Pentagon leaders warn debt default could endanger troops’ pay

The Pentagon’s top two officials on Thursday warned lawmakers a default on the nation’s debt would put troops’ pay in danger and benefit China. 

Defense Secretary Lloyd Austin told the Senate Appropriations defense subcommittee that busting the debt ceiling would put the country’s reputation at “substantial risk” in the world. 

“There’s just a number of things that we’re working with allies and partners on that would come into question as to whether or not we’ll be able to execute programs, but most important, this will affect the livelihood of our of our troops and our civilians,” Austin told lawmakers. “We won’t be able to pay people like we should, and I think that’s something that China and everybody else can exploit.” 

Joint Chiefs of Staff Chairman Gen. Mark Milley, who spoke alongside Austin, said China already openly describes the United States as a declining power. Defaulting on the debt “will only reinforce that thought and embolden China and increase risk to the United States,” he said. 

The comments mirror those made a week earlier by Director of National Intelligence Avril Haines, who also warned lawmakers China and Russia would likely “look to take advantage of” a U.S. government debt default, on which the nation is on the cusp. 

Haines said Beijing and Moscow could exploit such an event by using it as evidence that the country’s political system is chaotic and “not capable of functioning as a democracy.” 

The Biden administration is currently embroiled in a political standoff over increasing the U.S. debt limit, with Speaker Kevin McCarthy (R-Calif.) and his Republican colleagues maintaining that raising the debt ceiling must go along with cuts in spending.   

Biden and congressional leaders met earlier this week and are set to meet again Friday to continue negotiations.  

But with no solution in sight, Treasury Secretary Janet Yellen has warned Washington could default on its obligations as soon as June 1. 

Such an event would be catastrophic for global financial markets, analysts have cautioned, and could cause late Social Security payments and delays on paychecks for veterans and federal employees, such as service members. 

Austin pointed to troops’ pay as a major casualty in the event of a default, with the Pentagon unable to guarantee that military personnel are paid on time if it happens.  

“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. And that predictability is really, really important for us,” he said. “This would have a real impact on the pockets of our troops and our civilians.” 

Sen. Jack Reed (D-R.I.), who questioned Austin and Milley about the effects of a debt default during the hearing, warned such an event could give China “a huge opportunity to provide disinformation to American citizens to confuse them,” and make the U.S. look unstable on the world stage. 

“This could be one of the greatest strategic errors vis-à-vis China in history. Is that fair?” Reed asked Austin. 

“I think that’s an accurate statement,” Austin replied.