Trump government halts $26 billion in funding for Democratic states; find out why this major decision was taken?

US President Donald Trump on Wednesday halted $26 billion in federal transportation and green energy funding for Democratic states.

$18 billion was halted for the New York subway and Hudson Tunnel projects, considered a Democratic stronghold. $8 billion worth of green energy projects in Democratic states were also halted.

Hundreds of energy projects planned to be canceled.

Trump said he would meet with Russell Watt, Director of the Office of Management and Budget, to determine whether these cuts to "Democratic agencies" would be temporary or permanent. Meanwhile, the US Department of Energy also announced plans to cancel $7.56 billion in funding for hundreds of energy projects, which it said would not provide adequate benefits to taxpayers. However, the president said in a Truthout social post, "I can't believe the radical left-wing Democrats gave me this unprecedented opportunity to fire federal employees."

Threatened to Fire Federal Employees

During the shutdown that began on Wednesday due to a "partisan deadlock" in Congress, Trump has threatened to fire more federal employees. He is preparing to fire 300,000 federal employees by the end of this year. Meanwhile, Vice President J.D. Vance has warned that the administration may proceed with layoffs if the shutdown continues for much longer.

These moves make it clear that Trump will fulfill his threat to exploit the shutdown to punish his political opponents and increase his control over the $7 trillion federal budget, which is established by the U.S. Constitution as the jurisdiction of Congress. He wrote on TruthSocial late Wednesday night, "Billions of dollars could be saved."

Shutdown Blurred Economic Picture

The shutdown has blurred the US economic picture. If the release of economic data is delayed due to the prolonged shutdown, it could pose challenges, especially for the Federal Reserve Bank. The bank is scheduled to meet on October 28-29 with the aim of reducing interest rates again. The key inflation report is expected to be released on October 15, and the government's monthly retail sales report will be released the following day. The next industrial production report will be released on October 17.

Job Cuts and Signs of Recession

According to a FactSet survey, economists expect fewer hirings, along with slower recruitment. The unemployment rate is still projected to remain low at 4.3 percent. US human resources management and services provider Automatic Data Processing Inc. (ADP) released its monthly employment data on Wednesday, showing that businesses cut 32,000 jobs in September – a sign of a slowdown in the economy. The situation could be exacerbated by a prolonged shutdown.