The United States government has entered its first shutdown since 2019, after Congress failed to approve a stopgap spending deal before the midnight deadline. At the heart of the deadlock is a bitter clash between President Donald Trump and Democrats over healthcare funding , with both sides refusing to yield ground.
The shutdown, which began early Wednesday, will furlough an estimated 750,000 federal employees and halt or disrupt a wide range of government services. Unlike previous shutdowns, however, the Trump administration appears not only prepared for an extended standoff but is openly threatening to make many of the temporary job losses permanent.
Also read: How US govt shutdown is impacting millions
In the past, shutdowns have been politically damaging for both parties, but the current White House strategy signals a willingness to use the crisis to reshape the federal workforce.
Why this shutdown is more serious
Traditionally, shutdowns end with federal workers returning to their jobs and agencies resuming operations as before. This time, however, the Trump administration’s Office of Management and Budget has directed agencies to prepare “reduction-in-force” notices: Permanent layoffs in programmes deemed inconsistent with the president’s priorities.
The White House has already overseen deep cuts across government, bolstered by the newly formed “Department of Government Efficiency.” Officials have indicated that the shutdown could serve as an opportunity to accelerate these reductions, effectively shrinking the federal workforce far beyond the temporary impact of furloughs.
Labour unions have reacted angrily. AFL-CIO president Liz Shuler accused Trump of treating workers as “pawns for the president’s political games,” warning that families already hit by budget cuts now face further insecurity. House minority leader Hakeem Jeffries added that Democrats “will not be intimidated” by threats of mass firings, while urging Trump’s budget director Russell Vought to “get lost.”
What's closed and what's not
Not all federal functions grind to a halt. Agencies responsible for protecting life and property — such as border protection, air traffic control, law enforcement, and in-hospital medical care — continue to operate. Social Security and Medicare cheques will still be distributed, but services like benefit verification and card issuance are suspended.
Non-essential workers, including those in education, research, and regulatory agencies, face unpaid furloughs. This means student loan processing, food inspections, and operations at national parks will be curtailed. In the last major shutdown, limited staffing at parks led to vandalism and environmental damage, raising fears of a repeat.
The impact on research institutions is particularly stark. The National Institutes of Health will continue care for existing patients but suspend new clinical trials. The Food and Drug Administration has warned of delays in drug approvals, potentially slowing innovation and patient access to treatments.
Impact on US economy
Economists estimate that each week of shutdown could trim 0.1 to 0.2 percentage points from US economic growth, though some of this may be recovered once funding resumes. The Congressional Budget Office put the daily cost of furloughed employees’ lost compensation at around $400 million.
Markets have so far remained relatively calm, reflecting a history of muted financial fallout from past shutdowns. But this crisis is unfolding in an economy already unsettled by tariffs, technological disruption, and rising healthcare costs. The delay of key federal data releases, including the jobs report, is expected to add further uncertainty for businesses and investors.
Trump has suggested the shutdown could be used to cut programmes “Democrats like” and to remove workers aligned with his opponents. Such rhetoric, combined with the administration’s preparedness to make layoffs permanent, suggests the long-term damage could exceed previous episodes, both for federal employees and for public trust in government.
What led to the shutdown
The deadlock is rooted in Trump’s refusal to extend expiring Affordable Care Act subsidies and reverse Medicaid cuts imposed in his sweeping domestic policy bill earlier this year. Democrats insist that funding cannot continue without addressing those healthcare concerns, while Republicans argue that Democrats are “holding the government hostage.”
With neither side willing to compromise, Washington is bracing for a potentially prolonged shutdown. For Trump, the standoff represents a chance to push through his agenda of shrinking government. For Democrats, it is a high-stakes fight over healthcare — an issue where polls suggest they hold public support.
As Senator Chuck Schumer put it: “If the president were smart, he’d fix this healthcare crisis right away. Americans are going to hold him responsible.”
The shutdown, which began early Wednesday, will furlough an estimated 750,000 federal employees and halt or disrupt a wide range of government services. Unlike previous shutdowns, however, the Trump administration appears not only prepared for an extended standoff but is openly threatening to make many of the temporary job losses permanent.
Also read: How US govt shutdown is impacting millions
In the past, shutdowns have been politically damaging for both parties, but the current White House strategy signals a willingness to use the crisis to reshape the federal workforce.
Why this shutdown is more serious
Traditionally, shutdowns end with federal workers returning to their jobs and agencies resuming operations as before. This time, however, the Trump administration’s Office of Management and Budget has directed agencies to prepare “reduction-in-force” notices: Permanent layoffs in programmes deemed inconsistent with the president’s priorities.
The White House has already overseen deep cuts across government, bolstered by the newly formed “Department of Government Efficiency.” Officials have indicated that the shutdown could serve as an opportunity to accelerate these reductions, effectively shrinking the federal workforce far beyond the temporary impact of furloughs.
Labour unions have reacted angrily. AFL-CIO president Liz Shuler accused Trump of treating workers as “pawns for the president’s political games,” warning that families already hit by budget cuts now face further insecurity. House minority leader Hakeem Jeffries added that Democrats “will not be intimidated” by threats of mass firings, while urging Trump’s budget director Russell Vought to “get lost.”
What's closed and what's not
Not all federal functions grind to a halt. Agencies responsible for protecting life and property — such as border protection, air traffic control, law enforcement, and in-hospital medical care — continue to operate. Social Security and Medicare cheques will still be distributed, but services like benefit verification and card issuance are suspended.
Non-essential workers, including those in education, research, and regulatory agencies, face unpaid furloughs. This means student loan processing, food inspections, and operations at national parks will be curtailed. In the last major shutdown, limited staffing at parks led to vandalism and environmental damage, raising fears of a repeat.
The impact on research institutions is particularly stark. The National Institutes of Health will continue care for existing patients but suspend new clinical trials. The Food and Drug Administration has warned of delays in drug approvals, potentially slowing innovation and patient access to treatments.
Impact on US economy
Economists estimate that each week of shutdown could trim 0.1 to 0.2 percentage points from US economic growth, though some of this may be recovered once funding resumes. The Congressional Budget Office put the daily cost of furloughed employees’ lost compensation at around $400 million.
Markets have so far remained relatively calm, reflecting a history of muted financial fallout from past shutdowns. But this crisis is unfolding in an economy already unsettled by tariffs, technological disruption, and rising healthcare costs. The delay of key federal data releases, including the jobs report, is expected to add further uncertainty for businesses and investors.
Trump has suggested the shutdown could be used to cut programmes “Democrats like” and to remove workers aligned with his opponents. Such rhetoric, combined with the administration’s preparedness to make layoffs permanent, suggests the long-term damage could exceed previous episodes, both for federal employees and for public trust in government.
What led to the shutdown
The deadlock is rooted in Trump’s refusal to extend expiring Affordable Care Act subsidies and reverse Medicaid cuts imposed in his sweeping domestic policy bill earlier this year. Democrats insist that funding cannot continue without addressing those healthcare concerns, while Republicans argue that Democrats are “holding the government hostage.”
With neither side willing to compromise, Washington is bracing for a potentially prolonged shutdown. For Trump, the standoff represents a chance to push through his agenda of shrinking government. For Democrats, it is a high-stakes fight over healthcare — an issue where polls suggest they hold public support.
As Senator Chuck Schumer put it: “If the president were smart, he’d fix this healthcare crisis right away. Americans are going to hold him responsible.”
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