Wall Street Braces for U.S. Government Shutdown
In an effort to break the deadlock, Trump called congressional leaders from both parties to the White House on Monday.
Quick overview
- Donald Trump is facing the possibility of another government shutdown as Congress remains deadlocked over the budget.
- Republican leaders blame Democrats for the impending crisis, while Democrats argue that Republicans are unwilling to negotiate.
- With only two days left before the new fiscal year begins, the probability of a shutdown is estimated at around 60%.
- If no agreement is reached, approximately 900,000 federal employees could face furloughs and delayed paychecks.
Donald Trump faces the prospect of another government shutdown—the same political battle that, during his first term, led to the longest shutdown in U.S. history.
The administration has until midnight Tuesday to avoid a partial halt in federal operations, as Congress remains deadlocked over the budget. Analysts warn that a shutdown could weigh on the U.S. economy and complicate the Federal Reserve’s monetary policy outlook.
Republican Senate leader John Thune blamed Democrats for the looming crisis: “A shutdown is entirely the Democrats’ responsibility. The ball is in their court,” he told U.S. media, stressing that the House had already approved a seven-week stopgap funding bill.
Democrats, however, argue the opposite. Senate Majority Leader Chuck Schumer said Republicans are unwilling to negotiate: “God forbid Republicans shut down the government. The American people will know it’s their responsibility.” He added that his party will not back a short-term extension without conditions, pointing to public demands for expanded healthcare support.
The standoff comes just as the new fiscal year begins on October 1. With only two days left, estimates put the probability of a shutdown at roughly 60%. In past instances, such as in 2023, last-minute deals narrowly prevented the government from grinding to a halt.
Race against the clock
In an effort to break the deadlock, Trump called congressional leaders from both parties to the White House on Monday. Joining him will be Thune, Schumer, House Speaker Mike Johnson, and Democratic House leader Hakeem Jeffries.
The meeting follows a canceled session last week, when Trump dismissed Democratic demands as unproductive. Reports suggest the decision to cancel was influenced by conversations with Thune and Johnson, who advised against negotiating with the opposition.
What a shutdown means
If no agreement is reached, discretionary spending freezes and agencies without funding must suspend non-essential operations. Roughly 900,000 federal employees would face furloughs, with delayed paychecks until funding is restored. The release of key U.S. economic data could also be postponed, heightening market uncertainty and volatility.
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