​White House may nix pay for workers furloughed during shutdown

WASHINGTON — An untested legal theory that the White House doesn’t need to pay furloughed workers once the partial shutdown ends shook up Capitol Hill on Tuesday, while Democrats appeared emboldened in their demands to renew expiring health care subsidies.

A draft memo from the Office of Management and Budget’s top lawyer arguing that the 2019 law guaranteeing retroactive pay once a shutdown ends draws a distinction between workers who are furloughed and those who are forced to remain on the job due to the critical nature of their work.

Mark Paoletta, the OMB general counsel, wrote that the 2019 law is “not self-executing” and requires further appropriations to pay furloughed workers as part of stopgap legislation to end the funding lapse.

The memo, which is labeled “pre-decisional and deliberative,” says that the requirement for “excepted” employees to keep working creates “binding legal obligations” to pay those workers. On the other hand, Paoletta writes there is no such obligation for furloughed workers who were “not performing services for the government” during the shutdown.

Paoletta cites as justification for the move the fact that Congress included separate language in the continuing resolution that reopened the government after the 2018-19 shutdown, enacted nine days after the law guaranteeing back pay.

That stopgap law contained separate language specifying that funding made available for pay and benefits would be used to pay for “obligations incurred” under the new retroactive pay law. It also added a line to the new statute that money to pay furloughed workers for time off during a shutdown is contingent on “enactment of appropriations Acts ending the lapse.”

Paoletta’s memo says this means that separate language in the CR to reopen the government would be needed to ensure furloughed workers get back pay.

Opponents including federal worker unions and top congressional Democrats immediately took issue with the leaked draft, arguing it defies congressional intent in drafting the 2019 law, which was to remove the uncertainty facing furloughed workers in any shutdown. Prior to the 2019 law, Congress typically had to include language providing compensation to furloughed workers in spending measures to end the shutdown.

“This flies in the face of the plain text of the law, which could not be more clear,” Senate Appropriations ranking member Patty Murray, D-Wash., said on the floor. “(President Donald) Trump doesn’t get to change the rules and rob workers just because he’s worried his shutdown is backfiring.”

Trump noncommittal

Trump himself was noncommittal on his budget office’s draft legal opinion. He didn’t rule out picking winners and losers among federal workers, however, the same way his administration is considering mass layoffs for furloughed positions that he decides aren’t critical.

“I would say it depends on who we’re talking about,” Trump told reporters Tuesday in the Oval Office. “But for the most part, we’re going to take care of our people. There are some people that really don’t deserve to be taken care of, and we’ll take care of them in a different way.”

Republicans for the most part wouldn’t directly challenge Trump’s interpretation on the back pay issue, though they seemed surprised.

Speaker Mike Johnson, R-La., and Senate Majority Leader John Thune, R-S.D., each said they learned about it from press reports, but that the best way to ensure no one loses out on paychecks was to end the shutdown quickly.

Johnson said he hopes furloughed workers, which include “some extraordinary Americans,” ultimately get paid.

“I can tell you the president believes that as well, he and I have talked about this personally, he doesn’t want people to go without pay,” Johnson said. “The important point to remember here is this can stop right now.”

It’s natural for the executive branch “to make some decisions about who gets paid, who doesn’t get paid, which agencies and departments get priorities and prioritized and which ones don’t,” Thune said. “Now, hopefully that doesn’t affect back pay … But again, it’s just that simple: Open up the government.”

Senate Appropriations Chair Susan Collins, R-Maine, said she believed “Congress settled that issue” in 2019. “But as a backup, we could pass what often is passed after shutdowns and that is the bill that says that any obligations that were incurred during the shutdown are authorized to be paid,” Collins said.

Meanwhile, Senate Republicans at their weekly policy lunch debated the ongoing shutdown and what happens Oct. 15 if the funding lapse is ongoing and military personnel don’t receive their paychecks.

In past shutdowns it hasn’t been an issue because they were paid through separate legislation, which is still possible, according to Johnson, who attended the Senate GOP lunch. But for now, the main focus is on reopening the government.

Health insurance debate

And to do that, Democrats so far are insisting on renewing expiring tax credits to reduce health insurance premiums for coverage purchased on government exchanges.

Collins is shopping a commitment, in writing, to take up the Affordable Care Act tax credit issue as well as full-year fiscal 2026 spending packages, by a date certain.

Democrats, so far, aren’t budging, instead pushing for a firm commitment on what the tax-credit legislation will look like and that it will be taken up before open enrollment begins Nov. 1.

Even Sen. Angus King, I-Maine, one of three Democratic caucus members who’s voted for the GOP stopgap bill without a health care commitment in place first, is now wavering and says he may flip.

And Sen. Jeanne Shaheen, D-N.H., one of those whom Republicans hope to win over, said she needs a “commitment to actually do something” on the health care subsidies.

“You can’t compromise, you can’t figure out what works, if people aren’t talking to each other,” Shaheen said.

Democrats increasingly believe the political winds are at their back on the issue, particularly given painful premium increases insurers are advertising for the policies they are selling in the marketplaces for the 2026 plan year.

House Minority Leader Hakeem Jeffries, D-N.Y., on Tuesday rejected a one-year extension proposed by some moderate House Republicans as a “nonstarter,” a firmer line than he’s drawn before.

And Democrats have a new star case study: Rep. Marjorie Taylor Greene, R-Ga.

“Let’s just say as nicely as possible, I’m not a fan” of the 2010 health care law that established the subsidized insurance plans, Greene wrote on X. “But I’m going to go against everyone on this issue because when the tax credits expire this year my own adult children’s insurance premiums for 2026 are going to DOUBLE, along with all the wonderful families and hard-working people in my district.”

Jeffries spoke to reporters with a display of another, similar Greene social media post as a backdrop.

Recent polls have shown that large majorities of Americans want to see continued financial support for the “Obamacare” policies, with more than half of enrollees living in GOP congressional districts and three-fourths in states Trump won last year, according to KFF.

Senate Republicans involved in the talks appear to have already moved beyond a simple one-year extension. Some, like Alaska’s Lisa Murkowski, have proposed two years; others, like South Dakota’s Mike Rounds, have pitched a multiyear phase-down for the credit expansion that expires this year.

“I think the most reasonable (approach) would be to extend it for one year, but with an agreement at the same time to get it back to pre-pandemic (levels) over the next two years,” Rounds said Tuesday.

Top Republicans and Trump have said they are open to discussing a health care subsidies fix but only after Democrats agree to reopen the government. Johnson has repeatedly said the tax credits can be dealt with as late as December, though in recent days he’s softened that position and said it could be addressed this month, before open enrollment begins.

“We were always planning to have those discussions in the month of October,” Johnson said Tuesday.

Nonetheless, hard-liners in the House GOP conference appear to be the biggest obstacle to an ACA deal at this point. Senate Minority Leader Charles E. Schumer, D-N.Y. sought to pin the blame on Johnson.

“Speaker Johnson, perhaps more than anyone else, has dug in and shut the door to any cooperation,” Schumer said. “Speaker Johnson has become a massive roadblock to progress.”

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(Lia DeGroot, Aidan Quigley, Sandhya Raman, Paul M. Krawzak and David Lerman contributed to this report.)

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