Which Pay Is Threatened By Which Issue?

One of the things that is so confusing about our country’s current financial mess is that there are so many variables.  First, we’re dealing with two completely separate problems:  the federal budget and the debt ceiling.  Second, the wide variety of government benefits and payments are each governed by different laws, accounting systems, and appropriations and authorizations procedures.  As a result, there are no quick and easy answers when someone asks me, “Will my payment be paid?”

I am going to try to address the different types of federal payments and how each payment can be affected by the different issues.  The lack of federal budget, or continuing resolution, means that our country is currently working with no spending plan, nor authority to proceed with many of its programs.  For purposes of definition, I’m breaking the federal budget issue into two parts:  short-term and long-term.  Short-term budget consequences are things that happened on 1 October 2013, when we no longer had an authorized budget or continuing resolution to fund operations until a budget could be passed.  Long-term budget consequences are things that could still happen as a result of the lack of budget or continuing resolution.  The debt ceiling crisis, which is estimated to occur on 17 October 2013, is when the country runs out of legal authority to borrow any more money and is also out of cash available to pay its bills.

This information is accurate as of writing and to the best of my knowledge.  If you’ve got conflicting info, please let me know in the comments.  If you’re able to include sources, that’s even better.  Thanks for your help.

Military Pay

Short-term budget consequences:  While there was much concern about active-duty military pay, the Pay Our Military Act was passed into law on 30 September 2013.  This law authorizes the Department of Defense to continue paying active-duty military servicemembers despite the lack of proper authorization and appropriation.  After the law was thoroughly reviewed by the Department of Defense lawyers, it was determined that the services have been given the authority pay essentially all pay and allowances, except Reserves Inactive Duty Training (IDT.)

Long-term budget consequences:  Military pay, as protected under the Pay Our Military Act, should not be affected by any outcomes of a long-term budget standoff.

Debt ceiling consequences:  If Congress and the President can not agree to raise the debt ceiling, all federal benefits are threatened.  If this occurs, the most likely outcome is a delay in the 1 November 2013 military pay, and any subsequent pays until the debt ceiling is raised.

Retired Military Pay and Survivor Benefit Plan (SBP) Annuity Payments

Short-term budget consequences:  Retired military pay is not part of the annual authorizations and appropriations process.  As a result, retired military pay is not affected by a short-term budget situation, or the related government shutdown.

Long-term budget consequences:  As of this writing, there are no reasons to expect that the government shutdown would affect retired military pay or SBP payments.

Debt ceiling consequences:  If the government does not increase the debt ceiling, payments for retired military pay and Survivor Benefit Plan annuity payments will be immediately jeopardized.   While exact details are not clear, it is likely that payments would be delayed.

Veterans Affairs (VA) Disability Compensation, Dependency and Indemnity Compensation (DIC), GI Bill, and Low-Income Veterans and Survivors Benefits

Short-term budget consequences:  None.  VA disability benefits are not tied to the annual appropriations and authorization process.

Long-term budget consequences:  The VA does not currently have enough money to continue to pay benefits indefinitely.  Secretary of Veterans Affairs Eric Shinseki warns that if the shutdown continues through late October, payments to 3.8 million disabled veterans will be jeopardized.

Debt ceiling consequences:  These benefits will be affected by a debt ceiling shutdown.  1 November 2013 payments would probably be delayed, as would any subsequent payments until the debt ceiling is raised.

All this is so confusing and complicated.  Questions, additional information, and thoughts, please?

 

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • Georgia

    Thanks for explaining the short term and long term effects of these issues going on in Washington. I pray daily that the heart of the law makers will be soften and inhouse fighting will stop. It is a shame to see our great country in the mess it is in. I ask the men and women that was elected to present this county to do so by remembering the ones who sent you.

  • Jessi H

    As always, thanks for the valuable information, Kate!

  • Dennis C

    Thanks Kate, at last a short simple explanation of why I can expect to not receive any payments the first of November. However, the bills are still due and I must eat. I thought I had my retirement years pretty well covered, but not if I have to depend on our government. Please do not take this wrong, I believe in the United States, its Constitution and the Bill of Rights. Its just that the people running it are all after their own agenda instead of supporting those that put them in their positions.

  • Marleen G

    Thank you so much Kate! Pray for us all! Does anyone know if the red cross or any other aid organizations can help us? My hero is rated 100%. We are really scared. I”ve been emailing news media personalities, my big question is WHY AREN’T THEY COVERING THIS AT ALL?

  • Twlight C

    Thank you for the help of the explanation!!!!!!! We truly rely on this income—My hero is also rated 100%. This has been the biggest scare for us and have come to realize that our government does not have our back for all the sacrifices of our military men and women. We are very proud of our country and do noTt want it to be in any way degraded. This has been totally irresponsible and has shown absolutely no pride what so ever!!