Military Pay Deadline Could Press Congress for Compromise on Shutdown

WASHINGTON, D.C. — As the partial government shutdown drags on, the looming military pay date could spur Democrats and Republicans to reach an agreement. The shutdown has persisted with little hope for a swift resolution, but the scheduled paycheck for 1.3 million active-duty service members on October 15 may compel legislators and the White House to avoid the political fallout of missing the deadline.

Economists Ronnie Walker and Alec Phillips from a Wall Street firm expressed in a client note, “We believe the military pay date on Oct. 15 could be an important forcing event for a compromise to restore funding and expect the shutdown to end by mid-October.” Current prediction markets place a 71% probability that the shutdown will extend past October 14.

Despite both sides staying firm on their positions regarding the fiscal budget, the prospect of military personnel missing a paycheck may anger the public. This could potentially lead to a temporary measure known as a continuing resolution, which would allow the government to operate while negotiations continue, according to Goldman economists.

“We expect pressure to build on both parties to reach a compromise before then,” they noted. If not, the Department of Defense may find a way to pay troops despite the funding lapse or Congress might face pressure to approve specific funding for that issue.

The Senate is set to meet at 5:30 p.m. Monday, but few expect significant progress to occur. The President has warned that if no agreement is reached, some temporary layoffs could become permanent.

Other critical issues might also compel Congress to act, such as possible airport delays if Transportation Security Administration workers do not report for duty, and many other government services are currently paused pending a resolution.

Analyst Ed Mills from Raymond James remarked in a note, “Concerns over military pay, TSA operations, or delayed mortgage payments for service members could become catalysts for compromise. While a short-term continuing resolution remains the most likely outcome, we do not rule out the risk of a prolonged shutdown extending until November.”

Key dates to monitor include a potential expiration of Women, Infants, and Children benefits on October 13, the beginning of open enrollment for Obamacare on November 1, and Congress’s scheduled break for Thanksgiving on November 21, which coincides with one of the busiest travel periods of the year.

However, analysts at Pimco warn that the risk of the shutdown extending remains high, stating, “Shutdowns are easy, but reopenings are harder, and this one – which is the first full shutdown since 2013 – seems particularly intractable, at least for now.”