Shutdown

The US federal government shut down at 12:01 AM on Wednesday after Republicans and Democrats failed to reach a deal to continue funding it.

Context

Congress can enact the federal budget with as few as 50 Senate votes, thereby effectively telling the government what to spend its money on. Yet for the government to actually spend that money, Congress must pass a separate appropriations bill that allocates the funding.

The federal fiscal year runs from October 1 to September 30. If Congress doesn’t approve an appropriations bill or a continuing resolution (CR) – a stopgap law that temporarily extends funding at current levels – before the start of the next fiscal year, the government shuts down. 

That happened Wednesday morning.

Impact

At 12:01 AM on Wednesday, the new fiscal year began without funding, causing the government to shut down. Immediately, up to 750,000 federal workers were furloughed.

Mandatory spending programs – Social Security, Medicare, Medicaid, and interest on debt – are not affected. A majority of federal spending is mandatory and therefore untouched. 

“Essential” personnel – military, air traffic controllers, border patrol, and others – will keep working but may not be paid until appropriations resume.

“Non-essential” functions – national parks, passport processing, research grants, regulatory offices, and much more – halt operations. Notably, the shutdown will prevent the release of a highly-anticipated jobs report on Friday.

Dispute

The dispute that triggered the shutdown revolves around Democratic demands to reverse cuts to healthcare spending, which the Republicans slashed in this summer’s Big Beautiful Bill.