Trump threatens project cuts, layoffs; proposes rebate checks from tariffs

The White House on Thursday warned that "thousands" of federal workers could face layoffs if the ongoing U.S. government shutdown continues, as President Donald Trump explores unconventional measures to ease financial pressures while pursuing his political agenda.

White House Press Secretary Karoline Leavitt told reporters outside the White House that administration officials were already preparing for possible layoffs. "It's likely going to be in the thousands," she said, noting that the Office of Management and Budget (OMB) and other officials were actively discussing which departments could be affected, according to Fox News.

Leavitt placed the blame squarely on Democrats, accusing them of refusing to cooperate on a funding deal. "These conversations would not be happening if Democrats had voted to keep the government open," she said. She further alleged that Democrats were "playing politics" with the crisis, pointing to disagreements over health care benefits for undocumented immigrants as a sticking point.

She told reporters, "Let me ask you, do you think illegal aliens should get Medicare benefits?" She added, "Medicare benefits go to the most vulnerable people of our country. But the Biden administration allowed tens of thousands of illegal aliens from all over the world to come into the country and get free benefits."

The partial government shutdown began after lawmakers missed the midnight funding deadline on Wednesday, leaving several agencies without a budget. While essential services continue to operate, many departments face disruptions as negotiations remain stalled, according to Fox News.

President Trump has sought to leverage the shutdown to push for deeper spending cuts. He said he was scheduled to meet OMB Director Russell Vought to discuss which agencies might face reductions, with Vought asked to recommend whether potential cuts should be temporary or permanent.

Trump also floated unconventional approaches to counter the economic impact of the shutdown. In statements made on October 3rd 2025 , including a social media post , he indicated that tariff revenues could be used to issue rebate checks to Americans, potentially ranging from $1,000 to $2,000 per individual. He emphasized that the U.S. government’s new tariffs were just beginning to generate revenue, which he projected could eventually reach $1 trillion annually.

In his social media post, Trump wrote: "They are not stupid people, so maybe this is their way of wanting to, quietly and quickly, MAKE AMERICA GREAT AGAIN! “ Referring to Democratic lawmakers who are resisting the funding extension. Trump suggested that their political opposition might inadvertently create an opportunity for him to reshape federal spending and advance his policy agenda, framing the standoff as something that could ultimately work in his favor.

Leaders of both parties remain adamant that they will not shoulder blame for the funding lapse. Republicans insist Democrats need only agree to extend current funding for another seven weeks, while Democrats refuse without major concessions in exchange for their Senate votes, CNN reported.

The political standoff continues to cast uncertainty over federal operations and could have lasting consequences for government workers and ongoing projects, while Trump’s proposed tariff-funded rebate initiative adds an unconventional twist to fiscal policy debates.