US Government Shutdown Highlights: White House warns of mass layoffs as shutdown continues into next week

There is one person who can now decide the fate of the shutdown, White House Budget Director, Russel Vought. Known as the architect of the controversial Project 2025, Vought is now has power in determining which federal programs and employees stay or go during the shutdown. A graduate of Wheaton College and George Washington University Law School, Vought built his career in conservative circles, eventually becoming one of President Trump’s most trusted allies.

US market opened higher on Friday due to optimism surrounding a potential interest rate cut from the Federal Reserve. This is over the uncertainty over the US government shutdown. In the early hours of trading, Dow Jones Industrial Average (.DJI) gained 157.2 points, or 0.34%, opening at 46,6676.95. The S&P 500 (.SPX) increased by 6.8 points, or 0.10%, to 6,722.14, while the Nasdaq Composite (.IXIC) rose 42.1 points, or 0.18%, reaching 22,886.16.

Senate will convene at 11:30 a.m. and is scheduled to begin voting on the Democratic and Republican short-term spending bills at 1:30 p.m. today, following a pause in votes yesterday for the observance of Yom Kippur

White House budget director Russ Vought announced the Trump administration will withhold $2.1 billion allocated for Chicago’s infrastructure projects, including a plan to extend the Red Line train. Vought cited concerns over “race-based contracting” as the reason for the hold. This move is part of a broader strategy to freeze funding for Democratic-led areas, with a similar freeze of $18 billion in New York infrastructure funds, including a new rail tunnel under the Hudson River. President Trump has supported Vought’s approach.

For those who closely track the US economy, the first Friday of each month is called “Jobs Friday,” when the Bureau of Labor Statistics (BLS) publishes the previous month’s employment report. However, this Jobs Friday, the release of September’s employment data will be delayed. The BLS, along with other federal agencies, is temporarily closed due to the ongoing government shutdown.

House Speaker Mike Johnson, R-La., continued to place blame on Democrats for the government shutdown that began Wednesday during an interview on NBC.

He argued that Republicans had proposed a “clean, simple” resolution to keep the government open, while Congress worked to finalize spending levels for the coming year. Johnson explained that the shutdown occurred because there was not enough time to pass those measures before the fiscal year ended.

He accused Democrats of rejecting the resolution in order to push a political agenda, particularly criticising their decision to introduce a healthcare debate into what he considered a straightforward funding extension meant to buy time for negotiations on other issues.

As the government shutdown stretches into its third day, the GOP-controlled Senate is set to vote for the fourth time on partisan stopgap bills. At the same time, the White House is warning of potential mass layoffs for federal workers.

Hatch Act is a workplace guideline designed to prevent the federal government from engaging in partisan activities or influencing elections.

While violating the Hatch Act is not classified as a criminal offense, the consequences can vary widely, ranging from a simple reprimand to termination, depending on the severity of the violation.

Democratic Rep. Robert Garcia, the ranking member of the House Oversight Committee, has sent a letter to the acting special counsel requesting an investigation into the Trump administration for what he describes as potential violations of the Hatch Act. Other Democratic lawmakers have voiced similar concerns, claiming messages found on various government websites, including those of the White House, the Department of Housing and Urban Development, and the Small Business Administration, which allegedly place blame for the government shutdown on the left.

The US dollar is headed for its worst weekly performance since late July on Friday as the US government shutdown increased uncertainty, reported Reuters. The dollar index, which measures the greenback against a basket of key currencies, fell 0.1% to 97.78.

The Euro zone bond yields witnessed slight change on Friday amid a dearth of US economic data due to the Washington government shutdown, reported Reuters.

Speaking on the US government shutdown, Federal Reserve Bank of Dallas President Lorie Logan said the Federal Reserve appropriately took out some insurance against any sharp deterioration in the labour market with its rate cut last month, but needed to be “cautious”.

According to a New York Times report, Democrats seems to be firm on their demand for concessions on health care, including extending Obamacare subsidies and reversing cuts to Medicaid and other programs made at Trump’s direction. The Senate is due back on Friday, but things may not ease soon if Democrats again block the Republican plan.

The White House has reportedly asked nine US universities to sign an agreement pledging to uphold the President Donald Trump administration’s higher education priorities, or risk losing out on preferred access to federal funding, according to CBS News.

The nine-page document, title the “Compact for Academic Excellence in Higher Education,” has asked the varsities to freeze their tuition rate for five years, ban the use of sex and gender as factors in their admissions process, and cap their international student numbers, among other requirements.

This comes amidst the ongoing US government shutdown as the Trump admin huddles to reduce the risk of the same.

President Donald Trump and other GOP leaders have accused Democrats of demanding free health care for “illegal aliens” in return for their support of a federal funding bill, reported CNN.

“The Democrats want Illegal Aliens, many of them VIOLENT CRIMINALS, to receive FREE Healthcare,” the US president had said in a Truth Social post last week.

Buoyed by expectations of further US interest rate cuts this year and worries over the impact of a US government shutdown, gold continues to remain on track for a seventh straight weekly gain on Friday, reported AP. Spot gold was down 0.3% at $3,844.01 per ounce, as of 0434 GMT, as the dollar firmed. The bullion hit an all-time high of $3,896.49 on Thursday and has increased 2% so far this week.

“Climb in the dollar caused a minor speed bump for the gold price, but the precious metal is still well within shouting distance of the $3,900 level,” said KCM Trade Chief Market Analyst Tim Waterer.

The BBC spoke with an employee at the US Department of Commerce who said that even though the shutdown is causing financial hardship, they want Congress to stay firm. During the shutdown, the Commerce Department is furloughing 34,711 of its 42,984 staff members, nearly 81% of the total workforce. The employee, who asked to remain anonymous but was verified by the BBC, said they are struggling to pay bills and living week to week. They added that they are willing to face these difficulties rather than let Congress give in to pressure and create a plan that harms the American people.

The American football game on Saturday between two US military branches will take place as planned, even though some staff from the teams are on furlough due to the government shutdown.

The football programs for the Navy, Army, and Air Force are run by non-profit organizations, so they are not directly affected by Congress failing to pass a federal budget. The Air Force said it will not livestream home games while the shutdown continues and warned fans to expect fewer and slower updates.

The Senate adjourned on Thursday without holding any votes to observe the Yom Kippur holiday. The chamber will meet again at 11:30 am on Friday, which is 9 pm as per IST. Senators plan to vote on both Republican and Democratic bills to extend government funding, though both bills have failed in previous attempts.

Trump shared a series of videos and memes on Truth Social that seemed to be aimed at mocking congressional Democrats. One video called Office of Management and Budget Director Russell Vought, who is considering federal funding cuts and layoffs, “the reaper.”

“Russ Vought is the reaper / he wields the pen, the funds and the brain,” sings an unnamed person in the video, to the tune of Blue Öyster Cult’s “(Don’t Fear) The Reaper.”

The animated clip shows Vought as a Grim Reaper carrying a scythe, with Vice President JD Vance on drums and a hooded Trump playing a cowbell. The video calls Democrats “babies” and makes fun of lawmakers like House Minority Leader Hakeem Jeffries. CBS News has reached out to Blue Öyster Cult for comment.

Trump also shared a post saying, “All eyes are on Russ Vought today.”

Earlier Thursday, he had shared that he met with Vought to decide which Democrat-led agencies, many of which he called a political scam, should be cut and whether the cuts would be temporary or permanent.

The White House on Thursday warned that thousands of federal workers could lose their jobs if the government shutdown continues, increasing political tensions in Washington. Press Secretary Karoline Leavitt said officials are already preparing for possible layoffs, with the Office of Management and Budget and other departments discussing which areas could be affected, according to Fox News.

Leavitt blamed Democrats for the shutdown, saying the talks would not be happening if they had agreed to keep the government open. She also accused them of “playing politics” over disagreements on health care benefits for undocumented immigrants.

Speaker Mike Johnson has said that Trump has the power to lay off federal workers and hold back funding for ongoing approved projects. Johnson argued that Democrats handed “the keys of the kingdom to the president” by allowing funding to lapse. He explained that when Congress stops providing money and resources run out, it becomes the president’s job to decide how the remaining funds are used.

He added that this power was given to Trump by Democrats in the Senate and added that they “can’t complain” about him using it. Johnson also said the president does not want to avoid his responsibility. The remarks came during a news conference, where Johnson was answering questions from NBC News.

US Treasuries faced delays as the government shutdown entered its second day, holding back economic data and leaving investors without updates on the labor market that could indicate the Federal Reserve’s next move, according to Bloomberg. The report said that in US afternoon trading on October 2, yields had fallen from session highs but remained within two basis points of their previous closing levels.

US President Trump said he plans to meet with Russ Vought, the head of the Office of Management and Budget, to review which programs Vought suggests cutting. On Wednesday, the White House began pausing or canceling billions in funding for projects in Democratic-leaning states, increasing pressure on Democrats.

The FBI Agents Association has warned that if the government shutdown continues, it will limit travel, training, hiring, and other important FBI work. These limits will slow down investigations, delay forensic tests, and make it harder for the FBI to work with state, local, and international law enforcement. FBI agents will still have to work during the shutdown, but they will not be paid.

The Senate was open on Thursday, but no voting took place because of Yom Kippur. Votes are expected to resume Friday on both the Democrat funding bill, which includes health care measures, and the short-term government funding bill. Senator John Thune said he does not expect the Senate to work over the weekend. He added that he might meet with Minority Leader Chuck Schumer, but only if the meeting is serious and focused on resolving the shutdown, not just for show.

House Minority Leader Hakeem Jeffries said that Trump’s threats to fire more federal workers will not make Democrats give up on their demands for healthcare funding.

Jeffries pointed out that layoffs have already been happening since Trump took office, so additional threats are unlikely to change anything. He added that the administration has been firing thousands of federal employees even before the government shutdown, and these are hardworking public servants, many of them veterans. He described the ongoing firings as unfortunate.

Restaurants in the DC area are helping federal workers who are not getting paid as the government shutdown entered its second day, reported BBC. At Pork Barrel BBQ in Alexandria, just across the river from Washington, federal workers can get one free pulled pork sandwich per day if they show a government ID, for as long as the shutdown lasts. Manager Bill Blackburn told BBC that the neighborhood has many federal workers, and this is his way of giving back to the community that supported his restaurant during hard times, like the Covid-19 pandemic. The restaurant also offered free meals during the 2013 and 2018–2019 shutdowns.

Nearby La’Baik, a Mediterranean fast-casual restaurant, is offering furloughed workers a free drink or baklava.

Republican Senate Leader John Thune is stepping away from the White House budget director’s plan, saying he cannot support the idea of permanently laying off federal workers during the shutdown. “This is the risk of shutting down the government and handing the keys to Russ Vought,” Thune told Politico. He also said that “there should have been an expectation” among Democrats that Vought would try to fire workers.

Russ Vought, head of the Office of Management and Budget, is one of Trump’s most controversial appointees. He co-authored Project 2025, a conservative plan for Trump’s possible second term. Project 2025 proposes giving the president direct control over the entire federal bureaucracy, including independent agencies like the Department of Justice. It also calls for removing job protections for thousands of federal employees so they could be replaced by political appointees, and it supports a nationwide ban on abortion.

On Wednesday, Vought told Republicans that the plan to fire federal workers would begin in a “day or two.”

In his interview, Thune blamed Democrats for causing the shutdown that allowed Vought to take these steps. When asked if Vought’s actions to fire workers could confuse or alienate voters, Thune replied, according to Politico: “The only thing I would say about that is yes, and we don’t control what he’s going to do.”

Health and Human Services Secretary Robert F. Kennedy Jr. explained in a post on X why the FDA approved a new generic version of mifepristone. He said the agency had to approve it “because federal law requires approval when an application proves the generic is identical to the brand-name drug.”

Kennedy also shared a letter he had sent last month to Republican attorneys general, promising that the FDA would review abortion pills again. Abortion rights groups warn this could lead to major limits on the most widely used method of abortion in the country.

Kennedy repeated his promise on Thursday, highlighting that the review would also look at access to mifepristone through telehealth visits, which is how many women receive abortion care in states where bans are in place.