Why the US government has shut down and what happens now

Funding for the US government has been cut off after President Donald Trump’s Republican Party failed to agree with opposition Democrats on a way forward on a spending bill.

The news means that some – but not all – US government services will come to a temporary halt.

Although budget confrontations are common in US politics, this spending fight is especially tense because Trump has spent the last nine months drastically cutting the size of the national government.

This situation results from the inability of the two parties to come together and pass a bill funding government services into October and beyond.

The Republicans control both chambers of Congress, but in the Senate – or upper chamber – they are short of the 60 votes they need to pass a spending bill.

Democrats, therefore, have some leverage in this case. They refuse to back a Republican bill, saying it will make it harder for Americans to afford healthcare, and have made this standoff primarily about advancing their healthcare policy goals.

They are calling for an extension of tax credits that make health insurance cheaper for millions of Americans – which are set to expire – and for a reversal of cuts to Medicaid that have been made by Trump. Democrats also oppose spending cuts to the Centers for Disease Control (CDC) and National Institutes of Health (NIH).

A stopgap bill was earlier passed in the House, or lower chamber, but is yet to clear the Senate.

At 00:01 EDT on Wednesday (04:01 GMT), it became official: the US would have its first shutdown for nearly seven years.

The last time this happened was at the end of 2018, during Trump’s first term. Both sides made last-ditch efforts to avoid a repeat this time.

On Monday, Trump met all four congressional leaders – the top Democrats in the House and Senate as well as their Republican counterparts. But there was little progress, and both sides appear to have dug deeper into their positions.

On the Republican side, Trump administration officials have been unwilling, so far, to offer any substantive concessions.

They appear to believe Democrats, as the side making demands in exchange for keeping the government open, will bear the brunt of the public’s blame – as they have in some past shutdowns.

Democrats, meanwhile, believe their push for preserving health-insurance subsidies is a popular one.

What is more, their congressional leaders provoked the ire of left-wing activists for backing down during the last budget bout in March. Many Democrats are itching for a bigger fight this time around – and funding the government is one of the only places where their party has some leverage.

What stands out about this current standoff is the position of Trump’s team.

In the past, long shutdowns were usually seen as politically dangerous, hampering both voters’ everyday lives and the images of lawmakers and the president.

But this time around, the Trump administration appears more than happy to shutter large parts of the US government for an extended period. In fact, officials have threatened to use a shutdown to identify “non-essential” workers who could then be permanently let go.

“We’ll be laying off a lot of people,” Trump said on Tuesday.

Also, after previous shutdowns, government operations mostly returned to normal, with staff and spending levels largely going back to what they had been before, once the standoff was resolved.

Over the past nine months, however, the Trump administration has slashed spending and pushed workers out of their jobs, testing the boundaries of presidential power. A shutdown could allow the administration to accelerate its massive reductions.

Not all of government will shut down.

Border protection, in-hospital medical care, law enforcement and air-traffic control are expected to continue to operate during the stoppage.

While social security and Medicare cheques would still be sent out, benefit verification and card issuance could stop.

Generally, in a shutdown, essential workers continue as normal – some of them without pay for the time being – but government employees deemed non-essential are temporarily put on unpaid leave. In the past, these workers have then been paid retrospectively.

That means that services like the food assistance programme, federally-funded pre-school, the issuing of student loans, food inspections, and operations at national parks are expected to be curtailed or closed.

There could also be travel delays if the stand-off drags on and unpaid workers stop showing up.

Overall, analysts expect that this shutdown could be bigger than the one in late 2018, when Congress had passed some funding bills. They expect roughly 40% of federal workers – more than 800,000 people – to be put on temporary leave.

The scale of the damage will depend in part on how long the shutdown lasts – and how wide ranging it is.

In the past, disruption has tended to be temporary, with any lost activity mostly made up in the months after the shutdown ends.

Analysts estimate a shutdown this time could shave roughly 0.1 to 0.2 percentage points off economic growth for each week that it lasts – though much of that could be recouped.

That relatively muted impact may be why the stock market seems to be shrugging off this latest threat.

But, again, there are some ways that this shutdown could look different.

For one thing, Trump has threatened to fire – not just furlough – some workers, which would make the impact more long lasting.

The fight is also injecting more turmoil into an economy already being roiled by changes like tariffs and artificial intelligence, with the likely delay of key data – such as the official US monthly jobs report – expected to add to the uncertainty.

Quite common over the past 50 years.

There were three during Trump’s first term, including the longest in history at 36 days, which ended in January 2019. That one was brought about by disagreements over funding a wall on the Mexico border.

The Congressional Budget Office (CBO) estimated that it reduced economic output by about $11bn, including $3bn that it never regained.

Fellow Republican Ronald Reagan oversaw eight shutdowns during his presidency in the 1980s – though all were relatively brief.

Shutdowns over budgets are almost unique to US politics.

Under the US system, the different branches of government have to reach an agreement on spending plans before they can become law.

In most countries, budget votes become votes of confidence in the government itself. But because the US has equal and often divided branches of government, that is not the case.