WASHINGTON (AP) — President Donald Trump is approaching the government shutdown as a chance to reform the federal workforce and address critics by suggesting widespread layoffs and proposing significant reductions to programs that hold value for Democrats.
Instead of the typical practice of furloughing employees during budgetary gaps, White House press secretary Karoline Leavitt announced that job cuts were “imminent.” The Office of Management and Budget revealed that it was pausing approximately $18 billion in infrastructure funding for New York’s subway extension and Hudson Tunnel initiatives, located in the areas represented by Democratic leaders of the U.S. House and Senate.
Trump has marveled over the handiwork of his budget director.
“The budget can be reduced to an extent that would otherwise be unattainable,” remarked the Republican president, referencing OMB Director Russ Vought at the week’s outset. Vought was instrumental in crafting the Project 2025 conservative policy guide.
“So they’re taking a risk by having a shutdown,” Trump said during an event at the White House.
Now, on Day 2 of the shutdown, tensions are already high. Observers and certain lawmakers were concerned about this assertive strategy from the Trump administration, which might arise if Congress, failing to fulfill its duty to pass budgetary legislation, deferred its authority to the White House.
In a private discussion with House GOP lawmakers on Wednesday afternoon, Vought informed them about impending layoffs within the following days. This development extends the work of the Department of Government Efficiency under Elon Musk, known for streamlining federal functions earlier this year.
“These actions have been underway since January 20th,” commented House Democratic leader Hakeem Jeffries when discussing the president’s inauguration day. “Their harshness is deliberate.”
The economic effects
With no easy endgame at hand, the standoff risks dragging deeper into October, when federal workers who remain on the job will begin missing paychecks. The nonpartisan Congressional Budget Office has estimated roughly 750,000 federal workers would be furloughed on any given day during the shutdown, a loss of $400 million daily in wages.
The economic effects could spill over into the broader economy. Past shutdowns saw “reduced aggregate demand in the private sector for goods and services, pushing down GDP,” the CBO said.
“Stalled federal spending on goods and services led to a loss of private-sector income that further reduced demand for other goods and services in the economy,” it said. Overall CBO said there was a “dampening of economic output,” but that reversed once people returned to work.
“The longer this goes on, the more pain will be inflicted,” said House Speaker Mike Johnson, R-La., “because it is inevitable when the government shuts down.”
No meetings scheduled
Trump and the congressional leaders are not expected to meet again soon. Congress has no action scheduled Thursday in observance of the Jewish holy day, with senators due back Friday. The House is set to resume session next week.
The Democrats are holding fast to their demands to preserve health care funding and refusing to back a bill that fails to do so, warning of price spikes for millions of Americans nationwide. The Kaiser Family Foundation estimates insurance premiums will more than double for people who buy policies on the Affordable Care Act exchanges.
The Republicans have opened a door to negotiating the health care issue, but GOP leaders say it can wait, since the subsidies that help people purchase private insurance don’t expire until year’s end.
“We’re willing to have a conversation about ensuring that Americans continue to have access to health care,” Vice President JD Vance said Wednesday at the White House.
Reshaping the federal government
With Congress as a standstill, the Trump administration has taken advantage of new levers to determine how to shape the federal government.
The Trump administration can tap into funds to pay workers at the Defense Department and Homeland Security from what’s commonly called the “One Big Beautiful Bill” that was signed into law this summer, according to the CBO.
That would ensure Trump’s immigration enforcement and mass deportation agenda is uninterrupted. But employees who remain on the job at many other agencies will have to wait for government to reopen before they get a paycheck.
Already Vought, from the budget office, has challenged the authority of Congress this year by trying to claw back and rescind funds lawmakers had already approved — for Head Start, clean energy infrastructure projects, overseas aid and public radio and television.
The Government Accountability Office has issued a series of rare notices of instance where the administration’s actions have violated the law. But the Supreme Court in a ruling late last week allowed the administration’s so-called “pocket rescission” of nearly $5 billion in foreign aid to stand.
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Associated Press writers Stephen Groves, Joey Cappelletti, Matt Brown, Kevin Freking and Mary Clare Jalonick contributed to this report.
