Military Members And The Fiscal Cliff: Will The Economy Effect You?

For many families, the federal budget is likely only an occasional concern. The looming fiscal cliff, a package of tax hikes and spending cuts set to kick in automatically on Jan. 2 if Congress can’t agree on a plan to avoid it, sounds scarier than it may actually be.

But when the federal government is your employer, your landlord, your healthcare provider and even your grocer, its budget woes are a much more pressing and much more personal concern.

Avoid Going Over the Fiscal Cliff

As the end of the year approaches, and no agreement on how to avoid going over the fiscal cliff has been reached, the Department of Defense and other government agencies are starting to plan for deep spending cuts.

For military families, the more than $1 trillion in automatic spending cuts scheduled to go into effect Jan. 2 could have an almost immediate impact on day-to-day life. The Pentagon is responsible for making about half of those cuts, including $54 billion in 2013 alone.

The good news

The Pentagon is a big organization, with many moving parts. Some of its biggest components, including combat operations and salaries for active-duty personnel and the GI Bill, are protected from cuts by law. Military retiree pay and TRICARE for Life, which covers Medicaid co-pays and premiums for retirees older than 65, are also safe.

Other important programs that military families may rely on, including Social Security, Medicare and Medicaid, are also generally exempt.

The bad

If no agreement is reached to avoid going over the fiscal cliff, then spending cuts will have to come from somewhere. At this point, it’s unclear exactly how the Pentagon will do its slashing; defense education and training programs are one possible area, as are research and technology, weapons development and some programs for transitioning troops. (The budget of the Department of Veterans Affairs, however, is exempt.)

Many of the most obvious cuts could be made stateside, impacting military families directly. Those living on-base are most likely to notice the effects pretty immediately. Here are a few areas subject to cuts:

  • Operations and Maintenance budgets. Basically, anything that happens on your military installation (including family programs and facility maintenance). Already, some people living on-base are reporting overgrown grass, closures of entertainment venues and stores, and the elimination of teachers, classes and extracurriculars at some schools for military children.
  • Commissaries. Budget cuts to commissary operating funds could lead to staff reductions, restricted hours, and possibly some store closures.
  • Defense Health Program accounts. Fewer funds available for the Department of Defense to purchase medications, pay civilian doctors for care, and operate military hospitals and clinics will affect access to care for military families.
Non-defense programs that military families rely on could also end up on the chopping block.
  • Federal education programs face an 8.2 percent cut. This could eliminate $106 million for Impact Aid funding, a program that supports civilian schools educating military children; $1 billion for special education programs; $140 million for student financial aid; and $1.3 billion for programs to help disadvantaged youth.
  • The WIC Nutrition program, which gives food vouchers and nutrition information to mothers with newborns, also faces an 8.2 percent cut, an elimination of approximately $543 million affecting as many as 700,000 people.

Photo courtesy of Antony J Shepherd.