US Government Shutdown: Why November Looms as a Potential Deadline

November: The Buzzword in Washington for Ending the Government Shutdown

In the halls of power in Washington, one word is echoing with increasing frequency: November. This word points to a potential window for ending the current US government shutdown stalemate. With the shutdown now lasting 15 days, analysts and politicians alike are grappling with the question of when and how this unfortunate episode will conclude. Some are even beginning to wonder if the busy Thanksgiving holiday travel season at the end of November might be affected.

Henrietta Treyz of Veda Partners, provided her clients with a timeline suggesting that early November represents the next likely moment when increasing pressures to end the shutdown may force legislators to come to the negotiating table. Policymakers seem to implicitly agree with this view, as there is an increasing focus on pressure points that will emerge by the end of the month.

Moves to Alleviate Shutdown Pain and Fallout

In an effort to mitigate the impacts of the shutdown, the US government has taken several steps. It has reallocated funds to pay active-duty military personnel and has overseen the injection of $300 million into a food assistance program for low-income mothers. However, House Speaker Mike Johnson warned that these actions are merely temporary fixes, and that the situation may be different by the end of the month when the next payroll is due.

Senate Majority Leader Chuck Schumer has also voiced concerns about the open enrollment period for healthcare in November, when Americans enrolled in Affordable Care Act (ACA) subsidized plans may have to re-enroll, and premiums could spike in the absence of action. He warned that people might have to choose between forgoing health insurance or watching their family members suffer.

Mounting Economic Costs

Warnings are mounting about the increasing economic costs of the shutdown. Treasury Secretary Benet has declared that “it’s starting to hurt,” and that the shutdown could be costing the US economy as much as $15 billion per day.

Different Scenarios for November

In the absence of any negotiation moves between the two parties, analysts have raised their forecasts regarding the duration of the US government shutdown. The market is bracing for at least another three weeks of shutdown until at least November 4th. Some argue that this will have a mildly negative impact on the market, as politics will overlap with any final shutdown timeline.

Veda Partners also expects that early November is when the increasing costs of the shutdown may force both sides to compromise. The firm anticipates that the need to provide relief to farmers will force Republicans to come to the negotiating table with Democrats regarding their healthcare demands. The firm believes that the ultimate solution will be a combination of relief for farmers and an extension of Affordable Care Act subsidies.

Signum Global Advisors is also focused on November, but is currently expecting the shutdown to end “as early as possible in November 1st”. Their argument is that those end-of-the-month deadlines surrounding healthcare and troop pay will provide a forcing mechanism that both sides will want to address in advance.

Thanksgiving in the Crosshairs

Perhaps the most devastating scenario is a shutdown that drags on into mid-to-late November, affecting the busy Thanksgiving travel season. Scattered travel disruptions have already emerged, as US air traffic controllers and Transportation Security Administration (TSA) staff are currently required to work without pay.

Republican leaders have begun issuing warnings that these impacts could worsen as they continue to pressure Democrats. House Majority Whip Tom Emmer has cautioned that “airports will be riddled with flight cancellations and delays during the busiest travel time of the year”.

If the shutdown continues until the end of this week, it will be the third-longest government shutdown in US history. And if things continue at the current pace until mid-November, it will set a record, potentially surpassing the 34-day shutdown that began in 2018.