His budget funded them at a level substantially lower than the level needed to even keep up with inflation. The Republican Chairman of the House Veterans Affairs Committee, Chris Smith of New Jersey, was punished for his outspoken opposition to Administration cuts to veterans.
In 2005, The GOP House leadership removed Smith as Chairman--and to find a replacement who would be compliant with the Bush Administration's wishes, Speaker Hastert skipped over three more-senior Republicans on the committee to name Steve Buyer the new Chairman. Buyer gave lip service to veterans, but went along with all of Bush's cuts.
More info on the sacking of Chris Smith:
http://thehill.com/homenews/news/11214-vets-fight-to-save-rep-chris-smith-from-hasterts-axAnother excellent resource on VA issues:
http://www.vawatchdog.org/