Additional Coverage:
Federal Government Shuts Down Amidst Funding Stalemate
Washington, D.C. – The U.S. federal government entered a shutdown at 12 a.m. on Wednesday after Congress failed to pass legislation to extend government funding. The lapse in appropriations marks the beginning of widespread disruptions as hundreds of thousands of federal employees face furloughs.
The shutdown stems from weeks of intense disagreements between Republicans and Democrats over the terms of a new spending measure. Democrats insisted on including negotiations for expiring health care tax credits in any funding bill, a demand Republicans largely rejected, advocating for a “clean” temporary extension to allow more time for full-year appropriations.
As a result of the impasse, federal agencies and departments are initiating shutdown procedures. While essential personnel, including active-duty military members, many federal law enforcement officers, and air traffic controllers, will remain on duty, nearly all employees will go without pay for the duration of the funding lapse. The Congressional Budget Office estimates approximately 750,000 federal employees could be furloughed, with a daily compensation cost of around $400 million, though back pay is typically issued once the government reopens.
The Funding Process Explained
Under the U.S. Constitution, Congress is responsible for approving all federal spending by the start of the new fiscal year on October 1.
Funding bills must originate in the House of Representatives, pass both chambers, and be signed into law by the President. In recent decades, lawmakers have frequently relied on short-term “continuing resolutions” (CRs) to avoid shutdowns and provide more time for comprehensive budget negotiations.
However, these funding battles often become leverage points for the minority party to push for policy concessions. Shutdowns carry significant economic and political costs; the last major funding lapse, from December 2018 to January 2019, resulted in a permanent loss of an estimated $3 billion, according to the CBO.
The Current Stalemate
This year’s conflict centered on Democrats’ refusal to support a funding extension without addressing enhanced tax credits for health insurance purchased through the Affordable Care Act marketplace, which are slated to expire by year-end. Republicans, holding majorities in both the House and Senate, argued that health care policy should be debated separately from government funding.
On September 19, House Republicans passed a continuing resolution to fund the government at existing levels until November 21. While Republicans touted it as a “clean” bill, Democrats demanded negotiations to secure their support. Given the Senate’s 60-vote threshold for most legislation, Republican leadership, with 53 seats, requires Democratic cooperation to advance any funding bill.
Democrats countered with their own proposal to fund the government until October 31, which notably included a permanent extension of the ACA tax credits. Both the House-passed CR and the Democratic proposal subsequently failed in the Senate.
A meeting between President Trump and congressional leaders on Monday also concluded without an agreement, with both sides attributing blame for the impending shutdown. Further votes in the Senate on Tuesday again failed to break the deadlock.
Impact and Outlook
With the government now shut down, federal agencies will halt all non-essential operations. Each agency is responsible for determining which employees are deemed essential. Beyond furloughs, the White House’s Office of Management and Budget recently directed agencies to consider potential reductions-in-force (layoffs) for employees in discretionary programs, a move echoed by President Trump’s remarks about cutting personnel during a shutdown.
The path forward requires lawmakers to agree on a spending bill to reopen the government. Senate Majority Leader John Thune indicated that the upper chamber expects to hold additional votes this week, though he noted that senators will observe Yom Kippur, which begins Wednesday evening. The Senate could theoretically approve the House-passed continuing resolution and send it to the President’s desk, but Democratic support would still be necessary.
The duration of this shutdown remains uncertain, with the previous record-long shutdown lasting 34 days.