Trump says administration has ‘identified funds’ to pay troops during shutdown
News Summary
U.S. President Donald Trump announced on October 11, 2025, that his administration has “identified funds” to pay troops next week, despite the ongoing federal government shutdown. Trump stated in a Truth Social post that, using his authority as Commander in Chief, he would direct his "Secretary of War," Pete Hegseth, to utilize all available funds to ensure troops are paid on October 15. There was no immediate comment from the White House regarding whether all or some military members would be paid, or which specific funds would be used. Economists highlighted that the October 15 payday for 1.3 million active U.S. military personnel could significantly heighten the political stakes of the impasse. Goldman Sachs economists anticipate that this military pay date could serve as a crucial “forcing event” for a compromise, expecting the shutdown to conclude by mid-October.
Background
U.S. federal government shutdowns occur when Congress fails to pass appropriations bills, leading to the closure of non-essential government services and the furlough or unpaid leave of some federal employees. Government shutdowns were a recurring feature during Trump's previous presidential term, often marked by intense political wrangling over budget allocations and policy priorities. This specific 2025 shutdown has been ongoing, with the Senate repeatedly failing to pass funding bills to resolve the impasse. Government shutdowns typically have adverse effects on economic activity and public morale. Earlier reports indicated that the shutdown had already led to layoffs of numerous federal workers and the furlough of nearly half of the IRS workforce, underscoring its broad impact.
In-Depth AI Insights
What are the legal basis and political motivations behind Trump's executive action to pay military personnel during a shutdown? - Legally, the President's authority as Commander in Chief primarily pertains to military operations and command, not overriding Congress's power of the purse. Utilizing "all available funds" for pay could involve reappropriating funds not explicitly designated for this purpose, potentially infringing on congressional fiscal authority and facing legal challenges. - Politically, this move aims to alleviate direct financial hardship for military families, thereby mitigating public discontent with the shutdown and shifting blame more decisively onto Congress. It's a strategy to demonstrate decisive presidential leadership during a political stalemate, potentially setting a precedent for future executive actions that bypass the legislature. - The action seeks to garner support from the military community and related constituencies, while maintaining essential government functions to limit the negative impact of the shutdown on national security and public order. What are the deeper investment implications of Goldman Sachs economists viewing the October 15 military pay date as a "forcing event"? - Goldman Sachs' analysis suggests the market perceives this shutdown as a political stalemate rather than a long-term structural economic problem. The military payday, as a clear and highly publicly sensitive deadline, is seen as a potent political pressure point. - A "forcing event" implies this date is likely to compel a compromise between Congress and the executive branch, thereby reducing the duration of the shutdown and its cumulative negative economic impact. This could provide a short-term boost to market sentiment as uncertainty is expected to abate. - For investors, this suggests that associated market volatility (e.g., in stocks of government contractors, short-term Treasury yields) may be temporary, with a return to normalcy expected upon resolution. However, if the stalemate is not resolved as anticipated, markets will face greater uncertainty. What long-term implications could arise for U.S. governance and fiscal discipline if executive circumvention of congressional appropriations becomes normalized? - In the long run, such executive actions could erode Congress's "power of the purse," weakening the legislative branch's checks on the executive and fundamentally altering the balance of power within the U.S. constitutional framework. - Fiscal discipline could suffer. If presidents can unilaterally reallocate funds to avoid the immediate political consequences of a shutdown, Congress might lose some urgency in budget negotiations, potentially leading to more frequent impasses and lax control over deficits. - For financial markets, this uncertainty could lead to higher risk premiums, especially in the U.S. Treasury market, as investors question the stability of the U.S. fiscal system and its willingness to meet obligations. This could impact the dollar's global reserve currency status and the long-term attractiveness of U.S. assets.