Military, Veteran Pay Held Hostage in Debt-Ceiling Fight

Posted by Jason Van Steenwyk

military pay at riskWhite House to GOP: Let us increase the debt or the troops get it.

That’s the message Obama had for Congress during a press conference last week, in which reporters asked about the ongoing negotiations over the debt ceiling – a Congressionally-imposed cap on the amount of debt the federal government is authorized.

“If congressional Republicans refuse to pay Americans bills on time, Social Security benefits and veterans’ checks will be delayed,” stated President Obama. “We might not be able to pay our troops or honor our contract for small business owners.”

A Republican representative and War on Terror veteran Duncan Hunter of San Diego, California, has introduced legislation that authorizes the federal government to pay military salaries regardless of the debt limit.

“America’s military men and women fight to defend our freedom without asking for much in return,” said Hunter, a veteran of the wars in Iraq and Afghanistan. “Whether they are fighting in Afghanistan or supporting operations elsewhere, servicemembers deserve assurance that they will not be denied a paycheck. And if paychecks are withheld, it’s because the President, as commander in chief, made a decision not to pay them.

“Especially for those who are serving overseas while their families are at home, the threat of not getting paid can create unnecessary distractions. Removing the threat that paychecks might be withheld or delayed will provide a sense of relief and allow our servicemembers to stay focused on their duties.”

Duncan is currently a major in the U.S. Marine Corps Reserve.

About the Debt Ceiling

The Constitution of the United States gives Congress overall responsibility for determining the fiscal policy of the United States. That is, it is Congress, not the President, who primarily decides major tax and spending issues. Constitutionally, the President cannot direct the government to borrow without the approval of Congress.

At the same time, the President cannot refuse to spend money as directed by Congress. He must, by law, operate all the departments and programs he is directed to by Congress – which puts the President on the horns of a dilemma: For years, the amount of money Congress has ordered the government to spend has been greater than the amount coming in. The U.S. government has been forced to borrow the difference by selling bonds, which the government must eventually repay, with interest. The total amount financed by borrowing increases every year.

Meanwhile, though, Congress has also established an overall cap on borrowing, beyond which the President cannot go without getting further authorization from Congress.

This discussion is separate from the “sequestration” cuts that will slash about 10 percent from federal department funding across the board. Military pay and VA benefits will generally continue under sequestration, should it come to pass. The debt ceiling, on the other hand, is a separate argument.

Currently, the Congressional Budget Office projects that we will hit the borrowing limit next month – currently set at $16.4 trillion. Divided equally among every resident of the United States, the per capita national debt is over $52,000 for every man, woman and child.

Once that happens, the President must cease borrowing. The government must then, technically, limit its spending to current revenues coming in, minus those committed to paying existing interest payments. When that happens, the government will begin bouncing checks.

Congress has been extending the debt limit to allow Presidents to finance the operation of government routinely since WWII, including 18 times under President Reagan.

In recent years, however, under pressure from fiscal conservatives and Tea Party representatives in Congress, the legislative branch has been driving a harder bargain. The government almost came to a halt in 2011, for example, when Democrats and Republicans crafted a deal at the last minute that allowed for the increase of the debt limit to today’s level of $16.4 trillion.

The government also shut down, briefly, from November 13 through November 19, 1995, and from December 15, 1995 through January 5, 1996. This occurred after Republicans swept into power in the 1994 Congressional mid-terms and elected Newt Gingrich, a representative from Georgia, as the Speaker of the House. The GOP Congress and Clinton Administration were unable to come to an agreement on the debt ceiling and forced the government to suspend much of its operations and furlough hundreds of thousands of federal workers. Congress was successful in forcing a balanced budget for four years in a row, though revenues were artificially buoyed in the late 1990s by the Internet revolution and inflated equity prices.

Troops continued to be paid during that 21-day shutdown, though, because the defense spending law had already been passed.

Some Congressional Representatives, including Pat Toomey, have also proposed legislation directing the Treasury Department to keep paying active duty military pay and debt service, which is prioritized to ensure that the full faith and credit of the United States Government shall not be questioned. Failing to do so would potentially result in a default on U.S. bonds, which would cause interest rates to spike and make it much more expensive for the government to raise new debt.

Attempts to direct the Treasury Department to prioritize certain payments over others encounter a significant technical hurdle, however: The Treasury Department’s computer systems just aren’t designed to identify and prioritize millions of separate payments every day. It would take time and money to create a new system to do that.

So even if Congress does pass an eleventh-hour law exempting military pay, VA benefits, or other electoral sacred cows from interruptions as a result of the government hitting the debt ceiling, it is far from clear that the Treasury Department will be able to execute the measure.

This document from the Congressional Research Service details the processes by which some DoD functions can continue and some can be curtailed. Essential functions necessary to protect life and property can likely continue, but the troops and civilian workers actually executing the President’s orders (at Congress’s direction) would not be paid until Congress authorizes new borrowing or otherwise appropriates funds that need not be borrowed.

As a result, military pay, veterans’ benefits and contractual payments to defense contractors are all very much at risk of disruption if Congress and the President do not reach an agreement to lift the debt ceiling.

And each party to the conflict will do its best to blame the other.

 


One response to “Military, Veteran Pay Held Hostage in Debt-Ceiling Fight”

  1. Bruce Thomas says:

    As a Retired Service Member I find the President’s threat to not pay the Military, Military Retiries and Social Security recipients very short sighted. 
    One of the main reasons our volunter Military works is the promise the military retirement system. 
    If the goverment demonstrates it’s disdane for the Military and all those who draw Social Security, the goverment should be replaced.

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