Trump administration threatens no back pay for federal workers in government shutdown

President Donald Trump's administration is warning of no guaranteed back pay for federal workers during a government shutdown, reversing what has been longstanding policy for some 750,000 furloughed employees, according to a memo being circulated by the White House.

Trump signed legislation into law after the longest government shutdown in 2019 that ensures federal workers receive back pay during any federal funding lapse. But in the new memo, his Office of Management and Budget says back pay must be provided by Congress, if it chooses to do so, as part of any bill to fund government.

The move by the Republican administration was widely seen as a strongarm tactic — a way to pressure lawmakers to reopen government, now in the seventh day of a federal shutdown.

“There are some people that don’t deserve to be taken care of, and we’ll take care of them in a different way,” Trump said during an event at the White House.

He said back pay “depends on who we're talking about.”

Refusing retroactive pay to the workers, some of whom must remain on the job as essential employees, would be a stark departure from norms and practices and almost certainly would be met with legal action.

While federal workers — as well as service members of the military — have often missed paychecks during past shutdowns, they are almost always reimbursed once the government reopens.

“That should turn up the urgency and the necessity of the Democrats doing the right thing here,” said House Speaker Mike Johnson at a press conference at the Capitol.

Johnson, a lawyer, said he hadn’t fully read the memo but “there are some legal analysts who are saying” that it may not be necessary or appropriate to repay the federal workers.

Democratic Sen. Patty Murray of Washington blasted the Trump administration as defying the law.

“Another baseless attempt to try and scare & intimidate workers by an administration run by crooks and cowards," said Murray, who is the ranking lawmaker on the Senate Appropriations Committee. “The letter of the law is as plain as can be — federal workers, including furloughed workers, are entitled to their backpay following a shutdown.”

Asked a second time about backpay for furloughed federal workers given that the requirement is spelled out in law, Trump said: “I follow the law, and what the law says is correct.”

In a single-page memo from Trump’s Office of Management and Budget under Russ Vought, first reported by Axios, the office's general counsel seeks to lay out a legal rationale for no back pay of federal workers.

The memo explains that while the Government Employee Fair Treatment Act of 2019 says workers shall be paid after federal funding is restored, it argues the action is not self-executing. Instead, the memo says, repaying the federal workers would have to be part of legislation to reopen the government.

Meanwhile, President Trump cracked the door slightly to negotiations with Democrats on the health care subsidies they've made central to the shutdown fight, then abruptly closed it Monday, leaving the two sides once again at a seemingly intractable impasse.

Democrats are conditioning their support for a short-term funding patch on extending the health subsidies that lessen the cost of plans offered under the Affordable Care Act, commonly referred to as Obamacare.

“We have a negotiation going on right now with the Democrats that could lead to very good things,” Trump told reporters. “And I’m talking about good things with regard to health care.”

But Trump later followed up those comments on his social media site to reinforce what GOP leaders in Congress have been saying: The shutdown must end. And work on extending the enhanced tax credits for health insurance would take place separately.

“I am happy to work with the Democrats on their Failed Healthcare Policies, or anything else, but first they must allow our Government to re-open. In fact, they should open our Government tonight!” Trump wrote.

Before Trump walked back his remarks, the two Democratic leaders in Congress, Sen. Chuck Schumer and Rep. Hakeem Jeffries, has both denied there were any negotiations with Trump. Jeffries said the White House "has gone radio silent” since a meeting in the Oval Office last week.

“Trump’s claim isn’t true, but if he’s finally ready to work with Democrats, we’ll be at the table," Schumer said.

Senate Majority Leader John Thune told reporters “there may be a path forward” on ACA subsidies, but stressed, “I think a lot of it would come down to where the White House lands on that.”

More doomed Senate votes

The president's comments came as the Senate took another doomed pair of votes Monday on funding the federal government. Neither the Republican measure nor the Democratic proposal came close to gaining the 60 votes needed to advance.

Both parties used much of the day to ramp up the pressure on the other to end the impasse.

Thune said a critical food aid program for women, infants and children was starting to run low on funds, blaming Democrats and saying “now it's the American people who are suffering the consequences.”

Schumer said his side was ready to work with Republicans to “reopen the government and end the health care crisis that faces tens of millions of Americans."

"But it takes two sides to have a negotiation,” Schumer said.

Earlier in the day, the two sides dug in. House Speaker Mike Johnson said “there's nothing for us to negotiate” while Jeffries declared the “time is now” to work out a deal on health care.

Johnson, R-La., told reporters they could stop asking why he wasn't negotiating an end to the impasse. It was up to a handful of Democrats to “stop the madness” and pass a stopgap spending bill that had earlier passed the House, he said.

“We did the job to keep the government open, and now it's on the Senate Democrats," Johnson said.

The House is not expected to be in session this week, focusing attention on the Senate to take the lead on any deal in the Republican-led Congress. Senate Majority Leader John Thune told reporters “there may be a path forward” on ACA subsidies, but stressed, “I think a lot of it would come down to where the White House lands on that.” Yet even with House lawmakers away, the Republican and Democratic leaders have been holding almost daily briefings as they frame their arguments and seek to shift blame for the shutdown.

Turmoil for the economy

The stalemate comes at a moment of troubling economic uncertainty. While the U.S. economy has continued to grow this year, hiring has slowed and inflation remains elevated as the Republican president's import taxes have created a series of disruptions for businesses and hurt confidence in his leadership. At the same time, there is a recognition that the nearly $2 trillion annual budget deficit is financially unsustainable.

The Trump administration sees the shutdown as an opening to wield greater power over the budget, with multiple officials saying they will save money as workers are furloughed by imposing permanent job cuts on thousands of government workers, a tactic that has never been used before.

Trump had seemingly suggested Sunday night that layoffs were already taking place, but White House press secretary Karoline Leavitt said Trump was talking about furloughs. Under a furlough, workers cannot report to work, but they will return to their job and get paid retroactively after the shutdown ends. She said layoffs were still planned if the shutdown continues.

The talk of layoffs has escalated an already tense situation in which Washington lawmakers have struggled to find common ground and build mutual trust. Leaders in both parties are betting that public sentiment has swung their way, putting pressure on the other side to cave.

Food aid program running out of money

WASHINGTON (AP) — A food aid program that helps more than 6 million low-income mothers and young children will run out of federal money within two weeks unless the government shutdown ends, forcing states to use their own money to keep it afloat or risk it shutting down, experts say.

The $8 billion Special Supplemental Nutrition Program for Women, Infants and Children, also known as WIC, provides vouchers to buy infant formula as well as fresh fruits and vegetables, low-fat milk and other healthy staples that are often out of financial reach for low-income households.

The shutdown, which began Wednesday, coincided with the beginning of a new fiscal year, meaning programs like WIC, which rely on annual infusions from the federal government, are nearly out of money. Currently, the program is being kept afloat by an $150 million contingency fund, but experts say it could run dry quickly.

After that, states could step in to pay for the program and seek reimbursement when a budget finally passes, but not all states say they can afford to do so.

“We feel good about one to two weeks,” said Ali Hard, policy director for the National WIC Association. “After that, we are very worried.”

Gold futures hit record highs

Gold futures rose above $4,000 per ounce for the first time on Tuesday as many investors seek a “safe haven” for to park their money as the U.S. government shutdown continues.

Gold futures in New York briefly jumped above the $4,000 mark just after 9 a.m. ET, a record high. The going price for New York spot gold had previously closed at $3,960.60 per troy ounce — the standard for measuring precious metals — Monday.

Gold sales can rise sharply when anxious investors seek secure investments for their money. Before Tuesday, the asset — and other metals, like silver — had seen wider gains over the last year, particularly with President Donald Trump ’s barrage of tariffs plunging much of the world into economic uncertainty.