Pentagon chiefs: Debt default is bad for troops, good for China

Defense Secretary Lloyd Austin said a default would mean a “substantial risk to our reputation” that Beijing could exploit.

The Pentagon’s top civilian and military leaders have a warning for lawmakers fighting over the government’s borrowing limit: a default would be a win for China, and would endanger troops’ pay.

Defense Secretary Lloyd Austin and Joint Chiefs Chair Gen. Mark Milley on Thursday told the Senate Defense Appropriations panel that breaching the debt limit would significantly damage U.S. standing in the world and call into question the country’s global leadership.

“China right now describes us in their open speeches, etc., as a declining power,” Milley said. “Defaulting on the debt would only reinforce that thought and embolden China and increase risk to the United States.”

Austin added that a default would mean a “substantial risk to our reputation” that China could exploit.

The comments are the latest admonition that a default would harm national security, as Republicans and President Joe Biden spar over raising the debt limit with as little as a few weeks until the government runs out of money to pay its bills.

The most substantial impact, Austin said, would be troops’ pay. If the federal government defaults, the Pentagon would not be able to guarantee that military personnel are paid on time.

“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,” Austin testified. “But this would have a real impact on the pockets of our troops and our civilians.

“We won’t be able to pay people like we should,” he added. “And I think that’s something that China and everybody else can exploit.”

Director of National Intelligence Avril Haines told Congress last week that Russia and China would likely seize on the domestic chaos created by a default.

Biden and congressional leaders are slated to meet again on Friday to continue debt limit negotiations. House Republicans, led by Speaker Kevin McCarthy, are seeking to slash spending in exchange for raising the borrowing limit, while Biden and Democrats are insisting on a clean renewal.

Austin and Milley were pressed by Defense Appropriations Chair Jon Tester (D-Mont.) and Sen. Jack Reed (D-R.I.), an appropriator who also chairs the Armed Services Committee, to outline the effect of a default.

Reed warned that a default would make China appear to be “the adult in the room” on the world scene.

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

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

The warnings from top national security officials also stand in sharp contrast to former President Donald Trump, who downplayed the impact of a potential default.

In a CNN town hall on Wednesday, Trump, who presided over multiple debt ceiling increases, said Republicans should let the U.S. default if Democrats don’t agree to steep cuts to spending.