The US government shutdown is caught in a "veto cycle." Where will the shutdown crisis extend? Wait for the eighth Senate vote next week.
2025-10-10 14:45:24
A Republican bill to fund the U.S. government and end the shutdown, which entered its ninth day with few signs of progress, failed to secure the votes needed in the Senate on Friday.
Trump said his administration would use the current shutdown to permanently cut what he called "Democratic programs," signaling his push to reduce federal spending and shift policy focus toward his political base.
House Speaker Mike Johnson on Thursday refused to recall the House to pass a stand-alone bill that would have ensured military pay during the government shutdown.
President Trump on Tuesday slammed Democrats' shutdown strategy as a "suicide attack" and said it created an opportunity to cut "billions of dollars in waste, fraud and misuse" from the government.
Senators left Washington on Friday after a short-term funding bill to end the government shutdown failed for the seventh time and did not plan to return until Tuesday, as the shutdown continues with no end in sight.
The government shutdown will last at least two weeks. The next vote to reopen the government is on October 14. Military personnel are certain to miss their paychecks on October 15.
The Senate is scheduled to vote next Tuesday on a "simple" short-term funding bill passed by House Republicans to end the government shutdown. This will be the eighth time the Senate has voted on the measure.
The IRS, in an email to employees Thursday, rescinded guidance from an internal memo that said furloughed workers were entitled to back pay, according to emails obtained by ABC News.
In an email titled "Shutdown Guidance Update," IRS employees were told that a previous memo "incorrectly stated the nature of unpaid and off-duty status compensation under the Government Employees Fair Treatment Act of 2019" and that the Office of Management and Budget would provide further guidance.
The IRS sent an agency-wide email on Thursday with furlough guidance, noting that the Fair Treatment for Government Employees Act of 2019 "requires" furloughed federal employees to be paid back wages once funding is restored.
The Senate failed for the seventh time to advance a Republican-sponsored short-term government funding cleanup bill by a vote of 54 to 45, failing to reach the 60 vote threshold needed for advancement.
Sen. Rand Paul, R-Ky., again broke with party lines and voted against the bill.
Catherine Cortez Masto, a Nevada Democrat; John Fetterman, a Pennsylvania Democrat; and Angus King, an independent from Maine, voted in favor, while the remaining Democrats did not change their positions.
Republican Senator Ted Cruz of Texas did not vote.
Earlier, the Senate voted 47-50 to fail to advance a Democratic-led funding bill that included health care provisions. This was the seventh time the bill had failed to advance without any support from Republican lawmakers.
The government funding impasse continues with no clear resolution in sight, while the House of Representatives remains in recess.
President Trump continued to criticize Democrats over the government shutdown, which is now in its ninth day.
"The Democrats have lost their way, they lack leadership, and we don't even know who to deal with over there," Trump said during a Cabinet meeting at the White House.
"Republicans have voted repeatedly to pass a no-strings-attached, bipartisan bill to reopen the government with the same funding levels," Trump said.
Democrats have so far opposed the clean continuing resolution as they push for health care provisions, particularly an extension of Affordable Care Act subsidies.
"We're not going to do anything — anything — except improve health care. In fact, I think we've truly become the party of excellent health care," Trump said.
President Donald Trump has continued to threaten spending cuts during the government shutdown, saying he would target "Democratic projects."
"We're going to cut some programs that are very popular with Democrats but that Republicans don't like. Frankly, that's the way the game is. They wanted to do it, and now it's time for them to get a taste of their own medicine," Trump said, without giving specific details.
Legal experts say the Constitution and federal law allow only Congress to declare cuts to federal agencies or eliminate them entirely.
The White House did not provide further details on the legality of Trump's threat or respond to questions about how firing unpaid personnel would reduce waste.
Johnson reiterated Thursday that he would not reconvene the House to pass a separate bill to ensure that military personnel continue to receive their pay during the government shutdown.
If Congress fails to restore government operations by October 15, it will be the first time in modern history that military personnel will miss paychecks due to a government shutdown.
"We voted to fund the troops. We passed it three weeks ago. We brought the bill up for consideration and Republicans voted to fund the troops," Johnson said at a news conference at the Capitol on Thursday.
The spokesman's comments came hours after a C-SPAN caller named Samantha from Fort Belvoir, Virginia, told Johnson she was "very disappointed" with the GOP's response to the government shutdown, claiming that if her family's income was cut off on October 15, "the children might not survive."
Samantha directly addressed the speaker, saying, "I think this is terrible. It's crazy that someone who makes six figures a year would do this to a military family."
Johnson addressed the callers at a news conference and blamed Senate Minority Leader Chuck Schumer.
"They're living paycheck to paycheck, and a lot of service members are, and this is no joke. Chuck Schumer thinks this is a game," he said.
The IRS said it would furlough nearly half its workforce because "most IRS functions have been suspended due to funding constraints."
According to the IRS's emergency plan released Wednesday, of 74,299 employees, 39,870 will be retained as exempt workers, while 34,429 will be furloughed.
The plan states that work related to protecting government property and tax revenue will continue, including processing tax returns with payments, maintaining online systems, and running taxpayer verification services. Most other operations, such as taxpayer assistance and audits, will be suspended until funding is restored.
The US political deadlock deepened, with the Republican-sponsored appropriations bill failing in the Senate for the seventh time. The government shutdown, now in its ninth day, shows no sign of being resolved. House Speaker Johnson refused to recall members to pass a military pay bill, while President Trump publicly stated he would use the shutdown to permanently cut "Democratic programs," signaling a prolonged and radicalized political game.
This round of lockdowns is nothing new, and the market has become increasingly desensitized to their short-term impact. While the impasse persists, the upward momentum of the US dollar index may be limited, and its safe-haven potential will dim compared to a true global crisis (such as a major geopolitical conflict).
The IRS's retraction of its promise to backpay employees, the furlough of nearly half its workforce, and the military's anticipated miss of payday for the first time in modern history due to a shutdown have all exposed the fragility of government operations. This questioning of national governance is fundamentally negative for the US dollar as a reserve currency .
The government shutdown has disrupted the release of key economic data, such as CPI and non-farm payrolls. Without data to support this, the Federal Reserve will struggle to make accurate monetary policy decisions. This uncertainty will hinder the formation of a clear trend in the US dollar and could exacerbate market volatility.
In the short term, with no immediate solution in sight, some safe-haven buying from political uncertainty may still provide bottom support for the dollar, preventing it from falling sharply.
If the shutdown is extended, it will substantially drag down economic growth in the fourth quarter, which may force the Federal Reserve to consider looser monetary policy in the future, thereby putting pressure on the US dollar in the medium and long term .
In the medium to long term, the political polarization, lax fiscal discipline, and declining governance capacity exposed by this impasse are eroding the dollar's credibility. Once the market focus shifts from risk aversion to concerns about the sustainability of U.S. fiscal and governance policies, the dollar will face greater downward pressure.
At 14:35 Beijing time, the US dollar index is currently at 99.35.
Trump said his administration would use the current shutdown to permanently cut what he called "Democratic programs," signaling his push to reduce federal spending and shift policy focus toward his political base.
House Speaker Mike Johnson on Thursday refused to recall the House to pass a stand-alone bill that would have ensured military pay during the government shutdown.
President Trump on Tuesday slammed Democrats' shutdown strategy as a "suicide attack" and said it created an opportunity to cut "billions of dollars in waste, fraud and misuse" from the government.
Senate adjourns for weekend, government shutdown continues
Senators left Washington on Friday after a short-term funding bill to end the government shutdown failed for the seventh time and did not plan to return until Tuesday, as the shutdown continues with no end in sight.
The government shutdown will last at least two weeks. The next vote to reopen the government is on October 14. Military personnel are certain to miss their paychecks on October 15.
The Senate is scheduled to vote next Tuesday on a "simple" short-term funding bill passed by House Republicans to end the government shutdown. This will be the eighth time the Senate has voted on the measure.
IRS withdraws memo promising to pay back wages to furloughed employees
The IRS, in an email to employees Thursday, rescinded guidance from an internal memo that said furloughed workers were entitled to back pay, according to emails obtained by ABC News.
In an email titled "Shutdown Guidance Update," IRS employees were told that a previous memo "incorrectly stated the nature of unpaid and off-duty status compensation under the Government Employees Fair Treatment Act of 2019" and that the Office of Management and Budget would provide further guidance.
The IRS sent an agency-wide email on Thursday with furlough guidance, noting that the Fair Treatment for Government Employees Act of 2019 "requires" furloughed federal employees to be paid back wages once funding is restored.
The Senate again failed to advance a clean funding bill, and the government shutdown stalemate continues with no end in sight.
The Senate failed for the seventh time to advance a Republican-sponsored short-term government funding cleanup bill by a vote of 54 to 45, failing to reach the 60 vote threshold needed for advancement.
Sen. Rand Paul, R-Ky., again broke with party lines and voted against the bill.
Catherine Cortez Masto, a Nevada Democrat; John Fetterman, a Pennsylvania Democrat; and Angus King, an independent from Maine, voted in favor, while the remaining Democrats did not change their positions.
Republican Senator Ted Cruz of Texas did not vote.
Earlier, the Senate voted 47-50 to fail to advance a Democratic-led funding bill that included health care provisions. This was the seventh time the bill had failed to advance without any support from Republican lawmakers.
The government funding impasse continues with no clear resolution in sight, while the House of Representatives remains in recess.
Trump says Democrats have lost their way on government shutdown
President Trump continued to criticize Democrats over the government shutdown, which is now in its ninth day.
"The Democrats have lost their way, they lack leadership, and we don't even know who to deal with over there," Trump said during a Cabinet meeting at the White House.
"Republicans have voted repeatedly to pass a no-strings-attached, bipartisan bill to reopen the government with the same funding levels," Trump said.
Democrats have so far opposed the clean continuing resolution as they push for health care provisions, particularly an extension of Affordable Care Act subsidies.
"We're not going to do anything — anything — except improve health care. In fact, I think we've truly become the party of excellent health care," Trump said.
Trump threatens to cut popular Democratic programs
President Donald Trump has continued to threaten spending cuts during the government shutdown, saying he would target "Democratic projects."
"We're going to cut some programs that are very popular with Democrats but that Republicans don't like. Frankly, that's the way the game is. They wanted to do it, and now it's time for them to get a taste of their own medicine," Trump said, without giving specific details.
Legal experts say the Constitution and federal law allow only Congress to declare cuts to federal agencies or eliminate them entirely.
The White House did not provide further details on the legality of Trump's threat or respond to questions about how firing unpaid personnel would reduce waste.
Johnson says he won't reconvene the House to pass a bill to pay the troops
Johnson reiterated Thursday that he would not reconvene the House to pass a separate bill to ensure that military personnel continue to receive their pay during the government shutdown.
If Congress fails to restore government operations by October 15, it will be the first time in modern history that military personnel will miss paychecks due to a government shutdown.
"We voted to fund the troops. We passed it three weeks ago. We brought the bill up for consideration and Republicans voted to fund the troops," Johnson said at a news conference at the Capitol on Thursday.
The spokesman's comments came hours after a C-SPAN caller named Samantha from Fort Belvoir, Virginia, told Johnson she was "very disappointed" with the GOP's response to the government shutdown, claiming that if her family's income was cut off on October 15, "the children might not survive."
Samantha directly addressed the speaker, saying, "I think this is terrible. It's crazy that someone who makes six figures a year would do this to a military family."
Johnson addressed the callers at a news conference and blamed Senate Minority Leader Chuck Schumer.
"They're living paycheck to paycheck, and a lot of service members are, and this is no joke. Chuck Schumer thinks this is a game," he said.
IRS to furlough nearly half of its workforce as most IRS operations are suspended
The IRS said it would furlough nearly half its workforce because "most IRS functions have been suspended due to funding constraints."
According to the IRS's emergency plan released Wednesday, of 74,299 employees, 39,870 will be retained as exempt workers, while 34,429 will be furloughed.
The plan states that work related to protecting government property and tax revenue will continue, including processing tax returns with payments, maintaining online systems, and running taxpayer verification services. Most other operations, such as taxpayer assistance and audits, will be suspended until funding is restored.
Analysis of potential impact on the US dollar trend
The US political deadlock deepened, with the Republican-sponsored appropriations bill failing in the Senate for the seventh time. The government shutdown, now in its ninth day, shows no sign of being resolved. House Speaker Johnson refused to recall members to pass a military pay bill, while President Trump publicly stated he would use the shutdown to permanently cut "Democratic programs," signaling a prolonged and radicalized political game.
This round of lockdowns is nothing new, and the market has become increasingly desensitized to their short-term impact. While the impasse persists, the upward momentum of the US dollar index may be limited, and its safe-haven potential will dim compared to a true global crisis (such as a major geopolitical conflict).
The IRS's retraction of its promise to backpay employees, the furlough of nearly half its workforce, and the military's anticipated miss of payday for the first time in modern history due to a shutdown have all exposed the fragility of government operations. This questioning of national governance is fundamentally negative for the US dollar as a reserve currency .
The government shutdown has disrupted the release of key economic data, such as CPI and non-farm payrolls. Without data to support this, the Federal Reserve will struggle to make accurate monetary policy decisions. This uncertainty will hinder the formation of a clear trend in the US dollar and could exacerbate market volatility.
In the short term, with no immediate solution in sight, some safe-haven buying from political uncertainty may still provide bottom support for the dollar, preventing it from falling sharply.
If the shutdown is extended, it will substantially drag down economic growth in the fourth quarter, which may force the Federal Reserve to consider looser monetary policy in the future, thereby putting pressure on the US dollar in the medium and long term .
In the medium to long term, the political polarization, lax fiscal discipline, and declining governance capacity exposed by this impasse are eroding the dollar's credibility. Once the market focus shifts from risk aversion to concerns about the sustainability of U.S. fiscal and governance policies, the dollar will face greater downward pressure.
At 14:35 Beijing time, the US dollar index is currently at 99.35.
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