After the federal government shut down Tuesday night, leaving roughly 750,000 federal workers furloughed without pay. Disputes over Medicaid and Affordable Care Act subsidies stalled negotiations, with Republicans demanding a clean continuing resolution and Democrats pushing for extended healthcare benefits.
The Trump administration quickly froze $26 billion in funding for Democratic-leaning states, including $18 billion for New York transit projects and $8 billion for green-energy initiatives in states such as California and Illinois. White House officials said the freezes would continue until Democrats agree to a short-term deal.
Vice President JD Vance warned the administration may begin permanent layoffs if the shutdown extends beyond a few days, on top of 300,000 positions already slated to be cut by December. Federal agencies ranging from the Patent and Trademark Office to the Department of Veterans Affairs announced service suspensions, with many essential workers ordered to work without pay.
Top Democrats accused Trump of using taxpayer money as leverage. Senate Majority Leader Chuck Schumer said, “He is using the American people as pawns, threatening pain on the country as blackmail.” Republican leaders countered that Democrats were obstructing funding for partisan reasons, while both parties maneuvered ahead of the 2026 midterm elections.
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