Amid the mix of euphoria and unease surrounding Zohran Mamdani’s victory as New York City’s new mayor, the US government shutdown quietly stretched into Wednesday, marking its 36th day and officially becoming the longest in the nation’s history.
The lapse in federal funding has now eclipsed the 35-day shutdown of late 2018 and early 2019, also under President Donald Trump’s administration.
That previous funding lapse ended on the 35th day, when Trump signed a bill to extend government funding for three weeks.
This time, however, negotiations have stalled, with little sign of a breakthrough as both the White House and Congress dig in.
Bipartisan talks on Capitol Hill showed faint signs of progress, and leaders remained locked in a bitter stalemate.
The impasse, which began over a dispute surrounding expiring health insurance subsidies, has widened into a broader confrontation over the size and role of the federal government.
Trump refuses to negotiate with Democrats
President Trump has so far refused to negotiate with Democrats until they agree to reopen the government, insisting that their demand to salvage health insurance subsidies is unacceptable.
Democrats, meanwhile, remain skeptical that the president will uphold his word, particularly after the administration moved to restrict SNAP food aid despite court orders directing it to continue.
The president, whose first term saw the previous shutdown record, is set to meet with Republican senators over breakfast early Wednesday.
However, no discussions have been scheduled with Democratic leaders.
Trump’s handling of this shutdown stands in sharp contrast to his approach during his first term, when the government was partially closed for 35 days over funding for a proposed border wall.
Then, Trump met publicly with congressional leaders before eventually relenting when negotiations reached an impasse.
This time, both sides appear entrenched.
Administration signals it will increase pressure; parts of national airspace may close
The White House has indicated it is prepared to ramp up the pressure on Democrats.
On Tuesday, Trump threatened on social media to deny food subsidy payments to 42 million Americans until the government reopens, apparently defying a federal court order.
The White House press secretary later clarified that the administration would comply with the court’s directive.
Transportation Secretary Sean Duffy warned that parts of the national airspace might have to close next week because of air traffic controller shortages, predicting potential “mass chaos” in air travel.
The administration also left open the possibility that it might not fulfil its legal obligation to restore back pay to furloughed workers who have missed multiple paychecks since the shutdown began.
“Temporary shutdowns have always brought periods of disruption but the ultimate resolution and backpayment means that the effect is relatively minimal,” said Joshua Mahony, Chief Market Analyst at Scope Markets.
“However, the longer this rolls on, the more stressed certain services become, and things could begin to break,” he added.
Did the federal shutdown impact the elections?
Trump has blamed the government shutdown for Republican losses in Tuesday’s elections, while Democrats celebrated their victories as a public endorsement of their stance on healthcare.
“‘Trump wasn’t on the ballot, and shutdown were the two reasons that Republicans lost elections tonight,’ according to pollsters,” Trump wrote on Truth Social.
In New Jersey and Virginia, two Democrats, Mikie Sherrill and Abigail Spanberger, won gubernatorial races, with Spanberger becoming the first woman elected governor of Virginia.
Interestingly, Trump’s claim that the shutdown contributed to Republican losses may not be without merit.
According to The Independent, in Virginia, there is a concentration of federal workers impacted by the government shutdown and the president’s sweeping layoffs of the federal workforce, which may have contributed to the election of Spanberger.
According to White House data, 189,000 federal workers in Virginia are either furloughed or working without pay, representing nearly 5% of the state’s workforce.
The report also warned that if the shutdown persists, federal contract spending could drop by $3 billion in Virginia and small business loans could face delays of $53 million.
“Combining this with federal employees going unpaid, consumer spending from lost wages will fall by an estimated $3.6 billion in Virginia each month the government shutdown extends,” the White House report claims.
ADP payrolls to assume importance in the absence of the jobs report
The impact of the shutdown has extended well beyond Washington.
Federal agencies, including the Bureau of Labor Statistics, have halted data collection, delaying key economic indicators such as the monthly employment and inflation reports.
This is likely to complicate the Federal Reserve’s policy planning at a time when officials are weighing whether to adjust interest rates in December.
In the absence of the Labor Department’s jobs report, investors will turn to the private-sector ADP payrolls data for direction, due to be released today.
“Markets expect a moderate rise to 32k, which would mark the sixth sub-100k reading out of the past seven releases,” said Mahony.
“This highlights the relatively weak private job creation since Trump came to power. With the Federal Reserve apparently undecided on the December rate decision, today’s data will undoubtedly be viewed through a prism of how it will impact the pace of easing at the Fed.”
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