The US federal government risks it closes on Wednesday, October 1, 2025 if Congress fails to approve the new budget.
In continuing budget negotiations between parties, Republicans proposed extending current spending levels until November 21, but Democrats offered proposals to impose additional health care regulations and restrictions on President Donald Trump’s ability to block funds.
However, these conditions are unacceptable for Republicans. Incompromise between the two sides increases the likelihood of shutdown. Congressional leaders are reportedly meeting with Trump at the White House on Monday to seek a solution.
If Congress fails to approve the funds needed to federal agencies, a government shutdown occurs. The Ministry of Finance is prohibited from making expenditures not permitted by law by the Constitution. The effective anti-efficiency laws in various updates since 1870 require that agencies cease operations if no funding is provided. However, services intended to protect lives and property, national security, and functions directly related to constitutional processes are excluded from this scope.
Most federal agencies in the United States are funded by 12 separate budget bills passed by Congress each year. The new fiscal year will begin on October 1st, but budget invoices have not yet been established this year. Thanks to a sweep package previously passed by Republicans, some agencies, particularly the Department of Defense and Homeland Security, can continue to operate during the closure.
Since 1980, there have been 14 government closures in US history. It lasted for 34 days, the longest in 2018. If the current impasse is not resolved, the country could face one of its most important budget crises since 2018.
*This is not investment advice.
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