Military pay date may pressure Trump and Congress if shutdown drags on

As the government shutdown drags on with little hope of a quick resolution, a situation involving the U.S. military could push the warring factions in Washington to come to an agreement.

No, soldiers won’t be called into duty to force Congress to get back to work.

However, a looming paycheck scheduled in the middle of October for the 1.3 million active-duty members of the armed services might convince legislators and the White House that missing the date won’t be worth the political cost.

“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,” Goldman Sachs economists Ronnie Walker and Alec Phillips said in a client note.

The Wall Street firm noted that prediction markets are placing high odds that the shutdown will last beyond the deadline. Polymarket reflects a 71% probability that the shutdown will run past Oct. 14.

While the respective sides have dug in their heels regarding the fiscal budget, missing a pay period could rile public anger. At the least, it could lead to a temporary bill known as a continuing resolution to allow government to operate, the Goldman economists said.

If not, then that could mean an even longer stalemate.

“We expect pressure to build on both parties to reach a compromise before then,” they wrote. “That said, if this pressure leads to an alternative outcome — the Dept. of Defense might find a way to pay troops despite the funding lapse, or Congress might come under pressure to approve funding for that specific issue — there are few other specific forcing events on the calendar that could lead to a restoration of funding.”

The observations come with scant hopes of a resolution.

The Senate has scheduled a vote for Monday at 5:30 p.m., but observers expect little progress. President Donald Trump has threatened that if no agreement is reached, some of the temporary layoffs resulting from the impasse could become permanent.

There are myriad issues that could force Congress’ hand beyond the military pay. Data releases that policymakers rely on have been suspended, airport delays are a looming possibility depending on whether Transportation Security Administration workers show up, and most other government services are closed pending an agreement.

Still, there are fears that neither side will budge.

“Concerns over military pay, TSA operations, or delayed mortgage payments for service members could become catalysts for compromise,” Ed Mills, Washington policy analyst at Raymond James, said in a note. “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.”

Other dates to watch include a potential Oct. 13 expiration of Women Infant Children benefits, Nov. 1 when open enrollment begins for Obamacare and Nov. 21, when Congress is scheduled to break for Thanksgiving at the busiest period of travel during the year.

However, the risk remains that the shutdown will continue, according to Pimco analysts.

“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,” the firm said in a note.