As congressional negotiators say they may be getting closer to a deal to raise the country’s debt limit, Veterans Affairs leaders are warning that they have no way of protecting veterans from the financial fallout if an agreement isn’t reached.
“There is no blueprint of what happens to VA if the debt limit is reached,” VA Secretary Denis McDonough told reporters on Wednesday. “But what is clear is that without the ability for the federal government to borrow funds, there is a very real potential that any government program or payment would be halted or severely delayed.”
Treasury officials have warned that the X-date — the day which the U.S. government will not be able to pay off its financial obligations without an increase in the country’s $31.4 trillion debt ceiling — could come as early as June 1.
With the deadline less than a week away, White House officials and House Republican leaders are expected to work together on a compromise bill in hopes of passing something before then.
Unlike ahead of a partial government shutdown, when federal agencies issue warnings to impacted employees and beneficiaries, the department is not planning to issue any detailed guidance on the effects of a debt limit breach.
“There’s just no precedent for default,” McDonough said. “So it’s difficult to know the precise impacts on specific federal programs.”
But they could be severe, with a wide range of VA benefits and payments potentially delayed for days or weeks if the government can’t pay its bills.
Veterans benefits checks — about $12 billion in payouts are due to 7.1 million individuals early next month — and paychecks for more than 450,000 department employees are the two biggest possible casualties.
But McDonough warned that other payments from VA are at risk as well: $2.6 billion in checks due to outside health providers, some of whom may stop veterans’ planned care if payments aren’t made; $835 million for roughly 57,000 outside pharmacy orders, which could disrupt veterans medications; and $3 billion in support stipends to veteran small businesses and other outside groups.
If any of that routine business is delayed or disrupted, McDonough warned, the effects could be “catastrophic.”
Earlier this week, Treasury officials announced they may be able to stave off the X-date a short while past June 1 by auctioning off new treasury bills in coming days. But they also warned that those moves will only provide temporary relief, not a lasting solution.
Leo covers Congress, Veterans Affairs and the White House for Military Times. He has covered Washington, D.C. since 2004, focusing on military personnel and veterans policies. His work has earned numerous honors, including a 2009 Polk award, a 2010 National Headliner Award, the IAVA Leadership in Journalism award and the VFW News Media award.