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Budget battle could put military pay at risk

Aug. 29, 2013 - 06:53PM   |  
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Congress returns to work Sept. 9 to face a bruising budget battle with strong odds of having another round of sequestration and an additional threat of delaying November checks to service members, veterans and retirees.

Pressure is on lawmakers and the White House to reach some kind of agreement on spending for the fiscal year that begins Oct. 1 and to raise the federal debt ceiling by mid-October to protect the government from default.

If they fail, there would be another round of sequestration to control spending. This would result in a reduction of between $52 billion and $56 billion in defense spending, with the ax falling in mid-January.

There also is a chance the government would not have enough money to cover Social Security checks, military and federal civilian salaries, and retired pay and veterans’ benefits because the nation is about to run out of borrowing power.

There had been hope the two looming budget crises could be handled separately, tackling agency spending limits first and the debt ceiling later, but Treasury Secretary Jacob Lew notified Congress on Aug. 26 the federal government will reach the $16.7 trillion borrowing limit by mid-October.

“Operating the government with no borrowing authority and with only the cash on hand on a given day would place the United States in an unacceptable position,” Lew warned, estimating the cash balance for the U.S. could be as low as $50 billion. That would be “insufficient to cover net expenditures for an extended period of time.”

Without a debt limit increase, Lew said, it could be a day-to-day matter of what bills could be paid because available cash would fluctuate based on tax revenue, expenditures and the willingness of lenders to reinvest in U.S. Treasury securities.

Several bills have been introduced in Congress to guarantee military pay even in the event of a government default, but none of these measures is expected to become law because of the difficulty of reaching a political compromise on what programs, if any, ought to receive special protection.

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