September 29, 2025 • 16 mins
The US government is facing its first potential shutdown in nearly seven years, and the clock is ticking.
On today’s Big Take podcast, Bloomberg Congress editor Megan Scully and host David Gura break down the political incentives for President Trump, the Republican Party and for Democrats — and discuss what’s at stake for the economy if a shutdown comes to pass.
Read more: US Economy Will Only Get Murkier If Key Data Is Delayed in Shutdown
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Episode Transcript
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Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio.
Speaker 2 (00:06):
News, thirty six hours.
Speaker 3 (00:08):
How far out are we thirty six houssy about thirty
six hours.
Speaker 1 (00:11):
Yes, not that I'm counting.
Speaker 2 (00:13):
Not that you're counting. Meghan Scully heads up Bloomberg's coverage
of Congress, and she says if the White House and
lawmakers can't agree to a funding bill by midnight on Tuesday,
the US government will shut down. Ahead of a meeting
at the White House on Monday, President Trump and congressional
leaders from both parties are staking out their positions. These
(00:33):
people are crazy, the Democrats.
Speaker 1 (00:35):
So if it asked to shut down, it love.
Speaker 3 (00:37):
We don't want to shut down the government. It's Trump
who's doing it, so ask him. What you have is
everybody trying to shift the blame, like who is going
to be the one responsible politically for a shutdown, which
seems increasingly likely as the hours go by.
Speaker 2 (00:52):
Meghan says the sticking points and negotiations come down to
a couple key issues for Democrats.
Speaker 3 (00:59):
They have decided to centralize their message here on healthcare.
Rising ACA premiums. That's the Obamacare premiums that were kept
at lower levels due to subsidies from the Biden administration.
They're due to expire on January first. For Republicans, they
are arguing that they want a so called clean stop
(01:21):
gap spending bill. They just want to keep the government
funded until November twenty first, and they said that they
will negotiate on these ACA premiums and other demands from
Democrats after they pass this bill.
Speaker 2 (01:33):
Government shutdowns have become more and more common, but Megan
says this one, if it comes to pass, would be
very different. Aside from the usual fears of furloughs and
delayed economic data, the White House has called for using
a shutdown as a way to eliminate thousands of federal jobs,
which could have a big impact on the economy.
Speaker 3 (01:52):
In the last several years, we have seen markets largely
shrug off the effects of a government shutdown, and what
makes this one potentially more durable then previous shutdowns is
the threat of mass firings.
Speaker 2 (02:04):
Last week, the White House asked government agencies for plans
to lay off, rather than furlough, many non essential workers
if the government shuts down.
Speaker 3 (02:12):
If tens of thousands or hundreds of thousands of US
government workers get laid off as a result of this shutdown,
that means they do not get their back pay, they
do not have jobs at the end of this that
will have a longer term economic impact.
Speaker 2 (02:30):
I'm David Gera, and this is the big take from
Bloomberg News today on the show. As the US gets
closer and closer to another government shutdown, what's up for negotiation,
what isn't, and why this shutdown could have a more
significant impact on markets in the economy than we're accustomed to.
(02:52):
It's shutdown eve Eve, as Bloomberg's Megan Scully calls it.
Democrats say they're not willing to budge on those Affordable
Care Act subsidies. I asked Megan to explain why.
Speaker 3 (03:03):
So they affect millions of Americans, and it would come
with a bill of about three hundred and fifty billion
dollars to increase these subsidies into the new year. That's
a pretty hefty price tag, although it is something that
Democrats say is necessary both you know, financially, but also economically.
If a family's health insurance payments go up double triple
(03:24):
in the new year, that obviously has widespread economic effects.
Speaker 1 (03:29):
For Democrats, they see this as a.
Speaker 3 (03:31):
Winning argument heading into the twenty twenty six midterms when
they're hoping to reclaim control of the House, the Senate
or both. And wrapped up in this broader healthcare debate is,
of course, the Medicaid cuts that were part of the
huge Trump tax bill that passed on the backs of
Republican only support earlier this year. They're also demanding that
(03:52):
these cuts get reversed.
Speaker 1 (03:55):
I think that is.
Speaker 3 (03:56):
Very unlikely to happen, but they are making it part
of their broader messaging on this.
Speaker 2 (04:01):
Given the fact that there are Republican voters who benefit
from these subsidies, who rely on these subsidies, given the
fact that this isn't just a blue state issue or
a red state issue. Are there Republicans who down the
line conceivably would be willing to negotiate around this.
Speaker 3 (04:15):
Yes, absolutely, and Republicans have said that they are willing
to negotiate on this come you know, November, but let's
just keep the government open. Within the Republican ranks, you
certainly have some who would be opposed to this, particularly
I'm thinking of fiscal conservatives like the House Freedom Caucus,
who don't want to be spending this money. But what
Democrats are saying is this is their biggest point of leverage.
Speaker 1 (04:37):
Republicans need sixty.
Speaker 3 (04:38):
Votes in the Senate to pass the stop gap spending bill,
and for Democrats, they have the most sway now then
they would have on a standalone healthcare only bill, So
they see this as the best chance to get most
of what they want.
Speaker 2 (04:54):
Where is President Trump on these negotiations. Is he in
line with Republicans in the House and Senate or does
he have kind of a different perspective here?
Speaker 3 (05:02):
You know, last week he said, you know, if there's
a shutdown, there's a shutdown, it'll happen.
Speaker 1 (05:06):
Well, this is all caused by the Democrats.
Speaker 3 (05:08):
He was supposed to meet last week with the Democratic
leaders of the House and Senate that got canceled at
the last minute. They are meeting today for the first time.
The Republican congressional leaders will also be at this meeting.
But we saw a little bit of a preview of
that this morning with Carolyn Levitt, the White House spokesperson,
really digging into the President's message and Republican's message writ large,
(05:31):
which is it's our way or the highway. There is
zero good reason for Democrats to vote against this clean
continuing resolution. Either we passed this so called clean cr
or the government shuts down. Not expecting to see a
whole lot of wiggle room coming out of this meeting today.
Speaker 2 (05:47):
Megan says her expectations for how all of this will
play out are based on years of reporting on pass
shutdowns and near shutdowns. They've become increasingly common over the
last few decades.
Speaker 3 (05:58):
There have been four fourteen shutdowns going back to nineteen
eighty one, which is when sort of the current the
modern era of shutdowns began.
Speaker 2 (06:08):
Before nineteen eighty one, all government employees still had to
report to work when there was a shutdown, so the
disruption to government services was minimal. The biggest impact was
on government workers who didn't get paid.
Speaker 3 (06:22):
The last shutdown we had was the twenty eighteen to
twenty nineteen shutdown, the thirty five days shutdown during Trump's
first administration, and the longest shutdown in US history. Since then,
we have certainly gotten to the brink of a shutdown
more times than I can count. Pretty much anytime there
has been a funding deadline, it is at the eleventh
(06:44):
hour that an agreement comes through. We saw that most
recently in March, but we have not actually seen a
shutdown now in nearly seven years.
Speaker 2 (06:56):
But this shutdown, if it happens, could look very different
from any of those fourteen previous shutdowns that's coming up.
Last week, the White House sent a memo to federal
agencies ahead of this looming shutdown saying it would quote
(07:18):
use this opportunity to consider reduction in force, that it
would lay off employees in government programs that don't align
with President Trump's priorities. So I asked Bloomberg's Megan Scully,
what we know about the jobs that are potentially at
risk if the government does shut down.
Speaker 3 (07:34):
So we don't know certainly exactly whose jobs are at risk.
They did say, you know, programs that were not specifically
authorized and jobs within the government that do not support
Trump's broader agenda, both domestically and internationally. This is extremely,
extremely unusual for a shutdown. Typically, what happens is most
(07:56):
federal employees get furloughed. Some deemed essential must report to
work without pay at the end of a shutdown. Thanks
to a twenty nineteen law that was passed during the
last long shutdown that our employees must receive back pay.
We have never seen an administration use a shutdown as
an opportunity to carry out a mass firing of the
(08:18):
federal workforce.
Speaker 2 (08:19):
Should we see that as the White House acting opportunistically
or some other way? In other words, the White House
could kind of do these layoffs in the way they
have during the first few months of this the president's
second term. Why is this the mechanism that they're thinking
of using here.
Speaker 3 (08:33):
Russ Vote, who is Trump's budget director, the chief of
the Office of Management and Budget within the White House
and also sort of the architect of Project twenty twenty five,
which has been sort of the guiding principle of many
of Trump's policies in his first term, is a firm
believer in a strong executive and sees this as an
opportunity for Trump to really exert executive authority. Government funding
(08:57):
runs out on October first, then gives the president the
ability to make these mass firings that Congress did not
do its job via the power of the purse, thus
giving Trump the ability to do these. Of course, Trump's
efforts to fire the federal workforce has been tied up
in courts.
Speaker 1 (09:17):
We've seen him win.
Speaker 3 (09:18):
A lot of these arguments, a lot of these cases
in court. But this is sort of a new way
for him to go about this.
Speaker 2 (09:25):
Thinking more about russ Vote's role here as the director
of the Office of Management Budget, there's this more muscular
approach to executive power. Certainly these layoffs potential layoffs are
part of that. In the past, we've also relied on
OMB for detail about what's supposed to happen if there
is a shutdown, and I gather this time around, we're
not getting a lot of clarity about the way that
OMB is thinking about contingency planning.
Speaker 3 (09:47):
Yes, so typically by this point on shutdown eve eve,
we would have agency by agency documentation of what will
happen who is considered an essential employee and who is not.
Federal workers would start signing off on these shutdown plans,
would be making their plans for when they leave work
(10:09):
tomorrow if the shutdown does.
Speaker 1 (10:11):
In fact go into effect.
Speaker 3 (10:13):
It certainly feels like this is very late to the game,
especially because under law, federal employees who are non essential
need to start signing off on paperwork saying they will
not be working during the shutdown.
Speaker 2 (10:28):
Is there a risk that this government might not be
ready to shut down by this deadline if they're not
where they should be in terms of preparations.
Speaker 3 (10:35):
For one, they don't really have a choice thanks to
the Anti Deficiency Act. When the shutdown comes, the government
is shut down. Aside from essential personnel, we already know
sort of the broad contours of who are the essential workers.
Active duty military is considered essential workers. Emergency workers like
FEMA as well as air traffic controllers all considered emergency employees,
(10:57):
So you know, that's pretty much set. There is some
concern though, that this will certainly be more disruptive and
more chaotic because of the absence of planning and communication
to the federal workforce. So this has rippling effects across
the country. People not knowing whether they need to report
to work or not on Wednesday certainly is disruptive and
(11:20):
just kind of adds to the chaos of an already
turbulent event.
Speaker 2 (11:26):
In March, the country faced another funding deadline. Senate Minority
Leader Chuck Schumer warned that a shutdown would allow the
administration to quote destroy vital government services at a significantly
faster rate than they can right now. He ultimately decided
to vote to fund the government to avoid that scenario,
and he faced a lot of blowback for that decision
from progressives within the Democratic Party. This time, Megan says,
(11:49):
he's taking a very different.
Speaker 1 (11:51):
Approach going back to March.
Speaker 3 (11:54):
The last time we were at this funding stalemate, Schumer
at the last minute decided that Trump, who was only
two months into his second term at that point, was
too powerful to risk it politically for the party, and
so a minority of Democrats in the US Senate voted
with Schumer to avert a shutdown. That immediately prompted blowback
(12:17):
from progressives within the party who saw this as Senate
Democrats really just acceding to Trump and to Republicans. Schumer
personally had his own book coming out that same week
and he had to cancel his book tour due to
the tremendous backlash he was receiving. So I think it's
fair to say he learned his lesson that time around.
(12:38):
Should also note that Trump's approval ratings have been sort
of on a decline in the intervening six months, giving
Schumer more ability to really risk it here. And we
are also inching closer to the twenty twenty six midterms.
Democrats are seeing this more as an opportunity to stand
up to the Trump administration and politically for them. That
(13:01):
is more of a net positive than it was six
months ago.
Speaker 2 (13:05):
I'm very curious sort of what you see as potential
off ramps here. So there is this meeting on Monday
at the White House among congressional leadership and the President,
with just hours to go here till funding runs out.
How do you see this playing out or what are
the ways in which it could play out in the
next few hours.
Speaker 3 (13:21):
I think that the most likely scenario here is that
the government shuts down at twelve oh one am on
October first. There is, I would say, a potential for
them to come out of this meeting and agree to
a very short stop gap spending bill, something in the
(13:42):
order of a week or two, and say, you know,
we will vote in the Senate today to keep the
government open until October seventh or October tenth, to avert
a shutdown this week, but Democrat saying we are not
going to agree to this longer seven weeks gap that
Republicans have demanded. If that were to happen, the Senate
(14:05):
could vote on that tonight and the House, which it's
important to note, are out of town until October seventh.
They could then vote by unanimous consent sort of in
absentia to keep the government open, and has provided nobody
objects to that. Then that could certainly be the band
aid for the next week or so, especially as storms
(14:27):
threaten the southeast coast right now. That is certainly a
possibility that we should not discount, but part of his
intentions being what they are at this moment, I am
not banking on that.
Speaker 1 (14:40):
Megan.
Speaker 2 (14:40):
How do you think about the potential consequences of all
of this too, markets and the economy, and looking at
those past hunt ends, we've talked about what impact have
they had and when does it really become an issue
for investors and for the US economy broadly.
Speaker 3 (14:55):
So a shutdown is not the market rattling catas that say,
a debt ceiling breach would bring about, but it certainly
is disruptive, at least in.
Speaker 1 (15:07):
The short term.
Speaker 3 (15:08):
In the last several years, we have seen markets largely
shrug off the effects of a government shutdown, and we
have seen that in the run up to this one.
What we could see sort of in the immediate aftermath
of a shutdown is some short term market consequences and
certainly some short term economic consequences.
Speaker 2 (15:27):
For example, if there is a government shutdown, the jobs
report won't come out on Friday when it's scheduled too.
Speaker 3 (15:34):
That certainly is a huge indicator of where the economy
is and where it's going, and not having that then
has effects on what decisions people make in the short term,
on their finances and on their investments. Typically, though, in
a government shutdown, any economic effect or market effect is
short lived, even during the thirty five day shutdown of
(15:57):
twenty eighteen and twenty nineteen.
Speaker 2 (16:00):
Again, that's for the typical government shutdown. But like we've
been saying, this time could be different if the White
House follows through on its plan to use the government
shutdown as a way to further reduce the federal workforce.
If those workers lose their jobs instead of merely being
furloughed with back pay, the economic consequences of this government
shutdown could have a much bigger impact. This is the
(16:27):
Big Take from Bloomberg News. I'm David Gura. To get
more from The Big Take and unlimited access to all
of Bloomberg dot com, subscribe today at Bloomberg dot Com
Slash Podcast offer. Thanks for listening. We'll be back tomorrow.
Bloomberg Audio Studios, Podcasts, radio.
Speaker 2 (00:06):
News, thirty six hours.
Speaker 3 (00:08):
How far out are we thirty six houssy about thirty
six hours.
Speaker 1 (00:11):
Yes, not that I'm counting.
Speaker 2 (00:13):
Not that you're counting. Meghan Scully heads up Bloomberg's coverage
of Congress, and she says if the White House and
lawmakers can't agree to a funding bill by midnight on Tuesday,
the US government will shut down. Ahead of a meeting
at the White House on Monday, President Trump and congressional
leaders from both parties are staking out their positions. These
(00:33):
people are crazy, the Democrats.
Speaker 1 (00:35):
So if it asked to shut down, it love.
Speaker 3 (00:37):
We don't want to shut down the government. It's Trump
who's doing it, so ask him. What you have is
everybody trying to shift the blame, like who is going
to be the one responsible politically for a shutdown, which
seems increasingly likely as the hours go by.
Speaker 2 (00:52):
Meghan says the sticking points and negotiations come down to
a couple key issues for Democrats.
Speaker 3 (00:59):
They have decided to centralize their message here on healthcare.
Rising ACA premiums. That's the Obamacare premiums that were kept
at lower levels due to subsidies from the Biden administration.
They're due to expire on January first. For Republicans, they
are arguing that they want a so called clean stop
(01:21):
gap spending bill. They just want to keep the government
funded until November twenty first, and they said that they
will negotiate on these ACA premiums and other demands from
Democrats after they pass this bill.
Speaker 2 (01:33):
Government shutdowns have become more and more common, but Megan
says this one, if it comes to pass, would be
very different. Aside from the usual fears of furloughs and
delayed economic data, the White House has called for using
a shutdown as a way to eliminate thousands of federal jobs,
which could have a big impact on the economy.
Speaker 3 (01:52):
In the last several years, we have seen markets largely
shrug off the effects of a government shutdown, and what
makes this one potentially more durable then previous shutdowns is
the threat of mass firings.
Speaker 2 (02:04):
Last week, the White House asked government agencies for plans
to lay off, rather than furlough, many non essential workers
if the government shuts down.
Speaker 3 (02:12):
If tens of thousands or hundreds of thousands of US
government workers get laid off as a result of this shutdown,
that means they do not get their back pay, they
do not have jobs at the end of this that
will have a longer term economic impact.
Speaker 2 (02:30):
I'm David Gera, and this is the big take from
Bloomberg News today on the show. As the US gets
closer and closer to another government shutdown, what's up for negotiation,
what isn't, and why this shutdown could have a more
significant impact on markets in the economy than we're accustomed to.
(02:52):
It's shutdown eve Eve, as Bloomberg's Megan Scully calls it.
Democrats say they're not willing to budge on those Affordable
Care Act subsidies. I asked Megan to explain why.
Speaker 3 (03:03):
So they affect millions of Americans, and it would come
with a bill of about three hundred and fifty billion
dollars to increase these subsidies into the new year. That's
a pretty hefty price tag, although it is something that
Democrats say is necessary both you know, financially, but also economically.
If a family's health insurance payments go up double triple
(03:24):
in the new year, that obviously has widespread economic effects.
Speaker 1 (03:29):
For Democrats, they see this as a.
Speaker 3 (03:31):
Winning argument heading into the twenty twenty six midterms when
they're hoping to reclaim control of the House, the Senate
or both. And wrapped up in this broader healthcare debate is,
of course, the Medicaid cuts that were part of the
huge Trump tax bill that passed on the backs of
Republican only support earlier this year. They're also demanding that
(03:52):
these cuts get reversed.
Speaker 1 (03:55):
I think that is.
Speaker 3 (03:56):
Very unlikely to happen, but they are making it part
of their broader messaging on this.
Speaker 2 (04:01):
Given the fact that there are Republican voters who benefit
from these subsidies, who rely on these subsidies, given the
fact that this isn't just a blue state issue or
a red state issue. Are there Republicans who down the
line conceivably would be willing to negotiate around this.
Speaker 3 (04:15):
Yes, absolutely, and Republicans have said that they are willing
to negotiate on this come you know, November, but let's
just keep the government open. Within the Republican ranks, you
certainly have some who would be opposed to this, particularly
I'm thinking of fiscal conservatives like the House Freedom Caucus,
who don't want to be spending this money. But what
Democrats are saying is this is their biggest point of leverage.
Speaker 1 (04:37):
Republicans need sixty.
Speaker 3 (04:38):
Votes in the Senate to pass the stop gap spending bill,
and for Democrats, they have the most sway now then
they would have on a standalone healthcare only bill, So
they see this as the best chance to get most
of what they want.
Speaker 2 (04:54):
Where is President Trump on these negotiations. Is he in
line with Republicans in the House and Senate or does
he have kind of a different perspective here?
Speaker 3 (05:02):
You know, last week he said, you know, if there's
a shutdown, there's a shutdown, it'll happen.
Speaker 1 (05:06):
Well, this is all caused by the Democrats.
Speaker 3 (05:08):
He was supposed to meet last week with the Democratic
leaders of the House and Senate that got canceled at
the last minute. They are meeting today for the first time.
The Republican congressional leaders will also be at this meeting.
But we saw a little bit of a preview of
that this morning with Carolyn Levitt, the White House spokesperson,
really digging into the President's message and Republican's message writ large,
(05:31):
which is it's our way or the highway. There is
zero good reason for Democrats to vote against this clean
continuing resolution. Either we passed this so called clean cr
or the government shuts down. Not expecting to see a
whole lot of wiggle room coming out of this meeting today.
Speaker 2 (05:47):
Megan says her expectations for how all of this will
play out are based on years of reporting on pass
shutdowns and near shutdowns. They've become increasingly common over the
last few decades.
Speaker 3 (05:58):
There have been four fourteen shutdowns going back to nineteen
eighty one, which is when sort of the current the
modern era of shutdowns began.
Speaker 2 (06:08):
Before nineteen eighty one, all government employees still had to
report to work when there was a shutdown, so the
disruption to government services was minimal. The biggest impact was
on government workers who didn't get paid.
Speaker 3 (06:22):
The last shutdown we had was the twenty eighteen to
twenty nineteen shutdown, the thirty five days shutdown during Trump's
first administration, and the longest shutdown in US history. Since then,
we have certainly gotten to the brink of a shutdown
more times than I can count. Pretty much anytime there
has been a funding deadline, it is at the eleventh
(06:44):
hour that an agreement comes through. We saw that most
recently in March, but we have not actually seen a
shutdown now in nearly seven years.
Speaker 2 (06:56):
But this shutdown, if it happens, could look very different
from any of those fourteen previous shutdowns that's coming up.
Last week, the White House sent a memo to federal
agencies ahead of this looming shutdown saying it would quote
(07:18):
use this opportunity to consider reduction in force, that it
would lay off employees in government programs that don't align
with President Trump's priorities. So I asked Bloomberg's Megan Scully,
what we know about the jobs that are potentially at
risk if the government does shut down.
Speaker 3 (07:34):
So we don't know certainly exactly whose jobs are at risk.
They did say, you know, programs that were not specifically
authorized and jobs within the government that do not support
Trump's broader agenda, both domestically and internationally. This is extremely,
extremely unusual for a shutdown. Typically, what happens is most
(07:56):
federal employees get furloughed. Some deemed essential must report to
work without pay at the end of a shutdown. Thanks
to a twenty nineteen law that was passed during the
last long shutdown that our employees must receive back pay.
We have never seen an administration use a shutdown as
an opportunity to carry out a mass firing of the
(08:18):
federal workforce.
Speaker 2 (08:19):
Should we see that as the White House acting opportunistically
or some other way? In other words, the White House
could kind of do these layoffs in the way they
have during the first few months of this the president's
second term. Why is this the mechanism that they're thinking
of using here.
Speaker 3 (08:33):
Russ Vote, who is Trump's budget director, the chief of
the Office of Management and Budget within the White House
and also sort of the architect of Project twenty twenty five,
which has been sort of the guiding principle of many
of Trump's policies in his first term, is a firm
believer in a strong executive and sees this as an
opportunity for Trump to really exert executive authority. Government funding
(08:57):
runs out on October first, then gives the president the
ability to make these mass firings that Congress did not
do its job via the power of the purse, thus
giving Trump the ability to do these. Of course, Trump's
efforts to fire the federal workforce has been tied up
in courts.
Speaker 1 (09:17):
We've seen him win.
Speaker 3 (09:18):
A lot of these arguments, a lot of these cases
in court. But this is sort of a new way
for him to go about this.
Speaker 2 (09:25):
Thinking more about russ Vote's role here as the director
of the Office of Management Budget, there's this more muscular
approach to executive power. Certainly these layoffs potential layoffs are
part of that. In the past, we've also relied on
OMB for detail about what's supposed to happen if there
is a shutdown, and I gather this time around, we're
not getting a lot of clarity about the way that
OMB is thinking about contingency planning.
Speaker 3 (09:47):
Yes, so typically by this point on shutdown eve eve,
we would have agency by agency documentation of what will
happen who is considered an essential employee and who is not.
Federal workers would start signing off on these shutdown plans,
would be making their plans for when they leave work
(10:09):
tomorrow if the shutdown does.
Speaker 1 (10:11):
In fact go into effect.
Speaker 3 (10:13):
It certainly feels like this is very late to the game,
especially because under law, federal employees who are non essential
need to start signing off on paperwork saying they will
not be working during the shutdown.
Speaker 2 (10:28):
Is there a risk that this government might not be
ready to shut down by this deadline if they're not
where they should be in terms of preparations.
Speaker 3 (10:35):
For one, they don't really have a choice thanks to
the Anti Deficiency Act. When the shutdown comes, the government
is shut down. Aside from essential personnel, we already know
sort of the broad contours of who are the essential workers.
Active duty military is considered essential workers. Emergency workers like
FEMA as well as air traffic controllers all considered emergency employees,
(10:57):
So you know, that's pretty much set. There is some
concern though, that this will certainly be more disruptive and
more chaotic because of the absence of planning and communication
to the federal workforce. So this has rippling effects across
the country. People not knowing whether they need to report
to work or not on Wednesday certainly is disruptive and
(11:20):
just kind of adds to the chaos of an already
turbulent event.
Speaker 2 (11:26):
In March, the country faced another funding deadline. Senate Minority
Leader Chuck Schumer warned that a shutdown would allow the
administration to quote destroy vital government services at a significantly
faster rate than they can right now. He ultimately decided
to vote to fund the government to avoid that scenario,
and he faced a lot of blowback for that decision
from progressives within the Democratic Party. This time, Megan says,
(11:49):
he's taking a very different.
Speaker 1 (11:51):
Approach going back to March.
Speaker 3 (11:54):
The last time we were at this funding stalemate, Schumer
at the last minute decided that Trump, who was only
two months into his second term at that point, was
too powerful to risk it politically for the party, and
so a minority of Democrats in the US Senate voted
with Schumer to avert a shutdown. That immediately prompted blowback
(12:17):
from progressives within the party who saw this as Senate
Democrats really just acceding to Trump and to Republicans. Schumer
personally had his own book coming out that same week
and he had to cancel his book tour due to
the tremendous backlash he was receiving. So I think it's
fair to say he learned his lesson that time around.
(12:38):
Should also note that Trump's approval ratings have been sort
of on a decline in the intervening six months, giving
Schumer more ability to really risk it here. And we
are also inching closer to the twenty twenty six midterms.
Democrats are seeing this more as an opportunity to stand
up to the Trump administration and politically for them. That
(13:01):
is more of a net positive than it was six
months ago.
Speaker 2 (13:05):
I'm very curious sort of what you see as potential
off ramps here. So there is this meeting on Monday
at the White House among congressional leadership and the President,
with just hours to go here till funding runs out.
How do you see this playing out or what are
the ways in which it could play out in the
next few hours.
Speaker 3 (13:21):
I think that the most likely scenario here is that
the government shuts down at twelve oh one am on
October first. There is, I would say, a potential for
them to come out of this meeting and agree to
a very short stop gap spending bill, something in the
(13:42):
order of a week or two, and say, you know,
we will vote in the Senate today to keep the
government open until October seventh or October tenth, to avert
a shutdown this week, but Democrat saying we are not
going to agree to this longer seven weeks gap that
Republicans have demanded. If that were to happen, the Senate
(14:05):
could vote on that tonight and the House, which it's
important to note, are out of town until October seventh.
They could then vote by unanimous consent sort of in
absentia to keep the government open, and has provided nobody
objects to that. Then that could certainly be the band
aid for the next week or so, especially as storms
(14:27):
threaten the southeast coast right now. That is certainly a
possibility that we should not discount, but part of his
intentions being what they are at this moment, I am
not banking on that.
Speaker 1 (14:40):
Megan.
Speaker 2 (14:40):
How do you think about the potential consequences of all
of this too, markets and the economy, and looking at
those past hunt ends, we've talked about what impact have
they had and when does it really become an issue
for investors and for the US economy broadly.
Speaker 3 (14:55):
So a shutdown is not the market rattling catas that say,
a debt ceiling breach would bring about, but it certainly
is disruptive, at least in.
Speaker 1 (15:07):
The short term.
Speaker 3 (15:08):
In the last several years, we have seen markets largely
shrug off the effects of a government shutdown, and we
have seen that in the run up to this one.
What we could see sort of in the immediate aftermath
of a shutdown is some short term market consequences and
certainly some short term economic consequences.
Speaker 2 (15:27):
For example, if there is a government shutdown, the jobs
report won't come out on Friday when it's scheduled too.
Speaker 3 (15:34):
That certainly is a huge indicator of where the economy
is and where it's going, and not having that then
has effects on what decisions people make in the short term,
on their finances and on their investments. Typically, though, in
a government shutdown, any economic effect or market effect is
short lived, even during the thirty five day shutdown of
(15:57):
twenty eighteen and twenty nineteen.
Speaker 2 (16:00):
Again, that's for the typical government shutdown. But like we've
been saying, this time could be different if the White
House follows through on its plan to use the government
shutdown as a way to further reduce the federal workforce.
If those workers lose their jobs instead of merely being
furloughed with back pay, the economic consequences of this government
shutdown could have a much bigger impact. This is the
(16:27):
Big Take from Bloomberg News. I'm David Gura. To get
more from The Big Take and unlimited access to all
of Bloomberg dot com, subscribe today at Bloomberg dot Com
Slash Podcast offer. Thanks for listening. We'll be back tomorrow.
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