US government begins shutdown that may lead to mass layoffs and cuts

WASHINGTON – The US federal government shut down on Oct 1 after a midnight deadline, amid a bitter spending deadlock between President Donald Trump and Democrats in Congress that will disrupt federal services and leave many federal workers furloughed.

It was the first federal shutdown since 2019, when parts of the government were shuttered for 35 days in a stand-off between congressional Democrats and Mr Trump over the President’s demand to fund a wall at the southern border.

This time, the dispute is over Democrats’ demand that the President agree to extend expiring healthcare subsidies and restore Medicaid cuts enacted over the summer as part of Mr Trump’s marquee tax cut and domestic policy law.

The shutdown became all but inevitable on Sept 30 after Senate Democrats voted just hours before a midnight deadline to block Republicans’ plan to keep federal funding flowing.

In back-to-back Senate votes that reflected how acrimonious the funding dispute has become, each party blocked the other’s stopgap spending proposal, just as they had earlier in September.

On a 55-45 vote, the Grand Old Party, or Republican, plan, which would extend funding till the end of Nov 21, fell short of the 60 needed for passage, all but assuring the shutdown at 12.01am on Oct 1 that would furlough workers and disrupt federal services.

Republicans also blocked Democrats’ plan, which would extend funding till the end of October and add more than US$1 trillion (S$1.29 trillion) in healthcare spending, in a 53-47 vote.

Shortly afterwards, Mr Russell Vought, the White House budget director, directed agencies in a memo to “execute their plans for an orderly shutdown”.

Senate Republican leaders held the votes as a part of what they promised would be a daily effort to force Democrats to go on the record against extending government funding.

“The Democrats’ far-left base and far-left senators have demanded a showdown with the President,” said Republican Senator John Thune, the majority leader. “And the Democrat leaders have bowed to their demands. And apparently, the American people just have to suffer the consequences.”

Democrats said they were resolute in their determination to continue the stand-off until Republicans relented on the Democrats’ demands, which include the extension of Affordable Care Act subsidies that are set to expire at the end of 2025, as well as the reversal of cuts to Medicaid and other health programmes that Republicans included in the tax cut legislation.

“If the President were smart, he’d move heaven and earth to fix this healthcare crisis right away, because Americans are going to hold him responsible when they start paying $400, $500, $600 a month more on their health insurance,” said Democrat Senator Chuck Schumer, the minority leader. “We have less than a day. If there was ever a moment for Donald Trump and Republicans to get serious about healthcare, it is now.”

But instead of any negotiation, lawmakers in both parties spent the hours before the spending deadline pointing fingers at one another for the coming crisis, and Mr Trump issued threats from the White House, appearing to relish the prospect of a shutdown that he said he would use to hurt his political opponents.

The President said he would move during a shutdown to enact measures that are “bad” for Democrats “and irreversible by them, like cutting vast numbers of people out, cutting things that they like, cutting programmes that they like”.

Later in the Oval Office, he said that “a lot of good can come down from shutdowns”, including laying off federal workers who are Democrats and undermining initiatives they support.

In a shutdown, Mr Trump said, “we can get rid of a lot of things that we didn’t want, and they’d be Democrat things”.

Democrats appeared unbowed by the threats. In March, a clutch of Senate Democrats led by Mr Schumer allowed a stopgap spending Bill to advance, prompting an outpouring of ire from liberal voters and activists who had urged their leaders to deny their votes in protest against Mr Trump’s administration.

This time, Democrats have picked a fight with Mr Trump on money for healthcare – an issue on which polls show Democrats have the upper hand – and dared the President and Republicans to say no.

“The strategy is – the American people are demanding it,” Mr Schumer said.

Still, a few members of the Democratic caucus broke from the party on Sept 30 evening in the hours before the spending deadline and voted for the Republicans’ spending plan. Senators Catherine Cortez Masto of Nevada, John Fetterman of Pennsylvania and Angus King of Maine all supported the measure.

Senator Rand Paul of Kentucky was the sole Republican to vote against his own party’s funding Bill.

If the “Obamacare” tax credits are allowed to lapse, about four million people are projected to lose coverage starting in 2026, and prices would go up for an additional 20 million people. The Congressional Budget Office has projected that 10 million more Americans would become uninsured by 2034 as a result of the health cuts in the new tax law.

Mr Thune has said he would be willing to negotiate separately on extending the tax credits. Many of his senators who are up for re-election in 2026 have endorsed the move. But Democrats are taking government funding “hostage”, he said.

“The negotiation happens when the government is open,” he said.

Separately, Democrats have said they cannot continue to fund an administration that routinely tramples Congress’ power of the purse.

“That’s just another excuse,” Democrat Senator Ben Ray Lujan, said of Mr Trump’s threat to lay off federal workers during a shutdown. “They’re doing this time and time again. They’re going to do what they want to do.” NYTIMES