The U.S. federal government is again on the brink of a shutdown. It has been barely two months since the record-long 43-day shutdown ended last year. This time, a shooting by a federal immigration enforcement agent in Minnesota has frozen budget talks. Major outlets said the budget deadline set for midnight on the 30th has emerged as a political flashpoint in Washington after Senate Democrats declared they would not cooperate on the Department of Homeland Security budget bill.
The crisis began in Minneapolis, Minnesota. On the 24th, during an immigration enforcement operation, citizen Alex Jeffrey Pretty died after being shot by a federal agent. It was the second case in less than a month since the fatal accident involving Rene Good earlier this month. Democrats defined it as an abuse of authority and escalated their response.
Senate Democratic leaders said they would not cooperate on an expenditure bill that includes the Department of Homeland Security (DHS) budget. The DHS budget is about $64.4 billion (about 94 trillion won), of which Immigration and Customs Enforcement (ICE) operating expenses account for about $10 billion (about 14.55 trillion won). Senate Majority Leader Chuck Schumer said "reforms to curb ICE abuses were rejected," formalizing a hold on the budget bill, Axios reported.
The U.S. federal government must pass 12 expenditure bills every fiscal year to operate normally. This year, only six, or half, have passed first. Only the budgets of departments with fewer political flashpoints, such as the Department of Agriculture, Department of Commerce, and Ministry of Justice, were agreed to first.
By contrast, budgets for the Ministry of National Defense, Department of Homeland Security, and the education, health, labor, and transportation departments were delayed as immigration policy, welfare, and border control issues became entangled. Congress decided to process these six budgets all at once and reached a temporary agreement allowing interim budget execution. Its validity expires at midnight on the 30th.
If the Senate fails to pass the final budget by the deadline, only the departments whose budgets have not been finalized will halt operations. Because departments with approved budgets will continue to operate normally, this crisis amounts to a "partial shutdown," not a "full shutdown" that freezes the entire government.
The Department of Homeland Security and ICE are classified as public safety and security functions. Even if a shutdown occurs, core operations will continue. In fact, during last year's shutdown, most DHS personnel kept working and were paid retroactively.
Even so, the reason Democrats are blocking the budget vote is that they are aiming to institutionalize control and oversight mechanisms over ICE as a condition for budget approval. The Washington Post reported that Democrats said the budget bill must include measures such as stricter warrant requirements for arrests, mandatory identification, and stronger training and oversight.
If the Senate does not pass the budget by the 30th, a shutdown will materialize again. In that case, an economic shock is inevitable. The Congressional Budget Office (CBO) estimated the economic loss from last year's 43-day shutdown at more than $11 billion (about 16 trillion won). Of that, about $3 billion (about 4.4 trillion won) remained a permanent loss that could not be recovered.
Analysis also showed that during a shutdown, real GDP growth falls by about 0.12 percentage points each week. Pay for roughly 800,000 federal employees is halted or delayed, and when government procurement and administrative procedures stop, consumption and investment weaken. Essential functions such as air traffic control and border patrol are maintained, but administrative delays can increase uncertainty in logistics and financial markets.
In fact, as shutdown fears grew, the bond market reacted immediately. As of the 25th local time, the U.S. 10-year Treasury yield moved around 4.22%. That is about 0.10 percentage points higher than a month ago, showing a trend of increased long-term rate volatility as shutdown risk is priced in. Some say if political gridlock repeats, international credit rating agencies could again raise issues with the U.S. credit rating.
The political ripple effects are also significant. Ahead of the November midterm elections, Democrats are elevating immigration enforcement as a key issue. Some progressive-leaning lawmakers called for a full cut to ICE's budget. Meanwhile, some moderates within the party expressed concern that a renewed shutdown could hurt district budgets and disaster response.
Republicans pushed back, saying Democrats are exploiting national security for political strife. President Trump defined the shooting as self-defense and moved to rally his base. Both parties are leaning more toward trading blame and staking out clear lines than compromise.
The Senate is scheduled to reconvene on the 27th after a snowstorm. Just over 72 hours remain until the deadline. The Republican leadership is unlikely to agree to the Democrats' demand to split off the Department of Homeland Security budget for separate passage. The House is already in recess, leaving little physical time.
CNBC analyzed, "In recent budget clashes, the two parties are increasingly using shutdowns as a tool of political pressure rather than negotiating," and "if this approach repeats, the negative impact of shutdowns on corporate investment, hiring, and consumer sentiment could grow compared with before."