what is a U.S. government shutdown, why does it occur, and what impact does it have?

In recent news, you may have encountered the term 'US shutdown'. This refers to a situation where the functions of the US federal government are temporarily suspended. Today, I'll explain what this shutdown exactly is, why it happens, and how it affects us.

1. What is a shutdown?

The US government needs approval from Congress (Senate, House of Representatives) every year to use the budget. If the budget for the following year is not passed by Congress by October 1st, the start of the fiscal year, budget execution is suspended. This is called a shutdown.

It's like a family needing to agree on the household budget, but if they can't agree, they can't spend any money. Except for essential expenditures (defense, public safety, etc.), government agencies close, and hundreds of thousands of civil servants go on unpaid leave.

2. Why does a shutdown happen?

Shutdowns primarily stem from political conflicts. They occur when the ruling and opposition parties cannot agree on the details of the budget (e.g., welfare budget, defense budget). Because each party has different political beliefs and policy priorities, they often clash fiercely over the budget and eventually fail to find common ground.

In recent cases, shutdowns occurred as the fiscal year 2026 budget and temporary budget were rejected in the US Senate.

It's been 7 years since 2018, when Trump was in his first term.

Chuck Schumer, the Democratic Senate Majority Leader, said, "This is really the Trump shutdown. It's going up $1,000 a month, $500, $600 to $700. Imagine families getting these health insurance premium increase notices."

The extension of subsidies for public health insurance, called 'Obamacare', became the main issue, and the budget was not passed as each party tried to enforce their policy goals.

3. What are the impacts of a shutdown?

When a shutdown occurs, it has various impacts across American society.

• Suspension of government services: Many public facilities, such as national parks, museums, and public libraries, close.

• Unpaid leave for civil servants: Hundreds of thousands of civil servants, excluding essential personnel (soldiers, border patrol, air traffic controllers, etc.), work without pay. They later receive retroactive pay when the budget is passed.

• Economic impact: Reduced government spending and decreased consumption by civil servants have a negative impact on the overall economy. Past shutdowns have resulted in billions of dollars in economic losses.

• Decline in international trust: If prolonged, it can lead to a downgrade of the US's national credit rating, which can damage trust in the international community.

A shutdown is not just a political issue of one country, but a significant issue that can affect the global economy and financial markets.