President Donald Trump escalated his standoff with congressional Democrats on Thursday by threatening permanent mass layoffs of federal employees if the government shuts down next week.
The Trump administration raised the stakes significantly when the Office of Management and Budget (OMB) sent a memo to federal agencies on Wednesday night, directing them to prepare “reduction-in-force” notices for employees whose programs are “not consistent with the President’s priorities.” The directive instructs agencies to permanently eliminate positions rather than temporarily furlough workers, a standard practice in previous shutdowns.
Speaking from the Oval Office on Thursday, Trump placed full responsibility for the potential shutdown and resulting layoffs on Democratic lawmakers.
Democrats are looking for:
Affordable Care Act Subsidies: Democrats want to permanently extend enhanced premium subsidies for Americans purchasing health insurance through ACA marketplaces, which are set to expire at the end of 2025. Without these subsidies, the Congressional Budget Office estimates that premiums could increase by 75% for many Americans, leading to over 4 million people becoming uninsured.
Medicaid Restoration: Democratic leaders are demanding the reversal of approximately $911 billion in Medicaid cuts enacted through Trump’s “One Big Beautiful Bill” earlier this year. These cuts are projected to result in 7.5 million Americans losing their Medicaid coverage by 2034, with rural hospitals and healthcare providers particularly affected.
Healthcare Infrastructure Protection: Democrats aim to restore funding for public health programs and prevent further cuts that have already led to the closure of rural clinics across the country.
The president did not directly address the controversial OMB directive but repeated his assertion that Democrats were making “unserious and ridiculous demands” in funding negotiations. Trump had canceled a scheduled meeting with Democratic leaders earlier this week, further complicating efforts to reach a budget agreement before the September 30 deadline.
The administration’s plan represents a significant escalation from previous government shutdowns. During the longest shutdown in 2018-2019, approximately 380,000 federal employees were furloughed, while another 420,000 worked without pay. However, all were eventually compensated with back pay once funding resumed.
This time, the OMB memo instructs agencies to issue reduction-in-force notices “in addition to” standard furlough notices, meaning some federal workers could face permanent job loss rather than temporary unpaid leave. The directive would affect programs whose discretionary funding expires on October 1 and lack alternative funding sources.
The threatened layoffs would compound existing workforce reductions already underway across the federal government. Approximately 300,000 federal employees have departed their positions this year, with about 154,000 taking buyouts that become effective on September 30.
OMB Director Russell Vought, a key architect of the conservative Project 2025 blueprint, has spearheaded these workforce reduction efforts throughout 2025. Earlier this year, Vought issued separate memos directing agencies to submit mass layoff and reorganization plans by March 13.
Congressional Democrats dismissed the White House threat as a political intimidation tactic designed to pressure them into accepting Republican funding demands. Senate Minority Leader Chuck Schumer characterized the memo as “an attempt at intimidation,” stating that “Donald Trump has been firing federal workers since day one—not to govern, but to scare.”
The government faces a shutdown at midnight on September 30 unless Congress passes a funding bill. House Republicans approved a stopgap measure to extend funding through November 21, but Senate Democrats have blocked its advancement, demanding concessions on healthcare spending.
