President Donald Trump has seized on the government shutdown as an opportunity to reshape the federal workforce and punish detractors, by threatening mass firings of workers and suggesting “irreversible” cuts to programs important to Democrats.
Rather than simply furlough employees, as is usually done during any lapse of funds, White House press secretary Karoline Leavitt said layoffs were “imminent.” The Office of Management and Budget announced it was putting on hold roughly $18 billion of infrastructure funds for New York’s subway and Hudson Tunnel projects — in the hometown of the Democratic leaders of the U.S. House and Senate.
Thursday is day two of the shutdown, and already the dial is turned high. The aggressive approach coming from the Trump administration is what certain lawmakers and budget observers feared if Congress, which has the responsibility to pass legislation to fund government, failed to do its work and relinquished control to the White House.
Here’s the latest:
Johnson’s advice on Trump’s video attacks: ‘Just ignore it’
House Speaker Mike Johnson has a bit of advice for his Democratic counterpart when President Trump posts doctored videos of him in a sombrero. “Just ignore it.”
Trump’s decision to post the videos of House Democratic leader Hakeem Jeffries has become a bit of a subplot in the government shutdown fight. Jeffries, a New York Democrat, has called the videos “racist” and challenged Trump to address him in person.
But Johnson’s advice shows how he’s balancing both his loyalty to Trump and the necessity of working with Jeffries to keep the House functioning. Johnson, a mild-mannered Louisiana Republican, has also consistently urged lawmakers to tone down their rhetoric when debates become heated.
Johnson says the shutdown hands ‘the keys of the kingdom’ to Trump
House Speaker Mike Johnson says the government shutdown gives President Trump and his budget director vast power over the federal government.
The White House is preparing to unleash mass layoffs and funding cuts during the shutdown, and Johnson, a Louisiana Republican, agreed the president has the constitutional power to make those decisions. Blaming Democrats, he said “they have effectively turned off the legislative branch” and “handed it over to the president.”
Still, Johnson said Trump and the White House budget director Russ Vought take “no pleasure in this.”
White House threatens ‘harm’ for Democratic constituents during the shutdown
Earlier this morning, Trump said he would meet with his top budget adviser, Russ Vought, to discuss funding cuts that could be made during the shutdown.
Asked on Fox News whether this was just a negotiating tactic, White House press secretary Karoline Leavitt said “it’s very real.”
“The Democrats should know that they put the White House and the president in this position, and if they don’t want further harm on their constituents back home, then they need to reopen the government,” she said.
Speaking at the White House on Wednesday, Vice President JD Vance said that despite threatened layoffs because of the shutdown, federal agencies would not be targeted based on politics.
House Speaker casts Democratic funding bill as a ‘wild list of partisan priorities’
House Speaker Mike Johnson was speaking at the Capitol and urged Senate Democrats to reverse course and support a Republican bill to reopen government mostly at current spending levels.
Johnson, a Louisiana Republican, called a funding bill put forward by Democrats a “wild list of partisan priorities” and said it would reverse many of the actions Congress has taken since Republicans took majorities in the House and Senate this year.
While Democrats have put forward the alternative legislation, they are not seriously demanding that Congress pass it. Instead, they mostly want Republicans to negotiate a deal to extend tax credits for health plans offered under the Affordable Care Act.
No meetings scheduled on the shutdown
President Trump and the congressional leaders aren’t expected to meet again soon. Congress has no action scheduled Thursday in observance of the Jewish holy day, with senators due back Friday. The House is set to resume session next week.
The Democrats are holding fast to their demands to preserve health care funding and refusing to back a bill that fails to do so, warning of price spikes for millions of Americans nationwide. The Kaiser Family Foundation estimates insurance premiums will more than double for people who buy policies on the Affordable Care Act exchanges.
The Republicans have opened a door to negotiating the health care issue, but GOP leaders say it can wait, since the subsidies that help people purchase private insurance don’t expire until year’s end.
“We’re willing to have a conversation about ensuring that Americans continue to have access to health care,” Vice President JD Vance said Wednesday at the White House.
Treasury Secretary Scott Bessent says the GDP could take a hit from the shutdown
Bessent said “we could see a hit to the GDP, a hit to growth and a hit to working America” as a result of the government shutdown.
Bessent made the statements on CNBC’s “Squawk Box” on Thursday morning.
Data from previous shutdowns have shown little impact on U.S. GDP unless they’re extended, according to Congressional Budget Office Director Phillip Swagel. “The impact is not immediate, but over time, there is a negative impact of a shutdown on the economy,” he recently told The Associated Press.
The federal shutdown will cut off vital economic data, including Friday’s jobs report
The government shutdown that began Wednesday will deprive policymakers and investors of economic data vital to their decision-making at a time of unusual uncertainty about the direction of the U.S. economy.
The absence will be felt almost immediately, as the government’s monthly jobs report scheduled for release Friday will likely be delayed. A weekly report on the number of Americans seeking unemployment benefits — a proxy for layoffs that’s typically published on Thursdays — will also be postponed.
If the shutdown is short-lived, it won’t be very disruptive. But if the release of economic data is delayed for several weeks or longer, it could pose challenges, particularly for the Federal Reserve. The Fed is grappling with where to set a key interest rate at a time of conflicting signals, with inflation running above its 2% target and hiring nearly ground to a halt, driving the unemployment rate higher in August.
▶ Read more about the shutdown and economic data
Trump administration wants colleges to sign ‘compact’ in exchange for preferential funding terms
The Trump administration is offering nine prominent U.S. universities preferential access to federal funds if they pledge to take a series of steps that align with the Republican administration’s goals of eliminating what it sees as liberal influence on academia.
The 10-point memo calls on colleges to agree to freeze tuition for five years, cap the enrollment of international students to 15% of undergraduate student body, commit to strict definitions of gender and other steps.
The memo was sent to officials at Vanderbilt University, University of Pennsylvania, Dartmouth College, University of Southern California, Massachusetts Institute of Technology, University of Texas, University of Arizona, Brown University, and the University of Virginia, according to a White House official who was not authorized to comment publicly about the matter and spoke on the condition of anonymity.
“To advance the national interest arising out of this unique relationship, this Compact for Academic Excellence in Higher Education represents the priorities of the U.S. government in its engagements with universities that benefit from the relationship,” the administration says in the lengthy memo, obtained by The Associated Press.
— Aamer Madhani
Bessent presses on with Argentina credit swap line discussions
Treasury Secretary Scott Bessent posted on the social media site X on Thursday morning that he’ll soon welcome an Argentinian delegation to Washington to “meaningfully advance our discussions in-person regarding options for delivering financial support” to Argentina.
Argentine President Javier Milei seeks a $20 billion credit swap line from the U.S., which has angered both Democrats and Republicans since Argentina has been able to sell billions of dollars in soy crops to China, undermining the U.S.
Bessent said on X that U.S. Treasury “is fully prepared to do what is necessary, and we will continue to watch developments closely.”
Anti-abortion group says it plans to spend on another 2026 Senate race
Susan B. Anthony Pro-Life America said it’s adding North Carolina to the list of U.S. Senate races it’s targeting next year.
The anti-abortion group committed to spending $4.5 million in an effort to defeat Roy Cooper, a Democratic former governor who’s running next year to replace retiring Republican Sen. Thom Tillis.
The announcement comes about a week after SBA said it would put the same amount into each of two other Senate races, in Michigan and Georgia.
If it follows through with the spending, it would be about the same amount it put into independent political expenditures across the country in 2022 and 2024 combined.
The group says it will also get involved in other 2026 races.
Trump to meet with White House budget director as he eyes spending cuts during shutdown
The president said on his social media site that he’ll meet with White House budget director Russ Vought to discuss “temporary or permanent” spending cuts as part of the government shutdown.
Trump specifically highlighted in his Truth Social post that Vought played a role in putting together the Project 2025 initiative to reshape the federal government around right-wing policies. During the 2024 presidential campaign, Trump had denied having any involvement with the Project 2025 playbook released by The Heritage Foundation, a conservative think tank.
Trump said the point of the meeting is “to determine which of the many Democrat Agencies” Vought “recommends to be cut, and whether or not those cuts will be temporary or permanent.”
The president said Democratic lawmakers, by having the shutdown, are giving him “this unprecedented opportunity” to reorient the government to his liking.
By The Associated Press
