The group of moderate-to-conservative House Democrats is siding with the GOP in blocking the Iraq–Afghanistan war funding bill because it includes money for Jim Webb's GI bill for soldiers returning from Iraq. This runs afoul of the Blue Dogs' commitment to uphold the Democrats' (increasingly tenuous) pay-as-you-go pledge.
In general I tend to be pretty sympathetic to the Blue Dogs' fiscal stance--certainly more so than Tom Schaller is. It's nice that at least somebody on Capitol Hill cares about the size of the deficit. But Schaller and liberal critics of the Blue Dogs have a point in this instance. It's patently absurd for the Blue Dogs to be devil-may-care about the immense fiscal cost of staying the course in Iraq (to say nothing of the human cost), but then throw a fit when Webb proposes spending $720 million over two years (the equivalent cost of about one day of fighting the war in Iraq) to help Iraq war veterans get an educational boost when they leave the service. That's a pretty messed-up set of priorities.
It's also important to note, of course, that it's not just the Blue Dogs at fault here. The entire GOP is too. But House Republicans are so far gone when it comes to fiscal responsibility that this development isn't really news. The Blue Dogs, on the other hand, have some credibility on this front--but they'd have a lot more if they were objecting to the massive, deficit-swelling costs of the war itself, not just the relatively small price of veterans' benefits associated with it. If we're going to shoulder the burden of a multi-trillion dollar war without raising taxes--which the Blue Dogs keep signing off on--we'd damn well better be willing to do the same to keep faith with those who have served multiple tours in Iraq and Afghanistan without complaint.