President Donald Trump has seized on the government shutdown as an opportunity to reshape the federal workforce and punish detractors, by threatening mass firings of workers and suggesting “irreversible” cuts to programs important to Democrats.
Rather than simply furlough employees, as is usually done during any lapse of funds, White House press secretary Karoline Leavitt said layoffs were “imminent.” The Office of Management and Budget announced it was putting on hold roughly $18 billion of infrastructure funds for New York's subway and Hudson Tunnel projects — in the hometown of the Democratic leaders of the US House and Senate.
Trump has marveled over the handiwork of his budget director.
“He can trim the budget to a level that you couldn’t do any other way," the president said at the start of the week of OMB Director Russ Vought, who was also a chief architect of the Project 2025 conservative policy book.
"So they're taking a risk by having a shutdown,” Trump said during an event at the White House.
Thursday is day two of the shutdown, and already the dial is turned high. The aggressive approach coming from the Trump administration is what certain lawmakers and budget observers feared if Congress, which has the responsibility to pass legislation to fund government, failed to do its work and relinquished control to the White House.
Vought, in a private conference call with House GOP lawmakers Wednesday afternoon, told them of layoffs starting in the next day or two. It’s an extension of the Department of Government Efficiency work under Elon Musk that slashed through the federal government at the start of the year.
“These are all things that the Trump administration has been doing since January 20th,” said House Democratic leader Hakeem Jeffries, referring to the president’s first day in office. “The cruelty is the point.”
With no easy endgame at hand, the standoff risks dragging deeper into October, when federal workers who remain on the job will begin missing paychecks. The nonpartisan Congressional Budget Office has estimated roughly 750,000 federal workers would be furloughed on any given day during the shutdown, a loss of $400 million daily in wages.
The economic effects could spill over into the broader economy. Past shutdowns saw “reduced aggregate demand in the private sector for goods and services, pushing down GDP,” the CBO said.
"Stalled federal spending on goods and services led to a loss of private-sector income that further reduced demand for other goods and services in the economy," it said. Overall CBO said there was a “dampening of economic output,” but that reversed once people returned to work.
“The longer this goes on, the more pain will be inflicted,” said House Speaker Mike Johnson, R-La., “because it is inevitable when the government shuts down.”
Trump and the congressional leaders are not expected to meet again soon. Congress has no action scheduled Thursday in observance of the Jewish holy day, with senators due back Friday. The House is set to resume session next week.
The Democrats are holding fast to their demands to preserve health care funding, and refusing to back a bill that fails to do so, warning of price spikes for millions of Americans nationwide. The Kaiser Family Foundation estimates insurance premiums will more than double for people who buy policies on the Affordable Care Act exchanges.
The Republicans have opened a door to negotiating the health care issue, but GOP leaders say it can wait, since the subsidies that help people purchase private insurance don’t expire until year’s end.
“We’re willing to have a conversation about ensuring that Americans continue to have access to health care,” Vice President JD Vance said Wednesday at the White House.
With Congress as a standstill, the Trump administration has taken advantage of new levers to determine how to shape the federal government.
The Trump administration can tap into funds to pay workers at the Defense Department and Homeland Security from what’s commonly called the “One Big Beautiful Bill” that was signed into law this summer, according to CBO.
That would ensure Trump's immigration enforcement and mass deportation agenda is uninterrupted. But employees who remain on the job at many other agencies will have to wait for government to reopen before they get a paycheck.
Already Vought, from the budget office, has challenged the authority of Congress this year by trying to claw back and rescind funds lawmakers had already approved — for Head Start, clean energy infrastructure projects, overseas aid and public radio and television.
The Government Accountability Office has issued a series of rare notices of instance where the administration's actions have violated the law. But the Supreme Court in a ruling late last week allowed the administration's so-called “pocket rescission” of nearly $5 billion in foreign aid to stand.
