While political leaders in Washington are negotiating to avert defaulting on US debt obligations, defence officials are warning about the potenital national security fallout.
The US government faces two potential financial disruptions: failure by Congress to pass a new defence budget for fiscal year 2024, which begins in October, and failure to raise the USA’s borrowing limit.
Treasury officials expect the USA will hit that limit by the end of May, which could leave the government subject to defaulting on debt.
“It would be very serious,” says secretary Frank Kendall, the civilian administrator of the US Air Force (USAF).
Speaking during congressional budget hearings on 2 May, Kendall repeatedly fielded questions about the impact of financial disruptions on the USAF and national security more broadly.
The secretary says hitting the debt ceiling and defaulting would likely hamper long-term efforts at the Pentagon to modernise the air force’s ageing fleet.
“Interest on the debt is already roughly at the level of the defence budget,” Kendall notes. “If interest rates go up, which is what happens to you when you default… then that expense becomes much greater.”
In FY2022, the federal government spent $767 billion on defence and $475 billion on debt interest, according to the US treasury.
The US government issues bonds to fund daily operations, including to pay for defence and to make interest payments. The US treasury currently does not collect enough tax revenue to cover spending obligations approved by Congress.
Because US law caps the amount of debt the federal government can accrue, lawmakers must occasionally increase the limit to maintain services and continue making interest payments.
Barring extraordinary and untested measures – such as issuing a trillion dollar coin to the treasury – failure to raise the debt ceiling would result in a government default, which could increase future borrowing costs and affect defence funding.
“It would be devastating,” Kendall says.
Treasury secretary Janet Yellen has said the US government could default as soon as 1 June.
The potential that Congress will fail to pass an annual budget for FY2024 also looms.
When lawmakers cannot agree on full-year spending plans – often the case when Congress is politically divided, as it is now – they sometimes pass short-term funding mechanisms known as continuing resolutions. Ranging in duration from a few weeks to an entire year, the laws essentially extend previously approved budgets. They do not permit changes to existing funding levels nor provide funding for new programmes.
Pentagon leaders have long railed against using continuing resolutions to fund the Department of Defense, saying doing so delays long-term planning, including for developing and acquiring new equipment.
“We cannot afford that time,” Kendall says. “The Department of the Air Force needs timely authorisations and appropriations.”
The USAF’s FY2024 budget request seeks funding for at least 20 new or “significantly re-scoped” programmes, he notes. Those include the Next-Generation Air Dominance sixth-generation fighter initiative, an autonomous Collaborative Combat Aircraft programme and acquisition of Boeing’s E-7 Wedgetail airborne command and control platform.
Some officers, including USAF chief of staff General Charles Brown and chief of space operations General Chance Saltzman, have echoed Kendall’s statements.
Saltzman, whose US Space Force falls under Kendall’s purview, says the FY2024 budget request will allow the Pentagon to “out-innovate and out-compete potential adversaries… But only if the Congress passes timely appropriations”.
“We strongly desire consistent and stable budgets from Congress,” US Army Major General and top procurement officer Robert Barrie said at an army aviation conference in Nashville, Tennessee on 27 April.
The army is establishing an acquisition programme for Bell V-280 tiltrotors as it prepares to phase out Sikorsky UH-60 Black Hawks in coming decades. It is also preparing to flight test two prototype rotorcraft competing to be a new manned scout platform known as the Future Attack Reconnaissance Aircraft.
Army officials indicate that those programmes – collectively known as Future Vertical Lift – could be disrupted if Congress funds defence through continuing resolutions.