What Makes This US Shutdown Different (as well as More Intractable)?

Placeholder image Government shutdown illustration

Shutdowns are a repeat element in American political life – however this one feels especially difficult to resolve due to political dynamics and deep-seated animosity among the two parties.

Some government services are temporarily suspended, with approximately 750,000 people are expected to be put on unpaid leave as Republicans and Democrats can't agree on a spending bill.

Legislative attempts to resolve the impasse continue to fall short, and it is hard to see an off-ramp this time as both parties – as well as the President – perceive advantages in digging in.

These are the four ways in which this shutdown distinct currently.

First, For Democrats, the focus is on Trump – not just healthcare

The Democratic base have insisted over recent periods that their party more forcefully fights the Trump administration. Currently the party leadership has a chance to show their responsiveness.

Earlier this year, the Senate's top Democrat was fiercely criticised after supporting a Republican spending bill and averting a government closure early this year. This time he's digging in.

This is a chance for the Democratic party to demonstrate they can take back some control from a presidency pursuing its agenda assertively with determined action.

Refusing to back the GOP budget proposal comes with political risk as citizens generally will grow frustrated as the dispute drags on and impacts accumulate.

Democratic representatives are leveraging the budget standoff to put a spotlight on expiring health insurance subsidies together with GOP-backed federal health program reductions for the poor, which are both unpopular.

They are also trying to curtail the President's use of presidential authority to rescind or withhold money authorized legislatively, which he has done in international assistance and various federal programs.

Second, For Republicans, they see potential

The President and one of his key officials have openly indicated of the fact that they smell a chance to make more of the cutbacks in government employment implemented during the current presidential term so far.

The President himself stated recently that the shutdown had afforded him an "unprecedented opportunity", adding he intended to reduce funding for "opposition-supported departments".

The White House stated they would face the "unenviable task" involving significant workforce reductions to keep essential government services operating if the shutdown continued. The Press Secretary described this as "fiscal sanity".

The scope of the potential lay-offs is still uncertain, though administration officials has been in discussions with the Office of Management and Budget, the budgeting office, which is headed by the administration's budget director.

The budget director has already announced the halting of government financial support for regions governed by of the country, such as NYC and Chicago.

3. There's little trust between both parties

Whereas past government closures have been characterised by extended negotiations between the two parties aimed at restoring federal operations, currently there seems little of the same spirit for compromise presently.

Conversely, there is rancour. The bad blood persisted recently, with Republicans and Democrats exchanging accusations for causing the impasse.

House Speaker from the majority party, accused Democrats of not being serious toward resolution, and holding out over a deal "for electoral protection".

Meanwhile, the Senate leader levelled the same accusation against their counterparts, stating how a Republican promise regarding health funding talks after operations resume can not be taken seriously.

The administration leader personally has inflamed the situation through sharing a computer-created controversial depiction featuring the opposition leader along with another senior in the House, where the legislator appears wearing a large Mexican-style sombrero and a moustache.

The representative with party colleagues denounced this as discriminatory, which was denied by the Vice-President.

4. The US economy faces vulnerability

Experts project about 40% of the federal workforce – over 800,000 workers – to be put on unpaid leave due to the government closure.

That will depress spending – with broader economic consequences, including halted environmental approvals, delayed intellectual property processing, interrupted vendor payments along with various forms of federal operations connected to commercial interests cease functioning.

A shutdown also injects new uncertainty into an economy already being roiled from multiple factors including tariffs, previous budget reductions, enforcement actions and technological advancements.

Analysts estimate potential reduction of approximately 0.2% from national economic expansion for each week it lasts.

However, economic activity generally rebounds the majority of interrupted operations after a shutdown ends, similar to recovery patterns caused by a natural disaster.

That could be one reason why the stock market has appeared largely unfazed by the current stand-off.

Conversely, experts indicate that if the President carries out proposed significant workforce reductions, the damage could be more long-lasting.

Marissa Clark
Marissa Clark

A seasoned business consultant with over a decade of experience in helping startups scale and thrive.