The White House has directed federal agencies to prepare mass layoff plans ahead of a potential government shutdown, as Congress faces a Sept. 30 deadline to pass a funding bill, according to Politico.
A Sept. 23 memo from the Office of Management and Budget obtained by Politico instructs agencies to update their “lapse plans” and prepare for possible workforce cuts and furloughs if funding expires. Agencies were told to identify programs that meet three criteria:
- Discretionary funding expires Oct. 1.
- No other source of funding, such as H.R.1, is available.
- The program is not consistent with President Donald Trump’s priorities.
“[Reduction in force] notices will be in addition to any furlough notices provided due to the lapse in appropriation,” according to the memo. “RIF notices should be issued to all employees working on the relevant [programs, projects or activities], regardless of whether the employee is excepted or furloughed during the lapse in appropriations.”
Even if Congress passes fiscal 2026 appropriations later this year, the OMB said agencies should prepare to retain only “the minimal number of employees necessary” to carry out statutory functions.
The move is a sharp escalation from recent shutdown protocols, in which nonessential federal workers were typically furloughed and later reinstated with back pay, according to Bloomberg. Unlike past shutdowns, OMB has not released agency-specific contingency plans, and the extent of potential cuts remains unclear.
An OMB official told Politico several core functions would continue even if a shutdown occurs, including Medicare, Social Security, Medicare, veterans benefits, military operations, law enforcement, Immigration and Customs Enforcement, Customs and Border Protection and air traffic control.
The path to a funding agreement remains uncertain amid partisan standoffs. While lawmakers are deadlocked, the future of several healthcare policies hangs in the balance, including Medicaid disproportionate share hospital cuts, site-neutral payment changes, the extension of ACA premium tax credits, pandemic-era telehealth flexibilities and the hospital-at-home programs.
Without a short-term extension, a shutdown would begin Oct. 1.
