Department of Homeland Security Shutdown

Action: Congress has left for its recess without agreeing on funding for the Department of Homeland Security (DHS), beginning a shutdown of the agency that could be prolonged as Republicans and Democrats negotiate reforms to DHS immigration operations.

Trusted Insights for What’s Ahead^®

• On February 3, Congress passed a two-week continuing resolution (CR) for DHS through February 13 to allow time for negotiations on restrictions to DHS immigration operations.
• The next day, Democratic Congressional leadership sent a leader to Republican Congressional leadership outlining guardrails on US Immigration and Customs Enforcement (ICE) operations.¹ Including judicial warrant and ID requirements, a prohibition on masks, an end to racial profiling, stronger use of force standards, body cameras, and enhanced state and local coordination.
• Republicans reacted negatively to the Democratic demands, particularly the requirement for judicial warrants, the prohibition on masks, and mandated identification.² Negotiations stalled this week as both political parties dug into their positions. Centrist Democrats in the Senate who previously voted to reopen the government signaled opposition to another CR absent meaningful negotiations.³ Republicans pushed for an end to “sanctuary cities” that limit local cooperation with Federal law enforcement on immigration matters.⁴
• Legislative text the White House sent to Democrats on Wednesday was not sufficient to break the impasse.⁵ On Thursday, the Senate rejected a House-passed bill to fund DHS through September 30 by a vote of 52-47⁶ (appropriations bills require 60 votes in the Senate), setting up a shutdown as lawmakers began a week-long recess. The Administration also announced a drawdown of its immigration enforcement operations in Minneapolis, lowering pressure on Republicans to agree to comprehensive reforms.⁷
• Based on DHS’s last shutdown plan, over 90 percent of DHS employees must work without pay during the shutdown.⁸ ICE and Customs and Border Protection received $130 billion from Public Law No. 119-21 (H.R.1, 2025), also known as the One Big Beautiful Bill Act or OBBBA, and the agencies also obtain revenue from mandatory funding and fees.⁹ The Federal Emergency Management Agency (FEMA) has approximately $7 billion in its disaster relief fund for disaster aid work and Transportation Security Administration (TSA) employees will not miss their first paycheck until mid-March. It could be weeks before most Americans experience significant disruptions to DHS programs and services.¹⁰ The Coast Guard will continue in service.
• What this means for business: As negotiations continue, Congressional leaders have instructed lawmakers to be ready to return quickly if Democrats and the White House strike a deal.¹¹ In the meantime, businesses should prepare for eventual disruption to TSA, FEMA, and other DHS operations during the shutdown.