As the government funding deadline approaches on September 30, a contentious stalemate has emerged between Republican and Democratic leaders, risking a partial shutdown of the federal government. Senate Republican Joni Ernst, R-Iowa, has requested a detailed economic analysis from the Congressional Budget Office (CBO) on the potential impact of a shutdown, including back pay for furloughed workers, military and congressional pay, and broader economic effects. The CBO previously published an analysis detailing the financial toll of the 2019 shutdown, revealing an $18 billion loss in federal spending and a $8 billion decline in GDP. With the Senate locked in bipartisan discord, the situation has escalated as President Trump canceled a meeting with Schumer and House Minority Leader Hakeem Jeffries, further complicating efforts to avoid a government shutdown.
Ernst, who chairs the Senate DOGE Caucus named after Elon Musk’s Department of Government Efficiency, laid the fault of a potential shutdown on Senate Minority Leader Chuck Schumer, D-N.Y. In her letter to CBO Director Phillip Swagel, she accused the same politicians who had previously criticized the department for laying off unnecessary bureaucrats of now forcing a government-wide shutdown to expose essential versus non-essential employees. She requested a sweeping economic operational impact analysis, including how a shutdown could affect back pay costs for furloughed non-essential employees, military pay, congressional pay, and the broader economic impact on the private sector.
Specifically, she sought details on how businesses could be impacted by a temporary stoppage of government services like loans, permits, and certifications, and how companies could recoup losses after a shutdown ended. She also wanted information on lost efficiencies in the government, the costs of unfulfilled procurements, allowing contracts to lapse, and whether the burden of keeping national parks open would fall on the states or if they would be closed as well. The CBO’s 2019 analysis found that the shutdown caused a $18 billion delay in federal spending, resulting in an $8 billion drop in the first quarter of that year’s GDP. The report estimated that about $3 billion of that loss would not be recovered, with private businesses and federal workers being the hardest hit.
It remains unclear whether Senate Majority Leader John Thune, R-S.D., and Schumer can reach a compromise. After Trump canceled a planned meeting with Schumer and House Minority Leader Hakeem Jeffries, both Democrats blamed the president for the looming shutdown. However, it is evident that Democrats’ demands for a short-term funding extension are too high for Republicans. They seek permanent extensions to Affordable Care Act subsidies, the full repeal of the health care title, including the $50 billion rural hospital fund, and the clawback of the canceled funding for NPR and PBS.
Schumer criticized Trump, saying, ‘Once again, Donald Trump has shown the American people he is not up to the job. It’s a very simple job: sit down and negotiate with the Democratic leaders and come to an agreement, but he just ain’t up to it. He runs away before the negotiations even begin.’ With the deadline looming, the political tensions continue to intensify, and the uncertainty remains high for both the government and the American economy.