The federal government’s fiscal year closes Sept. 30, and as of this moment, there is no plan to fund the government through fiscal year 2026. If a funding agreement is not in place by Oct. 1, the federal government will be faced with a shutdown.
The U.S. Congress could avoid a shutdown by passing all 12 pending appropriations bills and having the president sign them into law before Sept. 30, but that has not happened since 1996. If a shutdown is to be averted, it will require Congress to pass a continuing resolution (CR), which would extend current funding levels to a specific date. Clearly this is the path Congress will take, but there are still several factors it must consider before it can move forward.
For Republicans, the first decision that needs to be made is what type of CR they will propose. If they believe a full-year funding agreement can eventually be reached, they are likely to push a short-term CR to give parties more time to negotiate. Previously, deadlines have been extended until the end of the year, giving both sides extra incentive to reach an agreement. The other option would be to propose a full-year CR at current funding levels. This approach would settle this issue for a year and allow Congress to focus on other priorities.
For Democrats, they need to decide how much they want to cooperate with Republicans…or if they want to cooperate at all. Because Republicans will need bipartisan support to pass either a short-term or year-long CR, many Democrats believe the funding debate is the only area where they can exert any legislative influence. Furthermore, many progressive Democrats felt that their leadership caved to Republicans and the president when they agreed in March to support the plan that funded the federal government for the remainder of FY 2025.
If Democrats decide to push back against Republicans and withhold their support for a Republican-drafted CR, the country will face its first government shutdown since the end of 2018. How long a shutdown would last would most likely depend on the reaction from the public. If they blame the shutdown on the Republicans’ unwillingness to have bipartisan talks, it could last for a while, but if Democrats are being blamed for causing the shutdown, it won’t be long before rank-and-file members push Democratic leadership into making a deal to reopen the government.
What does this mean for the staffing industry? Besides the fact that a shutdown would inject even more uncertainty into the economy, it would also mean that other legislative issues would be stuck in a holding pattern. That would be problematic, because one of the legislative items expected to be considered this fall is a bipartisan tax extenders package that would likely contain an extension, and possible expansion, of the Work Opportunity Tax Credit program. A prolonged shutdown could very well mean that consideration of an extenders package gets pushed until the end of 2026, which would leave the future of expiring programs like WOTC uncertain. WOTC is currently set to expire at the end of 2025.
As of now, the House of Representatives is scheduled to be in session for 14 days during the month of September, and the Senate will be in session for 16 days. Is that enough time to reach an agreement to keep the government open? ASA will keep its members updated.