Where We Are
The federal government is set to run out of money at the end of the fiscal year, September 30, 2025, because Congress has failed to pass its appropriations bills for 2026. To avert a shutdown, Congress would need to pass a budget, or a continuing resolution (CR), which is a common procedure holding funding flat at the previous year’s fiscal level, before October 1, 2025. This outcome is unlikely.
The House and Senate are both currently out of session, with the Senate scheduled to return on September 29, and the House scheduled to return after October 1st. While it’s possible either chamber could be called back to DC before their scheduled recess ends, it’s not likely, given this recess coincides with the observance of a major holiday, and members would be expected to travel from across the country on short notice.
How We Got Here
On Friday, the House narrowly approved a Republican led CR, which was defeated in the Senate later that afternoon on a near party-line vote. Senate Majority Leader John Thune is expected to force another vote on the House-approved CR next Monday when the Senate returns. There is currently no reason to expect that the upcoming CR vote in the Senate will succeed, as Republicans would need 6 new Democratic Senators to vote in favor of their CR. Once this vote fails, the Senate will have just one day to negotiate a deal to keep the government open, or else a shutdown begins on October 1, 2025.
The prospect of a shutdown has been brewing for months. No one expected Congress to pass its appropriations bills on time, but over the past few weeks it became clear that the two parties would not even be able to negotiate a CR, which is typically how our government is funded.
Senate Minority Leader Chuck Schumer is under tremendous pressure to show his party that he’s willing to fight against President Trump and the agenda of the Republican Party. In March, the last time the government nearly shut down, Schumer provided the votes to pass the GOP-led CR, which kept the government open but failed to extract any concessions from Republicans. Senator Schumer was extensively criticized by his own party for this decision, and now faces increased pressure to handle the current shutdown dynamic more forcefully. As a result, Senator Schumer has lobbied against the House-approved CR, and instead advanced his own funding bill that includes Democrat wish list items such as restoring Medicaid Cuts from the One Big Beautiful Bill, limiting the executive power of the Trump administration, and more. This budget was quickly defeated in the Senate, and it will not succeed.
The House-approved CR is GOP-led, and is simply an extension of ongoing spending levels until November 21, 2025, with additional security spending to protect members of Congress and other high-profile government officials.
What Happens Next
The House and Senate minority leaders, Congressman Hakeem Jeffries and Senator Chuck Schumer, are actively working to schedule a meeting with President Trump, where they can attempt to negotiate a deal to keep the government open.
A primary sticking point in the budget negotiations has been the extension of the soon-expiring Affordable Care Act (ACA) Premium Tax Credits. While Republicans have thus far refused to include ACA extensions in budget talks, it’s the number one demand for Democrats, and also popular amongst many moderate Republicans. Moreover, Senate Leader John Thune has already indicated a willingness to eventually negotiate ACA extensions.
Should we find ourselves in a government shutdown that Congress quickly negotiates out of, expect ACA extensions as the likely culprit for bringing both parties together for a funding deal.
Previous Shutdowns & Lessons Learned
2018-2019 was the last and longest government shutdown, which lasted for 35 days and was only a partial shutdown because roughly half of the budget had already been passed (none of the 2026 budget has been passed at this point). Over those 35 days, nearly 800,000 federal employees were furloughed (sent home without pay or required to continue working without pay).
Additionally, many federal services immediately ground to a halt, starting with those deemed “non-essential”, such as museums, zoos, and national park services, under the shuttered Department of the Interior. The EPA and FDA were also quickly hollowed out, halting audits and inspections of food and energy production.
Services deemed “essential”, like national security, transportation, and critical infrastructure, remained intact, though were understaffed and experienced slowdowns in services, such as delayed flights, suspension of military preparedness activities, and more. Essentially, the effects of the 2019 shutdown became more noticeable and disruptive with each passing day, as more federal employees were sent home and routine government services we take for granted were increasingly reduced or halted altogether. All in, this partial shutdown resulted in $11 billion of lost revenue.
The 2013 shutdown was different and is more likely to resemble the shutdown we’re currently barreling toward. The 2013 shutdown also took place in the wake of no congressional appropriations bills being passed – 800,000 federal employees were furloughed within the first week, and many services were immediately stopped or reduced, as opposed to gradual increases as the shutdown continued. The 2013 shutdown lasted 16 days and cost the U.S. economy nearly $24 billion in lost revenue.