A government shutdown could have significant economic consequences, though an analysis released Tuesday by the nonpartisan Congressional Budget Office said it’s difficult to pinpoint ramifications without knowing the length of a funding lapse or how exactly the Trump administration will try to reshape the federal workforce.
Director Phillip L. Swagel wrote in a four-page letter the agency projects about 750,000 federal workers would be furloughed, leading to a $400 million impact per day.
“The number of furloughed employees could vary by the day because some agencies might furlough more employees the longer a shutdown persists and others might recall some initially furloughed employees,” Swagel wrote.
New plans from the Trump administration to lay off federal employees en masse, he wrote, could significantly change those calculations.
The economic impacts and ramifications for business activity are hard to predict, he wrote, because it’s not yet clear how exactly the Trump administration will handle a shutdown or how long it will take congressional leaders to broker a stopgap funding agreement.
The partial government shutdown that began in December 2018 and lasted through January 2019 led to a loss of about $3 billion in gross domestic product that couldn’t be recovered, according to a prior CBO analysis that was referenced in the letter.
That represented about 0.02% of annual GDP in 2019.
Swagel wrote the “effects of a government shutdown on business activity are uncertain, and their magnitude would depend on the duration of a shutdown and on decisions made by the Administration.
“CBO expects that if a government shutdown persisted for several weeks, some private-sector entities would never recover all of the income they lost as a result of the suspension of federal activity.”
CBO conducted the analysis after receiving a request from Iowa Republican Sen. Joni Ernst.
Thune, Schumer debate shutdown on Senate floor
A government shutdown will begin Wednesday unless congressional leaders broker a stopgap funding agreement before the new fiscal year starts.
That seemed like a long shot early Tuesday afternoon as Senate Majority Leader John Thune, R-S.D., and Senate Minority Leader Chuck Schumer, D-N.Y., engaged in a brief debate on the floor, a rarity.
Thune said Democrats would have the same leverage on health care issues they have now in mid-November, when the stopgap spending bill that passed the House but stalled in the Senate would expire.
“They will have another funding cliff they can take advantage of come November the 21st,” Thune said. “This funds the government and protects federal workers and the American people from the hostage-taking that has become, evidently, now the Democratic norm. Even though it’s something they decried not that many years ago.”
Thune told reporters afterward the chamber would likely be out of session for Yom Kippur, which begins shortly before sunset on Wednesday and continues until Thursday night, but would otherwise hold votes during a shutdown.
“We will observe the Jewish holiday, but I would expect additional votes throughout the week,” Thune said. “I mean, we filed last night on a whole new bunch of (nominees) and I would expect additional votes on funding the government.”
Speaker Mike Johnson, R-La., canceled the House’s schedule for this week and doesn’t plan for that chamber to go back into session until Oct. 6 at the earliest.
Meeting breaks up with no deal
Congressional leaders, including Schumer and House Minority Leader Hakeem Jeffries, met with President Donald Trump at the White House on Monday, but were unable to make progress toward a stopgap funding agreement.
Schumer said on the Senate floor Tuesday that Democrats need a deal with GOP leaders to extend the enhanced tax credits for people who buy their health insurance on the Affordable Care Act Marketplace, which are set to expire at the end of the year.
“In a day or two, millions of Americans — millions — are going to get notices that their insurance premiums will rise an average of $400 a month, $5,000 a year,” Schumer said. “A middle-class family can’t afford that. We want to renew those credits, among other things in health care. But renew those credits so that people won’t pay that horrible increase.”
Schumer called Republican assertions that Democrats want immigrants without legal status to have access to federal health care programs, like Medicare and Medicaid, “utter bull.”
“There is no money, not a penny of federal dollars that are going there. So why do they bring this up? Because they’re afraid to talk about the real issue, which is health care for American citizens, health care for people who need the health care and can’t afford these premiums,” Schumer said.
Without a new funding law before the start of the fiscal year at 12:01 a.m. on Wednesday, the government will begin shutting down.
The ramifications will be significantly broader than the 35-day shutdown that took place during Trump’s first term, when five of the dozen full-year government spending bills had become law.
That isn’t the case this time around and a shutdown is expected to affect every department and agency to varying degrees.
‘They’re taking a risk’
White House Office of Management and Budget Director Russ Vought has also called on Trump administration officials to implement mass layoffs during a prolonged funding lapse.
Trump said during a press conference in the Oval Office on Tuesday that he didn’t want a shutdown but that his administration might take sweeping action to restructure the federal government if one does begin.
“We can do things during the shutdown that are irreversible, that are bad for them and irreversible by them, like cutting vast numbers of people out, cutting things that they like, cutting programs that they like,” Trump said, referring to Democrats. “So they’re taking a risk by having a shutdown, because because of the shutdown, we can do things medically and other ways, including benefits.”
JimboXYZ says
That sign & barricade doesn’t seem to be working well. Guess the shut down happened before the rest of it was completed ? And look at all the law breakers ? Not that it makes sense to close down the area. The violators seem to be harmless. There’s bound to be someone though that sees an opportunity for something bigger & more nefarious. I agree that the wrong level of labor is being furloughed. They need to suspend Congressional pay until this shut down is resolved. Make them work for free until they can find a common ground solution. Of course the Pelosi-types that have been insider trading for wealth won’t feel even a Congressional pay freeze of a shut down. I think a lot of these folks are taking an early retirement, next phase of a Government right sizing ?
Pogo says
Laurel says
“Speaker Mike Johnson, R-La., canceled the House’s schedule for this week and doesn’t plan for that chamber to go back into session until Oct. 6 at the earliest.”
I’m sorry, Johnson, is working inconvenient?
What this government shutdown does do, is get our minds off the Epstein files, and prevents a bad jobless report from coming out.
Now that’s convenient!
How’s that Trump’s “concept of a [health insurance] plan” coming along? Not so good? Huh.
JOBS! JOBS! JOBS! the Republicans cried all though the Biden Administration. They are quiet now. Again, huh.
Ed P says
The shut down has no winners, just victims.
The entire Congress is to blame, each side for differing reasons but both are the cause, arguments otherwise are gullible. Political gamesmanship prevails.
Nonsense should never shut down our government.
The party divide, too few adults, as well as suspension of common sense continues to insure dysfunction.
Does anyone honestly believe that the ACA financial assistance/subsidy, known as the premium tax credit would just end at years end and financially cripple 24.5 million Americans? Strategically it would prove devastating for the Republicans at midterm.
Both sides lack vision, honesty or compassion. Fund raising and job retention rules.
Al L says
Laurel says
October 1, 2025 at 8:50 am
“Speaker Mike Johnson, R-La., canceled the House’s schedule for this week and doesn’t plan for that chamber to go back into session until Oct. 6 at the earliest.”
I’m sorry, Johnson, is working inconvenient?
Actually, session was already suspended for observance of Yom Kippur.
Joe D says
Actually the end of the Obamacare ACA health insurance premium credits are INDEED due to expire for millions of Americans on 12/31/25. It’s part of the ONE BIG BEAUTIFUL BILL, that was created WITHOUT Democratic input (ie: NO Bipartisan involvement, just shoved down the Democrats throats because at the time, they only needed Republican votes to pass it, under “reconciliation” rules.
However to have that bill now ADVANCE and become Law….a few Democrats are now required in the Senate ( the House has already voted for it), and if it doesn’t get changed (before 12/31/25 …which would send it back to the HOUSE) …It WILL become law on 1/1/26 just the way it’s WRITTEN.
Why would you believe the Republican majority in the House and the Senate would have ANY reason to change the rule now, unless they were FORCED to do what they should have done MONTHS AGO…negotiate in Congress with Democrats to come up with a COMPROMISE which they didn’t have to do under just “Reconciliation” rules. Now they can’t just rubber stamp the law through without Democratic approval.
So now EVERYONE SUFFERS….but actually not everyone….CONGRESS still gets paid during any Federal Government shutdown of layoffs!
Laurel says
Al L: Neither chamber had votes on Thursday as lawmakers observed the Yom Kippur holiday, with the House not returning until Tuesday. Speaker Mike Johnson’s decision.
Yom Kippur 5786 (2025) will begin this year on Wednesday evening, October 1 – the 10th of Tishrei and end the following evening, Thursday, October 2 – the 11th of Tishrei.
Twenty four hours, and then? It’s our government. Friday? Jobs report? Monday? Are weekends too much for them? Poor babies.
Sherry says
Thank you Joe D! The republican leaders of the House are holding a press conference right now. They are repeating lying “talking points” that completely IGNORE the upcoming expiring OBAMACARE subsidies which the Democrats are trying to save. The republican plan is to wait until the very last minute to even discuss the cost of health care so that they can maximize their leverage for other onerous trump desires.
Bottom line, the republicans are nothing but bullies for trump and the democrats are weak and scared. BOTH sides are so obsessed with holding on to their personal power . . . what’s best for their constituents often doesn’t even enter into their thinking! FOLLOW THE MONEY!
Sherry says
Johnson just extended the GOP holiday until October 13th. . . “If” Congress was serious about ending the Shutdown “every” member from both parties would be “Working” on a solution 24/7!
Sherry says
FACTS FIRST! This from the AP:
President Donald Trump and other high-ranking Republicans claim Democrats forced the government shutdown fight because they want to give free healthcare to immigrants in the U.S. illegally.
Democrats are trying to extend tax credits that make health insurance premiums more affordable on marketplaces established by the Affordable Care Act, commonly known as Obamacare, and reverse Medicaid cuts in Trump’s big bill passed this summer. But immigrants who entered the country illegally are not eligible for either program.
Here’s a closer look at the facts:
CLAIM: Democrats shut down the government because they want to give free health care to immigrants who entered the U.S. illegally.
THE FACTS: This is false. Democrats say they are pushing for the inclusion of key health care provisions in the next congressional spending package. In particular, they are seeking an extension of tax credits that millions of Americans use to buy insurance on the Affordable Care Act exchange and a reversal of Medicaid cuts made in the bill Trump signed into law in July. However, immigrants in the U.S. illegally are not eligible for any federal health care programs, including insurance provided through the Affordable Care Act and Medicaid.
Hospitals do receive Medicaid reimbursements — which would be reduced under Trump’s bill — for emergency care that they are obligated to provide to people who meet other Medicaid eligibility requirements but do not have an eligible immigration status, according to KFF, a nonprofit health policy research, polling and news organization. This spending accounted for less than 1% of total Medicaid spending between fiscal years 2017 and 2023.
Dennis C Rathsam says
There are more folks working for our government than needed.Obama & Biden created meaningless jobs in the government. Many do very little for that fat pay check they recieve. Obamacare…. If it was so good why does the federal gov have to subsadise it? The socialist part of the democrat party our holding moderate democrats by the balls, & not one of them have the spine to stop them. Democrats just gave TRUMP the power to lay off everyone he sees fit. He is about to clean house, & the only way to stop it is to pass the exstension. The 2 Amigos, Schumer & Jeffries, have been made a laughing stock by TRUMP all over X. Just think how much we could bring down the deby, with all his wasted money! TRUMP will be the 1st president since Clinton to lower the debt.
Laurel says
Dennis C Rathsam: Exactly how do you know which jobs are “meaningless” and how do you know who should be fired? Are thousands of American workers’ job descriptions and performances being scrutinized, and if so, by whom, and by what method?
What happened to your party’s “Jobs! Jobs! Jobs!” claim? As soon as Trump got in, poof! Gone! No cries of joblessness, and now, no jobs report. The last couple of reports were not good. Now, Speaker Johnson made this last report disappear, as some claimed, due to Yom Kippur, which Johnson has now extended (do the Jews know this?).
Why doesn’t it bother you that Trump wants the Epstein files to go away? He campaigned on the files being exposed, and you are always claiming “Promises made; promises kept!” Where is he *keeping* this promise?
Where is TRUMP’S (your caps) “concept of a [healthcare] plan”? A 10 year old promise, not kept.
The fact that you find the President of the United States playing with kids games online, to add sombreros and mustaches (a purely bigoted post) to members of Congress, amusing, is very disturbing. We are dealing with a badly behaved 10 year old mentality.
As for the National debt, we will see. When AI is asked “Has President Trump brought down the National debt, it replied “No, under President Trump, the national debt increased significantly, reaching over $37 trillion by 2025. His administration’s policies, including tax cuts and increased spending, contributed to this rise in debt.”
Your bubble is closing in on you. Don’t forget your Super Bowl tickets.