US govt shuts down after Trump, Democrats fail to reach budget agreement

The United States government has gone into shutdown for the first time in seven years, after weeks of wrangling failed to bring about a compromise between the Republicans and the Democrats.

At stake are thousands of jobs, as the U.S. government shut down funding to all departments and agencies deemed “non-essential”.

Shut it down

The U.S. government is shutting down as the Senate failed to pass a budget bill before Oct. 1.

The last shutdown occurred in December 2018, during U.S. President Donald Trump’s first administration, and it lasted 35 days.

The Financial Times reported that the shutdown cost the U.S. economy US$11 billion (S$14.2 billion) in 2018.

Fears of the impending shutdown saw gold prices hit record highs, while stock markets are expected to fall, Reuters reports.

Why shut it down?

Trump and the Republicans have blamed the failure to come to an agreement on the Democrats.

The Democrats have demanded an extension of healthcare programmes first introduced under Barack Obama, saying that a failure to do so would see the healthcare costs for Americans balloon.

While Republicans have offered to do so separately from the budget, Democrats are sceptical such negotiations will be fruitful or conducted in good faith once the Republicans have already gotten what they wanted, preferring to use their leverage in the budget process to make their demands.

Meanwhile, Trump has not exactly reassured them, countering their threats with threats of his own, saying just before the shutdown started, "the last thing we want to do is shut (the government) down, but a lot of good can come from (it)".

"We can get rid of a lot of things that we didn't want, and they'd be Democratic things."

4 million civil servants without pay, 150,000 leaving

Currently, Trump needs five more votes in the Senate to break the deadlock, having gotten four Democrats to defy their party already, for a total of 60 out of 100.

As negotiations failed on Sep. 30, both sides traded barbs, with Vice President JD Vance saying Democrats “won’t do the right thing”, as quoted by ABC.

Meanwhile, Democratic leaders have said they were willing to negotiate, but that Republicans were insisting on “their partisan way”, with Senate Minority Leader Chuck Schumer saying that they were insisting on “it’s our way or the highway”.

Any shutdown would see up to four million government employees go without pay.

But this is not the limit of the difficulty facing U.S. government employees, as over 150,000 federal employees have accepted a “buyout offer” to leave the government.

An expert speaking to Reuters described the event as the start of a massive “brain drain” from the U.S. government, as many with years of “deep knowledge and expertise” walk out the door.

Reuters said that the number of experienced civil servants leaving the government has negatively impacted many government activities, such as weather forecasting, food safety, and space projects.

While this is the first shutdown in seven years, the tactic of forcing a budget standoff has become increasingly common, with the U.S. government nearly shutting down in 2024 and again in 2023.

We explained why this happens in 2023:

Top image via Bernd Dittrich/Unsplash