Trump-Congress Meeting Collapses, Shutdown Looms...Senate Vote Becomes Decisive Moment

The meeting between President Donald Trump and the leaders of the Republican and Democratic parties, held on September 29 (local time), broke down as they attempted to avert a U.S. federal government shutdown (temporary suspension of government operations). If the short-term spending bill (continuing resolution, or CR) scheduled for a re-vote in the Senate on September 30 fails to pass, the federal government will enter a shutdown starting on October 1. Since the shutdown would halt most federal government activities except for essential functions, it is expected to inevitably disrupt the conduct of monetary policy due to gaps in key economic indicators, including the monthly employment report.

AP Yonhap News

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According to CNBC and CNN, President Donald Trump, Senate Republican Leader John Thune, and Senate Democratic Leader Chuck Schumer met at the White House but failed to reach an agreement. President Trump and the Republican and Democratic leadership parted ways after confirming their differences over the extension of subsidies for the public health insurance program known as "Obamacare" (ACA, Affordable Care Act), which had become a sticking point in the federal budget negotiations. Senate Democratic Leader Chuck Schumer stated that there are still "very significant differences of opinion" regarding health insurance.

Vice President JD Vance, who attended the meeting, placed the blame on the Democrats, saying, "The government is heading toward a shutdown because the Democrats are not willing to do the right thing."

Earlier, the House of Representatives, led by the Republicans, passed a seven-week CR on September 19. However, on the same day, the Senate voted it down after Democrats insisted that the extension of Obamacare subsidies, set to expire at the end of this year, must be included. In response, Senate Republican Leader John Thune announced that he would push for a re-vote on September 30, the last day of the 2025 fiscal year.

If Congress fails to pass the CR, the federal government will shut down starting at midnight on October 1. Sixty votes are required in the Senate to overcome a filibuster, but the Republicans currently hold only 53 seats, making it impossible to pass the bill without Democratic cooperation.

However, the gap between the two parties remains wide, making an agreement unlikely. The Republicans are pushing for an "unconditional short-term spending bill" to keep the government running, while the Democrats insist that the extension of Obamacare subsidies, which expire at the end of this year, must be included. The Washington Post reported, "The Republicans and Democrats are still strongly opposing each other's proposals, so it is highly likely that neither side will secure enough votes."

If the shutdown becomes a reality, three risks-suspension of key economic indicator releases, the possibility of permanent layoffs, and a gap in the Federal Reserve's policy decision-making-are expected to combine and create policy uncertainty. On this day, the U.S. Department of Labor announced that, in the event of a shutdown, the Bureau of Labor Statistics (BLS) would completely halt operations and not release major statistics, including the September employment report. This means that the key indicators used as the basis for decisions by the market and the Federal Reserve would disappear. Reuters noted, "Wall Street and strategists are concerned that this data gap could cloud the Federal Reserve's judgment," adding, "As in the past (2013), the data could be released all at once later, but the timing and intensity of policy could be affected."

Concerns are also rising over employment instability due to President Trump's threat of layoffs. President Trump has publicly mentioned the possibility of mass layoffs in the event of a federal government shutdown, signaling a plan for large-scale workforce reductions. This is seen as an attempt to pressure the Democrats for cooperation by using federal employees' jobs as leverage.

Concerns are also rising over employment instability due to President Trump's threat of layoffs. President Trump has publicly mentioned the possibility of mass layoffs in the event of a federal government shutdown, signaling a plan for large-scale workforce reductions. This is seen as an attempt to pressure the Democrats for cooperation by using federal employees' jobs as leverage. CNBC predicted, "This could have a long-term impact on an already unstable employment situation," and added, "If President Trump actually carries out these threats and pushes forward with lawsuits over abuse of executive power, what has so far been a political incident could become a major economic variable as well."

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