Risk of Partial Government Shutdown Increases

28 January 2026 / Newsletters & Alerts

Action: As the Federal government approaches a January 30 deadline to enact the remaining six appropriations bills for fiscal year (FY) 2026, a debate in the Senate regarding funding for the Department of Homeland Security (DHS) threatens to precipitate a partial government shutdown at the end of the month, though the number of agencies that would be affected by a shutdown remains unclear.

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Lawmakers have spent January working on a bipartisan compromise to fund agencies that were not covered in the “minibus” passed in November. On January 15, Congress passed a minibus to fund three bills: Commerce-Justice-Science, Energy-Water, and Interior-Environment.¹The House has also approved appropriations bills for two more bills for the Departments of State and Treasury by a bipartisan vote of 341-79.²This address eight of the 12 bills.
On January 20, Congressional leaders released bill text for a $1.2 trillion appropriations package funding the agencies of Defense, Labor, Health and Human Services (HHS), Housing and Urban Development (HUD), Transportation, Education, and Homeland Security.³ The compromise includes health care legislation affecting pharmacy benefit managers and additional funding for community health centers, though not an extension of enhanced Affordable Care Act premium subsidies.⁴Additionally, the package contains nearly $16 billion in earmarks for local projects, to smooth passage.⁵
Last week, a three-bill minibus funding Defense, Labor-HHS-Education, and HUD-Transportation passed the House 341-88.⁶ The House held a separate vote for the DHS appropriations bill because of controversy surrounding DHS operations in Minneapolis, with the bill ultimately passing by 220-207 after seven Democrats joined all but one Republican in support.⁷The House passed a resolution to combine the six outstanding appropriations bills into one package before transmitting the legislation to the Senate.⁸
The Senate must pass the remaining six appropriations bills by January 30 to avoid a partial shutdown. After another shooting by DHS agents in Minneapolis over the weekend, Democratic Senators, including some who voted to reopen the Federal government back in November, came out in strong opposition to the DHS appropriations bill.⁹ Senate Minority Leader Chuck Schumer (D-NY) said Senate Democrats are “ready to quickly advance the five appropriations bills separately from the DHS funding bill before the January 30th deadline,” suggesting a potential path to avoiding a significant shutdown.¹⁰
Thus far, however, Senate Republicans have not suggested they will agree to split the DHS bill from the overall funding package. Any changes to the six-bill appropriations package would have to go back to the House for approval, which does not return until February 2.¹¹
What this means for business: Because the House held a separate vote on the DHS bill, the possibility remains that a shutdown could be limited to DHS, if Senate Republicans are willing to advance a package excluding that bill.
Otherwise, businesses should prepare for the possibility of at least a temporary partial shutdown on January 31. The sector most likely to be affected is homeland security, though other agencies, including HHS, Labor (including economic data from BLS), Education, HUD, and Transportation (including air traffic control), may be affected if the Senate does not decouple the DHS bill from the others. Impacts on sectors such as air travel may be limited if the shutdown is brief, but government payments to businesses from other agencies such as HHS could be delayed as well.

[1] Al Weaver. “Senate passes trio of spending bills”. The Hill. January 15, 2026.

[2] Katherine Tully-McManus. “House passes 2 more funding bills — with 4 more to go”. Politico. January 14, 2026.

[3] Jennifer Scholtes and Katherine Tully-McManus. “Congress clinches $1.2T funding deal for DHS, Pentagon, domestic agencies”. Politico. January 20, 2026.

[4] Benjamin Guggenheim and Robert King. “Congress clinches bipartisan health deal”. Politico. January 20, 2026.

[5] Jennifer Scholtes, Katherine Tully-McManus, and Mia McCarthy. “How $16B in earmarks evaded conservative ire — and helped clinch a funding deal.” Politico. January 26, 2026.

[6] H.R.7148 - Consolidated Appropriations Act, 2026. Congress.gov. January 26, 2026.

[7] Emily Brooks and Sudiksha Kochi. “House passes final government funding bills in milestone, overcoming Democratic DHS opposition”. The Hill. January 22, 2026.

[8] “H.Res.1014 - Providing for consideration of the bill (H.R. 7148) making further consolidated appropriations for the fiscal year ending September 30, 2026, and for other purposes; providing for consideration of the bill (H.R. 7147) making further consolidated appropriations for the fiscal year ending September 30, 2026, and for other purposes; and for other purposes.” Congress.gov. January 22, 2026.

[9] Sophie Brams. “Democratic senators vow to block DHS funding after latest Minneapolis shooting”. The Hill. January 24, 2026.

[10] Alexander Bolton. “Schumer: Democrats will speed up non-DHS funding bills ahead of shutdown deadline”. The Hill. January 26, 2026.

[11] Punchbowl News AM. “DHS funding and a shutdown: What you need to know”. Punchbowl News. January 26, 2026.

CED Newsletters & Policy Alerts

Risk of Partial Government Shutdown Increases

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