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Government shuts down after Senate deadlock; Trump signals mass layoffs

Health care tax credits remain at center of standoff

10/2/2025, 6 p.m.
The federal government began shutting down early Wednesday after Congress failed to approve a funding bill before the start of …
Yvette Clarke, chair of the Congressional Black Caucus and a New York Democrat, speaks at a news conference outside the U.S. Capitol in Washington on Sept. 30. Shauneen Miranda/States Newsroom

The federal government began shutting down early Wednesday after Congress failed to approve a funding bill before the start of the new fiscal year, setting off nationwide disruptions and giving the Trump administration an opening to lay off federal workers.

The Senate rejected two short-term funding measures late Tuesday, with both falling short of the 60 votes needed. Republicans’ seven-week plan drew a 55-45 vote, while Democrats’ one-month proposal that included health care provisions failed 47-53. 

Three Democrats — Sens. Catherine Cortez Masto of Nevada, John Fetterman of Pennsylvania and independent Angus King of Maine — voted with Republicans on their bill, saying they wanted to avoid harm to families and federal employees. Sen. Rand Paul, R-Ky., opposed it. 

Cortez Masto said she could not support “a costly shutdown that would hurt Nevada families and hand even more power to this reckless administration.” Fetterman said his vote was “for our country over my party.” King said a short-term extension was “better than chaos.” 

In a memo to agencies, White House budget director Russ Vought directed departments to begin “orderly shutdown” plans. About 750,000 federal workers could be furloughed, with an estimated $400 million daily economic impact, according to the Congressional Budget Office. Employees will remain unpaid until funding resumes. 

President Donald Trump has pledged mass layoffs during the shutdown, a move unions are challenging in federal court. The American Federation of Government Employees and the American Federation of State, County and Municipal Employees filed suit Tuesday, arguing the administration lacks authority to fire workers in this context. 

 “These actions are contrary to law and arbitrary and capricious, and the cynical use of federal employees as a pawn in Congressional deliberations should be declared unlawful and enjoined by this court,” the filing says. 

Partisan impasse

Senate Majority Leader John Thune, R-S.D., said Democrats had “chosen to shut down the government” but insisted a solution was within reach if five Democrats crossed party lines. 

“The negotiation happens when the government is open,” Thune said. “Democrats may have chosen to shut down the government, but we can reopen it tomorrow.” 

Sen. John Barrasso of Wyoming, the Republican whip, pointed to Democratic defections as a sign of momentum. “The cracks in the Democrats are already showing,” he said. 

Senate Minority Leader Chuck Schumer countered that Republicans were refusing to address health care tax credits expiring at year’s end. Without action, premiums on Affordable Care Act marketplace plans could more than double by 2026, from $888 annually to $1,904, according to an analysis by the nonprofit KFF. 

Schumer accused Republicans of spreading false claims that undocumented immigrants could receive ACA subsidies. 

“That is absolutely false,” he said. “Undocumented immigrants do not get federal health insurance premiums.” 

Pressure within both parties

While Democrats face pressure over the defection of three members, Republicans are also hearing concerns. Sen. Susan Collins, R-Maine, chair of the Appropriations Committee, said she was troubled by signals from the Office of Management and Budget about possible mass firings. 

“They’re performing very essential work, they’re just not being paid,” she said of furloughed workers. 

Sen. Josh Hawley, R-Mo., said he worried about the toll on working people. 

“The solution is to not shut the government down,” he said. “Why would you punish working people because you’re not getting what you want?” 

Sen. Mike Rounds, R-S.D., said he expects the standoff to last until Democrats feel they have made their point. 

“I’m not optimistic that we’re going to get a path forward until they’ve had a shutdown,” he said. 

Shutdown effects

Agencies began releasing contingency plans. The Interior Department will furlough 9,300 of 14,500 National Park Service employees. Roads, trails and open-air memorials will remain open unless safety becomes an issue, although services will be limited. 

Essential operations like border protection, emergency response and firefighting will continue. 

Health care fight at core

Democrats have made the extension of ACA tax credits their central demand, arguing the credits are vital to families and must be resolved before the Nov. 1 open enrollment period. Schumer said families would soon receive premium notices, adding, “There will be huge heat on Republicans on this issue.” 

Rep. Yvette Clarke, D-N.Y., chair of the Congressional Black Caucus, said Democrats would keep pressing for health care protections, calling the GOP approach “reckless.” 

Sen. Elissa Slotkin, D-Mich., said she was willing to negotiate. 

“I’m willing to accept that I certainly will not get everything I want,” she said. 

Senate Minority Whip Dick Durbin, D-Ill., said Democrats could not support a continuing resolution under current conditions. 

“What President Trump is doing to this country, particularly when it comes to health care costs for families,” he said, “is unacceptable.” 

Uncertain road ahead

With no full-year appropriations bills passed, the shutdown affects nearly every federal agency. The start of the fiscal year on Oct. 1 left lawmakers with no fallback plan. 

Republicans say they will continue offering a “clean” stopgap bill. Democrats insist on negotiations tied to health care. 

“I’m not optimistic,” Rounds said. “But at some point, we’ve got to find a way forward.” 

This story originally appeared at VirginiaMercury.com.