WASHINGTON – The federal government shut down in the early hours of Wednesday due to a tense standoff between Republicans and Democrats over measures aimed at protecting health insurance for millions of Americans.
The lapse in appropriations came just hours after the Senate rejected a pair of competing spending bills that would have kept the government open until November. Republicans managed to peel off a few Democratic votes on their funding extension — but it wasn’t enough to break a filibuster. Republicans all voted against a Democratic spending bill that extended subsidies for people who get their health insurance through the Affordable Care Act.
The shutdown affects federal agencies and operations that are funded each year by lawmakers on Capitol Hill. Hundreds of thousands of federal workers will go home while others, including active-duty troops, will have to work without pay.
The shutdown does not stop activities necessary for protecting human life or property, such as air traffic control and law enforcement, and it doesn’t apply to some of the federal government’s biggest programs, such as Social Security and Medicare, because those have “mandatory” funding lawmakers don’t fuss with every year. So there might be even fewer people answering the phone at Social Security, but nobody’s benefits should be interrupted.
Since so many essential functions continue in a shutdown, some Republicans have said in the past that it’s not such a big deal. President Donald Trump said on Tuesday that a shutdown can actually be beneficial.
“We’re doing well as a country so the last thing we want to do is shut it down. But a lot of good can come down from shutdowns. We get rid of a lot of things that we didn’t want, and they’d be Democrat things,” Trump told reporters at the White House. “But they want open borders, they want men playing in women’s sports, they want transgender for everybody. They never stop. And they don’t learn. We won an election in a landslide, they just don’t learn. So we have no choice. I have to do that for the country.”
The Trump administration has asked federal agencies to initiate permanent layoffs targeting workers in programs not aligned with the president’s priorities, something no administration has ever done before in a shutdown. It’s unclear whether courts would permit such layoffs or if agencies will follow through. Democrats have cast the potential firings as a mere threat and continuation of the administration’s ongoing efforts to slash the federal workforce.
There’s no question that a shutdown is a big deal. The Congressional Budget Office said Tuesday it expects some 750,000 workers to be furloughed, meaning they won’t come to work, at a daily cost of $400 million. Congress typically authorizes back pay for furloughed workers, so the time they spend not working can be a loss.
And a shutdown can hurt the economy, thanks to furloughed workers spending less money and potentially millions fewer tourists visiting National Parks because they’re closed. The CBO estimated that a five-week partial shutdown, which ended in January 2019, hurt the overall U.S. economy, subtracting 0.02% from annual gross domestic product. That’s not a huge hit, but the economy today is more fragile than it was six years ago.
After a 16-day shutdown in 2014, the Office of Management and Budget under President Barack Obama reported the episode subtracted 120,000 private-sector jobs from the economy, temporarily shuttered Head Start facilities, delayed loans to small businesses and hindered trade by putting holds on import and export licenses. The deadweight loss from furloughs amounted to $2 billion.
It’s not clear how long this shutdown will last. Democrats believe they have the upper hand in this fight because Republicans are refusing to extend enhanced subsidies passed during the COVID-19 pandemic for people who get their health insurance through the Affordable Care Act. Those tax credits are due to expire at the end of the year, resulting in skyrocketing monthly insurance premiums for millions of Americans. Enrollees start receiving notices about higher premiums on Oct. 1, and Democrats hope those people will get engaged and push Republicans back to the table.
“The American people are learning how bad this health care crisis is, and they will put tremendous heat on Republicans to solve it. We believe that this is an issue worth fighting for,” Senate Minority Leader Chuck Schumer (D-N.Y.) told reporters at a press conference on Tuesday, hours before the government shut down.
Meanwhile, Republicans believe that some Democrats will blink and vote with them to reopen the government without an extension of ACA subsidies, as they will feel pressure from federal employees who want to return to work. GOP leaders need at least eight Senate Democrats to break with their party and vote for a bill funding the government. Democrats rejected such a measure on Tuesday, but Republicans can continue to bring it up for a vote repeatedly, exerting maximum pressure.
“There’s a famous movie line that says, ‘If you pray for rain, you better be prepared to deal with the mud,’ and Chuck [Schumer] is going to have to deal with the mud,” Sen. John Kennedy (R-La.) told reporters on Tuesday.
Some Republican senators say they are open to discussing a short-term extension of ACA subsidies, but only after Democrats vote to reopen the government. Other Republicans — particularly many Republicans in the House — say they oppose an extension outright since it would be costly and since the pandemic is over.
The prospect of a deal seems far off right now as both sides dig in for a protracted showdown. Progressives want Democrats to hold the line until Republicans give in on the ACA subsidies.
“I know a lot of Americans have felt in recent years that you don’t always know what Democrats stand for, don’t always know when Democrats are willing to stand up and fight. Well, today we provide an answer,” said Rep. Greg Casar (D-Texas) at a press conference on Tuesday. “This week, unlike the [House] Republicans who have fled on vacation, Democrats are willing to stand up and fight so your family has the basics that it needs, so that your family can go see a doctor.”