On October 1, 2025, the US government officially suspended part of its operations after Democrats and Republicans failed to agree on a budget for the new fiscal year. Congress was supposed to approve spending before the fiscal year began, but disagreements blocked the legislation.
Democrats insisted on adding healthcare measures to the funding package, including extending insurance subsidies, reversing Medicaid cuts, and restoring some previously reduced social spending. Republicans argued those issues should be handled separately and urged support for a temporary funding bill to avert a shutdown. Although Republicans control both chambers, they still lack the votes they need in the Senate, where 60 votes are required for most major measures and they hold only 53.
As a result, millions of federal workers could go unpaid. According to ABC News, nearly 4 million people may be affected, not only in Washington: at least 85% of federal employees work outside the capital. National parks, parts of the federal bureaucracy and federal courts are at risk, with courts potentially running out of money by Friday. Lawmakers, however, will continue receiving their annual salaries of $174,000.
Some services will continue. Airport staff and more than 13,000 air traffic controllers are required to report to work. The Pentagon said service members, including reservists on federal active duty, will remain on duty; most of the roughly 2 million military personnel are expected to be paid on October 1. The FBI, DEA, Coast Guard, immigration judges and ICE personnel will also remain at work.
“Active-duty service members, including reservists serving on federal active duty, will continue to report for duty and perform their responsibilities,” a Pentagon document said.
Social benefits are still being paid, including Social Security, Medicare and Medicaid. But part of the workforce in those agencies has been furloughed. At the National Institutes of Health, about 24% of employees will remain on duty, almost all without pay. SNAP and WIC food assistance programs continue for now, but the head of WIC told ABC News that if the shutdown lasts longer than a week, the money could run out, affecting nearly 7 million low-income women and children.
The IRS can rely on reserve funding approved by Democrats in 2022 for the first five working days, allowing it to avoid furloughing nearly 75,000 employees. What happens after that remains unclear, Politico reported. FEMA has $2.3 billion in reserve and can still respond to hurricanes or other disasters, although about 4,000 of its staff will be furloughed.
The economic impact will depend on how long the impasse lasts. The Congressional Budget Office previously estimated that the 2018–2019 shutdown caused about $3 billion in permanent economic losses. It now warns that up to 750,000 federal employees could be furloughed each day, with unpaid wages reaching about $400 million per day. Moody’s chief economist Mark Zandi told Business Insider that a prolonged shutdown could disrupt Federal Reserve policy and weaken investor confidence; according to Politico, falling stock futures, pressure on the dollar and record gold prices already show the markets reacting.