PODCAST: If you download the Substack App (available on IOS and ANDROID) you can listen to audio versions of all Trillions columns.
Estimated reading time of this week’s update: 14 minutes
(1) SHUTDOWN DAY 34: As the Shutdown becomes the longest ever this Wednesday, the adverse impacts on millions of Americans continue to mount; Partisan political gridlock in Congress persists and President Trump remains detached, urging the U.S. Senate to kill the filibuster and permanently abandon bipartisanship.
Background: The Federal government was required by law to shut down on October 1st when the new fiscal year began because Congress had not passed funding bills for fiscal year (FY) 2026. Shutdowns are required by the Antideficiency Act, which makes it a crime to spend money in excess of that appropriated by Congress. Tomorrow, the shutdown ties the longest ever at 35 days (during Trump 1.0), and becomes the longest ever on Wednesday.
House-Passed CR: The House of Representatives in September passed 217-212 a stopgap continuing resolution (“CR”) to provide temporary funding through November 21st, but the Senate has failed has to pass the measure 13 times, most recently last Tuesday, Oct. 28. (The Senate has also failed 7 times to pass a Democratic alternative CR, most recently on Oct. 9.)
Furloughed vs. Excepted Employees: During a shutdown, longstanding Justice Department interpretations of the Antideficiency Act require that Federal agencies furlough employees, which means they do not work and are not paid until appropriations are enacted. About 670,000 employees are furloughed.
However, some workers are designated as “excepted” employees because their responsibilities impact the “safety of human life or the protection of property.” “Excepted” employees are required to work, but are not paid until appropriations are enacted (unless funds authorized outside the annual appropriations process, called “mandatory spending,” are available to pay the excepted employees.) About 470,000 employees are designated as “excepted” and are currently working without pay.
During October, the Senate failed to pass a GOP-sponsored bill to pay excepted workers and active duty military, and also failed to pass Democrat-sponsored measures to pay all federal employees.
5 More Votes Needed for CR: With 60 votes required in the Senate to advance a shutdown-ending CR, Republicans need the support of 8 Democrats or Independents to pass the measure. Thus far, only 3 have supported stopgap funding (Cortez Masto (D-NV), Fetterman (D-PA), and King (I-ME). One Republican (Paul, R-KY) opposes the funding levels in the CR as too high, which is why the 53-member Senate Republican conference needs to secure 8 votes to reach 60.
Senate Democrats are Withholding CR Support to Force Negotiations on ACA Health Subsidies and Congressional Spending Authority: Nearly all Senate and House Democrats are continuing to withhold their support of stopgap funding in order to force a negotiation with Republicans to enact provisions that would:
So far, Republican Leaders Are Not Negotiating: There have been no leadership level negotiations and House Speaker Mike Johnson has kept the House of Representatives out of session since September 29 in order to pressure Senate Democrats to accept the House-passed CR. Republican leaders and President Trump on 60 minutes last night, continue to say they will not discuss ACA premiums until a CR is passed.
However, in late-breaking developments, Sen. John Thune said late today (Monday) he is “optimistic” the Senate will move to end the shutdown this week.
The pending House-passed CR would extend funding only through November 21, and would need to be updated when an agreement is eventually reached.
Last week the largest federal worker union (American Federation of Government Employees) broke with Democrats and urged approval of a continuing resolution. But another union disagrees, supporting Democrats’ strategy.
President Trump has done nothing to facilitate bipartisan negotiations and, instead, has urged Senate Republicans to abandon the Senate’s (filibuster) rules requiring 60 votes to advance major legislation.
Fortunately, Senate GOP leaders have thus far resisted this option since doing so would eliminate the Senate’s key incentive for bipartisan negotiation on legislation. Republican leaders realize that abandoning the Senate’s 60-vote threshold would seriously weaken their leverage the next time they are the minority party, which could come soon. Since 1900, the Senate majority party has changed 17 times.
With no leadership level negotiations under way to extend the enhanced ACA (Obamacare) insurance subsidies, higher ACA premiums are being announced throughout the country. The extent of the premium hikes depend on a person’s state, income, and how much of a subsidy they receive.
(2) SHUTDOWN’S ADVERSE IMPACTS CONTINUE TO MOUNT: SNAP Food Benefit Cuts and Delays Impact 42 million; Federal Workers Face Dire Circumstances; Air Travel Delays; and Impacts on Head Start, Heating Assistance, Dept. of Education, and Economic Data.
Federal Judges Last Week Ordered the Administration to Tap Emergency Funding for (SNAP) Food Benefits, but the Administration warns it could take some states weeks or months to calculate and distribute the aid. The federal food benefits program (“SNAP”)—although a federal entitlement—must be annually appropriated. The program provides monthly food benefits to 42 million, 1-in-8 Americans. Since Congress has not enacted appropriations for the new fiscal year that began October 1st, the SNAP program ran out of funds during October. The Trump Administration had decided in late October not to tap emergency funds to keep the program operating, but last week two Federal District Judges ordered the Administration to make emergency funds available. Today the Administration reported to the court that it will partially fund SNAP using emergency funds.
FINANCES BECOMING DIRE FOR FEDERAL WORKERS: Most federal workers received only partial paychecks in early October and missed their full paychecks on October 24. The shutdown has halted pay for 670,000 furloughed workers (who are not working and will not be paid until the shutdown is over) and 470,000 “excepted workers” (who continue to work, but without pay).
Said one excepted worker whose job is reviewing the Congressional Record each day: “They hate each other so much, and we — we are just caught in the middle.”
Some excepted workers—including military personnel and immigration and border officers—are being paid from “mandatory” (not annually appropriated) funding sources.
Finances are becoming dire for the over one million workers who have been going without pay for a month.
Read more from Politico about the personal impact on federal employees—many of whom are veterans and most of whom cannot afford to miss a paycheck.
FLIGHT DELAYS AND POSSIBLE AIR SAFETY ISSUES HEADING INTO THE HOLIDAYS: More than 13,000 air traffic controllers missed their paychecks in October due to the shutdown. Working without pay is leading to an increase in air traffic controller shortages—resulting in flight delays and possible safety issues due to overstressed, exhausted controllers worried about paying bills and working second jobs.
“We work overtime to make sure the system is safe. And we will slow traffic down, you’ll see delays, we’ll have flights canceled to make sure the system is safe,” Duffy said Sunday on CBS’s “Face the Nation.”
Before the shutdown, the FAA was already dealing with a long-standing shortage of about 3,000 air traffic controllers.
HEAD START FUNDS RUNNING DRY: The federally funded low-income preschool program is currently operating on reserve funding that will run out, threatening a wave of local closures in a program that serves about 65,000 low-income children.
THE LOW INCOME HOME ENERGY ASSISTANCE PROGRAM (LIHEAP), which helps low-income Americans heat their homes, may also be running dry. The Administration has proposed the complete elimination of the program.
EDUCATION DEPT. FURLOUGHS offer a glimpse of Trump’s end-game—elimination of the Department of Education.
Even before the shutdown, mass layoffs had left the agency with 2,400 employees, down from 4,100 when Trump took office. Remaining workers have mostly been furloughed during the shutdown, leaving 330 excepted workers.
Most of the billions of dollars the Education Department steers to schools each year went out the door in October, leaving schools funded until July. However, other programs that aren’t funded in advance face more uncertainty. That includes Head Start preschool centers (see above), and school nutrition programs funded by the Department of Agriculture, which could run out of funds within two months.
THE SHUTDOWN HAS EMBOLDENED WHITE HOUSE BUDGET DIRECTOR VOUGHT’S EFFORTS TO SEIZE CONGRESS’S POWER OF THE PURSE—freezing billions in funds for “Democrat programs”; attempting layoffs of thousands of federal employees (temporarily blocked by court order); threatening to deny furloughed employees their automatic back pay; and reprogramming funds from one purpose to another, without congressional approval.
One analysis finds the Administration has used the shutdown to fund priorities for the Administration (the military, and ICE & border agents), while ignoring low-income Americans (beneficiaries of SNAP, Head Start, and LIHEAP). “They are willing to hurt people at the bottom when they take care of their friends and priorities,” said Senate Appropriations Ranking Member Patty Murray.
Another analysis says it is clear that the Administration spending money on military salaries when the appropriation for those salaries has expired, “is a very overt violation of the Antideficiency Act.”
Adding to Congress’s marginalization and loss of power, work on the 12 regular Appropriations Bills has stopped with Speaker Johnson having kept the House out of session since September 29, which increases the chances of Republicans pushing for a full-year CR.
LOSS OF ECONOMIC DATA during the shutdown has muddled the economic picture.
STATE-SPECIFIC IMPACTS: NPR has posted state-specific shutdown impacts HERE.
(3) TARIFFS AND THE ECONOMY: SCOTUS Hears Trade Arguments; U.S. - China; Cattle Ranchers; Mexico; Impact of Tariffs; Fed Rate Cut; The Trump Economy.
This Wednesday, November 5, at 10am the Supreme Court will hear oral arguments on President Trump’s use of “emergencies” to unilaterally impose global tariffs. The case centers on whether the President has the constitutional and statutory power under the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs without explicit congressional approval.
You can listen to the Supreme Court oral arguments live this Wednesday by streaming the Court’s official audio feed at supremecourt.gov, starting at 10:00 AM EST. Additionally, news outlets such as PBS and SCOTUSblog will provide live coverage and commentary during the arguments.
Last Week’s U.S. China Trade Agreement, was a “truce” as both sides buy time to seek leverage on the bigger issues.
Cattle ranchers and GOP Senators are not happy with the Trump Administration’s plans to increase beef imports.
The U.S. has given Mexico more time to meet Trump’s demands to avoid tariffs.
Economic Impact of Trump’s Volatile Tariff Policies – Last week the Yale Budget Lab released the following “State of U.S. Tariffs”:
Consumers face an overall average effective tariff rate of 17.2%, the highest since 1935.
The price level from all 2025 tariffs rises by 1.3% in the short-run, the equivalent of an average per household income loss of about $1,700.
All Trump tariffs are projected to raise about $2.5 trillion over 2026 to 2035—equivalent to only 11 percent of the total projected increase in federal debt held by the public. Publisher’s Comment: tariff revenues do not “make America rich.” Rather, they only marginally reduce the amount of projected public debt—at a cost of higher prices for ordinary Americans and greater uncertainty for businesses trying to make investment decisions.
Last week, the Federal Reserve cut a key interest by a quarter point. But Fed Chair Powell cautioned that there were “strongly differing views about how to proceed in December” due to competing concerns over rising inflation (which calls for higher rates) and a sluggish jobs market (which calls for lower rates).
The rate cut brings the Fed’s key rate down to about 3.9 percent—down from its high of roughly 5.3 percent in 2023 and 2024 to combat inflation. “Lower rates could, over time, reduce borrowing costs for mortgages, auto loans, and credit cards, as well as for business loans.”
The Fed also said last week that it would stop its “quantitative tightening.” Quantitative tightening is the reduction of the Federal Reserve’s massive security holdings (accumulated during the pandemic and after the Great Recession). A reduction in the Federal Reserve securities holdings is called “quantitative tightening” because it withdraws liquidity from the financial system, which can raise interest rates, tighten financial conditions, and slow economic growth. By stopping quantitative tightening, the Federal Reserve is supporting the economic stimulus expected to result from the interest rate reduction.
Reviewing the Trump economy as we near the end of the first year, Reuters finds that:
The dollar has lost value broadly;
Stocks are at record highs due to the AI boom;
Gold and bitcoin are up as investors seek non-dollar assets amidst trade turmoil; and
Bond yields are rising due to worries over unsustainable government debt.
(4) OTHER MAJOR DEVELOPMENTS ACROSS GOVERNMENT:
Administration readies a $12 billion aid package for farmers suffering from the loss of export markets due to President Trump’s trade wars with China and other nations.
The Trump Administration has the Social Security Administration falling flat on customer service.
President Trump’s illegal attacks on boats off the coast of Latin America: Sec. Hegseth is requiring military officials to sign Non-Disclosure Agreements.
President Trump’s overall job approval hit a new low for his second term.
President Trump finally acknowledged last week he cannot run for a third term.
ProPublica reports that “red state workers could lose out on disability benefits as the Trump Administration rewrites eligibility rules.”
Energy and Environment: Why the Price of Electricity is spiking across the country; The U.S. is staying away from UN climate negotiations in Brazil; GM does a 180 on electric cars and emission standards; and Bill Gates tries to soften climate alarmism.
Trump Administration moves to overrule state laws protecting credit reports from medical debt.
Refugee Admissions: President Trump sets lowest refugee cap in U.S. history, allocating 7,500 spots to mostly Afrikaners.
Ethics: Reuters released a new report, “Inside the Trump family’s global crypto cash machine.” Also, how is Trump evading legal and ethical requirements to build his ballroom and “triumphal arch?” – he fired the Arts Commission.
(5) THIS WEEK’S SUGGESTED READS:
The Folly of Letting the Executive Control Spending – CATO Institute
Hunger. Cold Loom as Shutdown Imperils Funding for Poverty Programs – NYT
Tariffs, TACOs, and dollars: global markets in a year of Trump 2.0. - Reuters
About the author: Charles S. Konigsberg, J.D., served as Assistant Director at the White House Office of Management and Budget for three successive Budget Directors; General Counsel at the U.S. Senate Finance Committee; Minority Chief Counsel at the U.S. Senate Rules Committee; Staff Attorney at the U.S. Senate Budget Committee; Director of Congressional Affairs at CFPB and AmeriCorps; and Staff Director of a national bipartisan budget task force.
He is author of the book, Trillions: A Primer on Federal Spending, Taxes, the U.S. Debt Ceiling, and Fiscal Law. Click here to purchase.
He is also Publisher of:
Appropriations.com which tracks the 12 appropriation bills and presidential impoundment developments each day;
andGovBudget.com which tracks major developments, by subject area, each day including: Law & Democracy | Cut Tracker | WH-OMB-DOGE | Economic News | Federal Taxes | Tariffs | Health and Human Services Programs | Debt, Deficits and Debt Limit | Discretionary Spending Programs | Mandatory Spending Programs | Immigration | Disabilities Programs | Defense | Climate/Energy | Budget Process
Speaking engagements and press interviews can be scheduled by calling: (301) 509-5688. Email comments, suggestions, and questions to: ckonigsberg@capitolpublicpolicy.com.
A sad comprehensive summary of where we are...