U.S. government faces potential shutdown

The U.S. federal government could face a shutdown if Congress fails to pass a budget bill before the end of fiscal year 2025 on Wednesday. A shutdown would force the suspension of all non-essential federal activities.

The House of Representatives approved a budget on 19 September, funding the government until 21 November, but the Senate has yet to pass the Republican-backed bill. Both parties met with President Donald Trump on Monday, but no agreement was reached.

Democrats are demanding an extension of health insurance subsidies and the reversal of Medicaid cuts, while Republicans have refused to compromise. Vice President JD Vance warned that the U.S. is “headed to a shutdown,” while Senate Democratic Leader Chuck Schumer said the outcome depends on Republican action.

A government shutdown would halt many federal services, including non-essential operations, while essential services such as border security, hospitals, air traffic control, law enforcement, and power grid maintenance would continue. Social Security, Medicare, and Medicaid payments would remain in effect.

Past shutdowns, including the 35-day closure during Trump’s first term in 2018–2019, have disrupted government operations and caused economic losses. The Congressional Budget Office estimates the 2018–2019 shutdown reduced U.S. GDP by $11 billion, with $3 billion never recovered.

While a shutdown is disruptive, experts stress it is not the same as a sovereign default, which could trigger severe financial instability and higher borrowing costs.

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