What Makes The Current American Government Shutdown Distinct (and More Intractable)?

Placeholder image Government shutdown illustration

Government closures have become a recurring element of US politics – but the current situation appears particularly intractable due to shifting political forces along with deep-seated animosity between both major parties.

Some government services are temporarily suspended, with approximately 750,000 people likely to be placed on unpaid leave as Republicans and Democrats can't agree on a spending bill.

Legislative attempts to resolve the deadlock continue to fall short, and it is hard to see a clear resolution path in this instance as each side – as well as the nation's leader – perceive advantages in digging in.

These are several key factors that make this shutdown distinct currently.

1. For Democrats, the focus is on Trump – beyond healthcare issues

The Democratic base has been demanding for months for their representatives adopt stronger opposition against the Trump administration. Well now the party leadership have an opportunity to show they have listened.

In March, the Senate's top Democrat faced strong criticism after supporting GOP budget legislation and averting a shutdown in the spring. Now he's holding firm.

This is a chance for the Democratic party to show their ability to reclaim some control from a presidency pursuing its agenda assertively with determined action.

Refusing to back the GOP budget proposal comes with political risk as citizens generally will grow frustrated as the dispute drags on and impacts accumulate.

The Democrats are leveraging the shutdown fight to highlight concerns about ending healthcare financial support and Republican-approved federal health program reductions for the poor, both facing public opposition.

Additionally, they're attempting to restrict executive utilization of presidential authority to cancel or delay funding approved by Congress, which he has done in international assistance and various federal programs.

2. For Republicans, it's an opportunity

The President and one of his key officials have openly indicated their perspective that they smell a chance to advance further the cutbacks in government employment that have featured in the Republican's second presidency to date.

The President himself said last week that the government closure had afforded him a "unique chance", and that he would look to reduce funding for "opposition-supported departments".

The White House stated they would face the "unenviable task" involving significant workforce reductions to keep essential government services operating should the impasse persist. An administration spokesperson described this as "fiscal sanity".

The scope of the potential lay-offs is still uncertain, but the White House have been consulting with the Office of Management and Budget, or OMB, which is headed by the administration's budget director.

The budget director has previously declared the suspension of federal funding for regions governed by of the country, including New York City and Illinois' largest city.

3. There's little trust between both parties

Whereas past government closures typically involved late-night talks among political opponents aimed at restoring federal operations, currently there seems little of the same spirit for compromise presently.

Conversely, animosity prevails. The bad blood persisted recently, with Republicans and Democrats exchanging accusations for causing the impasse.

The legislative leader a Republican, charged opposition members with insufficient commitment toward resolution, and maintaining positions over a deal "to get political cover".

Simultaneously, the opposition's chief levelled the same accusation against their counterparts, stating how a majority party commitment regarding health funding talks once the government reopens cannot be trusted.

The administration leader personally has inflamed the situation through sharing a computer-created controversial depiction featuring the opposition leader and the top Democrat opposition figure, in which the legislator appears wearing a large Mexican-style sombrero and facial hair.

The affected legislator with party colleagues denounced this as discriminatory, a characterization rejected by the Vice-President.

4. The US economy faces vulnerability

Analysts expect about 40% of government employees – more than 800,000 people – to face furlough as a result of the government closure.

That will depress spending – and also have wider ramifications, as environmental permitting, delayed intellectual property processing, payments to contractors along with various forms of government activity tied to business comes to a halt.

A shutdown also injects new uncertainty within economic systems currently experiencing disruption by changes ranging from tariffs, previous budget reductions, immigration raids and technological advancements.

Economic forecasters project potential reduction of approximately 0.2% off US economic growth for each week it lasts.

However, economic activity generally rebounds most of that lost activity following resolution, similar to recovery patterns after major environmental events.

That could be one reason why the stock market have shown limited reaction by the current stand-off.

On the other hand, experts indicate should the President carries out proposed significant workforce reductions, the damage could be more long-lasting.

Alexis Mills
Alexis Mills

A seasoned automotive real estate consultant with over a decade of experience in market analysis and property investments.