Photo via The New Yorker
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The United States government has ground to a halt as a budget dispute in Congress has triggered the first shutdown of the fiscal year. Lawmakers are deadlocked over how to spend federal funds, causing hundreds of thousands of federal workers to be furloughed, jeopardizing military pay, and potentially costing the country billions. The shutdown began at midnight on October 1st, when the new fiscal year started without a spending deal or a budget resolution to fund the government temporarily. The lapse in funding stems from a fierce partisan standoff over funding for government programs and medical care. Democrats want to extend Affordable Care Act subsidies for the following year and reverse cuts to Medicaid, while Republicans argue that such measures would deepen the already large deficit.
Repeated attempts to pass a compromise have failed in the Senate, where 60 votes are needed to pass funding legislation. With neither party willing to yield, the federal government ran out of legal authority to spend money, forcing agencies to suspend operations. The shutdown has had a significant impact on the armed forces. Active-duty service members must continue working without pay until Congress authorizes funding. Unless emergency legislation is passed, troops will not receive their next paychecks on time. The Department of Defense’s 741,000 civilian employees face a mix of furloughs and unpaid work depending on the necessity of their duties. Training exercises, maintenance schedules, and routine operations have been delayed, threatening long-term readiness. Family support programs, childcare centers, and recreational facilities on military bases are scaling back or facing closure. Even commissaries and exchanges, which provide groceries and basic goods to troops, are relying on reserves that could soon run out if the shutdown continues.
For many service members, especially those with families or those living paycheck to paycheck, the disruption poses significant financial challenges. Relief organizations and military credit unions are preparing emergency loans and assistance programs to help families through the crisis. Across the federal workforce, millions are feeling the effects. Vital employees, like TSA officers, air traffic controllers, and border patrol, must continue working without pay, while others are furloughed indefinitely. Early reports indicate delays at major airports, as understaffed control towers and security checkpoints struggle to maintain smooth operations. Major federal agencies have also ceased operations. The Bureau of Labor Statistics, Bureau of Economic Analysis, and Census Bureau have suspended operations, halting key reports on employment and economic growth. Businesses, investors, and policymakers are left without critical data that guides financial planning.
Due to the shutdown, federal welfare programs have struggled to continue operations. Food assistance programs, such as WIC and SNAP, are operating on temporary reserves that may be depleted within weeks. Social Security and Veterans Affairs benefits continue, but many public offices are reducing hours or closing altogether. Regulatory agencies, including the EPA, FDA, and SEC, have paused most nonessential functions such as inspections, permit approvals, and investigations.
The economic impact of the shutdown is mounting quickly. The White House estimates that the U.S. could lose up to $15 billion in gross domestic product each week the government remains closed. Even conservative projections suggest several billion dollars in weekly losses as consumer spending declines and federal contracts cease payments. The shutdown is already eroding market confidence. Due to the aforementioned closure of several key federal bureaus, investors and analysts are operating in the dark, unable to accurately assess the economy’s true situation. Past shutdowns had lasting economic effects; the 35-day closure in 2018 cost at least $11 billion, including $3 billion in permanently lost output. If the current deadlock persists beyond the next few weeks, economists warn of rising unemployment, slower economic growth, and increased uncertainty for businesses that rely on federal approvals or funding.
Ending the shutdown requires Congress to pass either a new appropriations bill or a temporary continuing resolution to fund agencies until a permanent deal is reached. The President must then sign the legislation to restore normal operations and authorize retroactive pay for government employees. In past shutdowns, Congress has passed measures intended to protect military pay; however, there has yet to be one during the current shutdown. Deep-seated political conflicts over healthcare, social programs, and spending have stalled negotiations. Until one side concedes or both agree to a temporary compromise, the federal government remains partially paralyzed. Every day of inaction adds to the strain on families, service members, and the economy.
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This article was edited by Naba Syed and Sarah Davey.
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