What would a federal government shutdown mean for North Carolina?

If Congress does not pass a new budget by Wednesday, the federal government will run out of money, and cease many operations. What does that have to do with Republican efforts to kick North Carolinians off their healthcare? We’ve got answers.

If you like racing toward financial cliffs, you’re going to love the last two days of September. 

North Carolina faces looming funding shortfalls because Republicans in the state legislature have not passed a budget three months after it was due, and if those gaps aren’t filled by Oct. 1, the state could enact significant cuts to Medicaid and other services. At the same time, President Trump’s tariff, energy, and economic policies are driving up grocery and utility prices as the holidays and colder months approach.

With all these distractions, North Carolinians might have missed an even bigger gorge that the entire country could topple into: At midnight on Wednesday Oct, 1, the federal government could partially shut down.

A shutdown essentially means that Congress has allowed the federal government’s budget to expire without a replacement and there’s no longer any money to pay for many government services. Shutdowns mean that federal parks, museums, and other institutions could shutter, some food safety inspections come to a halt, and most federal workers don’t get paid.

And while shutdowns are not necessarily immediately catastrophic, they are a bit like a rolling snowball: The longer they tumble down the mountain, the bigger they get and the more damage they do. The longer a shutdown goes, the likelier it becomes that programs like Head Start childcare, the Supplemental Nutrition Assistance Program (SNAP), and the Women, Infants, and Children (WIC) could lose more funding and reduce services.

The United States has heard these warnings before, of course, with the risks of a shutdown seeming to reenter the news cycle every quarter. But while Republicans and Democrats made last minute deals to head off a prolonged shutdown in previous years, the current circumstances are more volatile, chaotic, and—potentially—far-reaching.

This time, history is a weaker herald of the future.

So here is a quick guide to what a shutdown even is, the arguments behind this one, and what it all could mean for North Carolina.

What is a shutdown?

Like many businesses, the federal government operates its budgets in fiscal years rather than calendar years. The current fiscal year ends on Sept. 30, which means the previously agreed upon budget and all its funding expires along with it. 

If Congress does not approve a new budget or an extension of the old one by midnight on Sept. 30, the government essentially runs out of money. Many essential services will continue, but big chunks of day-to-day operations will cease. 

Social Security checks, for example, will still be deposited in your account during a shutdown, but you might be unable to get anyone at the Social Security Administration on the phone.

If the shutdown lasts less than a week, you might not even notice. If it drags on a month, you almost certainly will.

So what?

As every North Carolinian with a shopping list knows, prices are surging. The country has been dealing with inflation for years, but Trump’s tariffs turned a slow burn into a wildfire.

Consumer confidence is down, unemployment is up, and from board rooms to kitchen tables, finances are uncertain. This is a terrible environment for a shutdown. 

According to the North Carolina Department of Commerce, there are more than 82,000 federal employees living in the state. That’s a lot of people who could lose paychecks in a shutdown, even if they get back pay once the shutdown is over. And, if the Trump administration gets its way, many of these workers could even lose their jobs entirely.

Shutdowns also affect public safety sectors.

Most food inspections will end during a shutdown, and though Transportation Security Administration (TSA) staff and air traffic controllers are considered essential and will be required to stay on the job, they won’t get paid until after a shutdown ends, adding far more stress to an already stressed, overworked, and understaffed workforce. 

If a shutdown goes on long enough, it could lead to travel delays, the way it did during the last government shutdown in 2018-2019, when TSA staff called out in significant numbers because they weren’t being paid.

And shutdowns loosen the nuts and bolts of the country’s economy, pausing many small business loans, rattling markets and consumer confidence alike, and increasing the risks of a recession. The longer they last, the more risk they pose to an already shaky infrastructure. 

Why is this happening?

The Republican-controlled US House voted on party lines this month to pass a budget bill that would have maintained current spending levels, but Democrats in the Senate have blocked the legislation. While Republicans control the Senate, they need 7 Democratic votes to pass a budget bill, and Democrats are hoping to use their leverage to protect health care for millions of Americans.  

House and Senate Democrats have refused to back a new budget until Trump and Congressional Republicans agree to protect federal subsidies that make health insurance through the Affordable Care Act (ACA) more affordable. They also want Republicans to reverse the huge cuts they made to Medicaid earlier this year.

The subsidies expire in January.

If those cuts go into effect and those subsidies aren’t renewed, hundreds of thousands of North Carolinians could lose Medicaid. Another 157,000 could lose their insurance through the ACA, and those who keep it could see their premiums double or even quadruple.

In Avery County, for example, 27% of the population does not have health insurance, one of the highest rates in North Carolina. According to an estimated premium calculator from the Kaiser Family Foundation, an adult couple with a 10 year old and a household income of $50,000 total would see their insurance costs go from $63 a month with the subsidies to $250 a month without. 

A similar couple making $80,000 total would see their costs go from $400 a month to $664 a month.

The consequences of any lapse in ACA subsidies and the Medicaid cuts, scheduled to go into effect in 2027, would be devastating, and Democrats are trying to use the prospect of a shutdown to bring Republicans back to the health insurance negotiating table.

US Rep. Deborah Ross, a Democrat who represents Wake County, said she voted against the House bill because it “fails to address our country’s looming healthcare crisis.”

“For months, Trump and Congressional Republicans have taken a chainsaw to the services that North Carolina relies on, including FEMA, the VA, Medicaid, and SNAP,” she said in a statement immediately after the House vote this month. 

“Let’s be clear – I would enthusiastically support a bipartisan funding bill that improves the health, safety, and economic well-being of working Americans.”

She added: “If the government shuts down, Republicans control all branches of government and will only have themselves to blame.”

Now what?

Ross and other Democrats say voters will blame Republicans for the shutdown, and Democratic leaders see Trump’s threat to healthcare as a key issue that could help them take back Congress in the 2026 midterm elections. 

Trump and Congressional Republicans, however, have already blamed the looming shutdown on Democrats, and will likely fill the vacuum the shutdown brings with increased moves to consolidate power in unprecedented and potentially dangerous ways.

“I would expect this shutdown to look different than any other shutdown,” Joshua Sewell, the director of research and policy at Taxpayers for Common Sense, told Politifact. 

In effect, Trump and far right conservatives could use a shutdown to accelerate what they’ve already been doing in the first 8 months of his second term: dismantling huge portions of the government. 

In previous shutdowns, federal workers went unpaid. In this possible shutdown, the Trump administration says it could also enact more widespread layoffs. 

Democrats called the threat a “mafia-style blackmail” and said it was likely illegal. They also noted the threat makes little sense given the administration’s simultaneous effort to rehire workers it half-hazardly fired this spring.

House and Senate Democratic leaders sought a meeting with Trump last week to try and resolve their differences on the issues, and Trump initially agreed to sit down with them. Then he canceled the meeting, and there were no signs anyone would talk to anyone before the deadline.

But over the weekend Trump agreed to meet on Monday with Congressional leaders from both parties.