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US government services ground to a halt on Wednesday as lawmakers and the White House traded blame over responsibility 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 take the unprecedented step of permanently firing public employees.
Trump wrote in a post on Truth Social that Republicans “must use this opportunity of Democrat forced closure to clear out dead wood, waste, and fraud”.
“Billions of Dollars can be saved,” he wrote.
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 — and how many government workers would lose their jobs permanently.
“If this thing drags on for another few days, or, God forbid, another few weeks, we are going to have to lay people off,” vice-president JD Vance said. “We’re going to have to save money in some places so the essential services don’t get turned off in other places.”
The last government shutdown, from late 2018 to early 2019, dragged on for five weeks and reduced US economic output by about $11bn.
But Republican Speaker of the House Mike Johnson on Wednesday bristled at the suggestion he would broker a deal with Democrats, saying: “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.”
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 included an extension for healthcare subsidies that are due to expire at the end of the year.
Markets were sanguine about the shutdown, though analysts noted a 0.05 percentage point decline in the benchmark 10-year Treasury yield, which indicates traders were seeking protection in the traditional haven asset.
Mike Zigmont, co-head of trading and research at Visdom Investment Group, said: “The government shutdown isn’t as worrisome as it was in the past and investors went from trivially bothered to entirely unconcerned in half a trading day.”
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 said 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 on Wednesday morning failed by the same 55-45 margin as on Tuesday, as three Democratic senators broke with their party and endorsed the Republicans’s stop-gap funding measure. The bill needs to meet a 60-vote threshold to pass.
Vance said Republicans would work to persuade another five Democrats to sign on.
The vice-president said: “Three moderate Democrats joined 52 Republicans last night. We need five more in order to reopen the government, and that’s really where we’re going to focus, is how to get those five additional Democrats.”
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 said. “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 made clear it was ready to pile pressure on Schumer and his party.
The Office for Management and Budget director Russell Vought on Wednesday morning announced about $18bn in federal funding for infrastructure projects in New York City would be put on hold. Schumer and his counterpart in the House of Representatives, Hakeem Jeffries, represent New York.
A personal familiar with the move said US transportation department employees working on the project had been furloughed.
Vought later said the government would also cancel nearly $8bn in federal funds set aside for green energy projects in more than a dozen Democratic-leaning states.
Additional reporting by George Steer in New York
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