard stationed outside your office," noted Rep. Charlie Dent, R-Pa., during Shulkin's appearance before the House Appropriations Committee.

"Is all of this squabbling affecting your mission to serve veterans?" Dent asked.

Shulkin quickly pivoted, saying he would "prefer not to discuss the specifics" of his security detail, which reportedly has been posted there as the secretary battles political appointees within his own department.

He said he was speaking at the committee "for one reason, and that is to improve the lives of veterans."

"A lot of people are more interested in politics," Shulkin said. "I'm interested in getting the job done. I do believe we are getting back on track. And there is a lot of work to do."

He might not get much chance to do that. Shulkin's job of overseeing the nation's biggest integrated health-care system was widely considered to be hanging by a thread, along with that of other high-level officials in the Trump administration.

The White House and the VA did not immediately respond to a request for comment from CNBC.

Shulkin's now-bruised reputation and relationship with Trump — who previously had been a big fan of his — stem from several issues.

One is the outcry over an internal watchdog's finding that Shulkin used taxpayer money for his wife's airfare during travel with him on an official trip to Europe last year.

Another problem is the long-standing criticism of the quality of health care delivered to veterans, waste within the VA and Shulkin's resistance to increasingly outsource vets' health care to private providers as many conservatives want to see happen.

No plans to participate in Trump's parade on Veterans Day

Volkan Furuncu | Anadolu Agency | Getty Images

Shulkin's shrunken status in Trump's world was highlighted by his revelation to lawmakers that the VA has not been involved in preparations for the president's planned "grand military parade" through the nation's capital. The event is scheduled for Nov. 11 – Veterans Day – and will focus on celebrating active military as well as the contributions of veterans throughout U.S. history, the Pentagon said in a memo earlier this month.

On March 15, Shulkin said that he has not gotten any direction about what role, if any, the Veterans Affairs Department will play in the parade.

"We have had no discussions with the White House about participating in the parade," Shulkin told the House Appropriations Committee.

Shulkin noted that on Veterans Day the department traditionally focuses on a ceremony held at Arlington National Cemetery.

"Veterans Day is a very important day to us. We put our resources and our efforts into the recognition at Arlington National Cemetery that day. We have no plans to change that," Shulkin said.

Trump's pageantry is expected to have a price tag ranging from $10 million to $30 million, according to estimates from White House budget director Mick Mulvaney.

The U.S. has not held a major military parade in Washington since 1991. A parade that year to mark the end of Operation Desert Storm reportedly cost approximately $8 million. That was covered with about $3 million in government funds, and the rest from private donations.

'Failures in leadership' and a climate of complacency at the VA

Secretary of Veterans Affairs David Shulkin (L) testifies before the Senate Veterans Affairs Committee September 27, 2017 in Washington, DC.
Win McNamee | Getty Images

Earlier this month, a report from the VA's internal watchdog slammed the leadership of the department, one of the government's largest, for a laundry list of failures at a big veterans' hospital in Washington.

The 150-page report from the Office of the Inspector General revealed significant deficiencies, including:

– Patients receiving unnecessary or prolonged anesthesia.

– Problems in maintaining sterile instruments and equipment for medical use.

– Lack of accurate inventory of supplies and equipment that led to more government spending, while 500,000 overstocked items sat at a warehouse.

– Patient records and personally identifiable information stored in unsecured areas.

The IG's probe also brought to light poor accounting procedures that led to significant taxpayer waste. The report cited $92 million in supplies and equipment that were charged "over a two-year period without proper controls to ensure the purchases were necessary and cost-effective."

In one case, the government rented three in-home-use hospital beds for nearly $875,000. If purchased outright, those bed would have cost just $21,000.

His extravagant trip to Europe

David Shulkin, Under Secretary for the US Department of Veterans Affairs.
Dominick Reuter | AFP | Getty Images

In February, the IG's office issued a damning report blasting Shulkin for telling a subordinate to handle personal travel plans for him and his wife during an official trip to Denmark and England last summer.

The report also criticized him for improperly accepting tickets to the Wimbledon tennis tournament during the same trip.

That excursion came less than two weeks after Shulkin signed a memo advising senior leadership to curtail unnecessary travel.

The IG's report accused Shulkin's chief of staff, Vivieca Wright Simpson, of potential criminal conduct by making false statements and altering a document so that the VA could "improperly" pay for Shulkin's wife to travel to with him, at a cost to taxpayers of $4,312.

Wright Simpson retired on the heels of the report.

Shulkin initially pushed back against the IG's findings, but then said he would reimburse the VA for his wife's travel.

An indication of Shulkin's already perilous standing within the Trump administration last month was a statement in response to the report by the VA's own spokesman, Curt Cashour, who pointedly did not defend Shulkin.

"Accountability and transparency are important values at VA under President Trump, and we look forward to reviewing the report and its recommendations in more detail before determining an appropriate response," Cashour said.

Shulkin reportedly has stopped using Cashour to act as his conduit to the media.

USA Today in late February reported that Shulkin's assistant secretary for public and intergovernmental affairs, John Ullyot, in a call initiated by Cashour, had lobbied a senior aide on the House Committee on Veterans Affairs to persuade members of Congress to call the White House and request Shulkin's ouster.

Both Ullyot and Cashour denied they lobbied for assistance in getting rid of Shulkin.

However, USA Today noted that two sources had told the newspaper that they did. And The Washington Post followed up with a report of its own that said three people with knowledge of the situation corroborated that claim.

WATCH: Top VA aide retires amid Shulkin scandal

Top VA aide retires amid Shulkin scandal
Top VA aide retires amid Shulkin scandal