The US federal government is at risk of shutting down on Wednesday, October 1, 2025, if Congress fails to approve a new budget.
In the ongoing budget negotiations between the parties, Republicans have proposed extending current spending levels until November 21, while Democrats have offered a proposal that would impose additional health care regulations and limits on President Donald Trump's ability to block funding.
However, these conditions are unacceptable to Republicans. The intransigence between the two sides increases the likelihood of a shutdown. Congressional leaders will reportedly meet with Trump at the White House on Monday to seek a solution.
A government shutdown occurs when Congress fails to approve necessary funding for federal agencies. The Treasury Department is prohibited by the Constitution from making any expenditures not authorized by law. The Antideficiency Act, in effect with various updates since 1870, requires agencies to cease operations if funding is not provided. However, services intended to protect life and property, national security, and functions directly related to the constitutional process are excluded from this scope.
Most federal agencies in the US are funded by 12 separate budget bills passed by Congress each year. Although the new fiscal year begins on October 1st, no budget bills have yet been enacted this year. Thanks to the sweeping spending package previously passed by Republicans, some agencies, particularly the Department of Defense and the Department of Homeland Security, will be able to continue operating during a shutdown.
There have been 14 government shutdowns in US history since 1980. The longest occurred in 2018, lasting 34 days. If the current impasse is not resolved, the country could face one of the most critical budget crises since 2018.
*This is not investment advice.