What Is a Government Shutdown? Everything You Need to Know in 2025

The United States is again facing the threat of a government shutdown as the October 1, 2025 funding deadline nears. A shutdown happens when Congress fails to approve spending for federal agencies, forcing many parts of the government to halt operations. This can impact millions of workers, public services, and the economy.

The standoff comes as Republicans push to extend funding at current levels until November 21, while Democrats want a shorter extension with added health care protections and limits on presidential spending powers. Talks with President Donald Trump have yet to break the deadlock, raising the risk of a shutdown this week.

How a Government Shutdown Works

A government shutdown occurs when Congress does not pass the twelve annual appropriations bills that fund most federal agencies before the new fiscal year starts on October 1. Without these bills or a stopgap law called a continuing resolution, agencies lose the legal authority to spend money. The Antideficiency Act prohibits federal spending without an approved budget, making it illegal for agencies to continue normal operations once funding expires.

Some functions continue. Agencies can keep work going if it protects life and property or supports core constitutional duties. This means active-duty military personnel, federal law enforcement, air traffic controllers, TSA officers, and staff at federally funded hospitals remain on the job, though pay is delayed. Nonessential employees are furloughed until new funding is approved. Essential employees also miss paychecks until the government reopens.

Social Security, Medicare, and Medicaid benefits continue because they are funded through permanent laws, but agency staff may be furloughed, causing service delays. The U.S. Postal Service remains open since it is self-funded. National parks and museums may close or operate with limited staff, risking service cuts or damage, as seen in past shutdowns.

The White House Office of Management and Budget has told agencies to prepare not only for furloughs but also potential permanent layoffs in programs that run out of discretionary funding. This could make the impact of a 2025 shutdown more severe than in past years.

Impact on People and the Economy

A shutdown disrupts government services and hits workers’ paychecks. Hundreds of thousands of employees face delayed salaries, and contractors may not be paid at all. Past shutdowns have delayed immigration hearings, hampered regulatory oversight, and slowed business permits and loans.

The 2018-2019 shutdown — the longest in U.S. history at 34 days — cost the economy $11 billion, according to the Congressional Budget Office, with $3 billion lost permanently. Federal workers missed paychecks and relied on food banks and charity kitchens. Businesses tied to government contracts saw layoffs and reduced sales.

This time, economic effects could be sharper if layoffs accompany furloughs. Essential services such as air travel and border security could face delays if unpaid employees protest or call in sick. Tourists may encounter closed national parks and museums, while federal customer service hotlines, benefit processing, and regulatory reviews may pause.

A government shutdown means parts of the U.S. government stop functioning until Congress approves new funding. It hurts workers, slows services, and can damage the economy — especially if it drags on. As the October 1 deadline approaches, Americans watch closely to see whether lawmakers can reach a deal and avoid another costly lapse in funding.

FYI (keeping you in the loop)-

Q1: What causes a government shutdown?

It happens when Congress fails to pass spending bills or a stopgap funding law before the new fiscal year starts.

Q2: Who gets paid during a shutdown?

Essential workers keep working but do not get paid until funding resumes. Nonessential employees are furloughed and later get back pay.

Q3: How long was the longest shutdown?

The 2018-2019 shutdown lasted 34 days, the longest in U.S. history.

Q4: Do Social Security and Medicare stop?

No. Benefits continue because they have permanent funding, but customer service and new applications may slow.

Q5: How much do shutdowns cost the economy?

The 2018-2019 shutdown cost $11 billion, with $3 billion in permanent losses, according to the Congressional Budget Office.