Government shutdowns in the U.S. have frequently turned out to be false alarms. Typically, lawmakers from both parties engage in intense, last-minute negotiations, ultimately reaching an agreement to avert a shutdown.
A shutdown occurs when Congress fails to agree on the next fiscal year’s budget, resulting in a partial suspension of federal government operations. While its impact on financial markets and the economy is usually limited, a prolonged shutdown could lead to significant economic repercussions and increased market volatility.
If lawmakers fail to reach an agreement by the end of this month, the U.S. government will enter a shutdown starting Wednesday.
Although previous shutdown concerns have often been overblown, this time might be different. There is a possibility that President Trump could use the shutdown as an opportunity to implement large-scale layoffs of federal employees.
The most recent significant shutdown occurred seven years ago during Trump’s first term, lasting a record 35 days. However, it did not cause major disruptions, only slightly impacting economic growth.
This time, Yahoo Finance reported on September 28 that the likelihood of a prolonged shutdown and extensive layoffs in the federal government is increasing.
Currently, both parties in Congress remain deeply divided over next year’s budget.
The Republicans’ proposed seven-week stopgap funding measure was rejected in the Senate on September 19, and the Democrats’ budget plan also failed to gain traction.
Although Republicans hold a majority in the Senate with 53 seats, they need 60 votes to pass the budget, requiring the support of at least seven Democrats (who hold 47 seats).
However, Democrats continue to oppose the budget, citing key demands such as the extension of Affordable Care Act subsidies. If an agreement is not reached by the end of this month, the U.S. government will enter a shutdown on Wednesday.
Should a government shutdown occur, a significant number of federal employees may face furloughs, and non-essential personnel could be laid off.
Reports suggest that the Trump administration is preparing for mass layoffs rather than the typical furloughs, indicating that the process will begin with agencies that do not align with the President’s priorities among departments facing budget cuts.
After taking office, Donald Trump established the Department of Government Efficiency, once led by Elon Musk, which carried out large-scale layoffs of federal employees. In this context, there is a possibility that Trump may use the shutdown as an opportunity to further intensify layoffs among federal employees.
Experts unanimously agree that this shutdown could trigger a significant restructuring of government organizations and personnel in line with the Trump administration’s policy priorities, setting it apart from previous shutdowns.
Since 1980, the U.S. has experienced 14 shutdowns, with the longest occurring during Trump’s first term—lasting 35 days from December 2018 to January 2019.