Shutdown enters second day with escalating risks

The U.S. government shutdown entered its second day on Thursday, with President Donald Trump adopting an unusually aggressive strategy: threatening mass layoffs of federal employees rather than the temporary furloughs that typically accompany funding lapses.

White House press secretary Karoline Leavitt told reporters that layoffs were “imminent,” signaling a sharp break from precedent. The administration is positioning the shutdown not merely as a standoff over spending, but as a chance to reshape the federal workforce and cut programs viewed as Democratic priorities.

The Office of Management and Budget (OMB) announced that roughly $18 billion in infrastructure funds for New York’s subway and Hudson Tunnel projects would be frozen — a direct blow to the home state of Democratic leaders of both chambers of Congress.

Trump’s strategy and the role of Russ Vought

President Trump praised OMB Director Russ Vought, calling him a budget cutter capable of doing what “you couldn’t do any other way.” Vought, a key architect of the conservative Project 2025 policy agenda, reportedly told House Republicans on a private call that layoffs could begin within days.

This approach builds on earlier efforts, including the Department of Government Efficiency initiative spearheaded with Elon Musk, which has already eliminated thousands of federal positions this year.

Democrats call the move “cruelty by design”

Democrats quickly condemned the strategy. House Minority Leader Hakeem Jeffries said the layoffs show that “the cruelty is the point.” With no immediate plans for negotiations, the shutdown risks dragging further into October, when hundreds of thousands of federal workers could miss paychecks.

The Congressional Budget Office (CBO) has projected:

• 750,000 federal workers furloughed daily if the shutdown persists.
• $400 million in lost wages per day.
• Broader economic ripple effects, including reduced consumer demand, stalled federal contracts, and a drag on GDP.

Historically, CBO notes, shutdowns have depressed private-sector spending but typically see reversals once operations resume.

Political and economic stakes grow

The White House’s hardline approach is testing the balance of power with Congress. Lawmakers usually control appropriations, but the administration is using alternative funding levers to prioritize its own agenda.

• Defense and Homeland Security workers remain funded under the “One Big Beautiful Bill” passed earlier this year, ensuring immigration enforcement and deportation efforts continue.
• Agencies outside these core areas, however, face frozen paychecks and operational slowdowns.
• The Government Accountability Office (GAO) has already flagged multiple instances of unlawful rescission attempts by OMB. Still, the Supreme Court recently upheld the administration’s authority to cancel nearly $5 billion in foreign aid.

Health care funding fight at the center of the standoff

At the heart of the shutdown is a dispute over health care. Democrats are demanding preservation of funding for Affordable Care Act subsidies and related programs, warning that premiums could more than double for millions of Americans. The Kaiser Family Foundation estimates that losing subsidies could cause significant spikes in insurance costs by year’s end.

Republicans have indicated a willingness to negotiate eventually, but not under shutdown pressure. Vice President JD Vance said Wednesday that the subsidies don’t expire until December, allowing time for talks.

Why this shutdown feels different

Past shutdowns have typically ended with both parties striking deals to reopen the government while preserving jobs. This time, however, Trump’s administration is using the funding lapse as a political tool to:

• Purge federal workers viewed as hostile to his agenda.
• Freeze funds for Democratic-leaning states and projects.
• Reshape the federal government around conservative priorities.

If layoffs proceed as threatened, the impact could be irreversible, making this shutdown fundamentally different from past budget impasses.

What’s next?

With Congress in recess for religious observances and no new negotiations scheduled, the shutdown appears poised to drag on. The coming weeks will reveal whether Trump’s gamble forces Democrats to compromise or whether the mounting economic and political fallout compels Republicans to change course.

For federal workers, the uncertainty is immediate: delayed paychecks, looming layoffs, and the prospect of returning to a government permanently reduced in size.