A federal government shutdown began at midnight on October 1, 2025, as lawmakers failed to pass a funding agreement. As of the date of publication, negotiations between Republicans and Democrats remain locked in a stalemate.
Below, we address some of your most frequently asked questions.
What is a government shutdown?
Each year, Congress must pass legislation providing funding for discretionary programs. This is typically done through a series of 12 appropriations bills or, if Congress is unable to write and pass the bills in time, a continuing resolution (CR) that serves as a temporary stopgap measure to keep the government open. If Congress fails to pass a funding bill before the deadline, the government shuts down, pausing all non-essential federal work.
Why is there a shutdown if we have a unified government?
A unified government is when one party controls both chambers of Congress and the White House. A divided government is one in which one party controls the White House and another controls at least one chamber of Congress. Currently, the government is unified under Republican control. Republicans hold a 219 – 213 majority (with three vacant seats) in the House and a 53 – 47 majority in the Senate.
Though only 51 votes are needed to pass legislation in the Senate, most major bills are subject to the filibuster, which has a 60-vote threshold. Because Republicans only control 53 seats in the Senate, they need Democratic support to overcome the filibuster and, in turn, pass government funding bills. To date, the two parties haven’t been able to find a compromise acceptable to enough lawmakers to fund the government (see further discussion below).
What government services are impacted?
Federal spending is divided into two main categories: mandatory and discretionary. Mandatory spending is predetermined and not dependent upon annual appropriations. Discretionary spending is determined each year by Congress; if funding is not appropriated, these programs shut down.
- Mandatory Spending includes Social Security, Medicare and Medicaid, as well as some smaller programs such as supplemental nutrition assistance (SNAP benefits), retirement benefits for federal employees and military veterans, and various financial safeguards like unemployment insurance.
- Discretionary Spending includes most national defense, transportation, education, health, housing, law enforcement, tax, data, science, environmental, national parks and other social programs.
When the government is shut down, there is no funding available for discretionary spending, and those programs are impacted to varying degrees. Some functions will continue as they are considered “essential,” such as military operations and air traffic control; however, federal employees do not receive paychecks during a funding lapse.
How is the Internal Revenue Service impacted by a shutdown?
The Internal Revenue Service (IRS), like all other federal agencies, must submit a lapse in appropriations plan, or contingency plan, to the Office of Management and Budget (OMB). The IRS submitted a contingency plan that allowed the bureau to remain fully operational for five business days, through October 7, 2025, by utilizing the supplemental appropriations provided by the 2022 Inflation Reduction Act (IRA).
While no additional information has been released, Bloomberg recently reported that the IRS intends to furlough approximately 35,000 of its 75,000 workers; the other 40,000 will remain working through the shutdown.
What are the economic impacts of government shutdowns?
JPMorgan, a leading global financial services firm, projects that “each week, a shutdown subtracts about 0.1% of annualized GDP growth via reduced government activity.” The Congressional Budget Office (CBO), Congress’s nonpartisan scorekeeper, estimated the last shutdown, which occurred in 2018 – 2019 and lasted 34 days, reduced economic output by $11 billion over the two quarters impacted.
On an individual level, federal workers are not paid during government shutdowns. Some workers are considered “essential” and have to report to work, while others are deemed “non-essential” and sent home. Federal employees are guaranteed back pay once the shutdown ends, but government contractors are not. The CBO estimates 750,000 employees could be furloughed at a daily cost of $400 million in compensation.
What are the main issues driving the current shutdown?
Republicans and Democrats have each proposed a continuing resolution (CR) that will keep the government open for a short time. The Republican proposal is a “clean” CR that passed the House with almost exclusively Republican votes in mid-September; it doesn’t include any policy riders and would fund the government through November 21, 2025. The Democratic proposal is a CR that would fund the government through October 31, 2025, but has policy stipulations attached, which include the following:
These enhanced premium tax credits expire on December 31, 2025. A lapse in these health insurance subsidies would impact over 20 million taxpayers, resulting in drastically higher premiums for some taxpayers and a loss of coverage for others. While the credits don’t expire until the end of the year, open enrollment begins on November 1, 2025. A permanent extension of the credits would cost $350 billion and increase the number of people with health insurance by 3.8 million over the next 10 years, according to the CBO.
Democrats have asked for a permanent extension of the PTCs in their proposal; however, they’re generally only insisting on coming to a bipartisan agreement on their fate before they will reopen the government. Democrats want to find a resolution before open enrollment begins in a few short weeks. Republicans assert they will only start to negotiate once Democrats agree to the Republican House-passed CR. Republicans are divided over the fate of the PTCs; conservatives would like to see the subsidies expire, but moderate and vulnerable Republicans are in favor of at least a short-term extension. Rep. Jen Kiggans (R-VA) has proposed a bill that would extend the credits for one year, with 13 Republican and 10 Democratic co-sponsors.
Rescissions bills cancel funds that were previously appropriated by Congress. Office of Management and Budget (OMB) Director Russell Vought has issued two recessions requests during the 119th Congress — one that Congress passed in July and a “pocket rescissions” request in August that has created some consternation among lawmakers.
Democrats have requested a limitation on the administration’s rescission powers, arguing they threaten Congressional control over federal spending. While it takes 60 votes in the Senate to overcome the filibuster and get a funding bill to the floor, only 50 votes are needed to approve a rescissions package that claws back previously appropriated funds. While several Republican lawmakers have expressed dismay at the OMB’s deployment of “pocket rescissions,” none have signaled a willingness to support restrictions on their use.
The democratic proposal includes a rollback of the Medicaid cuts that were enacted in the 2025 “One Big Beautiful Bill” Act. This is widely viewed as an unserious request, as Republicans are not inclined to unwind their signature legislation and such a move would cost almost $1 trillion over 10 years.
There are many nuances to the issue noted above, as well as numerous other factors that influence both party leadership and individual lawmakers’ decisions.
When do you expect the government to reopen?
The shutdown could drag on as neither side has shown signs of budging over the last week. Speaker Johnson (R-LA) has recessed the House until further notice, insisting they will not return until the Senate passes the House-passed CR.
In the Senate, Majority Leader John Thune (R-SD) continues to force votes on both the Republican House-passed CR and the Democrats proposal. The Republican measure has drawn support from all but one Republican, two Democrats and an Independent who caucuses with Democrats. Thune needs at least five more Democrats to break with their party in order to pass the measure; however, there has not been an increase in Democratic support since the second vote. The Democratic proposal has not drawn support from any Republicans to date.
If enough lawmakers can come to a bipartisan agreement, they may be able to facilitate an end to the current shutdown. A possible deal seems unlikely to be driven by party leaders, who appear to be hardening their positions; however, discussions are taking place among bipartisan groups of more moderate lawmakers.
Alternatively, as pressures increase and public sentiment declines, one party may decide to acquiesce in order to reopen the government. The party seen as responsible for the shutdown can also impact lawmakers’ decisions. The most recent national poll, conducted by CBS, shows Americans place more blame on Republicans than Democrats, but that can change quickly.
The dynamics of this shutdown are continuously evolving and, at this moment, it’s impossible to predict an end date. We continue to monitor the situation and will provide updates as developments occur.
What pressures will lawmakers face if the government shutdown drags on?
The impacts of a government shutdown often accumulate over time. Some of the primary pressures lawmakers may face now and in the coming weeks include:
- Flood Insurance: The National Flood Insurance Program (NFIP) lapsed at the end of September, leaving individuals no ability to renew, increase or purchase new coverage. While this isn’t part of government funding, if Speaker Johnson (R-LA) keeps the House out, the NFIP cannot be reauthorized.
- Food Assistance: The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) may run out of money this week, leaving low-income Americans without food benefits.
- Federal Employee Pay: Federal employees will miss their first paycheck on October 10, 2025, if funding is not restored.
- Military Pay: Similarly, troops would miss their first paycheck on October 15, 2025.
- Federal Reserve Meeting: The Federal Open Market Committee (FOMC), the Federal Reserve’s policymaking body, is meeting October 28 – 29, 2025. They are expected to drop the federal funds rate by one-fourth percentage point at that meeting; however, the government shutdown could call that into question. Most Bureau of Labor Statistics (BLS) employees are currently furloughed, which has delayed the collection of data and release of key economic indicators that the FOMC relies on to make monetary policy decisions.
How long have recent government shutdowns lasted?
The current shutdown is our ninth in the last 40 years. The previous eight shutdowns have lasted between one and 34 days, with an average length of 10 days.
|
Date Shutdown Began |
Length of Shutdown (Days) |
| October 1986 | 1 |
| December 1987 | 1 |
| October 1990 | 3 |
| November 1995 | 5 |
| December 1995 | 21 |
| September 2013 | 16 |
| January 2018 | 2 |
| December 2018 | 34 |
What should government contractors do during a shutdown?
Last week, we published 2025 Government Shutdown: Action Steps for Contractors to provide insights for government contractors, who are uniquely impacted by government shutdowns.
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