Government shutdown continues as White House weighs "thousands" of layoffs

What to Know About the Government Shutdown

The 2025 federal government shutdown stretched into its second day on Thursday, with no sign of an immediate resolution as Republicans and Democrats continued trading blame over who is responsible for the lapse in funding.

Why It Happened

The shutdown began at midnight on October 1 after Congress failed to pass appropriations for fiscal year 2026. The deadlock stems from deep disagreements over healthcare subsidies, overall spending levels, and the president’s authority to unilaterally rescind previously approved funding.

Democrats have pushed for extending Affordable Care Act subsidies, reversing Medicaid cuts, and restoring public broadcasting funds that Republicans sought to eliminate. Republicans, meanwhile, are pressing for spending rescissions, reduced funding for programs in Democratic-led states, and broader executive discretion over federal dollars.

What’s at Stake

The immediate consequences are wide-reaching. Nearly 800,000 federal workers have been furloughed without pay, while an additional 700,000 are required to continue working without immediate compensation under essential services designations. Programs like Social Security, Medicare, Medicaid, and airport security remain in operation, but many other federal activities, research efforts, and discretionary programs have been suspended.

Some programs serving vulnerable communities are at particular risk. The Women, Infants, and Children (WIC) nutrition program is expected to run out of funds soon if the shutdown continues, putting millions of families in jeopardy. Federal inspections, housing programs, and grant disbursements are also being delayed.

Threats of Mass Layoffs

What makes this shutdown different from past episodes is the Trump administration’s threat to impose permanent layoffs. White House officials have said thousands of federal jobs could be eliminated outright. Press Secretary Karoline Leavitt described layoffs as “likely going to be in the thousands,” signaling a dramatic shift from the usual practice of furloughs followed by reinstatements once funding is restored.

Legal experts and senior government officials, however, have warned that carrying out layoffs during a shutdown could run afoul of the Antideficiency Act, which prohibits government agencies from making financial commitments without approved funding. Unions representing federal employees have already signaled they will challenge any reduction-in-force actions in court.

Political Maneuvers and Targeted Cuts

President Trump has made it clear he sees the shutdown as an opportunity to reshape government. He has met with Office of Management and Budget Director Russell Vought to discuss which agencies and programs should face cuts. Billions in federal funding for infrastructure and green energy projects in Democratic-leaning states have already been frozen, a move critics say is designed to punish political rivals.

The administration has also invoked themes from “Project 2025,” a conservative policy blueprint that emphasizes deep cuts to federal agencies, expanded executive power, and a rollback of progressive programs. The White House has framed the shutdown not as a crisis, but as a chance to “reset” government spending priorities.

Legislative Gridlock

The Senate adjourned on Thursday without taking up either of the two competing funding proposals, delaying action due to the Yom Kippur holiday. Senators remain deeply divided over how to move forward. The House passed a stopgap measure that would extend funding for seven weeks, but Democrats want to add protections such as healthcare tax credits and restrictions on presidential authority to rescind appropriated funds. Republicans argue that such conditions undermine the purpose of negotiating a new fiscal framework.

Both the House bill and a Democratic alternative are expected to come up for votes on Friday, but momentum is weak and the path forward remains uncertain.

Economic and Human Impacts

Economists estimate that every week of shutdown drains billions from the U.S. economy and slows overall growth. The ripple effects extend beyond federal workers. Contractors, research institutions, and small businesses that rely on federal grants or government customers are already feeling the pinch.

Delays in regulatory enforcement could also impact public safety and industry oversight. Health research projects, environmental inspections, and housing programs are among the areas most heavily disrupted. The longer the shutdown persists, the greater the risk of long-term damage to programs that depend on continuous funding.

For everyday Americans, the effects are tangible. Families relying on nutrition and housing assistance may see benefits disrupted. Travelers could experience delays at airports if the Transportation Security Administration and Federal Aviation Administration face staffing shortages. Communities that depend on federal disaster relief funding may find support delayed.

Outlook

The 2025 shutdown has quickly become one of the most contentious in recent memory, not just because of its political gridlock but also because of the administration’s willingness to use it as leverage for sweeping changes in government operations.

With Democrats and Republicans still far apart on core issues, there is little reason to believe the impasse will end quickly. The likelihood of mass layoffs, targeted funding freezes, and an extended shutdown is greater than in past disputes.

As negotiations resume, the central question is whether either side is willing to compromise—or whether the shutdown will stretch on, exacting a heavier toll on federal workers, vulnerable families, and the broader U.S. economy.

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