The US government has experienced several shutdowns in recent memory, the most recent of which was in 2018. How would a government shutdown affect the average American, and just as importantly, what would it mean for our men and women in uniform?
These are great questions. A government shutdown would affect a large segment of our population, including federal government employees and military members. But what about military retirees, Social Security Recipients, and recipients of other government and military benefits such as TRICARE, VA benefits, and more? The answers to these questions vary, depending on several situations.
What Happens if the Government Shuts Down?
First, let’s start with a little background on the situation: The US government is required to pass a spending bill each year. Essentially, this is their budget – without it the government ceases many operations and as a result, many government agencies will stop work and many will stop paying employees. The current spending bill ends September 30th, and without passing a new spending bill, the government will essentially shut down.
Will Military Members Get Paid?
Update: The government has passed approved military pay during the government shutdown. However, most government civilians will not receive pay during the shutdown, and man government and military support facilities will be closed. Check with your base for a list of current closings.
The answer is yes, and no. Military members will receive their paycheck on October 1st, but there is the possibility that service members won’t get paid beyond October 1st if the government shutdown extends beyond that date. The Air Force Times recently quoted Rep. C.W. “Bill” Young, R-Fla., chairman of the House defense appropriations subcommittee, as saying, “All military personnel will continue to serve and accrue pay, but will not actually be paid until appropriations are available.”
In this case, employees would be paid for their work up to the day the spending bill expired, or September 30th. Earnings through September 30th would be paid on October 1st. So the first possible missed paycheck would be the mid-month paycheck due on October 15th.
What does this mean for military members? The first thing to consider is that this hasn’t happened yet – the government has a tendency to burn the midnight oil when a showdown looms, often working until the early morning hours to either pass the funding bill, or pass a bill that gives them a deadline extension. At this point, a band-aid is better than nothing. Should they fail to reach a new agreement on the funding bill, it is possible that the government could shut down many services and stop making payments.
How much will you be paid, and when? If the government shuts down, you will receive your pay earned through the date at which the government shuts down. At this time the deadline is September 30th, which would make for a normal paycheck on the regularly scheduled October 1st payday. As stated above, military members would continue working and accruing pay after the cutoff date, so the next paycheck would be normal as long as the funding bill was passed in enough time for payments to be made.
Military members will receive back pay. If the government shuts down and military members don’t receive paychecks, they will receive back pay for missed paychecks.
Some government employees may not be required to report to work. If a funding bill is not passed, most government employees will be temporarily furloughed and will not be required to work until a spending bill is passed. However, there are exemptions, especially for those whose work is required for national security, including most military members. These groups of military members will be broken into exempt and non-exempt categories. So operations in war zones, humanitarian relief, and many people involved in fields such as medical, security, and transportation will continue to work.
What about other benefits? Benefits related to your pay, such as BAS and BAH will not be paid during a potential government shutdown, however, other benefits may still be around, such as health care. Military members may also be forced to cancel leave because technically the government is not allowed to permit government workers to take paid leave while there is no spending plan, due to the way paid leave works from an accounting standpoint. At this point, much is still in the air, and these concerns may not have all been determined at this time. The Pentagon is awaiting more information before releasing official guidance for military members and their families.
Military related payments not expected to stop. The government shut down will only affect paychecks for government spending which must be approved on an annual basis. Some military related payments are made from a separate pot of money and likely won’t be affected. The following payments are expected to continue without interruption:
What about Social Security Benefits, Veterans Health benefits, Medicare, Medicaid, etc.? During the last shut down, the government continued sending Social Security Benefits to recipients. This should continue again. However, many non-emergency veteran health care services were curtailed during the shutdowns. Medicare, Medicaid and VA health care benefits would continue during a shutdown, but payments for the care may be later than normal. So be aware of this when planning any non-emergency or low-priority medical care.
Lesson Learned from the Last Government Shutdown
The last government shutdown affected just about everyone in some way. And for many of us, it was scary. Would we get paid? Would veterans benefits continue?
The answers changed depending on the day of the week. Until laws were changed, no one would get paid. Congress eventually passed a law that ensured active duty military members would get paid, but many non-military government employees were furloughed without pay (many of them will get back pay, but that doesn’t account for the problems many people incurred while they were without pay).
There were other problems: many members of the Guard and Reserves had their drills canceled, reducing their points for the year, and leaving them without their expected pay. Numerous base activities and benefits were temporarily canceled or shut down. The Commissary, base exchange, child care, and other base benefits were unavailable.
In short, it was a bad dream for most military members and government employees. And here is the worst part: it can, and likely will, happen again.
Like the last few times dealing with the debt ceiling, the government placed a band aid on the wound. They didn’t make a permanent fix. This has been going on for the last two years, and it is likely to continue unless the government passes a permanent solution. In the mean time, it is up to all of us to do as much as we can to take control of our lives. Here are some tips we can all use to get on a better financial footing so the next time something like this happens it will still be an inconvenience, but hopefully, it won’t be catastrophic.
We Need to Take Control of Our Finances
It is hard to be in control when you are in the military. You go where they tell you to go, you get paid when the government says you get paid, etc. I get that. But there are things we can all do to help ourselves be in more control of our financial lives.
It starts with our day-to-day and week-to-week living. Living paycheck to paycheck is tough, and for many, it is a reality. But we all need to try to get ahead of the paycheck game. (Yes, I know it is hard to live on an enlisted salary, but tens of thousands of military families do it every day).
Getting our of the paycheck-to-paycheck cycle: There are no secrets here. The only way to get out of the paycheck-to-paycheck cycle is to spend less than you earn (or earn more than you spend). It won’t happen any other way. Here are some recommended tips to get you started:
Build an emergency fund
An emergency fund is nothing more than a savings account you set up for a rainy day. You don’t touch it unless you absolutely need to. There is no magic number for how much money you need in your emergency fund, but a recommended starting point is $1,000 (you don’t have to stop there, just set that as a target to get started). That is a lot of money, but you don’t have to put it all in right away. Start saving $25 a week, or $50 a paycheck, or whatever you can afford to put away. The money in your emergency fund will help you deal with any unexpected expenses that pop up, such as a flight home, a car accident, or a government shutdown. Your emergency fund will help you avoid relying upon credit cards or other loans in an emergency.
Reduce your debt
Debt is nothing but an anchor to your financial growth. It is hard to cut back your spending when you have a large portion of your income tied up in payments every month. Every bit of debt you reduce now is less money you have to spend before it hits your bank account, making it easier to weather the storm of a government shutdown or other event that limits your cash flow.
Increasing your income is a great way to supercharge your savings or reduce the time it takes you to get out of debt. Not everyone can work a part-time job when in the military (and most military members shouldn’t). But there are other ways to earn more money, including having a side business, or a hobby that can generate income. Spouses may also be able to work part-time, either in or out of the home. Any additional income can make cash flow problems easier to deal with.
The government shutdown was not a static event. There was news about it in the weeks leading up to it, and a constant news stream during the shutdown. There was no permanent solution, so it is very possible this can happen again. Be ready if it does. If you see anything about this in the news, start preparing as soon as you can. Cut expenses where possible, save what you can, encourage your spouse to look for part-time work if possible, etc. Look at your personal situation and adjust as necessary. Preparing even a month out can reduce your stress levels.
Bank with Someone Who Understands
I recommend banking with a military financial institution such as Navy Federal Credit Union, Pentagon Federal Credit Union, or United Services Automobile Association (USAA). (There are likely other good financial institutions out there, I am recommending the ones I am most familiar with). All of these financial institutions are built to serve their members first, not shareholders like corporate banks. (Credit Unions by definition are owned by their members, and USAA is under a unique charter; they too are owned by their members). Because of these differences, these financial institutions are able to do things for their members that other financial institutions won’t do, such as offer interest free loans during a government shutdown or other forms of assistance to help members get through a difficult period. They may also offer member benefits during a PCS or deployment, better customer service than most large commercial banks, better financial products, fewer fees, and more. I recommend looking into joining one of these institutions if you aren’t already a member.
Take Control Where Possible
At the end of the day, the government shutdown was a major inconvenience for many people. And that is unfortunate, because the shutdown harmed the people the government is supposed to protect. That makes for an eye-opening experience for many of us. For me, it reinforced that I need to take as much control into my hands as possible.
UPDATE: Here are some tips for Dealing With a Missed Military Paycheck. These tips can show you how to get by on your own or how to contact your lender, landlord, or financial aid service to get help with this situation.