With less than 36 hours left until the deadline for the US government to run out of funds, President Trump met with leaders of both parties in Congress at the White House on Monday in an attempt to avoid a federal government shutdown at midnight on Tuesday (October 1) (early Wednesday morning in Singapore), but ultimately failed to reach a consensus.
After the meeting, Vice President Vance criticized the Democratic Party for "holding people hostage" and said, "I think we are heading towards a shutdown." Senate Democratic leader Schumer said there are still huge differences between the two sides and bluntly stated that "whether to shut down depends on the Republican Party.
In this debate, the Republican Party advocates for a "limited scope" short-term funding bill to extend current appropriations until the end of November, in order to buy time to continue negotiations on the long-term budget, while the Democratic Party demands the restoration of hundreds of billions of dollars in healthcare spending in any extension plan, especially to preserve the related health insurance subsidies and tax breaks for low-income families under Obamacare.
This time, the subsidy for health insurance has become the core of the dispute, and it will further affect the 2026 midterm elections. The Democratic Party strives to consolidate voter support through this, while the Republican Party emphasizes fiscal discipline, and the two sides may find it difficult to compromise in the short term.
In terms of procedure, the House of Representatives has passed a short-term appropriations bill, and the Republican Party controls both houses. However, Senate rules require budget bills to receive 60 votes in support, which means that the Republican Party must seek the cooperation of at least seven Democratic senators to pass them.
If a shutdown occurs, hundreds of thousands of federal employees may be forced to take leave and temporarily unable to receive pay, federal courts may close, and small business subsidies and multiple public services will be delayed. But the White House has changed its usual practice of only "suspending payroll" and publicly threatened to use the shutdown as an opportunity to lay off federal employees on a large scale, increasing uncertainty and political risks.
The Trump administration began announcing on Monday which services would be suspended in the event of a shutdown, with the US Department of Health expected to shut down 41% of its employees. The Ministry of Labor and the Ministry of Commerce have also warned that their statistical agencies will suspend the release of important economic data, including the highly anticipated September employment report, August construction spending, and some trade data, in the event of funding interruptions.
Analysts point out that if the release of these core data is delayed, it may hinder the judgment of the Federal Reserve and fiscal decision-makers at next month's meeting, thereby having a greater impact on monetary policy and financial markets.
Since 1981, the United States has experienced 14 partial government shutdowns, most of which lasted only a few days, but the longest one was the immigration controversy during Trump's first term, which lasted for 35 days.
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