With the Sept. 30 funding deadline looming, the White House is forcing agencies to brace for massive job cuts if Congress can’t agree on a continuing resolution.
About 2.4 million civilian federal employees are at stake.
The impasse hinges on Democrats’ demand to extend expiring health‐care subsidies versus Republicans’ refusal to include them.
Stakes of a Prolonged Shutdown
Historically, shutdowns temporarily furloughed workers who later received retroactive pay. But this time the threat is far graver. In the 35-day 2018–2019 shutdown, roughly 380,000 federal workers were furloughed, and 420,000 worked without pay.
The Congressional Budget Office later estimated that the episode cost at least $11 billion, highlighting the high economic stakes.
Shutdown History and Precedent
Funding gaps have occurred on the order of 20 times since 1976, about half leading to full shutdowns and furloughs.
The 2018–2019 standoff was the longest, lasting about 35 days. During past shutdowns, nonessential agency work paused, and furloughed staff were eventually reimbursed. By contrast, today’s plan marks a sharp break from past practice.
Workforce Reductions Underway
Even before the shutdown threat, Trump’s administration has been shrinking the federal workforce. A voluntary buyout program saw roughly 154,000 employees leave by Sept. 30, and OPM projects another ~300,000 departures by year’s end.
Agencies say these cuts have already hampered operations; some have scrambled to rehire personnel after initial layoffs.
White House Memo Spells Out Layoff Plans
The OMB memo explicitly orders agencies to prepare “reduction-in-force” (RIF) notices on top of regular furlough warnings. It tells officials to target employees working on programs whose funding would lapse Oct. 1 or “programs…not consistent with the President’s priorities”.
Programs lacking mandatory appropriations “will bear the brunt of a shutdown,” the memo warns.
Crucially, it clarifies that the RIF notices would come “in addition to any furlough notices” – a sharp departure from past shutdown protocols.
Federal Job Hot Spots
Federal workers are heavily concentrated in certain regions. As of late 2024, California had the most federal employees (147,487), followed by Virginia (144,483) and Maryland (142,876).
Washington, D.C., itself employs 162,144 federal workers (43.3% of its workforce).
In these local economies, federal jobs are a major pillar; potential mass layoffs could therefore hit their tax bases and spending power especially hard.
Anxiety Among Federal Families
Rank-and-file federal employees report growing alarm. NTEU President Doreen Greenwald warns that workers “will never grow accustomed” to shutdown brinkmanship and that the “political stalemates” cause “real anxiety” as families brace for lost pay.
In 2018–19, the 35-day closure forced many into debt or to cut basic spending.
A Congressional report estimated that the shutdown delayed spending and reduced GDP by $11 billion, while furloughed staff reported delinquent bills and hardship stories under #ShutdownStories on social media.
Union Vows of Legal Action
Federal employee unions reacted with outrage. Agencies across the government have already voided contracts, stripping representation from thousands of workers this year.
AFGE and NTEU leaders decried the layoff threat as “mafia-style blackmail” of public servants (a phrase echoed by Democratic lawmakers) and say they will sue. For example, AFGE’s general counsel says the union is “confident” in its legal case and will seek preliminary injunctions to protect members.
A Decades-Long Workforce Trend
The civilian federal payroll has actually grown modestly over the past two decades.
Excluding Postal Service employees, it rose from about 1.86 million in 2000 to ~2.405 million by early 2024, roughly 1.5% of all U.S. jobs. But the Trump administration is rapidly reversing that growth.
Over half a million workers have departed under new policies, and “federal workforce experts have already questioned whether RIFs tied to a brief funding lapse are even feasible”.
Inspector General Lawsuit Exposes Legal Risks
A federal judge on Sept. 24 ruled that President Trump had “violated the [Inspector General Act]” by firing eight inspectors general without the proper notice.
Although the judge declined to reinstate those IGs, the decision signals courts are closely scrutinizing the administration’s personnel tactics. The ruling underscored that even for national security or government integrity posts, the White House’s aggressive reorganization plans could run afoul of the law.
Heated Rhetoric on Capitol Hill
Democratic leaders instantly lashed out. House Minority Leader Hakeem Jeffries went on X (Twitter) to accuse the administration of plotting “to ruin your life and punish hardworking families” with mass firings.
He particularly targeted OMB Director Russ Vought as a “malignant political hack” whose threats “will not intimidate” Democrats.
Meanwhile, President Trump canceled a scheduled meeting with Congressional leaders, calling Democratic demands “unserious and ridiculous”.
Legislative Standoff
Republicans insist on a short-term “clean” funding bill, while Democrats say health care cannot be sidelined.
Senate GOP leader John Thune and Speaker Mike Johnson urged Democrats to support a funding extension to Nov. 21 without policy changes. But Senate Democratic leader Chuck Schumer has refused to back any bill without restoring enhanced ACA subsidies.
Trump praised the House GOP’s stopgap measure but acknowledged he would still need some Democratic votes in the Senate. With each side dug in, lawmakers see little chance for compromise as Oct. 1 nears.
Congress Votes, Time Runs Out
The House on Sept. 19 passed a continuing resolution funding the government through Nov. 21 by a narrow 217–212 margin (with one Democrat voting yes).
The Senate immediately rejected that bill 48–44, and also defeated a Democratic alternative 45–47. Both chambers then recessed, in effect pausing until Sept. 29 – just hours before funding expires.
With only one legislative day left, the probability of a shutdown has sharply increased.
Expert Doubts on Layoff Feasibility
Budget and legal analysts say the layoff plan may be more threat than reality. Office management veterans note that rushing a reduction-in-force amid a brief lapse may not even be doable.
As one former OPM official observed, “It doesn’t seem to me that they would really be able to legally do that additional work during a shutdown,” or complete it in advance.
Past attempts at rapid downsizing faced court hurdles and operational chaos.
Long-Term Precedent Set
The long-term stakes go beyond October. Using shutdown brinkmanship to enforce permanent cuts would mark a fundamental change in budget politics.
If this tactic succeeds, future administrations could treat funding impasses as occasions to unilaterally remake the civil service, turning routine appropriations fights into existential threats for agencies.
Observers warn that it signals a new willingness by the executive branch to leverage federal employment against Congress, fundamentally altering institutional power dynamics.
Healthcare Subsidies at the Core
At the heart of the impasse lies health-care funding. Democrats insist on extending the temporary ACA premium subsidies (now due to expire Dec. 31) to prevent rate spikes.
CBO and analysts estimate that locking in those credits permanently would cost roughly $350 billion over a decade.
Without renewal, independent studies predict average marketplace premiums would jump by about 75%, affecting millions of Americans.
Shutdown’s Economic Ripple Effects
The consequences would extend far beyond federal workers. Analysts project 2–4 million Americans could lose coverage in year one if the subsidies lapse. For health providers, the hit is huge: one Urban Institute study finds hospitals, clinics, and doctors could lose over $32 billion in 2026 revenue, with an additional $7.7 billion in unpaid care costs.
Those losses would trickle through local economies, especially in states already straining budgets.
Ending the subsidies could shrink the health-care sector at the same time federal layoffs squeeze the labor market.
Ongoing Legal Battles
Federal unions have already signaled they will contest the layoff orders in court. They argue that such a blanket mass-firing plan violates the separation of powers and statutes like the Anti-Deficiency Act. But courts have been wary of intervening mid-shutdown.
In 2019, a judge dismissed an NTEU suit after the shutdown ended, deeming it moot. This time, unions argue the threat is concrete and ongoing. They are filing suits seeking injunctions, hoping to force a judge to address whether these RIF plans are lawful before any employees are let go.
Democratic Pushback at Home
Democratic members representing Virginia and Maryland — home to large federal workforces — are especially vocal.
Maryland Sen. Chris Van Hollen also labeled the mass-layoff plan “mafia-style blackmail” of “dedicated workers who have nothing to do with the ongoing disputes”.
House Democrats are positioning themselves as defenders of furloughed employees and expanded health coverage, pointing out that Republicans now control the House, Senate, and White House.
A Watershed Moment in Budget Battles
The looming shutdown threat represents a watershed in how presidents and Congress fight over money. Making federal workforce stability an arm in budget negotiations is unprecedented, even if the crisis is averted.
The outcome – whether layoffs actually happen or the crisis is defused – will set a powerful precedent.
Future administrations will study this episode as a guide: it could normalize using the federal payroll as budget leverage and redefine executive-legislative relations in funding wars.