Washington: Stalemate triggers shutdown

The United States government officially entered a shutdown at 12:01 am on Wednesday, 1 October 2025, after Democrats and Republicans in Congress failed to reach an agreement over budget allocations. The deadlock has raised fears of furloughs and potential layoffs for thousands of federal employees.

This marks the first government shutdown in nearly seven years. The last partial shutdown occurred during president Donald Trump’s first term in 2018, which stretched for 35 days and became the longest in US history.

What a shutdown means

A government shutdown in the US occurs when Congress fails to approve funding bills, leaving federal agencies without money to operate. In such situations, all non-essential services are halted.

“Excepted” employees, such as those ensuring safety and security, continue to work but do not receive pay until after the shutdown ends. Non-essential staff are either furloughed or asked not to report to work. Essential functions like Social Security payments, border security and air traffic control remain operational.

What is at stake this time

The funding dispute stems largely from disagreements between Democrats and Republicans over healthcare provisions and immigration-related spending. Vice President JD Vance has accused Democrats of attempting to restore emergency healthcare funding for illegal immigrants—provisions removed during Trump’s earlier tenure. Democrats, meanwhile, argue that Republicans are blocking crucial public health and infrastructure projects.

Already, the shutdown has had ripple effects:

  • The Department of Transportation furloughed staff reviewing projects, halting reimbursements.
  • A federal lawsuit involving Harvard University’s $2 billion research funding has been delayed.
  • Large infrastructure projects like the Second Avenue Subway and Cross-Harbor Tunnel face suspension, threatening thousands of jobs.

Who gets paid and who does not

During a shutdown, federal workers face uncertainty. While essential personnel like military service members, border patrol agents and air traffic controllers continue working, they go without immediate pay. Non-essential staff are placed on unpaid leave.

As per contingency plans, student loans and federal aid programmes remain largely unaffected in the short term. Pell Grants and loan disbursements will continue, and borrowers are still expected to make payments.

Impact on economy and markets

Government shutdowns in the US have historically affected both domestic and global markets. With Indian IT firms and service providers heavily reliant on US contracts, experts warn of possible disruptions in project timelines and payment cycles. The US stock market is expected to react sharply in the coming days, with spillover effects likely on Indian exchanges as well.

Political blame game

The stalemate has triggered a war of words. Minority Leader Hakeem Jeffries accused the Trump administration of targeting “the jobs of hard-working Americans” through cuts in subway and tunnel projects. He said the government’s stance would “cause economic pain and hardship for the American people.”

On the other hand, Vice President Vance defended the Republican position, saying Democrats’ push to restore healthcare funding for illegal immigrants is unacceptable. “We want American citizens to benefit from hospital services,” he said.

Former president Donald Trump has so far shown little willingness to compromise, though he has agreed to meet key congressional leaders, including Senate Majority Leader John Thune, House Speaker Mike Johnson and House Democratic Leader Hakeem Jeffries.

Conclusion

With both parties unwilling to yield, the US faces a prolonged funding crisis. The government shutdown not only disrupts federal operations but also risks denting public trust and economic stability. As negotiations continue, the fate of thousands of employees and critical projects hangs in the balance.