At midnight on Tuesday to Wednesday, the United States Government shut down for the first time since 2018. The US faces soaring debt, a pronounced deficit, and a dysfunctional funding system that occasionally leads to a 'shutdown', the suspension of federal payments and services, due to lack of agreement in Congress. The political drama is recurrent, but usually ends with a last-minute agreement that resolves the issue temporarily. This time, however, no agreement was reached, leading to hundreds of thousands of public employees being sent home without pay until a new funding law is put on the table; museums, public buildings, and parks will close their doors, leaving only a few essential services operational, from the Police to border agents.
In the US, the fiscal year starts on October 1st. The Constitution mandates that Congress must approve all federal government spending. Bills originate in the House of Representatives, pass through the Senate, and are signed by the president. The budget allocation process is lengthy, tedious, and complex, and in recent decades, Congress has often resorted to temporary measures to extend the previous budget, as the minority party (in this case, the Democrats) uses the pressure to seek concessions. However, this time, there was no agreement on passing what is known as "continuing resolutions" or appropriations.
The Republicans made an attempt leveraging their majority in both chambers, but as such a measure requires support from at least 60 senators in the Senate, and they only have 53, it did not succeed. The Democrats also made their move, outlining their demands on healthcare after Donald Trump made significant cuts a few months ago under what he dubbed the Great and Beautiful Budget Law.
This Monday, leaders from both parties went to the White House to negotiate with Trump, which ended in failure. The best summary of this was a video posted by the US president on his social media shortly after, a parody made with AI, laden with racist undertones, featuring 'Mexican' hats and mustaches to mock Senator Chuck Schumer and Congressman Hakeem Jeffries. The battle in the Capitol continued throughout Tuesday, but by past 10 p.m., everyone threw in the towel.
Since 1976, the country has experienced 20 'shutdowns'. One under Gerald Ford, five under Jimmy Carter, eight under Ronald Reagan, one under George W. Bush, two under Bill Clinton, one under Barack Obama, and two during the first term of Donald Trump. Shutdowns typically last a short time, a day or two, maybe a week. Only seven have lasted more than 10 days, and just two of them, more than three weeks. However, the longest one was the last one under the current president, in December 2018, lasting through the entire holiday season, setting a record with 34 days of uncertainty, resulting in an $11 billion loss, $3 billion of which was permanent, according to the Congressional Budget Office. Each week of shutdown can cost an already fragile economy at least 0.1% of growth.
The same office estimated on Tuesday that around 750,000 federal employees could be temporarily furloughed, but they would receive their back pay once the shutdown ends. Not all sectors will be equally affected. Active-duty military, federal law enforcement agents, federally funded hospital employees, as well as air traffic controllers and Transportation Security Administration officials, are considered essential. Additionally, tens of thousands more can remain in their positions because their salaries are funded through other means, such as special laws or fees. However, programs like food assistance, federally funded preschool education, or student loan issuance may face restrictions or interruptions.
The only way to return to normalcy is for Congress to pass that continuity law. They will attempt to do so as early as this week, although there will be no sessions on Thursday at least to observe the Jewish holiday of Yom Kippur. Both parties have political incentives to maintain tension but also to resolve it quickly, as the consequences are unpredictable. A clear example of the chaos is that three Democratic senators voted in favor of the opposing proposal to try to prevent the shutdown, while one Republican did so, each for different reasons.
For Democrats, this is an almost unique opportunity to pressure the White House, which holds the majority in Congress, controls all federal agencies, and has almost complete support from the Supreme Court for all its controversial decisions in recent months. In March, there was significant criticism from the left towards the party for capitulating amid what they describe as the president's authoritarian drift. Now, they have decided to put up a fight to achieve their first significant political victory since the elections last November. "If the president were smart, he would move heaven and earth to solve this healthcare crisis immediately because Americans will hold him accountable when they start paying $400, $500, or $600 more per month for their health insurance," said the minority leader, Schumer.
For Republicans, this is a strain, but President Trump has stated, as he has in the past, that shutdowns are a good opportunity to lay off many people, close or cancel all kinds of federal programs, and hit the Democrats where it hurts the most. "We don't want to do that, but we don't want fraud, waste, or abuse," he pointed out. His team has explained that they see this as a magnificent opportunity and will use lists of which positions are essential and prioritized and which are not to take action. They have clung to the falsehood that the Democratic proposal aims to provide insurance paid by everyone to undocumented immigrants or cover operations for transgender individuals.
Democrats are demanding at a minimum an extension of the tax credits (Obamacare) that are about to expire and that make health insurance more affordable for 20 million Americans, as well as the reversal of Medicaid cuts implemented by Trump in the aforementioned Great and Beautiful Budget Law. They also oppose the cuts in spending for the Centers for Disease Control and Prevention and the National Institutes of Health (NIH).