The US government shutdown, which began earlier this fall over disputes surrounding healthcare subsidies and federal funding, shows no signs of ending soon.
According to Libby Cantril, the head of US public policy at PIMCO, the shutdown could last until November. “We may actually go into Thanksgiving with a government shutdown,” she told CNBC in a recent interview.
The impasse stems from disagreements over expiring Affordable Care Act (ACA) subsidies as well as broader budget negotiations.
President Donald Trump’s recent comments about certain agencies not returning at all have further complicated the landscape – leaving markets and citizens bracing for a prolonged standoff.
Why would it take weeks for the US government to reopen?
In the CNBC interview, Cantril emphasized that both parties believe they have the political upper hand, which is prolonging the deadlock.
“Democrats have had a hard time coalescing around an issue,” she noted, “but they believe this is a political winner by drawing attention to the expiring ACA subsidies.”
Meanwhile, Republicans argue they have passed a clean funding bill at current levels – one that Democrats have historically supported. According to Libby Cantril, the Senate, not the House, is now the focal point for any resolution.
“The House is gone,” she said bluntly, “and the fact that the House is likely to be gone at least until next week shows you this shutdown is going to be much more long-lasting.”
With 60 votes needed to pass both funding and healthcare measures, and the Republicans historic opposition of ACA subsidies, the path forward is anything but straightforward, Cantril concluded.
How might a prolonged shutdown affect the US economy
While markets have largely shrugged off the government shutdown, at least so far, Cantril warns of “nonlinear economic impacts the longer this lasts.”
Over 1.5 million federal workers are not being paid, and critical data collection has stalled. “This starts to actually have an economic impact,” she said, pointing to disruptions in consumption behaviour and broader headwinds facing the economy.
The shutdown also risks undermining investor confidence and delaying key policy decisions.
“We’ve been warning our clients since summer that there was no natural catalyst for government to reopen,” Cantril added. That prediction is proving accurate, and the longer this political standoff continues, the more severe the consequences may become.
A compromise on healthcare may be the only way out
Ultimately, Libby Cantril believes any resolution to the ongoing US government shutdown is going “to require some sort of compromise on healthcare.”
A one-year extension on ACA subsidies may be the most viable path forward, but even that faces resistance. With the Senate back in session and the House absent, legislative momentum is limited.
“This is intractable,” Cantril concluded, “and as a result pointing to a longer shutdown.” For now, the political calculus on both sides favors gridlock over compromise – leaving the government, and millions of Americans, in limbo.
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