Another Pay Crisis Averted – Now What?

Well, it appears that the federal debt ceiling crisis that could affect military pay and veteran benefits has (probably) been averted.  Now what?  This is not the time to relax.  The compromise contains all sorts of spending cuts that are going to impact military families, one way or another.

Key factors in the deal include:

  • Up to 2.4 trillion dollar increase in the government’s ability to borrow (the debt ceiling)
  • Mandated cuts to federal spending, including the Department of Defense
  • No impact on military pay and benefits, for now.

Okay, so we’re clear, right?  Not so fast.  For starters, this entire debacle has made our country’s financial situation look bad to the outside world.  Even if the United States’ debt rating isn’t downgraded, experts say that interest rates are likely to rise.  Rising interest rates are not really a good thing for most people.  (Unless you’ve got a stash of cash you’re trying to keep safe and grow.)  Housing costs will probably increase.  Inflation seems pretty likely.

More specific to military families, the Department of Defense is going to have to do some serious cutting.  Where can they begin?  The basic choices are equipment/technology, physical troops, and “extras.”   My guess is that the first things to go will be the extras:  child care, gyms, all those freebies they give out at events.  We all know about programs that aren’t worth the money being spent on them.  Hopefully, the powers that be will make the least painful cuts first.  Once they’ve trimmed programs, they’re likely to start looking at troops.  Quantity, quality, pay raises, and the long-term costs of keeping people on the payroll.  Technology and equipment are expensive, but they are also often locked into contracts that are equally expensive to break, so they’re likely to be late in the cutback game.

Military families need to be aware that times are going to be tough, and prepare appropriately.  As Philip Ewing says in his piece, The City On The Edge of Forever, “Whatever happens, Sunday’s announcements about this debt bargain don’t mean the end of this story — in fact, they might not even be the end of the beginning.”

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.
  • Dan from Indiana

    My guess is that 3 or 4 years from now the Republicans will really regrat forcing these “cuts” in Defense – when it means closing facilities in THEIR DISTRICT!

    • Military Vet

      The democrats OVER SPENDING has caused this!

      • LCDR J.

        There was a budget surplus when the republicans took charge of the country in 2000. The debt ceiling was raised 13 times under Bush. Both parties have created this mess.

      • Chic Di

        Why is everybody starting with [democrats and republicans].
        try Obama. He went crazy fist years in office. Obama care? Yeah right. BIG WASTE. Bailouts of outrageous amounts with NO STIPULATIONS OR ACCOUNTABILITY. Free check made out ofOUR account.



  • E. Couture

    It is a shame that they cut the militaire on Pay and Housing, bring our Boy’s home and look all the money you save,beaucrats stop giving yourself Pay raises.

  • BRG

    I’ll say it again… Our government needs to tax the UPPER (RICH) class & corporate companies ( I really can’t believe that they have been allowed for the greatest part to be exempt from all of this!!!) & participate/contribute in the giving of taxes etc… This is unbelievable & unfathomable to say the least!!! Every other country in the world tax all classes of people… What’s wrong with this picture?

    • Avenger

      Well you do realize that the vast majority of lower income citizens pay NO income tax at all don’t you? About 48% of Americans pay ZERO taxes, and I’m NOT talking about the rich!! What’s wrong with THIS picture?

      • disabled-gulf-vet

        I’m a single mom trying to live off my military disability. I cannot work due to multiple injuries during my military service. We don’t have cable, long distance, internet – we don’t get to see movies, eat out, or even buy new clothes when ours wear out! I can’t imagine what I would do if I had taxes taken out of my tiny check. What about single moms trying to go to college on welfare? They live off $385 a month & a studio apartment here is about $700 a month. How are they to better themselves for their children’s future & to contribute to society if they are taxed? Some people actuality need help through no fault of their own.

  • S.G.Jones

    Leave the costs of the nation’s protection along. Before taking away what little the military gets, why doesn’t Congress and the President cut out the the “Freebies” they get. I bet that would save a lot, for instance, sending their children to “Ivy League” colleges and not having to pay for the student loans; making our lawmakers stay in for more than one term, or maybe 10 years before they are entitled to retaining their full pay for the rest of their lives?

  • mike e.

    i served 20 trs in the navy i hear people bitching about congress but when democrats werent doing the job people said oh lets put the repulicans on the case well guess what people you put the so.b.s in there so deal with it

  • Bill

    Why is it that military active and retired get hit with changes to the system while our elected officials give themselves pay raises, free medical care for life after serving one term, college tuition for their dependents. Also they exempted themselves from this OBAMA Care fiasco . If they want to save money they should have Air Force one painted yellow and have TAXI painted on the plane since Obama seems to use it as his taxi service during his many trips he takes which are really Camoflaged election campaign stope. Wake up America.

  • BARBARA Ignatious

    VOTE out the MAN in the WHITE HOUSE and his family, tell the man to get his mother in law out of the WHITE HOUSE, what the first family is doing to the WHITE HOUSE is terrible. Why not move the rest of the family in, HE and everyone around him is a joke . WAKE up AMERICA and vote him and all his RICH friends out, if you all do not, then keep your mouth shut.

    • David

      Sorry, Barbara, but Obama proposed less defense cuts than what has been planned in the new deal. No defense cuts would have been needed had the tax cuts not been extended. Considering that less than 1% serve in the nations military. I think it is only fair that the rest of the country pay some tax as their share of the sacrifice.

  • carole

    maybe all of you can tell me why my son, who is retired army and did 2 tours in Afghanistan and came home with a blood disorder and PTSD cannot get his military benefits…you know the ones that he deserves for serving his country for 19 1/2 years until they forced him out because of the blood disorder. they promised to pay him for going to his regular appointments at the local VA but they lied, he hasn’t been paid, they haven’t given him some of the other monies he is owed, but they can give Congress a raise. right now the us gov is owing him at least $10,000, will he ever see it, I doubt it, will any of our boys and girls coming home from Iraq and Afghanistan ever see what is rightfully theirs for serving their country, I doubt that too…….By the way his dad was a Vietnam Vet and served in the USNavy for 23 1/2 years. sosrry I have no love for congress right no

    • Jim B

      Have your son join the VFW, theycan help. Also have him contact an attorney specializes in Vetreans disability cases. somethin WILL happen in his favor.

  • KC7717

    The big LIE is this… Republicans and Democrats are closer together than further apart in their ‘wants’ and ‘needs’. Yes, one party is more business leaning with some governance in it and the other is more Government-leaning but also understands we need good business practices too. This is really about class warfare. We have been sold a bill of goods for decades by the rich and powerful who NEED us to take our eye of the ball, mainly theirs. It is not the 48% poorest who pay no taxes that are the problem – they have no money and what they might pay would have no impact. It is not illegal immigration whose low wages keep our prices low. Okay, they do cost us but… nothing, not one scintilla, not even close to the billions – no trillions that the piggish corporations, banks and wall street thieves have sucked out of the middle class, stashed in their off-shore accounts or moved to overseas factories. To be continued….

  • kc7717

    This is the BIG lie people. But here’s what they don’t want you to get… It is ‘us’ those of us who work for a living that FUND their greed as the wage slaves we have become for their benefit! What would happen if we all, collectively, as a class – middle class, working poor decided to ‘pay ourselves back’ – the trillions given to bail out the rich powerful and greedy. It was our money, our sweat, our tax dollars they stole. What if we decided to take a ‘bill’ vacation for a couple of months or until Government fixed the injustices, the tax code, produced a real jobs bill, brought jobs back to America for Americans? A grassroots movement to target a month in the near future where if the American people’s will was not done – we withheld payment of any of our so-called ‘debt’, i.e. mortgages, insurance, car loans, investments, etc. as a class. Man! Haven’t we paid enough and for what? Now that would be justice! :) Stop fighting your neighbor – Republican or Democrat – they are not the problem – it’s the United Corporation of America!

  • Tim

    Congress, or the District Of Clowns, are nothing more than greedy, corrupt individuals who serve one purpose and one only…padding their own offshore accounts and those of their favored cronies….believe it or not, common sense could really serve our country’s leaders and get America headed back in the right direction…Unfortunately, roughly 80 per cent of Congress have committed some type of felony and seem to above the law concerning punishment…its everything from sexting, sexual harassment, bank fraud, embezzling, just to name a few…do they serve time in a hardcore institution for their crime? no way..only a resort style while collar facility where they can “vacation” for a short time…here are my thoughts: you cannot be the President unless you have done real time in the active military (min 4 to 6 years)…that way, you may at least have an idea of what its really all about and the Massive amounts of money the military troops take home each payday RIGHT!!!!!!!! make each young man and woman serve two years in the military as Germany does…..abolish Congress or the retirement pension these greedy and corrupt weasels receive for serving only one term…stop the war and take the billions used to currently support it and redirect that money elsewhere….cut Secret Service protection for ex Presidents and their families…guess what? most people don’t really care about you any more…these are just a few of my suggestions….in closing, its difficult enough to ensure good morale in the military…hard to retain people…now, your proposed cuts to retirement are going to lower morale and lead to the separation of a lot of good troops…possibly, most of them….the forces Congress and our other illustrious leaders count on to protect them….wake up people, they do not and never will care about the common man/woman…just the wealthy…and finally, you should not be able to be VP of the U.S, if you avoided the Vietnam draft…..and then become wealthy from your devious deeds in the Oil industry….that’s right Dick Cheney…you know it’s true…