Hello, Guest!

Report: Debt-Ceiling Standoff Could Impact Defense Contractors

A standoff between the White House and House Republicans over the debt ceiling could delay the passage of a national security budget for fiscal year 2024, a scenario that could increase the possibility of the Department of Defense operating under a continuing resolution and hurt military contractors, The Wall Street Journal reported Friday.

The meeting at the White House on Tuesday, May 9, between President Joe Biden and House Speaker Kevin McCarthy failed to reach a consensus on the debt ceiling. 

With the deadlock, the U.S. government could default on its obligations as soon as June 1 if Congress fails to raise or suspend the borrowing limit.

A CR or stopgap measure would hamper production increases, raise the cost of military programs and delay the launch of new initiatives, including the Collaborative Combat Aircraft program, according to the report.

Concerns that spending on military programs could be reduced or delayed as a result of the impasse over the debt limit have driven investors from defense stocks, according to the report.

Rob Stallard, a defense analyst at Vertical Research Partners, said the performance of stocks of some defense contractors indicates a “wall of worry” among investors over the budget debate.

Video of the Day

GovCon Wire Logo

Sign Up Now! GovCon Wire provides you with Daily Updates and News Briefings about Industry News

Related Articles