The United States Capitol behind a barricade on September 30, 2025 in Washington, DC. If lawmakers fail to reach a bipartisan compromise on the funding bill, the federal government shutdown will begin at midnight. (Photo: Kevin Dietsch/Getty Images)
WASHINGTON – A government shutdown could have significant economic consequences, although an analysis released Tuesday by the nonpartisan Congressional Budget Office found it is arduous to determine the consequences without knowing how long the funding interruption will last or how thoroughly the Trump administration will try to transform the federal workforce.
Written by Principal Phillip L. Swagel four-page letter the agency projects that about 750,000 federal workers will be furloughed, costing $400 million a day.
“The number of furloughed employees may vary from day to day as some agencies may furlough more employees the longer the shutdown lasts and others may recall some employees who were initially furloughed,” Swagel wrote.
New plans of the Trump administration lay off federal workers en masse, – he wrote, may significantly change these calculations.
It is arduous to predict the economic impact and business consequences, he wrote, because it is not yet clear how thoroughly the Trump administration will handle the shutdown or how long it will take for congressional leaders to negotiate an interim funding deal.
According to an earlier CBO analysis mentioned in the letter, the partial government shutdown that began in December 2018 and lasted through January 2019 led to a loss of approximately $3 billion in gross domestic product that could not be recovered.
This represented approximately 0.02% of annual GDP in 2019.
Swagel wrote that “the impact of the government shutdown on economic activity is uncertain and the magnitude will depend on the duration of the shutdown and the decisions made by the administration.
“CBO expects that if the government shutdown lasted several weeks, some private sector entities would never recover all of the revenues lost as a result of the federal shutdown.”
CBO conducted the analysis at the request of Iowa Republican Senator Joni Ernst.
Thune and the closing of Schumer’s debate in the Senate
The government shutdown will begin Wednesday unless congressional leaders negotiate a fleeting funding deal before the start of the novel fiscal year.
It seemed like a long shot early Tuesday afternoon when 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 will have the same influence on health care issues as they do now, in mid-November, when the stopgap spending bill, which passed the House but if stuck in the Senate, it would expire.
“On November 21, they will have another financial cliff to take advantage of,” Thune said. “It funds the government and protects federal employees and the American people from the hostage-taking that has apparently become the Democrat norm now. Even though they were condemning it not that many years ago.”
Thune later told reporters that the chamber would likely not deliberate on Yom Kippur, which begins Wednesday shortly before sunset and runs through Thursday evening, but the vote would otherwise take place while the session is suspended.
“We will observe the Jewish holiday, but I expect additional votes during the week,” Thune said. “I mean, we filed a whole new group (of nominees) last night and I would expect additional votes on government funding.”
Speaker Mike Johnson, R-LA, canceled the House schedule for this week and does not plan for the chamber to resume sessions until Oct. 6 at the earliest.
The meeting ends without an agreement
Congressional leaders, including Schumer and House Minority Leader Hakeem Jeffries, met with President Donald Trump at the White House on Monday, but did not unable to progress towards an interim financing agreement.
Schumer said on the Senate floor Tuesday that Democrats need an agreement with GOP leaders to extend increased tax breaks for people who buy health insurance on the Affordable Care Act Marketplace, which expire at the end of the year.
“In a day or two, millions of Americans — millions — will receive notices that their insurance premiums will increase by an average of $400 a month, or $5,000 a year,” Schumer said. “Middle-class families can’t afford this. We want to renew these loans, including for health care. But renew these loans so that people don’t pay such a terrible increase.”
Schumer called Republicans’ claims that Democrats want immigrants without legal status to have access to federal health care programs like Medicare and Medicaid “absolute nonsense.”
“There’s no money going there, not a penny of federal dollars. So why are they bringing it up? Because they’re afraid to talk about the real issue, which is health care for the American people, health care for people who need health care and can’t afford those premiums,” Schumer said.
Without a novel financing bill before the start of the financial year, the government will start operating at 12:01 a.m. on Wednesday.
The consequences will be much broader than the 35-day lockdown that occurred during Trump’s first term, when five of the dozen bills on year-round government spending went into effect.
This is not the case this time and a closure is expected impact every department and agency to varying degrees.
“They take risks”
White House Office of Management and Budget Director Russ Vought also called on Trump administration officials to do so introduce mass layoffs in the event of a prolonged interruption in financing.
During a news conference in the Oval Office on Tuesday, Trump said he did not want a shutdown but that his administration could take radical action to restructure the federal government if it happened.
“During the shutdown, we can do things that are irreversible, bad for them and irreversible for them, like cutting out huge numbers of people, cutting out things they like, cutting out programs they like,” Trump said, referring to Democrats. “So they are taking a risk by stopping the business because it allows us to address medical issues and other avenues, including benefits.”
