Tim Burchett Warns Government Shutdown Will Drag Beyond Thanksgiving As Goldman Sees Major Hit To US Economy: 'The Pain Is Going To Continue'
News Summary
U.S. Representative Tim Burchett (R-Tenn.) predicts the current longest U.S. government shutdown will extend beyond Thanksgiving. He attributes the standoff to Democrats' refusal to negotiate on expiring health care subsidies, accusing them of siding with health insurance companies profiting from the Affordable Care Act. Republicans, meanwhile, are pushing for a clean continuing resolution and are open to talks once the government reopens. Earlier, Senate Democrats introduced a short-term stopgap measure tied to a "minibus" of bills and a one-year extension of Affordable Care Act subsidies, which Republicans quickly dismissed. Goldman Sachs economist Alec Phillips warns the shutdown could shave more than a full percentage point off U.S. GDP growth in Q4 2025, cutting it to just 1%. President Donald Trump's favorability rating has fallen to a new low in his second term as the shutdown reaches record duration. Analysts fear missed paychecks for TSA workers and air traffic controllers could soon disrupt nationwide travel, echoing the airport chaos of the 2019 shutdown.
Background
The current U.S. federal government shutdown began on October 1, 2025, and has become the longest in modern U.S. history. At its core, the shutdown stems from a congressional stalemate between the two major parties over spending and legislative priorities, specifically regarding expiring healthcare subsidies. Such budget impasses are not unprecedented during incumbent President Donald Trump's second term; for instance, the 2019 government shutdown also led to widespread service disruptions and economic impacts, eventually resolving after airport operational chaos. This shutdown occurs against a backdrop of declining approval ratings for President Trump, reflecting growing public frustration with government efficiency and partisan gridlock. Economists have begun to quantify its potential negative impact on GDP growth, positioning this shutdown as a significant economic risk factor beyond its political implications.
In-Depth AI Insights
What are the true political and economic drivers behind this prolonged shutdown, particularly in Trump's second term? - Ostensibly, the shutdown is over healthcare subsidies, but a deeper analysis points to a fundamental power struggle over fiscal authority. In his second term, the Trump administration and congressional Republicans may be employing this hardline tactic to curb Democratic influence on social welfare spending and to gain leverage for future, broader fiscal debates. - Democrats' insistence on the subsidies isn't solely policy-driven; it could also be a strategic move to mobilize their base ahead of the 2026 midterm elections by highlighting perceived Republican attacks on the social safety net. This gridlock is less about direct opposition and more about both parties using the shutdown as a political tool to claim moral high ground with voters. - The economic impact, such as Goldman Sachs' projected GDP slowdown, is a known but accepted "collateral damage" for both sides, as long as their ultimate political objectives are met. President Trump's falling approval ratings might either push him towards an earlier resolution or prompt him to double down to solidify his core support base. Beyond the direct GDP impact, what are the less-considered economic ripple effects of this shutdown? - Confidence Shock: A prolonged shutdown significantly erodes consumer and business confidence. Beyond just missed paychecks for federal workers, there's a deeper concern about the U.S. government's ability to govern and maintain economic stability, which could lead to a broader contraction in private sector investment and consumer spending. - Supply Chain Disruptions: If missed paychecks for TSA workers and air traffic controllers lead to widespread absenteeism or inefficiencies, it won't just affect air travel. It could severely disrupt supply chains reliant on air cargo, impacting inventory management and just-in-time delivery for manufacturing and retail sectors. - International Image and Dollar Status: This sustained political gridlock and economic uncertainty can damage the U.S.'s international image as a stable economic anchor, potentially leading to decreased foreign investor confidence in U.S. assets and even subtly affecting the long-term status of the dollar as a reserve currency, though such impacts might not be immediately obvious. How should investors assess the risk exposure across different asset classes and sectors given this political stalemate? - Treasuries and Safe Havens: Initially, the shutdown might increase demand for safe-haven assets like U.S. Treasuries, but if the stalemate persists and erodes confidence in U.S. fiscal soundness, long-term Treasury yields could face upward pressure due to rising risk premiums. Gold and certain cryptocurrencies might also benefit from flight-to-safety sentiment. - Equity Market: Sectors directly impacted by government service disruptions, such as travel, airlines, and hospitality, will be most vulnerable. Consumer staples and healthcare (particularly companies not directly tied to federal subsidies) might show relative resilience. Longer-term, if economic growth expectations are revised down, cyclical sectors like industrials, discretionary consumer goods, and financials will face greater pressure. - Sector Nuances: Within healthcare, there will be divergence. Companies directly reliant on federal subsidies or heavily involved in government contracts face risks, while innovative biotech or private healthcare providers might be relatively insulated. Furthermore, defense contractors could be affected if government contract approvals are delayed.