Defaulting on the U.S. debt: Impacts on the military, veterans
As the deadline to raise the debt ceiling approaches, Washington is still dragging its feet. It’s been a month since President Biden’s and Speaker Kevin McCarthy’s last meeting and there’s no sign of progress.
What happens if the U.S. defaults on its debts? Federal benefits could be cut, markets would tank, jobs would be lost, and America’s reputation would sour. Virtually everyone would be worse off from this self-imposed disaster.
Each American would feel the effects of a default in different ways. Here’s what a default on the debt would mean for our military and veterans.
Services halted
The federal Department of Veterans Affairs (VA) would likely have to stop or reduce operations. The VA operates the largest healthcare system in the U.S., with 1,298 facilities caring for over 9 million veterans.
The VA also administers mental health services, job placement programs, and assistance for homeless veterans. This vital work could be put on pause during a default.
Paychecks and pensions could be canceled or delayed
The U.S. military has 1.3 million active-duty troops, 800,000 reservists, and 700,000 civilian employees. Active-duty pay varies widely, ranging from just under $2,000 to over $17,500 per month.
There are also more than 2 million veterans entitled to retirement payments. The median veteran pension is $1,756 per month.
After a default, the government may have to miss or delay these payments.
Healthcare and other benefits at risk
Active-duty soldiers are entitled to benefits such as medical, dental, vision, and prescription drug coverage, a housing allowance, a retirement savings plan, and school tuition assistance.
About 8.5 million veterans receive similar benefits, including disability payments, low-cost health insurance, and tuition and mortgage assistance. Another 450,000 households receive survivor benefits because they are the spouses and/or children of fallen veterans.
According to the White House Council of Economic Advisors, the average disabled veteran receives $1,428 per month in disability payments while a veteran in school gets $1,740 per month for tuition.
All this assistance could be halted during a default.
National Security Risks
In their recent article, “Debt-Ceiling Brinksmanship Weakens US National Security,” former Secretaries of Defense Leon Panetta and Chuck Hagel argue that America’s military might is due in part to our economic credibility.
They write that, in a default, “Bipartisan commitments to the national security needs of friends and allies would be impacted. … Funding for essential civilian and defense modernization efforts would be undermined.”
Similarly, the Military Officers Association of America warns that missing paychecks and cutting benefits could worsen the relationship between troops and the government in the long term.
“There must be a mutual commitment between those who serve and our nation: Any loss of trust and confidence in the value of service could prevent current and future generations from wanting to serve.”
The Bottom Line
There are plenty of “debates” that seem important to people in Washington but don’t matter much to regular people. The debt ceiling debate isn’t one of them. If the U.S., for the first time in our history, defaults on our debt obligations, every American will pay the price.
