US government shuts down: What it means, who is affected

Dubai: The US federal government has officially shut down on October 1 after Congress failed to pass a spending bill before the September 30 deadline.

Although Republicans control both Capitol Hill and the White House, they still needed Democratic votes in the Senate to keep the government running. Senate Minority Leader Chuck Schumer and his party demanded that any funding bill include an extension of enhanced Affordable Care Act subsidies, while GOP leaders pushed for a short-term, seven-week funding extension with added security money for federal institutions.

With no compromise in sight, the shutdown went into effect on October 1. But unlike past standoffs, this one could play out differently. President Donald Trump and his Office of Management and Budget (OMB) have signalled they may use the shutdown as an opportunity to permanently cut federal jobs and programs that don’t align with Trump’s priorities.

“We have the authority to make permanent change to the bureaucracy here in government,” OMB Director Russell Vought said on Fox Business, suggesting agencies could downsize staff rather than merely furlough them.

This is not Trump’s first shutdown battle. The longest one in US history lasting 35 days occurred during his first term, from December 2018 to January 2019.

Every year, Congress must approve funding for federal agencies. When lawmakers fail to agree on a full budget or a temporary extension (a continuing resolution), non-essential government services are forced to close until funding resumes.

Since no appropriations bills were passed this year, the current standoff has triggered a full shutdown.

Essential services such as border security, air traffic control, the military, and law enforcement will continue, but many workers will be required to do their jobs without pay.

Federal workers: About 900,000 could be furloughed without pay, while many more deemed “essential” will keep working unpaid until funding is restored.

Contractors: They risk losing pay permanently, since unlike federal employees, they are not guaranteed back pay.

Everyday Americans: Delays could hit passport services, immigration hearings, small business loans, food stamp distribution, and more.

Government shutdowns carry a real cost. The 2018—2019 shutdown drained $3 billion in economic activity that was never recovered, according to the Congressional Budget Office. Markets often react with uncertainty, while consumer spending and business confidence take a hit.

This time, the stakes are high. Federal workers’ paychecks, airline operations, food assistance programs, and even economic data releases — like the monthly jobs report — will be disrupted.

The US Travel Association has warned Congress that the shutdown will cost $1 billion a week in lost travel spending and strain an already stretched workforce.

Shutdowns have become a recurring feature of Washington’s political battles, but this one may prove especially painful. With the Trump administration openly signalling cuts and layoffs, the impact could go far beyond temporary furloughs — affecting workers, families, and the economy at home, and raising concerns abroad about America’s political stability.

With inputs from CNN