US government remains shut as senators fail to agree funding plan

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US government services ground to a halt on Wednesday as lawmakers and the White House traded blame over who was responsible for the first shutdown in nearly seven years.

The shutdown, which began at midnight after Republican and Democratic lawmakers failed to strike a deal to keep the government funded into the new fiscal year, threatens hundreds of thousands of jobs and risks costing the US economy billions of dollars’ in lost output.

Earlier this week, the Congressional Budget Office estimated about 750,000 workers would be furloughed, while President Donald Trump and administration officials suggested they would use the shutdown to permanently fire public employees.

But congressional leaders and the White House did not appear in the mood to compromise as furlough notices went out on Wednesday, raising questions about how long the shutdown would last.

Republican Speaker of the House Mike Johnson bristled at the suggestion that he would broker a deal with Democrats, telling reporters on Wednesday: “There’s nothing to negotiate. There’s nothing we can pull out of this bill to make it any leaner or cleaner than it is.”

The last government shutdown, from late 2018 to early 2019, dragged on for five weeks and reduced US economic output by an estimated $11bn.

Democratic leaders have said they will not sign on to the Republicans’ stop-gap measure to keep the government funded at current levels through November 21 unless it includes an extension for healthcare subsidies that are due to expire at the end of the year.

They have also accused Republicans and the White House of failing to negotiate in good faith.

Speaking to Fox News on Wednesday morning, vice-president JD Vance accused Democratic legislators of holding the US government “hostage”.

“You don’t take the government as a hostage because you want to engage in a negotiation about healthcare costs,” he said. “Let’s do that negotiation, but let’s do it in the context of actually opening the government and ensuring those essential services are actually provided to the American people.”

Market moves in response to the shutdown were muted on Wednesday, though analysts noted a 0.06 percentage point decline in the benchmark 10-year Treasury yield, which indicates that traders were seeking out protection in the traditional safe-haven asset. 

In recent days traders have held off from making big moves in the market, anticipating that essential economic data would not be released during the closure. 

John Thune, the Republican Senate majority leader, vowed to keep holding votes on his party’s resolution in an attempt to get more Democrats to endorse it.

“There is no way out, folks,” Thune told reporters on Capitol Hill on Wednesday morning. “Everybody is now asking the question: How does this end? Well, it ends when the Senate Democrats pick this bill up . . . and vote for it.”

A Senate vote held on Wednesday morning failed by the same 55-45 margin as on Tuesday. The resolution needs to meet a 60-vote threshold to pass.

Chuck Schumer, the Senate’s top Democrat, insisted his party would not be pushed around by Republicans, who control the White House and both chambers of Congress.

“We’ve shown the Republicans that they can’t bully us, they can’t bludgeon us,” Schumer told MSNBC. “We’re willing to sit down and negotiate a good deal to help the American people out of the healthcare dilemma . . . but in the meantime, we are going to be fighting everywhere on TV stations . . . in the social media, in picketing, in protesting, in emails, in every way.”

The White House, meanwhile, made clear it was ready to pile pressure on Schumer and his party.

The Office for Management and Budget director Russell Vought announced on Wednesday morning that about $18bn in federal funding for infrastructure projects in New York City would be put on hold. Both Schumer and his counterpart in the House of Representatives, Hakeem Jeffries, represent New York.

A personal familiar with the move said that US department of transportation employees working on the project had been furloughed “due to Chuck Schumer’s shutdown”.