Government shutdown could cost $14bn, congressional forecaster predicts
The US government shutdown has temporarily slowed the economy, and while most of its ill effects will disappear once funding is reauthorized, between $7bn and $14bn in GDP will not be recovered, the nonpartisan Congressional Budget Office (CBO) forecasts.
Their prediction underscores the shutdown’s potential for economic damage, which is now on its 29th day. Congress failed to agree on extending funding beyond the end of September, leading federal agencies to curtail their operations, around 700,000 workers to be furloughed and hundreds of thousands of others to continue working without pay.
The CBO predicts that the shutdown will slash real gross domestic product, which has been adjusted for inflation, by between one and two percentage points in the fourth quarter, though much of that damage will be undone whenever funding is restored.
But there will nonetheless be a lingering economic hit, CBO forecasts. If the shutdown were to end today, it would cost $7bn, while if it ended after six weeks, on 12 November, it would cost $11bn. After eight weeks, on 26 November, the toll would be $14bn.
Key events
Here’s more from the Guardian’s Lauren Aratani on the Federal Reserve’s interest rate decision:
The US Federal Reserve cut interest rates on Wednesday, the second rate cut this year amid economic turbulence from the federal government shutdown and Donald Trump’s tariffs.
The decision to cut the Fed’s benchmark interest rate by a quarter point to a range of 3.75% to 4% comes at an extraordinary moment for the central bank. The Fed has been under immense pressure from Donald Trump to cut rates despite persistent inflation.
In a statement, the Fed said that the unemployment rate had gone up but remains low. “Job gains have slowed,” the statement reads. “Inflation has moved up and remains somewhat elevated.”
The ongoing federal government shutdown, now one of the longest in US history, has also complicated the Fed’s job. Collection of important economic data has been indefinitely halted as employees at the Bureau of Labor Statistics (BLS) are furloughed during the shutdown.
The Fed typically studies BLS data to determine labor market conditions, including the number of new jobs added to the economy and the current unemployment rate. The last jobs report was released in early September, before the shutdown, and gave a relatively bleak snapshot of the jobs market in August. The number of jobs added to the economy in August was down by more than 100,000 since the spring, and unemployment crept up to 4.3% – the highest since 2021.
Though BLS was scheduled to release September’s job market report in early October, it suspended its release once the shutdown started. Private payroll firm ADP reported earlier this month that the private sector cut 32,000 jobs in September, a sign that the job market is continuing to slow.
Federal Reserve slashes interest rate again, notes ‘somewhat elevated’ inflation
The Federal Reserve has voted to slash its benchmark interest rate by a quarter percentage point amid inflation that has remained “somewhat elevated” and an uncertain US economic outlook.
The rate cut comes as the central bank shifts from fighting the inflation that plagued the economy’s recovery from the Covid-19 pandemic and towards bolstering economic growth and the labor market.
“Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated,” the policy setting Federal Open Market Committee said in a statement released just now, following the conclusion of its regular meeting.
In a sign of the tricky balance the Fed faces between quelling inflation and supporting hiring, the statement noted: “Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.”
The decision was endorsed by 10 of the committee’s 12 members. Donald Trump’s former top economic adviser, Stephen Miran, dissented, arguing for a cut of a half a percentage point, in line with the president’s desire for lower interest rates. Jeffrey Schmid also did not vote for the decision, preferring not to lower the rate.
US representative-elect Adelita Grijalva, a Democrat, has now been waiting 36 days to be sworn in to office, setting a new record that any member of Congress has had to wait following a special election, Axios reports.
The matter has become a political football, with House speaker Mike Johnson refusing to swear Grijalva in until the House is back in session.
The House speaker is able to swear in new members during “pro forma” sessions when the House isn’t in session, as Johnson did earlier this year with two Florida Republicans, but he is declining to do so with Grijalva, of Arizona.
She won almost 70% of the vote in the 23 September election for Arizona’s 7th congressional district. The results were certified on 14 October.
Democrats are accusing Johnson of depriving southern Arizona of representation, and feel he is delaying Grijalva’s swearing in because she is expected to deliver the final signature required on a petition to force the release of the Epstein files.
Further to that, millions of poor and disadvantaged Americans could face trouble accessing funds for home heating starting next month due to the government shutdown, lawmakers from both parties and non-profit groups said on Wednesday.
The shutdown, now in its 29th day, could prevent states from receiving about $3.6bn under the Low-Income Home Energy Assistance Program, or LIHEAP, run by the US Department of Health and Human Services. The funds help families pay winter heating and summer cooling bills, with about 80% used in the winter months.
States typically receive their allocations in late October or November, and the funds are distributed to households in November and December.
Republican representative Brian Fitzpatrick of Pennsylvania called on health secretary Robert F Kennedy Jr to ensure uninterrupted LIHEAP funding during the shutdown.
“No household should have to choose between keeping their homes at safe temperatures, basic healthcare, or having food on the table,” Fitzpatrick said in a letter to Kennedy, calling on HHS to use every available authority and mechanism to maintain LIHEAP operations without interruption and to communicate with states and providers to prevent service gaps that would endanger communities.
Officials in Minnesota and New York have also warned residents that funds may be delayed. The program assisted 1.5 million New York households last year, governor Kathy Hochul’s office said in a statement last week. “Thanks to Washington Republicans’ government shutdown, hundreds of thousands of vulnerable New Yorkers are about to be left in the cold,” she said.
The Trump administration fired LIHEAP staff in April as part of wider cutbacks in the federal government, which also raised concerns about getting funds to states.
Democratic representative Madeleine Dean, also of Pennsylvania, called the situation “unacceptable”. “While the most vulnerable among us pay the price for this shutdown, Republicans seem uninterested in ending it,” Dean posted on X.
Mark Wolfe, executive director of the National Energy Assistance Directors Association, said any delays in funding would be difficult for vulnerable Americans, 42 million of whom are also set to lose Snap food aid, which is set to lapse on Saturday.
“If the shutdown continues, the lives of low-income families, the lives of poor families, in the United States will just become much harder,” Wolfe told Reuters. “A $500 grant for energy assistance might not sound like a lot to a middle-income family, but for a low-income family, that’s what allows them to buy heating oil to get the furnace started.”
Schumer ended his press conference by accusing Republicans of using people who rely on Snap “as hostages”.
Replying to a question about whether Democrats should take any responsibility if the food aid benefits ends on Saturday because of the shutdown, as the Trump administration says it will, Schumer replied:
We are saying the Republicans can fund it now, and they’re using these people as hostages, plain and simple … that’s the answer.
He also linked Democrats’s insistence that Snap be funded with Republican’s refusal to negotiate over extending tax credits for Affordable Care Act premiums until the government is reopened:
And by the way, we don’t want to pit health care and food – they do. We think you can have both.
Schumer said that Senate Democrats would support two different bills, one proposed by a Republican senator, the other by a Democrat, to fund Snap beyond Saturday.
But it is up to Republican Senate majority leader John Thune to hold votes on those, and he said he is not in favor, insisting that Democrats vote for the GOP’s bill to reopen the entire government.
Referring to the Snap proposal from New Mexico Democrat Ben Ray Luján, Thune said on the Senate floor today: “This bill is a cynical attempt to provide political cover for Democrats to allow them to carry on their government shutdown even longer, and we’re not going to let them pick winners and losers. It’s time to fund everybody.”
Republican senator Josh Hawley has proposed similar legislation, which Democrats say they would support, but Thune is not expected to bring it up for a vote.
Calling Trump ‘heartless’, top Senate Democrat blames president for food aid cut off
Democratic senator minority leader Chuck Schumer is laying into Donald Trump, after his administration announced that it could not continue a crucial food aid program beyond Saturday, because of the government shutdown.
Schumer argues that money is available to continue the Supplemental Nutrition Assistance Program (Snap), otherwise known as food stamps, but Trump refuses to use it.
“For the first time in history, a president, Donald Trump, is refusing to fund Snap during a shutdown,” Schumer told a press conference.
“Forty-two million Americans – hungry children, middle class families who’ve just … lost [their] job, veterans, senior citizens who struggle to pay for their food, all of these people will lose their SNAP benefits, not because the money’s gone, not because it’s not permitted, because Donald Trump ordered it stopped. Donald Trump is a vindictive politician and a heartless man.”
Las Vegas eyed as host of GOP’s 2026 midterm convention – report
Donald Trump’s advisers are considering hosting his proposed political convention ahead of the 2026 midterms in Las Vegas, the Wall Street Journal reports.
Political parties typically hold conventions ahead of presidential elections every four years, but Trump has floated the idea of a convention ahead of next year’s midterm elections, where the GOP will be defending their majorities in Congress.
They control the House of Representatives by a mere three seats, when all vacancies are filled, and the Senate by the same amount. The party in power has lost control of the House in recent midterms – as Trump did, during his first term in 2018 – and the Democrats are seen as having a good shot of retaking the lower chamber. That would give them expanded powers to investigate his administration, and block much of his legislative agenda.
Las Vegas is the largest city in Nevada, a swing state that Trump became the first Republican to win in two decades last year, when he triumphed over Kamala Harris.
Government shutdown could cost $14bn, congressional forecaster predicts
The US government shutdown has temporarily slowed the economy, and while most of its ill effects will disappear once funding is reauthorized, between $7bn and $14bn in GDP will not be recovered, the nonpartisan Congressional Budget Office (CBO) forecasts.
Their prediction underscores the shutdown’s potential for economic damage, which is now on its 29th day. Congress failed to agree on extending funding beyond the end of September, leading federal agencies to curtail their operations, around 700,000 workers to be furloughed and hundreds of thousands of others to continue working without pay.
The CBO predicts that the shutdown will slash real gross domestic product, which has been adjusted for inflation, by between one and two percentage points in the fourth quarter, though much of that damage will be undone whenever funding is restored.
But there will nonetheless be a lingering economic hit, CBO forecasts. If the shutdown were to end today, it would cost $7bn, while if it ended after six weeks, on 12 November, it would cost $11bn. After eight weeks, on 26 November, the toll would be $14bn.
The Senate’s top Democrat, Chuck Schumer, believes that Republicans will back down from their positions as public outrage grows over sharply higher Affordable Care Act (ACA) premiums.
“We are just three days, three days away from open enrollment and three days away from the biggest health care crisis America has seen in a generation,” Schumer said in a speech on the Senate floor.
It’s the start of “window shopping” for the ACA, when enrollees can get a look at prices for health plans, and Schumer predicted that they “are seeing that, due to Republican obstruction, they will end up having to pay tens of thousands of dollars more each year for healthcare, seeing their premiums, triple, quadruple, or more”.
The current government shutdown is, in many ways, a continuation of the debate over the Affordable Care Act, which Democrats passed unilaterally in 2010 during Barack Obama’s presidency.
The tax credits that lower premiums for the plans came during Joe Biden’s presidency, and will expire at the end of the year. Democrats now want the GOP to extend them in conjunction with reopening the government.
Republicans have refused that demand, and insisted the government be reopened before the premium issue is addressed. But many Republicans are also pointing to the debate as proof that the Affordable Care Act has not lived up to its promise, though they have yet to resurrect their apparently dormant quest to repeal the law entirely. Here’s Senate majority leader John Thune just now, in a floor speech:
Suffice it to say, as Democrats are now implicitly admitting that Obamacare massively failed, Democrats of course now want to put a bandaid on a gaping wound by extending the Biden Covid bonuses. But, of course, that will do nothing to fix the underlying problem, which is that healthcare costs will continue to spiral under Obamacare.
Throwing $350bn in taxpayer dollars at the problem in the form of enhanced tax credits will do nothing to stop Obamacare premiums from going up by double digits, because that’s what they have been doing. And it will do nothing to improve health care for the majority of Americans who are not – not – on Obamacare health plans, like our seniors, our most vulnerable citizens, and those who get their coverage through their employer.
No end in sight as US government shutdown hits day 29
The US government shutdown has dragged into its 29th day, with no sign that lawmakers in Congress are anywhere near approving a measure to get federal agencies working again.
The Senate yesterday held its 13th vote on a bill that would fund the government through 21 November, but Democrats blocked its advancement because it does not include funding for their healthcare priorities. The House of Representatives remains out of session on Republican speaker Mike Johnson’s orders, as it has since 19 September. The prolonged recess is seen as a gambit to force Senate Democrats to get on board with the funding proposals, which Republicans passed through the House with almost no Democratic votes before leaving Washington DC.
All signs point to no resolution of this crisis today. While the Senate will take votes, majority leader John Thune has not announced plans to bring the funding bill back up.
