Is The US Government On The Verge Of Shutting Down? Here's What Happens If It Does
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Last Updated: September 29, 2025, 15:53 IST
With Congress gridlocked and the 30 September deadline hours away, a shutdown could furlough hundreds of thousands of workers, halt key services & jolt the world’s largest economy
US President Donald Trump (Image: AFP)
The United States is on the verge of a government shutdown, when large parts of the federal administration are forced to stop work because Congress has not approved money to keep them running. If no agreement is reached by midnight on 30 September, agencies will begin closing on 1 October, the start of the new fiscal year.
Such a shutdown would leave hundreds of thousands of federal employees without pay, disrupt services from food safety inspections to air travel, and risk damaging the world’s largest economy. The confrontation has pitted President Donald Trump and his Republican allies against Democrats in Congress, who are demanding the extension of healthcare subsidies and the reversal of cuts to domestic programmes.
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According to AP, Trump has repeatedly said he expects a shutdown, while Democrats argue his administration is deliberately driving the crisis. As per Guardian, this year’s threat is especially serious because agencies have been told to prepare for permanent layoffs, not just temporary furloughs, a first in modern US history.
What Is A Government Shutdown?
A government shutdown occurs when Congress fails to pass a spending bill or a temporary extension of funding before the start of a new fiscal year, which begins on 1 October. Without congressional approval, federal agencies cannot spend money and must halt non-essential functions.
Essential services such as Social Security, Medicare, immigration enforcement, military duties and air traffic control usually continue, but large parts of the federal bureaucracy close until a funding deal is reached. Employees in these departments are either furloughed, sent home without pay, or required to work without pay until the impasse ends.
According to CNN, since 1980 there have been 14 shutdowns. The longest occurred under Trump in 2018–19, lasting 35 days and sidelining around 800,000 workers.
Why Is The US Facing A Shutdown Now?
The American government cannot legally spend money without approval from Congress. Each year, lawmakers must pass 12 appropriations bills or at least a short-term “continuing resolution" to keep agencies funded. The deadline for that approval is 30 September, when the fiscal year ends. If no deal is reached, many parts of the government run out of money and are forced to shut down.
This year, the deadline has collided with a deep partisan divide. The Republican-controlled House of Representatives passed a temporary seven-week funding measure last week, but the Senate rejected rival stopgap bills, leaving no agreement in place.
President Trump, who controls the White House as well as both chambers of Congress, has been unwilling to compromise. Earlier this week, he cancelled talks with Democratic leaders, calling their demands “unserious," AP reported. He later reinstated a meeting with Senate Democratic leader Chuck Schumer, House Democratic leader Hakeem Jeffries, and Republican leaders John Thune and Mike Johnson, but expectations remain low.
At the core of the standoff are Democrats’ demands, which they say are necessary to protect ordinary families:
An extension of Affordable Care Act subsidies that lower health insurance costs for millions, set to expire at the end of the year.
A rollback of Medicaid cuts made under Trump’s One Big Beautiful Bill Act.
Restoration of funding for public media eliminated in recent budget rescissions.
Schumer said on X that ignoring the 93 per cent rise in health insurance costs due on 1 November was what was truly “unserious." Republicans, led by Thune, have dismissed these demands as “completely unhinged."
The political tension is sharpened by history. In March, Schumer angered his own party base by helping Republicans pass a short-term funding bill without winning concessions, CNN noted. Democrats now see this deadline as their chance to push back, while Republicans frame the fight as Democrats holding the government hostage to force through unrelated policies.
What Makes This Shutdown Different From Previous Ones?
In most shutdowns, federal employees are placed on temporary leave without pay, known as furloughs, until funding is restored. This time, however, the Trump administration has signalled a more drastic approach.
According to the Guardian, the White House Office of Management and Budget (OMB) has instructed agencies to prepare not just for furloughs but also for permanent layoffs in programmes whose funding expires and which are deemed “not consistent with the president’s priorities." This would mark a sharp escalation, turning what has historically been a temporary disruption into a long-term reduction of the federal workforce.
Alongside that directive, the administration has rolled out a deferred resignation programme. More than 100,000 federal employees are scheduled to formally resign on 30 September after spending months on paid administrative leave. The White House argues the scheme, costing $14.8 billion upfront, will ultimately save $28 billion a year by shrinking payroll costs.
Labour unions say the policy undermines the government’s ability to deliver essential services. The American Federation of Government Employees (AFGE), the largest union representing federal workers, has filed a lawsuit against the programme. The AFL-CIO, America’s largest labour federation with over 12 million members across different sectors, has also criticised the administration’s actions. Its president, Liz Shuler, told the Guardian: “They are not pawns for the president’s political games."
By tying permanent job cuts to a shutdown, unions and Democrats warn, the White House is using the budget standoff as leverage to push through the most sweeping federal downsizing since the 1940s.
How Would A Shutdown Affect Workers And Services?
CNN outlined that federal workers are most immediately affected: hundreds of thousands furloughed or forced to work without pay, with back pay only once funding resumes. Federal contractors, however, may never recoup losses.
The Defence Department has already warned that active duty and reserve military members will have to keep reporting for work without pay. Judiciary officials have said federal courts could be disrupted within days.
Past shutdowns have shown ripple effects: even a handful of air traffic controllers calling in sick in 2019 caused flight chaos at New York’s LaGuardia and other airports. National parks and Smithsonian museums may close, while states like Utah and Arizona sometimes step in with their own funds, CNN noted.
Other services likely to be delayed include food safety inspections, immigration hearings, and small business loans.
What Will Be The Economic Impact?
Shutdowns ripple through the economy by halting federal spending, delaying paycheques and cutting services that businesses and citizens depend on.
The Congressional Budget Office (CBO) estimated that the 2018–19 shutdown reduced economic growth by $3 billion, which was never recovered. CNN noted that tax revenues also fell during that period because the Internal Revenue Service scaled back compliance activities, while private businesses lost income they could not make up later.
The US Travel Association, which represents airlines, hotels and tourism businesses, warned in a letter to lawmakers that the current standoff could cost $1 billion every week, citing longer airport security lines, cancelled trips and delays. “A shutdown is a wholly preventable blow to America’s travel economy," said association president Geoff Freeman.
Unemployment in the US rose to 4.3 per cent in August, the highest since 2021. A prolonged shutdown could worsen job losses, disrupt markets and undermine public confidence in Washington’s ability to govern.
What Next For Trump And The Democrats?
For Democrats, resisting the shutdown is a chance to push back against cuts to healthcare and defend domestic programmes. For Trump, confrontation is the strategy. AP noted he has told allies that if “it has to shut down, it’ll have to shut down."
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The fight is also a proxy for Trump’s broader agenda. In recent months, he has flexed executive authority by deploying federal troops in US cities, challenging constitutional principles such as birthright citizenship, and reshaping agencies with sweeping workforce cuts. Democrats fear that if they concede on the budget, it will embolden the president to press ahead with even more aggressive moves.
This shutdown battle is not only about money. It is about how far Trump is willing to push his confrontation with government institutions, and how far Democrats are willing to go in resisting him.
About the Author Karishma Jain Karishma Jain, Chief Sub Editor at News18.com, writes and edits opinion pieces on a variety of subjects, including Indian politics and policy, culture and the arts, technology and social change. Follow her @kar... Read More Karishma Jain, Chief Sub Editor at News18.com, writes and edits opinion pieces on a variety of subjects, including Indian politics and policy, culture and the arts, technology and social change. Follow her @kar... Read More
First Published: September 29, 2025, 15:50 IST
News explainers Is The US Government On The Verge Of Shutting Down? Here's What Happens If It Does
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