Beijing News Agency on September 30th Economic hotspots ask why the U.S. federal government is repeatedly facing a "stop"

Xinhua News Agency reporter Su Liang

¡°Democrats don¡¯t want to do the right thing...¡± ¡°The ¡°stop¡± is because Republicans want to ¡°stop¡± and want to hurt Americans...¡± On September 29, local time, US President Trump met with Democratic leaders in Congress but failed to reach a consensus on the provisional allocation bill.

If the current deadlock continues until midnight on the 30th, the US federal government will "shut down" and some institutions will have to close their doors. It's nothing new, though. Historically, similar crises have occurred frequently, and the U.S. government has "shut down" more than 20 times. Why does the U.S. federal government repeatedly face the dilemma of "shutdown"? Why do the two parties often disagree on the budget? What consequences will the "lockdown" bring to the US economy?

Why is the federal government shutting down?

The federal government was shut down because there was no money.

The financial management of the federal government of the United States depends on the budget system. The Senate and the House of Representatives of the United States discuss and revise the draft budget proposed by the government, and then submit it to the president for signature after reaching an agreement, which becomes the basis for various expenditures of the federal government.

The U.S. fiscal year usually starts on October 1st every year and ends on September 30th each year. If the previous Congress fails to agree on the budget at the beginning of the fiscal year, it can only be sustained by a temporary allocation bill.

On September 19, the Republican draft provisional funding bill failed to break through the Senate. On September 29, Trump met with Democratic leaders in Congress without results. This means that in the upcoming fiscal year 2026, a number of U.S. federal government agencies may soon face shutdowns.

In fact, under the current budget system of the United States, there are few years when appropriation approval is completed on time and according to regulations. According to the statistics of Pew Research Center in the United States, after the current budget system began to be implemented in the United States in 1976, Congress only had four years to complete the appropriation process on time.

For example, the U.S. government¡¯s budget for the fiscal year 2025, which is about to end at the end of this month, has not yet been approved. Currently, the federal government is also relying on the provisional allocation bill. The U.S. Congress passed the provisional allocation bill in December 2024 and March 2025 hours before the government¡¯s funds were exhausted, thus avoiding a ¡°stagnation.¡±

Why can't the two parties always talk?

The dispute between the two parties over the budget and allocations is mainly due to party disputes.

Budgeting is closely linked to the policy of the presidential party.As U.S. political polarization intensifies, budget or temporary allocation bill voting often becomes a battlefield for the two parties.

In December 2018, Congress failed to pass a temporary allocation bill that included the cost of ¡°building a wall¡± on the U.S.-Mexico border, causing the federal government to ¡°stop¡± for 35 days, the longest federal government ¡°stop¡± since 1976.

In October 2013, the two parties failed to reach an agreement on the "Obama reform" and Congress vetoed the relevant budget, leading to the federal government "stop" for 16 days.

U.S. lawmakers have taken many steps to prevent the adoption of budgets or provisional allocations proposed by opposing parties, especially when the party¡¯s votes are insufficient to overturn the bill, using procedural gaps to hinder the agenda.

At present, Trump's Republican Party occupies a majority in both houses of Congress, so the Democratic Party does not hesitate to use the so-called "lengthy debate" rule to obstruct the proceedings by continuously speaking.

The provisional funding bill proposed by the Republicans previously failed to be approved in the Senate because of this "long debate".

From this it can be seen that the reasons for the two parties¡¯ discrepancies on budgets and appropriations are ¡°not wanting to negotiate¡±; and ¡°not wanting to negotiate¡± are the reasons for seeking an exchange of interests, pushing away political responsibilities, and even ¡°opposition to opposition.¡±

Why are the consequences of "shutdown" serious?

Political disability leads to economic disability. The government's "shutdown" may not last long, but it will still cause "complications" in the macro-economy, market stability and personal life of the United States.

At the macroeconomic level, the "stop" will cause direct losses to the U.S. economy. The U.S. Congressional Budget Office estimates that the U.S. federal government's 35-day "stop" will cause $3 billion of losses to GDP from the end of 2018 to the beginning of 2019. The U.S. Goldman Sachs Group has previously estimated that every week of the government's "stop" the economic growth rate will drop by about 0.15 percentage points, and if private institutions are impacted, the economic growth rate may drop by 0.2 percentage points.

Jeff Freeman, chief executive of the U.S. Tourism Association, said that a ¡°stop¡± would result in a billion dollars in tourism losses a week. The U.S. National Park Conservation Association estimated that national parks were closed during the ¡°stop¡± period, losing $1 million per day in ticket revenue and neighboring merchants losing $77 million per day.

In addition, the previous "shutdown" of the U.S. government has also seen situations such as the failure of relevant agencies to issue export certificates, resulting in a large number of products being stranded at ports, and the failure of hundreds of drilling licenses to handle energy production.

At the market level, the "stop" will lead to the shutdown of institutions issuing economic data such as the Bureau of Labor Statistics, if longer, may affect the release of key data such as employment reports, inflation. Marketers are generally concerned that this situation will affect investor judgment on the U.S. economy, thereby increasing U.S. debt, dollar exchange rate fluctuations, and even affect the U.S. Federal Reserve Committee monetary policy decisions.

At the level of personal life, each ¡°stop¡± will result in a large number of government staff pay delays, ¡°waste¡± and other situations. The U.S. federal government has recently said that not excluding ¡°stop¡± will lead to ¡°permanent¡± job cuts in some positions. This is also the first time the U.S. federal government has announced that it will be cut when facing a ¡°stop¡± crisis.