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Debt-Limit Fight Has Potential Defense Impacts

05-16-23 WR NDAA Delay WEBSITE
05-16-23 WR NDAA Delay WEBSITE
Washington Report

The House and Senate Armed Services committees have paused work on the annual defense policy and authorization bill until President Joe Biden and Congress find a compromise on the approaching debt limit crisis.

The HASC's subcommittees were supposed to begin work on their initial draft of the fiscal 2024 National Defense Authorization Act last week, but Republican leaders halted those plans until next month.

"For now, we’re going to wait and see how that process plays out before starting the NDAA," House Majority Leader Steve Scalise, R-La., told reporters May 10.

Senators similarly pushed back defense policy work until mid-June, after they see what political deals are made in the next few weeks.

It is possible an agreement concerning the debt limit could impact the top line for fiscal 2024 defense appropriations.

According to the Department of the Treasury, the deadline for a deal on the debt limit is actually June 1.

But realistically, any compromise would likely have to be in place several days before that deadline to fully implement the fix.

The debt limit is the sticking point. The federal government has reached the $31.4 trillion cap Congress mandated. Lawmakers must now do something or risk the nation defaulting on its loans.

The partisan battle lines are clear — the White House and congressional Democrats want a "clean" debt-limit increase without conditions.

Conversely, congressional Republicans are pushing for any increase in the nation's borrowing limit to be tied to future cuts in spending.

Pentagon leaders say the impact of a default would extend beyond America's creditors.

Last week, Defense Secretary Lloyd J. Austin III and Gen. Mark A. Milley, the chairman of the Joint Chiefs of Staff, told Congress that a default would be a win for China while endangering troops' pay.

"China right now describes us in their open speeches, etc., as a declining power," Milley said at a Senate Appropriations Committee defense subcommittee hearing last Thursday. "Defaulting on the debt would only reinforce that thought and embolden China and increase risk to the United States."

The most substantial impact, Austin argued, would be troop pay. If the federal government defaults, the Pentagon won't be able to guarantee that military personnel will be paid on time.

"What it would mean realistically for us is that we won’t, in some cases, be able to pay our troops with any degree of predictability," Austin said. "This would have a real impact on the pockets of our troops and our civilians."

Analysts say retirement and disability pay is also at risk.

Additionally, the federal government might not be capable of paying contractors, which would hurt military construction and other projects.

Last week's hearing dealt with Biden's fiscal 2024 budget request of $842 billion for the Defense Department — which is about a 3.2% nominal increase above the $816 billion Congress approved for 2023.

The debt limit standoff only adds to the list of fiscal challenges facing the U.S. military, Sen. Jon Tester, D-Mont., said last Thursday.

"The risk of a government default is real," said Tester, the chair of the Senate Appropriations Committee's defense subcommittee. "The risk of a government shutdown is real. The risk of a long-term [continuing resolution] is real, none of which are good by the way."

"And while we’re busy fighting amongst ourselves, the Chinese continue their military buildup and aggressive behavior, the Russians continue their unjust war against Ukraine," he finished.

— By John Goheen