This time, it’s much more serious and risky
The U.S. federal government has entered a partial shutdown. The cause is familiar (and has been seen many times before) – the absence of a temporary funding bill. But the heart of the conflict is not technical in nature, but (this time especially) political and ideological. The Democrats want to tie short-term funding to an extension of subsidies for health insurance (ACA), which are set to expire at the end of the year and currently protect tens of millions of households from rising premiums. The Republicans respond with a demand for a “clean” bill without any add-ons, insisting that subsidies be discussed later. The result is a deadlock in the Senate where, despite the Republican majority, a so-called supermajority* is still required for passage.
- A supermajority in the U.S. Senate means a threshold of 60 out of 100 senators needed to end debate (filibuster) and allow a vote on a bill. In other words, having a simple majority of 51 votes isn’t enough – most legislation requires 60 votes to pass. Currently, the Senate is composed of 53 Republican senators, 45 Democrats, and 2 independents who caucus with the Democrats.
What makes the situation more serious than the usual “shutdown scare” is the White House strategy to turn the shutdown into a lever for restructuring the state. Trump’s OMB (Office of Management and Budget) has instructed agencies to plan not only for furloughs*, but also for permanent layoffs, incorporating the shutdown into a broader program of reducing bureaucracy and reshaping the federal service. At the same time, the dispute over so-called impoundment — withholding congressionally approved funds — continues, along with “pocket” cancellations of already approved funds at the end of the fiscal year. This turns the budget conflict into a struggle over the separation of powers: how far can the executive branch go in redirecting or blocking spending that Congress has already approved?
- “Furlough” in the American context means a forced but temporary unpaid leave for government employees when the government runs out of authorized funds. Workers are still technically employed but are not paid and are not allowed to work until a budget is passed. After the shutdown ends, they are usually paid retroactively.
The political impact on the Trump administration is a double-edged sword. On one hand, the polarized public will divide the blame — some will accuse the Democrats of blocking temporary funding and thus — paradoxically — opening the door to “irreversible” steps they fear. On the other hand, the Republicans control both the White House and both chambers of Congress. Every day without an agreement feeds the narrative of incompetence among those in power. Timing is key: the longer the shutdown lasts, the more room the administration has for unilateral actions (layoffs, cancellation of small programs), but also the higher the risk of political collapse if the impact on the ground becomes tangible.
Is this just another short bluff, as it has often been before, or something more serious? Previous shutdowns have sometimes ended in a few days — the longest one, in 2018/19, lasted 35 days and ended without a real victory for either side. Today’s political setup encourages a longer standoff. Democrats are unusually united on the issue of healthcare, which is a core part of their identity, and the White House lacks a clear motive for a quick exit if the shutdown helps advance the “downsizing” of the state. A “quick middle ground” is hard to find when the stakes are ideological, not fiscal. So yes, it is more serious — definitely.
The economic consequences grow linearly with duration. About 750,000 federal workers are on forced leave, while another large group is already in a “buyout” program (a financial incentive to voluntarily leave their job) — so between 900,000 and a million people are without regular income while the shutdown lasts. Daily economic losses are estimated at several hundred million dollars. Some of that will be recovered later, but some spending is irretrievably lost. Markets are understandably nervous: stocks are falling, gold is climbing, and perhaps the most tangible effect on the real economy is the delay in publishing key macroeconomic data — without official employment and inflation reports, business and monetary decisions become like navigating in fog. “Essential” services are operating, but often without pay — it only takes air traffic controllers or TSA agents to start “calling in sick” for the bottleneck in air travel to force a political compromise, as happened in 2019.
External contractors, who carry out a significant share of government work in the U.S., must also be considered: their cash flow stops, projects are delayed, and private supply chains pull the handbrake. Social programs formally continue, but bottlenecks in processing requests and customer service affect the most vulnerable. Systemically, each new round of fiscal brinkmanship erodes the “management premium” the U.S. government enjoys on debt markets — after recent warnings from rating agencies, yet another sign of institutional fragmentation pushes yields higher and makes budgeting more expensive.
How does the shutdown spill over into Trump’s trade war with China and others? Operationally, parts of the trade machinery (tariffs, export controls, sanctions) fall under essential functions and continue operating, but with reduced capacity: the processing of licenses, exemptions, and regulatory reviews slows down, and disputes before trade bodies pile up. Paradoxically, the White House can escalate rhetoric — or even take unilateral tariff actions that don’t require new budget appropriations — while at the same time, the apparatus for fine-tuning and implementation becomes sluggish. For Chinese and other Asian exporters, this means greater regulatory uncertainty (which is effectively a non-tariff barrier), but also opportunities for loopholes or delays, depending on the segment. In practice, it’s a more turbulent, not necessarily stricter environment.
The war in Ukraine will not suffer a short-term shock because military deliveries from already approved packages will continue, and the Pentagon has its own multi-year funding lines. But anything requiring a new political mandate — new aid packages, supplements, long-term planning for munitions production — enters an uncertain zone (if this situation continues).
The worst-case scenarios for the U.S. are not in the calendar, but in the dynamics: a shutdown lasting six weeks or more, a wave of layoffs becoming permanent, disruptions in air travel, a fall in consumer spending ahead of the holidays, a new round of credit rating downgrades, and rising yields on “Treasuries” (U.S. government bonds). Institutionally, escalation of the dispute over withholding congressionally approved funds and mass layoffs could escalate into a constitutional conflict between the executive and legislative branches. Perhaps even more dangerous in such a situation is the invisible threat: erosion of the state’s capacity to respond quickly and effectively to crises (cyberattacks, natural disasters, banking tensions) while agencies are fragmented.
How does the European Union view all this? Of course, it fears that America is turning inward just as tensions with Russia rise and instability grows on Europe’s periphery. But fear can also be cathartic. If Washington signals that domestic cultural-social wars are more important than “stable” foreign policy continuity (which the EU has grown dependent on), then Brussels must finally choose between dependence and autonomy. Rational logic suggests de-escalation. EU industry is already suffering from high energy and security costs, and as long as the perception remains that “America can be relied on,” that condition will only get worse.
Finally, the main question: is this shutdown more serious? Yes — because the administration doesn’t see it as a technical glitch, but as a tool to change the country. The issue at hand isn’t just a few billion dollars in spending, but the architecture of U.S. social policy and the separation of powers — and because both sides believe that returning without a trophy is politically more costly than enduring the damage. The economy is currently absorbing the hit, but as days pass, the risk of real damage grows — in the labor market and in the bond market. On the foreign policy stage, the immediate security capacity of the U.S. remains intact, but the political message is one of weakness and unpredictability. In this space, the EU has a choice: wait for Washington to “pull itself together” again, or try to calm the fronts closest to home. The first option is more comfortable; the second is far more mature.
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