October 7, 2025 | Matthew Continetti

Fellow deficit hawks, I bring bad news. Republicans and Democrats are dug in for the first government shutdown for the first time in six years. What they’re fighting over should trouble you if you’re worried about entitlements and out-of-control spending.

The Democrats want to preserve healthcare subsidies projected to cost $350 billion over 10 years. But if Congress can’t summon the will to allow these “emergency” supports to expire, how will it solve the much larger problem of our deficit and debt?

To recap: In 2010 the Patient Protection and Affordable Care Act, a.k.a. Obamacare, set up a healthcare marketplace called the exchange where self-employed individuals and other people without employer-provided health insurance can purchase coverage.

Twenty-four million people purchase health insurance on the exchange. Obamacare provided these individuals with means-tested subsidies to lower the cost of insurance premiums on the exchange. The aid, of course, only shifted the cost from the consumer to the taxpayer—but limiting the program to people who earn less than 400 percent of the federal poverty line kept the overall price tag in check.

Then, in 2021, President Joe Biden and the Democratic Congress expanded both eligibility for, and the generosity of, the subsidies through the American Rescue Plan Act (ARPA). The cap on qualifying incomes went poof. The benefit grew fatter. The extra cash was needed, Democrats said, because the coronavirus pandemic had caused many people to lose their jobs and insurance and made it difficult to make ends meet. (They left out the record inflation caused by Biden’s spending splurge.)

These emergency subsidies were supposed to be temporary. The original legislation ended them in two years. But in 2022, as part of the absurdly named Inflation Reduction Act, Democrats extended them until 2025. Now they’re set to go on December 31.

Senate Minority Leader Chuck Schumer is adamant that Senate Democrats won’t vote to keep the government open until Republicans agree to extend the subsidies. John Thune, the Senate majority leader, says Republicans are happy to talk about the subsidies in a separate bill—so long as Democrats turn the federal lights back on.

Hence the panic. Democrats want to keep the money flowing, gradually expanding eligibility and subsidies to cover as many Americans as possible. Health insurers don’t want to see the extra government backing they’ve enjoyed disappear. And some Republicans fear a backlash from voters who could find themselves paying more for health insurance on the exchange.

Conservatives, meanwhile, fret that Republicans will follow Democrats on an off-ramp that would keep the spending intact—and add up to $350 billion in debt over a decade. The shutdown could wind up as a case study in the insidious entitlement ratchet effect: Each additional benefit creates a constituency that demands its perpetuation. The ratchet makes government growth look unstoppable—along with the accompanying debt and stagnation.

After all, Obamacare subsidies—$91 billion—are a teardrop in an Olympic-sized swimming pool of spending. In 2023 the federal government spent $1.6 trillion on healthcare for a staggering 150 million Americans. This year’s deficit—the difference between revenue and expenditure—is projected to reach $1.8 trillion. Interest payments—that’s just the cost of servicing our debt—will near $1 trillion. All this adds to the $38 trillion national debt.

The numbers are so large, they’re beyond comprehension. America’s debt stands at 125 percent of GDP—not as bad a ratio as Lebanon, but worse than Cuba. Not exactly the company we should be keeping. Rising bond yields and gold prices are hedges against government profligacy. They flash a warning: When government debt is this high, the question isn’t whether there will be a fiscal crisis. The question is when.

The time approaches so long as Americans continue to ignore the problem. The record isn’t encouraging. President George W. Bush’s proposal for Social Security personal accounts went nowhere. President Barack Obama’s Simpson-Bowles Commission to tackle the deficit flopped. Former House speaker Paul Ryan’s budget plan never passed. President Donald Trump believes, with reason, that entitlement reform to reduce the national debt is political kryptonite. The lack of restraint darkens the fiscal picture while whipping up surreal tableaux like the government shutdown.

Fiscal hawks resemble the captain who sees the iceberg in the distance but can’t rouse his crew to action. Impassioned warnings of crushing taxes, punishing inflation, and dismal economic growth have no effect. On the contrary: We’re embroiled in a petty controversy to keep spending. Disaster looms. What to do if nothing changes? Hold tight—and brace for impact.