Today (Monday, October 13) is a federal holiday and Congress is not in session, but the government shutdown continues and both parties are waiting for the other side to relent. Democrats continue to demand an extension of enhanced Affordable Care Act (ACA) premium tax credits that expire at the end of 2025 as part of a continuing resolution (CR) to extend government funding and end the shutdown, while Republicans won't negotiate on the issue until Democrats vote to reopen the government. Republicans have held firm to their position despite public concerns about higher ACA premiums, and Democrats have not been swayed by the Trump administration's massive cuts to the federal workforce, with more than 4,100 "reductions in force" (RIFs) across seven agencies outlined in a court document on Friday.

A story in the October 11 Washington Post said: "Senate Majority Leader John Thune's (R-SD) strategy is to wait for Democrats to fold. He has not spoken to Senate Minority Leader Charles E. Schumer (D-New York) since a brief conversation last week on the Senate floor, according to Thune and Schumer aides. Instead, Thune is betting that Democrats will start to buckle as soldiers, Transportation Security Administration agents and other federal workers start missing their first paychecks in the coming days."

House Republicans are expected to remain out of session this week and may stay away from Washington as long as the shutdown continues. (Including the August recess, the House has now been out of session for nine out of the past 12 weeks.) The Senate, which has repeatedly voted on the House-passed Republican CR (H.R. 5371) to patch funding until November 21 but has thus far failed to gain the requisite 60 votes, next convenes at 3 p.m. on Tuesday, October 14. An additional pressure point on ending the shutdown is that active-duty military personnel may not get paychecks this week without congressional action. President Trump said in an October 11 social media post, "I am using my authority, as Commander in Chief, to direct our Secretary of War, Pete Hegseth, to use all available funds to get our Troops PAID on October 15th. We have identified funds to do this, and Secretary Hegseth will use them to PAY OUR TROOPS."

There was some speculation last week that a promise by Republican leaders to hold a vote on extending ACA subsidies later this year could be enough for some Democrats to vote in favor of the GOP CR.

On NBC's "Meet the Press" on Sunday, Senator Mark Kelly (D-AZ) was asked whether Republicans' committing to hold a vote to extend the ACA subsidies before the end of the year would be enough for Democrats to reopen the government. Kelly said, "Not right now. No, we need a real negotiation, and we need a fix. We need this corrected for the American people. This is for so many people, their health care is running towards a cliff, and if we don't fix this, it's going to go right over it." He said, "having some vote without an assured outcome" would not be sufficient, but the two sides should be able to decide an approach to the subsidies because "the President has indicated that he wants to do something about this, and he wants the government open" and so do Democrats. "So, is there a problem here?"

On "Fox News Sunday," House Speaker Mike Johnson (R-LA) said on the ACA subsidies, "There has been a lot of work done on this. We have hundreds of ideas, literally, on the table to fix health care, to make it more affordable for the American people, to make access more available, and to increase the quality of care. There's a lot that can be done, but you have to build consensus in a large, deliberative public body like this." For Democrats, he said, "the reason they're talking about health care is because they're trying to create a distraction."

On the same program, House Democratic leader Hakeem Jeffries (D-NY) defended the party's stance on health subsidies, saying, "you've got people who are facing dramatically increased health care costs because of the refusal of some of my friends on the other side of the aisle to even have a conversation about extending the Affordable Care Act tax credits."

Many federal workers are furloughed or deemed essential and working without pay, which is typical in government shutdowns, but RIF layoffs are not. Treasury RIFs are expected to exceed 1,400 employees and HHS between 1,100-1,200 employees, based on a document filed by the Administration. And 1,300 of the Treasury positions reportedly will take place in the IRS. Bloomberg reported that the IRS layoffs would spare employees processing tax returns, but would affect many other divisions of the agency, such as back-office functions like scheduling, training and communications.

Vice President JD Vance said on Meet the Press Sunday, "We have to lay off some federal workers in the midst of this shutdown to preserve the essential benefits for the American people that the government does provide. So, we don't want to be in this situation. We don't want to be laying off federal workers. But the Democrats have shut down the government. They have forced us to choose between American citizens and federal bureaucrats. We're choosing the benefits, the critical services that benefit our American citizens."

Trade — Responding to China's move requiring global companies to obtain licenses to export products containing even minimal amounts of Chinese-produced rare earth minerals, President Trump posted on social media October 10, "the United States of America will impose a Tariff of 100% on China, over and above any Tariff that they are currently paying." The tariffs would be in addition to existing tariffs, starting November 1. Trump also threatened to cancel his planned meeting with Chinese President Xi Jinping at an upcoming international economic conference in South Korea. President Trump seemed to walk back the threat of new tariffs on social media last night, saying "it will all be fine!"

Asked on Fox News October 11 about the Supreme Court beginning to consider the President's authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA) on November 5, U.S. Trade Representative Jamieson Greer said, "it is incredibly important that we win this case. The President has used the statute exactly the way it was intended to be made, to manage a national emergency, and that's what we're facing with our deficit and the offshoring and everything that gave rise to it." Still, if the case is lost, "tariffs are going to be a part of the landscape, and we'll find a way." It has been suggested in press articles that the Administration could turn to the 1974 Trade Act to impose tariffs.

The EY Center for Tax Policy's "Tax in a time of transition" webcast series continues on Friday, October 17, at 12 p.m. ET. Register.