Last October, as the federal government kicked off fiscal year 2026, an impasse in budget negotiations forced a partial government shutdown that lasted over six weeks.
Now, with the expiration of the agreement that ended that shutdown approaching on January 30, another shutdown seems imminent.
The primary sticking point during the previous shutdown centered around the extension of additional Affordable Care Act (ACA) subsidies, which Congress approved to assist low-income individuals affected by the pandemic-induced recession in 2020.
These extra subsidies, enacted in 2021, were designed as temporary relief until the economy fully rebounded, with Congress generously allowing them to remain in effect through the end of 2025.
At the time the last shutdown concluded, in April 2020, the unemployment rate had soared to nearly 15%.
Yet, the economy rebounded swiftly, with the unemployment rate plunging to 3.9% by December 2021, dipping below what economists consider full employment. Despite this rapid recovery, Congress opted to extend those ACA subsidies in 2021.
Last year, as the subsidies neared expiration, Senate Democrats made clear that a budget agreement hinged on extending those subsidies for another three years.
This impasse culminated in the government shutdown, which concluded when GOP Senators consented to negotiate and work toward a resolution by January 30, 2026.
That deadline looms just days away. While the House has approved a proposed three-year extension of the subsidies, the Senate appears more inclined to consider a two-year extension.
Should that happen, cooperation from the House is still necessary. Can all of this be resolved by the week’s end?
Even if the ACA subsidies are agreed upon, another contentious issue remains funding for Immigration and Customs Enforcement (ICE).
ICE has been effectively carrying out its mission in cities across the U.S., including Minneapolis. Taxpayer dollars support these efforts, aimed at identifying and deporting illegal immigrants with criminal records.
In numerous jurisdictions, bipartisan cooperation with ICE has yielded positive outcomes, having removed thousands of criminal illegal immigrants and contributing to a notable drop in crime rates.
By ridding communities of criminal elements, ICE has played a pivotal role in enhancing public safety.
However, Minneapolis presents a challenging scenario. Both the city’s mayor and the governor of Minnesota are resistant to ICE's operations, fostering a climate of large-scale, apparently politically motivated protests.
With schools and businesses shuttered, citizens rally in the streets, creating a potentially volatile atmosphere as tensions run high among protesters and ICE agents.
Critics of the mayor and governor warn that, despite calls for peaceful protest, many gatherings have spiraled into violence, leading to confrontations where objects are hurled and government vehicles are targeted.
In these scenarios, ICE is left with little choice but to respond, which often results in conflict as they enforce federal laws and work to combat crime.
From the perspective of many Minnesotans, however, ICE's actions appear heavy-handed. Eyewitness accounts describe distressing scenes of community members being forcibly detained, with children left behind and vulnerable individuals sometimes harshly treated. The emotional fallout from these encounters has fueled public outrage.
In Congress, Democrats have rallied behind the concerns raised by Minnesotans, favoring reduced funding for ICE and increased oversight of its operations.
Conversely, Republicans champion ICE, advocating for increased funding to support its successful strategies nationwide. The significant drop in crime rates in other cities affirms their position that ICE’s work is vital for public safety.
Both the ACA subsidies and ICE funding issues must be hammered out before the week concludes. The GOP maintains that continued budget deficits and a staggering national debt exceeding $38 trillion necessitate a reduction in government spending.
They insist the health care dilemma is not merely the subsidies but the broader issues surrounding the ACA, which they argue has proven increasingly unworkable and costly.
Let's hope lawmakers can navigate these critical discussions and reach a resolution by Friday. The clock is ticking.
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Michael Busler is a public policy analyst and a professor of finance at Stockton University in Galloway, New Jersey, where he teaches undergraduate and graduate courses in finance and economics. He has written op-ed columns in major newspapers for more than 35 years.
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