Military pay, not to mention national security might be at risk if the U.S. defaults on its loans. That’s the warning from Defense Secretary Lloyd Austin.
The nation reached its debt limit at the end of July, and the Treasury could run out of cash reserves by Oct. 18.
If Congress fails to raise the U.S. debt ceiling by then, the nation could be headed for its first-ever default.
Austin said in a statement released Wednesday that if the country defaults, it would “undermine the economic strength” that national security relies on.
“It would also seriously harm our service members and their families because, as secretary, I would have no authority or ability to ensure that our service members, civilians, or contractors would be paid in full or on time,” Austin said.
In addition to service members not receiving pay, other potential impacts, according to Austin, include:
- The benefits earned by and owed to 2.4 million military retirees and 400,000 survivors.
- Federal contractors, including large firms and thousands of small businesses, that provide the military with world-class services, technology and equipment could have their payments delayed, jeopardizing their operations and American jobs.
- Undermining the international reputation of the United States as a reliable and trustworthy economic and national security partner.
- Undermining the stature of the U.S. dollar as the global reserve currency of choice.
Just last week Congress reached a deal at the eleventh hour, to avoid a government shutdown, funding the government through early December.
In the past, lawmakers have continued to fund military pay through government shutdowns, however, the U.S. defaulting on its obligations unprecedented.
“Our service members and Department of Defense civilians live up to their commitments,” Austin said in the statement. “My hope is that, as a nation, we will come together to ensure we meet our obligations to them, without delay or disruption.”Read comments