The U.S. government will be closed Wednesday if Congressional Democrats and Republicans are unable to reach a critical funding law agreement.
The closure could temporarily suspend some U.S. government services and put on hold or end the pay of government employees.
Recommended Stories
List of 4 itemsEnd of the list
It was a normal practice to place staff on “Furlough” during the previous government shutdown, but it means that they will be resurrected and receive wages once the government is back in operation – this time the Trump administration is threatening to fire people forever.
Why is the government shut down?
The new federal fiscal year begins on October 1st, but Congress has not agreed to the required short-term funding bill.
Republicans control both Congresses.
In the Senate, Republicans hold 53 seats and 47 Democrats. Republicans have not been taken away from the 60 votes needed to pass the law. The Senate majority leader is Republican John Tune, and the minority leader is Democrat Chuck Schumer.
In the House of Representatives, Republicans hold 220 seats, while Democrats hold 212. The House Speaker is Republican Mike Johnson, the majority leader is Republican Steve Scullyse, and the minority leader is Democrat Hakeem Jeffries.
The discrepancy comes against a short-term spending bill introduced by Republicans, laying out funds for government operations until November 21st. Without it, the government cannot function.
What exactly is the debate about?
The main obstacle is the ongoing funding of the Affordable Care Act, also known as Obamacare, a professor emeritus at Westminster University in London, with John Owens, a political professor at Westminster University in London.
Democrats have refused to support the Republican bill unless they cancel the recent Medicaid cuts enacted under Trump’s “One Big Beautiful Bill” in July.
Democrats also want to extend the special tax credits that reduce the costs of health insurance for Americans. These credits are set to expire later this year.
So Senate Democrats have proposed various alternatives, including a 7-10-day fundraising bill, and will propose other possible measures that can be implemented simultaneously, two Senate Democrat sources told Reuters on Monday.
However, Republicans have rejected these proposals, and so far neither side has shown any indication of backdown. Earlier this week, US President Donald Trump cancelled consultations with Democratic leaders and deemed their demands “unsafe.”
As a result, the council is in Limbo and we are not expected to vote for anything this week.
On Monday, Congressional leaders left the meeting with Trump without reaching a deal. Schumer and Jeffreys denounced Republicans for the imminent closure.
Hours after that meeting, Trump posted a “Deep Fark” video generated by Schumer and Jeffries’ AI, using audio produced on his true social platform. Schumer portrays Jeffries wearing a big sombrero and a handlebar mustache while saying, “If we give all these illegal alien healthcare, we might be able to put them by our side so that they can vote for us.”
The video has been accused by Democrats of racist dog whists alluding to Mexicans. “It’s a nasty video and we’re going to keep making it clear that bias won’t let you go anywhere,” Jeffries said. “We are fighting to protect American healthcare in the face of unprecedented Republican attacks.”
How likely is the government to be shut down?
Disagreements about healthcare funding are far from being resolved. Additionally, Owens explained that the Senate agreement must also be approved by the House of Representatives. There, the Trump Party has a small right majority that is closely matched with him. But some House Republicans fear the impact of district healthcare cuts.
“Next November midterm elections put a lot of pressure on the vulnerable Republican senators, especially those who are vulnerable in elections, to support his cuts,” Owens said.
“It remains to be seen whether the current impasse will lead to closures. The effect will depend on its length, the ultimate will of Trump and his party, and the Congressional Democrats who will reach some sort of compromise.”
Trump himself appears to be unoptimistic about resolving the impasse. “I don’t know how to solve this issue,” CBS News reported citing him on Sunday.
US Vice President JD Vance also warned that the government is denounced the Democrats and is heading towards shutdown. “I think we’re heading towards closure because Democrats don’t do the right thing,” Vance told reporters after Monday’s meeting.
If Congress does not agree to the short-term funding bill by midnight on Tuesday (Wednesday at 04:00 GMT), the closure will prompt a federal closure at 12:01 am (04:01 GMT) on Wednesday.
On Tuesday, Polymarket, a crypto-based forecast market, brought the possibility of government shutdown to 86%.
What happens during the government shutdown?
Government closures occur when a lapse of funding causes some federal government agencies to force non-critical functions and shut down operations.
Under US law, if the government closes, agencies must “flew” employees who are “excluded or discharged” or “not excluded” from the hospital. Once the shutdown is over and operations resume, a 2019 bill enacted by Congress, which will allow decisive employees to receive a receding salary.
“Exceptional Employees” are federal civil servants in the United States who “protect life and property.” During government shutdowns, except that employees stay at work, but there will be no payment until the closure ends.
Each agency develops its own plans for the closure and decide which employees will stay and who will be bored.
Owens estimated that about 900,000 federal workers would be fired if the shutdown occurred.
Some government work continues during the closure. Military members, the FBI, CIA, and air traffic controllers continue to function.
Programs funded by mandatory spending such as Social Security and Medicare will also continue during the closure.
The non-tax-funded US postal service continues during the closure.
Has the US government been shut down before?
Yes, recently during Trump’s first term as president.
Two years after Trump’s first term, in December 2018, Congress failed to reach a federal fundraising agreement, prompting a partial closure for 35 days, the longest in modern US history.
This has resulted in the complete or partial closure of nine federal departments: agriculture, commerce, homeland security, housing and urban development, internal, justice, state, transportation and the Treasury.
Trump had requested Congress to give him money to build a border wall between the United States and Mexico. The House Speaker at the time was Democrat Nancy Pelosi, who disagreed with this. Trump retreated 35 days later. During the standoff, roughly 340,000 of the 800,000 federal workers at the affected agency were given up.
During the administration of Democratic President Barack Obama, there was a 16-day government closure in October 2013. The closure was driven by violent family Republicans who argued that Obamacare should be blocked under the spending bill. The closure was resolved after bipartisan talks in the Senate. Again, Republican demands were not met.
The United States also experienced government shutdowns in the 1970s, ’80s and ’90s, and eight times under Democratic President Bill Clinton, Democrat Jimmy Carter, and Republican President Ronald Reagan.
What’s the difference this time?
Now, on September 24, the White House Management and Budget Office (OMB) sent a memo to the agency instructing its agencies to prepare for a massive layoff of federal workers if the government closes. The agency must send the proposed staff reduction plan to the OMB and notify the employee in the event of a shutdown.
This is a more aggressive move compared to the closures before fasted employees resurrected after government operations resumed. In this case, these federal employees will be fired forever and will not be resurrected after government operations resumed.
Congressional Democratic leaders denounced the memo. “This is an attempt to intimidate,” Schumer wrote in response to X’s notes on September 25th. Jeffries answered in the same way, posting on X on the same day.
What else can this be affected?
If the closure occurs on Wednesday, the monthly employment report from the Bureau of Labor Statistics (BLS) scheduled to be released on Friday could result in delays as it is one of the agencies that BLS closes.
Important data on inflation, which is scheduled to be released in mid-October, could also be delayed.
This can prevent the industry and market from receiving critical data to make investment decisions, and could affect the economy at a time when US debt is high.
