The U.S. Senate once again rejected the bipartisan temporary funding bill, and Vance warned that continued shutdowns will lead to layoffs

The U.S. Senate has consecutively rejected short-term funding proposals put forward by both parties, making it difficult to resolve the federal government shutdown in the short term. U.S. Vice President Vance warned that if the government shutdown continues, the Trump administration will have to lay off employees.

On Wednesday, October 1st, Eastern Time, the U.S. Senate first rejected the Democratic proposal with a vote count of more votes against than for, and then rejected the Republican proposal. Both proposals required 60 votes to pass the Senate procedural vote. In this vote, the Republican proposal received support from three Democratic senators, with ten more votes in favor than against, but it still did not reach the required threshold of 60 votes for passage.

The aforementioned votes occurred less than 24 hours after a similar vote the previous evening. As all proposals failed in the Senate vote, the federal government officially entered a shutdown state at midnight on October 1st, Eastern Time, marking the first government shutdown in nearly seven years.

Until Wednesday, leaders of both parties indicated they would stick to their respective positions. Republican leadership demanded that Democrats pass the seven-week temporary funding bill already approved by the House of Representatives, while Democrats insisted that any funding bill must include healthcare-related provisions.

U.S. Vice President Vance stated on Wednesday that he expects the government shutdown will not last long. If the shutdown continues, the Trump administration will have to lay off employees. If the government shutdown lasts for days or weeks, layoffs will occur. Legislative communication regarding healthcare policy is unrelated to the government shutdown.

Russ Vought, Director of the Office of Management and Budget (OMB), has instructed federal agencies to implement an "orderly shutdown" plan. Hundreds of thousands of federal employees face unpaid leave, and the release of key economic data may be delayed, adding uncertainty to the Federal Reserve's monetary policy decisions. OMB stated on Wednesday that layoffs will occur in the Trump administration within the next 1-2 days.

Senate Votes Fail Again

The results of the two votes in the Senate on Wednesday mirrored those of the previous evening.

The vote on the Democratic proposal strictly followed party lines, with the proposal being rejected by a vote of 47 in favor and 53 against. In the vote on the Republican proposal, Democratic Senators John Fetterman, Catherine Cortez Masto, and Independent Senator Angus King again switched sides to support the Republican plan, but Republican Senator Rand Paul voted against it, resulting in a final tally of 55 votes in favor and 45 votes against, still failing to reach the 60-vote threshold.

This marks the third time in less than a week that the Senate has rejected two proposals. Both proposals were previously rejected in a vote on September 19th, and on Tuesday evening, both parties' efforts to avoid a government shutdown also failed due to the rejection of the proposals.

The Republican proposal would provide funding for the government to operate until November 21st for seven weeks and increase security funding for lawmakers and government officials by $88 million, but it did not include the healthcare provisions demanded by Democrats. The Democratic alternative would extend funding until October 31st while including provisions to extend ObamaCare subsidies and repeal Trump-era Medicaid cuts

Leaders of Both Parties Blame Each Other and Stand Firm

The Republican congressional leadership made it clear on Wednesday that they would not make any changes to the temporary funding bill passed by the House of Representatives. Republican House Speaker Mike Johnson stated at a Capitol Hill press conference, "We cannot make this bill better for them. There is nothing to negotiate."

Senate Republican leader John Thune completely shifted the blame to the Democrats, stating that Senate Democratic leader Chuck Schumer "led his Democratic colleagues into a dead end at the behest of a group of far-left liberal activist groups." Holding a copy of the temporary funding bill, he said, "When will this situation end? It will only end when Senate Democrats pick up this bill passed by the House and vote in support."

Schumer accused the Republicans of attempting to "bully" Democrats into voting for the temporary resolution, emphasizing that Democrats insist that any government funding legislation must include healthcare provisions, particularly extending the tax credits from the Affordable Care Act introduced during the Obama administration that are set to expire at the end of this year. He stated on the Senate floor, "When ordinary Americans ask, 'Why are my medical bills doubling?' we will point to the Republicans as the cause."

Government Shutdown Impacts Economic Data Release

The direct effects of the government shutdown are becoming evident. Hundreds of thousands of federal employees are being forced into unpaid leave, and key personnel responsible for national security must continue working without pay. More seriously, the Bureau of Labor Statistics, which is responsible for releasing employment and inflation data, is likely to shut down, meaning that key data such as the employment report on October 4, the CPI report on October 15, and the retail sales report on October 16 may be delayed.

Historical experience shows that even when the government reopens, it takes considerable time for data releases to return to normal. The 16-day government shutdown in 2013 resulted in data release delays that lasted until the 51st day after the shutdown ended. This "data vacuum" will increase the difficulty for the Federal Reserve to assess economic conditions and reduce the likelihood of policy adjustments at its meeting at the end of October.

Goldman Sachs estimates that each week of government shutdown will reduce GDP growth by 15 basis points for that quarter. If the shutdown lasts for three weeks, it could lead to a 45 basis point reduction in GDP growth.

Trump Administration Considers Large-Scale Layoffs

Russ Vought, director of the Office of Management and Budget (OMB), has requested federal agencies to develop plans for large-scale layoffs, going beyond the traditional scope of temporary leave. House Speaker Johnson stated on Wednesday that the White House would act quickly to cut the federal bureaucracy, noting that the shutdown provides Republicans with "the opportunity to do things that we could never do because we could never get Democratic votes."

Vought announced on social media on Wednesday that the Trump administration would freeze $18 billion in federal infrastructure project funding, including the Second Avenue subway project in New York City and the Hudson Tunnel project. This move directly targets the districts of Democratic leaders Schumer and Hakeem Jeffries However, some Republican senators have expressed concerns about the radical layoff strategy. North Dakota Republican Senator Kevin Cramer warned that large-scale layoffs could provoke strong backlash from voters and make it more difficult to pass legislation in the Senate that requires 60 votes in the future. He stated, "This could cause a backlash in the polls and make our future policy and spending issues more difficult."

U.S. Vice President Vance attempted to downplay the layoff plan, insisting that Republicans do not want to "fire anyone," and stated that Democrats should take responsibility for any consequences of a government shutdown.

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