The Democrats’ alternative is to add about $US1.5 trillion of spending by extending healthcare subsidies that are set to expire at the end of the year and by undoing the big cuts to healthcare spending that were part of Trump’s One Big Beautiful Bill Act, which cut heavily into healthcare spending to fund big tax cuts.
Those cuts fall disproportionately on low-income households (particularly those in Republican states), while the tax cuts favour wealthy Americans. That has made the One Big Beautiful Bill Act extremely unpopular, to the point where Trump wants to rebrand it as the “Working Families Tax Cut Bill.”
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The Democrats’ leadership has sought a meeting with Trump to try to negotiate a deal that would see funding extended, but so far, he has refused to meet them.
“After reviewing the details of the unserious and ridiculous demands being made by the Minority Radical Left Democrats in return for their Votes to keep our thriving Country open, I have decided that no meeting with their Congressional Leaders could possibly be productive,” Trump wrote in a post on his Truth Social network on Tuesday.
During last year’s confrontation over the debt ceiling and funding, Trump exhorted Republicans, unsuccessfully in the end, to shut down the government to kill off the Biden administration’s agenda.
It will be difficult, if not impossible, at this late stage to avert a shutdown, with the House on leave until October 7 and the Senate not sitting until next Tuesday, the day before the current funding runs out.
[Trump] could choose which agencies to shut down and which to keep open. […] He could cut off funding for programs he doesn’t like.
Reversing the administration’s cuts to healthcare is a core issue for the Democrats, along with a broader concern about Trump’s willingness to ignore Congress’s authority by either refusing to spend funds for programs Congress has approved or, as is the case with his beloved tariffs, issuing executive orders on policies that Congress has specifically reserved for itself.
The Congressional Budget Office has projected that the administration’s cuts to Medicaid would result in four million people losing their insurance coverage next year and nearly 12 million by 2034. Prices would rise for 20 million more.
While healthcare is the focus of the Democrats’ demands, they also want to restore funding for public television and radio stations and stop the administration from refusing to spend funds on Congress-approved programs.
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Republicans, of course, won’t agree to any significant rolling back of the healthcare cuts, the most substantial of their efforts to reduce the impact on deficits and debt of the tax cuts.
Hence, the probability that there will be a shutdown.
It is conceivable that there could be a compromise thrashed out after a shutdown, given that neither side wants to be blamed for the disruption it would create – but, ironically, in a shutdown Trump would have even more discretion over spending decisions.
He could choose which agencies to shut down and which to keep open.
He, or his appointees, could decide how many and which employees would be sent on unpaid leave.
He could cut off funding for programs he doesn’t like.
He could ensure that those agencies that collect economic data, like the Bureau of Labor Statistics, were unable to collect or release data that he didn’t like.
There are even suggestions from Republicans that the administration could ignore the need for an appropriations bill to approve its spending plans for the next financial year.
While an extended shutdown might cause more chaos and disruption within the US and its economy, Trump seems to revel in being an instigator of turmoil. In the 2018 shutdown, he was furious when the Republicans finally caved in the fight over the funding for his wall along America’s southern border (after Mexico, unsurprisingly, declined to pay for it). He would have prolonged that confrontation.
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The rest of the world will look on bemused as America’s dysfunctional political system adds another layer to the existing volatility within the system and economy.
With its jobs market stalling, tariff-induced inflation edging up, growth weakening and relationships with its traditional friends and allies stressed, the last thing the US needs is another source of instability.
It appears increasingly probable, however, that it is going to get one.
