The Government Shutdown: Who Will Blink First?

0:05You've been on this podcast more times than there have been government shutdowns, I think. I think that's probably true. Because I've lived through really three big government shutdowns since I've had this beat, so I've been on for more than that. That's our colleague Siobhan Hughes, who covers Washington. And how does this one feel any different from those others? This is much worse. So we're 16 days into this shutdown so far, which is about halfway to the record of 34 days. Do you think we're going to surpass that record? Well, it's important to know that the White House is certainly messaging that we are going to surpass that record.

0:51And right now, they certainly aren't putting any pressure on lawmakers to resolve this quickly. Where are people starting to feel the pain from the shutdown?

1:28And so that's not something that's going to hit the entire country, but it's an aggravation and it starts to wear.

1:40These x-rays for black lung are just one example of countless government services across the country that are unavailable right now. And there's no telling when they'll be back. It does not seem right now like there is an end in sight.

1:55Welcome to The Journal, our show about money, business, and power. I'm Ryan Knudsen. It's Thursday, October 16th.

2:08Coming up on the show, the government shutdown enters its third week.

2:28For the last couple weeks, Siobhan says that D.C. has been a strange place. It's deja vu all over again every single day. All of the reporters traipse up to Capitol Hill. We watch the respective leaders give press conferences in which they repeat their talking points. The Republican leaders stand up and say that it is Democrats who are blamed at the shutdown. Democrats in the Senate are the last hurdle, the last hurdle to getting the government open again. And then Democrats get up and say it is Republicans who are to blame. The American people know that Republicans have shut the government down because of their unwillingness to provide health care to everyday Americans, working class Americans.

3:12Health care. That's the big sticking point here. Yeah, so the Democratic ask, the thing that Chuck Schumer has put on the table is to undo all of the Medicaid cuts from the big, beautiful bill, to stop doing all of the cutbacks in government spending, and to permanently extend the Affordable Care Act subsidies, which is very expensive. And these are the big health care subsidies that were introduced during the pandemic. That's right. Most of the more than 20 million people who are on the Affordable Care Act get some form of government subsidy. And so that's why it costs$350 billion over 10 years, which is a lot of money.

3:58So is it really just about health care for Democrats, or is there more to it than that? It's much bigger for Democrats. It is we are done with you. You have cut back the social programs we have cared about. You have cut money that we have spent on things that we care about. You are taking out after our states, our specific states, just because you don't like our policies. And we are done. And we remember that in 2018, we flipped the house and we beat you over the issue of health care. And you know what? We're coming back hard on this now. We are done. And what's the rationale right now for Republicans with the shutdown?

4:40and not coming to the table sooner? Well, they sort of feel like they have operated in good faith here, that the White House wanted to do a temporary spending bill into next year, that they had negotiated with Democrats to do something over the short term. But, you know, if you look a little bit more under the hood, Republicans have opposed the Affordable Care Act since its inception in 2010. They think that it's too much of an expansion of the social safety net, that you are bloating government spending, adding to debt, heading in the direction of socialized medicine. And so for them, this is just a core, core principle.

5:24After 16 days, the government shutdown is starting to be felt around the country. Siobhan says she's seeing it firsthand. So the big bite is coming in places that are heavily dependent on the federal government and federal contracting. I was talking to a union leader in Nevada last week who was telling me about how 150 of his workers at the Defense Department and the Department of Energy had been thrown out of work. If you are trying to close on a home purchase right now and you need flood insurance to do that, you can't complete your home sale because flood insurance is not being issued. People, maybe small business entrepreneurs who want to start a new business, you can't get your small business administration loan.

6:09That's closed. If I walk down the mall to the Smithsonian, you can't get into the museums. I was talking to somebody who'd wanted to play tennis the other day to get a permit to play tennis. And she couldn't get the permit, so she couldn't have her tennis lesson as planned. You know, it's all these little things like that. For the people that do this work, what has it meant for them? What are you hearing from federal employees who are not receiving a paycheck right now? It's producing anxiety because there are people who are not sure they're going to be able to, for example, meet their mortgage obligations.

6:46If you're trying to buy groceries and everybody knows that it's a lot more expensive to go grocery shopping these days, how are you going to fund that? you have to pay your credit card bill in full. But if you don't have money to do that, you're going to start to rack up interest costs. So it's not easy. Whether federal workers will be paid back for their time on furlough remains an open question. Government employees are supposed to get back pay. That's according to a 2019 law. But the White House has signaled that back pay may not be guaranteed. Because of the way the law is written, And in theory, there is this small potential they could not get paid.

7:25And that just adds anxiety, too. Speaker of the House Mike Johnson talked about this during a recent press briefing. There are some legal analysts who are saying that that may not be appropriate or necessary in terms of the law requiring that back pay be provided. So I'm sure there will be a lot of discussion about that. But there are legal analysts who think that that is not something that government should do. Other government officials, including some GOP congressional leaders, have said that back pay will be owed to those federal workers. It's more than just furloughs. There's also been a lot of layoffs, especially in parts of the government that Trump disagrees with.

8:07Ever since taking office, President Trump has pushed for slimming down the government workforce. And the shutdown has been an opportunity to make even deeper cuts. So, for example, there is an election security unit within the Department of Homeland Security, and more than 100 people there were given these layoff notices. Trump does not like that particular agency because it said the 2020 elections were the most secure in history, and that obviously went against his idea that the election was stolen. And so it's really a case that's being used to pick winners and losers. So we're being able to do things that we were unable to do before.

8:46So we're closing up programs that are Democrat programs that we wanted to close up or that we never wanted to happen. And now we're closing them up. And we're not going to let them come back. Yesterday, a judge temporarily blocked the Trump administration from moving ahead with mass firings while the government is shut down. You've worked in Washington for a long time and have talked to a lot of federal employees. Do you think that the way people feel about working for the federal government is changing right now? Yeah, because the federal government, from the perspective of workers, obviously it's there to serve the public.

9:27But it also provides a form of job security. and you are trading away high wages for the certainty that you are going to have reliable employment with a pension at the end. And all of a sudden that stability is being called into question. And also, I mean, for these workers, they're getting laid off and then a judge says they can't be laid off, but then the appeals process is still going on. I mean, these workers are just, have been in limbo for a significant portion of this year. Yeah, I mean, limbo is the exact word for it. And obviously in Washington, D.C., I'm privy firsthand to what it's like.

10:08And so there are plenty of people who have made the decision to uproot their families and move back to maybe wherever they had grown up as kids. But there are also people who are flooding companies with job applications trying to figure out if they can remain in the Washington area. but in the private sector. It is deeply unsettling. After the break, what it might take to end the shutdown.

10:46So in prior shutdowns, there's always been like these pressure points that seem to put more pressure on Republicans and Democrats to try to make a deal. In prior ones, I think the TSA lines and airports were starting to get clogged. What are the normal pressure points? And are those going to apply the same pressure this time? Or are steps being taken to try to alleviate some of those initial breaking points? So you're right. The big one was always the air traffic controllers calling in sick. The 2018-2019 shutdown ended because it just affected air travel too much. And so, yes, that is clearly a pressure point.

11:25That's happening this time, too. Already, we're seeing some hiccups at airports around the country. Air traffic control in multiple cities now being affected by this government shutdown. Newark to Nashville, Dallas to Chicago, all among the towers and facilities now affected. Thousands of flights have been delayed across the country this week as the government shutdown enters its eighth day. In fact, more than 2 ,500 flights were delayed just today. Trump administration officials are hoping Democrats are the ones to take more heat from it. Democrats in Congress refuse to fund the federal government.

11:59That's the Secretary of Homeland Security, Kristi Noem, speaking in a video meant to be displayed at airports. We will continue to do all that we can to avoid delays that will impact your travel. And our hope is that Democrats will soon recognize the importance of opening the government.

12:19Another pressure point has been coming from the military. In previous shutdowns, lawmakers have made sure that troops get their paychecks, even if other government employees don't. The military always gets paid. It has not been since the 19th century that the military did not get paid. What Republicans had been counting on was that the military would go unpaid on October 15th, and they thought that would present such enormous pressure for Democrats that Democrats would cave in and simply agree to temporarily reopen the government. But the president obviously removed that pressure point when he found a pot of money to be used to at least make sure the military was paid on October 15th.

13:01So that was taken off the table. To get troops paid, Trump is tapping into$8 billion of unspent Defense Department funds that was meant for research and development, according to the White House Office of Management and Budget. But there are more pressure points coming. The next big one will likely be October 24th, which is when many federal workers who are still working will come home with no paycheck. They simply will not get paid for the work that they have been doing. And, you know, you had one partial paycheck, then you have no paycheck. At some point, that starts to add up. Which side do you think is most likely to blink first?

13:44Honestly, I just cannot tell because both sides are so dug in. And I do think it is going to depend on the public. At some point, some segment of the population is going to be so upset with what's happening in their lives that they will rise up and say, that's it. We're done. You've just got to vote to reopen the government. What do you think is the most likely area of compromise? The most likely area of compromise is to extend the Affordable Care Act subsidies for a year. And the reason for that is all of the Democrats want it, plus a contingent of Republicans wants that extension, too. And that's because the Affordable Care Act subsidies flow to a lot of Republican constituencies.

14:27You know, people in rural areas, farmers, small business owners. So it's clear there's a deal here to be had. Trump has signaled in recent days that he may be open to extending the subsidies for health insurance. Democrats are hoping that he'll force Republicans to vote for an extension. Donald Trump is essentially functioning as the House whip. Typically, that is a role that belongs to Congress. But he is the person who gets Republicans in line, makes them vote yes on something, even if it's something they're not in favor of. And that that's why he is the key to the path forward. And the big point I want to make here is that a lot of people think it is only when Donald Trump truly engages on this that a deal will be unlocked.

15:24that's all for today Thursday October 16th the journal is a co-production of Spotify and the Wall Street Journal additional reporting in this episode by Teo Francis, Ken Thomas and Katie Stetch-Farick thanks for listening see you tomorrow

15:43Thank you.