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U.S. Government Shuts Down After Senate Fails To Pass Spending Bill; U.S. Federal Agencies Told To Launch Shutdown Plans; Trump Previews $500 Million Deal With Harvard On Trade Schools; U.S. Government Runs Out of Funding and Shuts Down; Trump Gives Hamas up to 4 Days to Respond to Peace Plan; What Will Be Open and Closed During a Shutdown; Sheinbaum Faces Off Against Trump, Cartels in First Year. Aired 1-2a ET

Aired October 01, 2025 - 01:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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[01:00:28]

UNIDENTIFIED MALE: This is CNN Breaking News.

PAULA NEWTON, CNN ANCHOR: Hello, and I want to welcome everyone to CNN Newsroom. I'm Paula Newton live in New York. It's 1:00 a.m. here in the eastern United States and we are now one hour into a new government shutdown that the House speaker called inevitable.

Well, reminder this was entirely preventable. This self-inflicted wound is the result of a bitter standoff in the halls of power between Democrats and Republicans who failed to agree on a new funding proposal. Many Americans are now asking how long will this last? How badly will this hurt us? And which side will blink first?

With the shutdown having just begun, there's no compromise in sight. It's unclear which party will ultimately bear the brunt of the public's growing anger over the political dysfunction and how that might impact next year's midterm elections. Democrats and Republicans held dueling funding votes on Tuesday that unsurprisingly, both failed.

And we're now witnessing a test of wills. CNN's newest anchor, Elex Michaelson is tracking all of this from us -- with us from Atlanta. Really appreciate you being with us and welcome to CNN.

ELEX MICHAELSON, CNN ANCHOR: Thank you.

NEWTON: And there is political dysfunction at this hour. I guarantee you that will continue as you continue your anchor duties. But I do want to ask you in terms of what's going down in Washington right now. What are we looking at?

MICHAELSON: Well, let's talk about what's not happening in Washington right now. Any negotiations. There are no senators or Congress members on the floor voting. In fact, the speaker of the House sent his members home until Monday. The White House digital team, though they are working, they just Posted this at WhiteHouse.gov It's a clock counting up on the shutdown time and blaming the Democrats.

So let's talk about how we got here. The Republicans and Democrats cannot agree on a budget. The Republican leadership essentially wants to punt. They passed a bill in the House that keeps things as is for the next seven weeks so there can be more negotiations. Democratic leadership says the status quo is not good enough. They want to use this moment as leverage to try and claw back cuts to Medicare the passed earlier this year by Republicans.

Here's the top Senate Democrat, Chuck Schumer at a press conference a little while ago. And House Speaker Mike Johnson, the Republican Leader, talking to CNN's Kaitlan Collins.

(BEGIN VIDEO CLIP)

SEN. CHUCK SCHUMER (D) SENATE MINORITY LEADER: Republicans are plunging America into a shutdown, rejecting bipartisan talks, pushing a partisan bill and risking America's health care. Worst of all. A few moments ago, Republicans once again rejected Democrats proposals to avoid a shutdown, fix healthcare premiums and spare Americans the calamity of skyrocketing through the roof health care costs. Republicans blocked it again.

REP. MIKE JOHNSON (R) U.S. HOUSE SPEAKER: They are throwing a fit. They're making partisan arguments. The House did its job. We sent to the Senate a clean CR, what that means. It's a very short stopgap funding measure so that the appropriators in Congress in both parties can continue their work of doing the appropriations bills, 12 separate bills.

We've made a lot of progress in that. We just need a little more time because tonight is the end of the fiscal year. Chuck Schumer has refused to give the extra time. Why? Because we won't agree to return -- to restore health care to illegal aliens. Because we won't agree to give a half a billion dollars back to the Corporation for Public Broadcasting.

(END VIDEO CLIP)

MICHAELSON: And just factually, illegal immigrants are not entitled to health care under Medicare right now. But essentially we have seen, Paula, both parties try this when they've been out of power, Republicans and Democrats using this lever and usually it doesn't work particularly well for them.

NEWTON: Yes. We will wait to see exactly how this all unfolds. What has been remarkable is the fact that there aren't even any negotiations on, and that is different. We have usually seen negotiations go down to the wire. What do we believe this means, though, for the average American person? I know last hour on CNN we certainly heard from federal employees not getting any paychecks.

MICHAELSON: Right. And there's some 4 million federal employees who will all be impacted in different ways, some not getting paid, some getting furloughed, some potentially losing their jobs altogether.

[01:05:00]

But let's talk about the average American and show you up on the screen some of the quote, unquote essential services that are set to keep running. Here's what's not impacted. Social Security, Medicare, Medicaid, they'll stay as normal. That's also true of veteran services, unemployment, National Weather Service, the Department of Homeland Security. They stay as is.

Here's what might be impacted. Air travel. Folks already in the FAA will continue working, but they're not going to be paid in time. And there's a hiring freeze now for new air traffic controllers. All that could mean flight delays for you. The national parks could temporarily shut down. So if you've got a trip plan that impacts you, if you need government documents that could take you longer to get, the FDA will stop processing new drug applications. And we've seen government shutdowns before.

This time around, though, we start with 200,000 fewer federal workers because all the firings, the buyouts, et cetera, from President Trump, Elon Musk, the DOGE team earlier this year. So after that, there aren't as many experienced bureaucrats who are used to navigating this sort of thing.

The Trump administration hasn't put out a lot of information this time around about what specifically is being impacted. So some of that we will find out over the coming days as we get a sense of this. But certainly those 4 million federal workers impacted in a big way. Paula.

NEWTON: Yes, I want to thank you for that synopsis of what's going on at this hour. I do want to point out that Governor Gavin Newsom has been posting on social media all day. Alex, I say this because I know you have great political experience in California and will bring us so much experience and again, more of the political dysfunction and discussion about that to come. Thanks so much for the wrap. Appreciate it.

MICHAELSON: Thank you. And you're about to talk to two of my favorite Californians.

NEWTON: And here we go to California, indeed. Sara Sadhwani is a political science professor at Pomona College. And Lanhee Chen is the former policy director for Republican Mitt Romney. Thanks to you both. It is good to see you and to both of you.

Let's get this started. How long do you believe this shutdown will last? Lanhee, first to you.

LANHEE CHEN, FORMER MITT ROMNEY POLICY DIRECTOR: Well, I actually think it could go on for some period of time because there's a pretty fundamental disagreement in policy that I think lies at the center of this disagreement. This is not a semantic difference. You know, if it were, I think in all likelihood we would have some kind of stopgap that would take us into November and we could solve this. But first, government shutdown we've seen in many years, and it really

does come over a pretty fundamental set of differences. So I think it could go on for some period of time. I hope not. But I do think that we ought to be prepared to ride this one out.

NEWTON: Sara, what are we talking here? How far are the Democrats prepared to go with this?

SARA SADHWANI, POLITICAL SCIENCE PROFESSOR, POMONA COLLEGE: Yes, I think Lanhee is right on this one. We definitely agree here that this could go on for quite some time. They do have fundamental differences. And we know back in 2018 when we saw the government shut down.

I think we might need to buckle up and be prepared for this to last at least as long, if not even potentially longer. There are significant issues for Democrats and Republicans to try and work out an actual budget deal. And certainly we have seen Democrats take on a different tactic at this stage of the game. Certainly something very different than when were talking about that big, beautiful bill.

NEWTON: Yes. And this might be about budgeting, but certainly it's the political gamesmanship that everyone's keeping an eye on. Democrats have said that they must take a stand right now, specifically rolling back what they say are cuts from, you know, President Trump's signature budget bill that's already passed. I want you to listen now to Hakeem Jeffries just hours ago. Listen.

(BEGIN VIDEO CLIP)

REP. HAKEEM JEFFRIES (D) U.S. HOUSE MINORITY LEADER: They basically have said, take it or leave it with respect to our partisan Republican spending bill that continues cuts that were first put into place in March of this year that hurt veterans, hurt children and families, hurt childcare, hurt housing affordability, and hurt the health care of the American people. And they're suggesting now that continuing that funding level is something that we should just accept and allow it to be jammed down the throats of the American people.

(END VIDEO CLIP)

NEWTON: So Lanhee -- we heard, Lanhee, we heard from the Speaker. Pardon me, the minority leader there. But do you see the president Trump, compromising on any of this?

CHEN: No, I don't see either side compromising. I mean, look, the reality is that the way that these shutdowns have been avoided for six years is we basically continued to kick the can down and spending levels, and we've extended them through something called a continuing resolution. And that was the expectation about what might happen this time.

Democrats have decided that's not what they want this time, that they want an actual policy conversation, a fight with the president and with Republicans in the House and the Senate, and that's what they're going to have for the next several weeks.

[01:10:05]

So I think the reality is that the common process would have been, look, let's just continue spending levels. The Democrats, to the point that you made earlier, they decided this is not the time for that. This is a time for a fight. This is a time that they want to take a stand about a set of issues they clearly care about. And going into next year's election, that is a political point they're hoping to score to put themselves in a position to reclaim control of at least one chamber of Congress in next year's midterm elections.

NEWTON: Certainly House Speaker Mike Johnson was all fired up on CNN a few hours ago. Listen.

(BEGIN VIDEO CLIP)

JOHNSON: I'll tell you, the government's never been so big and bloated as it is today. It's completely, it's too large, it does too many things and it does almost nothing. Well, there's a lot of reform minded people in the administration who would like to streamline government. So would conservatives. So do all of us.

Not in a way that disenfranchises or hurts anybody, but in a way that makes government work more efficiently and effectively for the people. That's what our legislation has done.

(END VIDEO CLIP)

NEWTON: You know, Sara, that doesn't sound like a speaker who's willing to negotiate anything at the moment. And more than that, the message that he is getting from the president and you know this, is that this shutdown might actually work in his favor in terms of the kind of cuts that they want to make to government.

And I remind everybody of what we've had in the last few months, especially when DOGE was at full throttle. So given that, Sarah, don't you see this as a completely risky proposition for the Democrats right now?

SADHWANI: It's risky for both sides, right at this point in time. Both parties can have that sort of discipline around their principles and in their messages as well. But what we know is that these kind of government shifts shutdowns sow discontent amongst the people.

What we will see is all sorts of hurt for people. We know that some of the first cuts that will ultimately start to come into the American people will be slowdowns in those payments for programs facing people with hunger. Snap, the Food Stamp Benefit Program, WIC, Women Infant and Children Program.

Those are some of the first kind of individuals who could be hit by this. And ultimately this is going to lead to a significant amount of discontent and outcry. So it's really a question of what is the threshold of pain that either of these parties can really take.

What we know from polling just out today from the New York Times is that Trump's numbers are flat. They have not moved in months. He's hovering still at 42, 43 percent approval rating, not very good. If those numbers continue to go down or start to go down, I should say things might really change.

But what we also learned from a recent poll is who might be to blame for this kind of a shutdown. Now, this poll was from a few days ago, but basically 26 percent would blame President Trump and the GOP, 19 percent for the Dems, 33 percent, wisely, I would say, would blame both parties. And, you know, 21 percent are just saying they're not tuned in now. They may be soon when they see the depth and the length of these cuts.

But, Lanhee, I want to ask you that is the political calculation that everyone's making right now, do you that in fact, contrary to what the Democrats might be saying right now, that the Republicans might manage to blame the Democrats for the shutdown in the end?

CHEN: Well, then there's no question that the messaging coming from Speaker Johnson, from Leader Thune, from the president, will be that this is a Democrat shutdown. But, you know, I think the tendency in these situations, these government shutdown situations, is that most people sort of look at it and say, you know, a fox on both their houses.

The other issue to consider is that we've still got a very long time until next year's midterm elections, which is really going to be the next time the American people will pass judgment in the form of a referendum on who ought to be leading and controlling Congress.

And so my sense is that even if we have this shutdown, even if it goes down for a prolonged period of time, Americans, because they have pretty short memories in politics, probably will look at a very different set of issues as they're making their decisions going into next year's election.

The only thing the President really has to be concerned about is if this ends up extending some form of an economic downturn, if people feel less confidence. We saw some consumer confidence numbers, for example, earlier this week that were a little bit troubling.

So if those things continue, that might be a source of concern for the president and Republicans. But quite frankly, I think by the time we get to next year's elections, there's going to be a whole different set of issues we're paying attention to.

NEWTON: Yes, you're right about that. Although the great arbiter here may indeed even be the stock market and the economy. It's been totally calm so far, barely coming off record highs. But we will see, especially given people are saying this could last weeks for sure. Sara Sadhwani and Lanhee Chen, thank you both. Really appreciate it.

SADHWANI: Thank you for having me.

[01:15:00]

NEWTON: Now, the US Government shutdown could dramatically reshape a variety of federal agencies. Hours before the midnight deadline, the Office of Management and Budget proactively asked agencies to launch their shutdown plans. Thousands of federal workers are expected to be furloughed, while many others will be required to continue working without pay.

As were just saying now, on Tuesday, the OMB director said the Trump administration has the authority to make permanent change to the bureaucracy, meaning some jobs and programs may be cut indefinitely.

Joining me now from Los Angeles is chief economist at the Milken Institute, William Lee. It is a pleasure to have you on board here as we try and parse the fallout from all of this.

You know, you point out that this shutdown is different, specifically, you say, because the Trump administration will turn what is normally a short disruption into a permanent mechanism to restructure the government. Can you explain a little bit more about that?

WILLIAM LEE, CHIEF ECONOMIST, MILKEN INSITUTE: Sure. The traditional shutdowns that we've had since President Reagan have been ones where both sides are arguing for small strategic gains, whether it's border war funding or allowing one or two pieces of legislation to pass.

Right now, the Democrats have raised the stakes to the point where they're trying to legislate using the leverage of the shutdown. And I think the Trump administration is strategically answering by saying, oh, wow, we can use the shutdown opportunity to accelerate what we've done with DOGE, the Department of Government Efficiency under Elon Musk, and really reshape the size of government and fulfill our promise to the electorate to reduce the size of government and reduce regulations.

So I think the Trump administration is looking at this as a real strategic opportunity to carry on its promises that it started under DOGE.

NEWTON: Which for the Democrats, it becomes even more treacherous politically and otherwise. You say that the Democrats, they're not tinkering, right. They want budget changes. They want to roll back key Trump policy, especially on things like health care. How do you believe that will affect the length of the shutdown and the effect it actually will have on the economy?

LEE: Well, I think the metaphor to use is that in the past, shutdown negotiations and brinksmanship has been a game of checkers. Right now, they're all playing chess. The Democrats have some real backfilling to do in terms of trying to protect themselves from the far left.

The Trump administration is trying to gain by saying, well, if the Democrats are being weakened by both sides, that is that the middle is trying to hold and the left is trying to attack, we're going to use this as a leverage to try to get our agenda put in place even faster before the midterm elections and allow the electorate to have an opportunity to vote.

So I think the kind of brinksmanship that's going on now is a whole different level than what we've seen in the past. NEWTON: Yes. And it's interesting because you call this a

transformative moment in American government governance. That's a profound statement. And you say that something rooted in what President himself said just a little while ago from the Oval Office, and I'm quoting him now, that a lot of good can come from shutdowns. He really is taking on exactly what you say. Right. He's saying, look, we need to finish the job that the DOGE cut started.

LEE: Very much so. And Elon Musk's famous phrases work fast and break things. Right. And I think that's exactly what's going on. They're willing to break a lot of things in order to try to fix them in a way that is consistent with smaller government, fewer regulations, and lower taxes. And that was the Make America Great promise that he got elected on.

And I think President Trump, more than anybody else, knows that he's got two years to make good on his promises, because he becomes completely lame duck after that. So his strategy is one of moving fast and breaking things.

NEWTON: In breaking things, though, he cannot afford to break the economy. This so far has not had any effect on the stock market per se. Do you worry about its effects on the real economy? And when do you start to worry about that? I mean, do we get 10 days out, two weeks out?

LEE: If you look at all the past shutdowns that have occurred, the majority of them have actually resulted in higher stock markets afterwards, because it seems as though what comes about after the shutdown has been an efficiency gain on the part of the government.

Right now we stand on the edge of maybe even the biggest efficiency gain that we've ever seen. So I'm really quite optimistic that after this shutdown, the economy will be able to work much better because we'll have a smaller government, fewer taxes, and fewer and smaller regulations.

But the danger, of course, is that when you fire a lot of people and downsize the government, you lose a lot of expertise. And there are a lot of very smart federal workers.

I used to work at the Federal Reserve, and fortunately, the Federal Reserve is not part of this shutdown movement, but nevertheless, a lot of good people in treasury and in all the bureaus of commerce that are out there collecting data.

[01:20:04]

Those people, if they're lost, will be a real bullet in the head for the U.S. economy.

NEWTON: yes, and a lot of effects already. We were unlikely to see jobs numbers on Friday, for instance. William Lee, we are smarter for your insights though, in terms of the effects of the shutdown. We'll continue to follow it with you. William Lee for us from Los Angeles. Appreciate it. LEE: Thanks for having me.

NEWTON: Now the U.S. President suggests using American cities as training grounds for troops. Ahead, a closer look at Donald Trump's remarks to a rare meeting of top U.S. military commanders.

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NEWTON: The packed house there, as you can see at Utah State University, chanting USA. Tuesday's event was the first Turning Point USA tour stop in Utah since the killing of its founder, Charlie Kirk. Kirk was assassinated on another Utah college campus last month.

The stop, which was scheduled before Kirk's death, focused on how the conservative organization is forging ahead without its leader. He was being celebrated as a martyr by many on the right.

[01:25:05]

President Donald Trump and Defense Secretary Pete Hegseth are laying out a new vision for the U.S. military to address an unprecedented gathering of top admirals and generals, with Hegseth detailing new directives slamming diversity and bashing what he called, quote, stupid rules of engagement. The defense chief also said combat troops will have to meet the highest military male standard.

(BEGIN VIDEO CLIP)

PETE HEGSETH, U.S. DEFENSE SECRETARY: This is not about preventing women from serving. We are -- we very much value the impact of female troops. If women can make it, excellent. If not, it is what it is. If that means no women qualify for some combat jobs, so be it.

(END VIDEO CLIP)

NEWTON: President Trump followed Hegseth with his own remarks, telling America's military brass that the U.S. is under invasion from within. CNN's Julia Benbrook has more now from Washington.

(BEGIN VIDEOTAPE)

JULIA BENBROOK, CNN NATIONAL CORRESPONDENT: Top generals and admirals stationed around the world, hundreds of them were told to travel to Virginia for this highly unusual meeting with very little notice. Sources say the idea for the gathering originated with Secretary of Defense Pete Hegseth and was intended to describe the administration's reinvention of the Department of Defense to the Department of War as well as outline new standards for military personnel.

In his remarks, Hegseth vowed to end diversity efforts and went as far as to say that if senior military officers do not agree with his views on diversity and other matters in the military, that they should, quote, do the honorable thing and resign.

HEGSETH: For too long, we've promoted too many uniform leaders for the wrong reasons, based on their race, based on gender quotas, based on historic so called firsts.

BENBROOK: President Donald Trump spoke later. His remarks lasted for over an hour and touched on a wide range of topics, including his recent efforts to deploy troops to American cities.

DONALD TRUMP, U.S. PRESIDENT: It's really a very important mission and I told Pete we should use some of these dangerous cities as training grounds for our military National Guard. But military.

BENBROOK: It's still unclear why hundreds of military officials had to travel in to attend this meeting. And several sources have expressed concern about the cost of getting them there. On his way to the gathering, Trump admitted that there was a quite, quote, a little bit of expense involved. At the White House, I'm Julia Benbrook.

(END VIDEOTAPE)

NEWTON: So the U.S. president claims his administration is close to finalizing a half billion dollar deal with Harvard University. On Tuesday, President Trump said the government is, quote, very close and it will be paid about $500 million to operate trade schools. Harvard officials and the White House have been discussing a deal to restore more than $2 billion in federal funding that President Trump revoked earlier this month.

A federal judge ruled in Harvard's favor. The Trump administration has targeted Harvard and other major universities for alleged antisemitism on campus. CNN has reached out to Harvard and is awaiting a response.

OK. Still to come for us, some more on the U.S. government shutdown and President Trump's threat to cut popular programs with Democrats as a result.

Plus, President Trump gives Hamas a deadline to respond to the 20- point Gaza peace plan. We'll have details of what he says will happen if the militant group rejects it.

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[01:32:21]

PAULA NEWTON, CNN ANCHOR: And welcome back. You are watching CNN NEWSROOM. I'm Paula Newton.

More now on our top story this hour.

The U.S. government has officially shut down after lawmakers failed to meet a midnight deadline to pass a new funding bill.

Americans are blaming Democrats for holding out instead of approving a stopgap measure to temporarily keep the government going.

But Democrats have dug in, demanding health care concessions from their Republican colleagues, in particular, an extension of subsidies in the Affordable Care Act.

President Trump, though, is warning Democrats their tactics could come at a cost.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: So the last thing we want to do is shut it down.

But a lot of good can come down from shutdowns. We can get rid of a lot of things that we didn't want, and they'd be Democrat things.

We can do things during the shutdown that are irreversible, that are bad for them, and irreversible by them, like cutting vast numbers of people out, cutting things that they like, cutting programs that they like.

(END VIDEO CLIP)

NEWTON: Joining me now is political analyst Michael Genovese. He's the president of the Global Policy Institute at Loyola Marymount University and author of "The Modern Presidency: Six Debates That Define the Institution".

Michael, great to see you. I've been saying, I don't know if you disagree with me or not, I've been saying that this shutdown hits differently. And the reason I say that is that there wasn't that, you know, last-minute haggling, there weren't negotiations, there weren't late night meetings.

I mean, our correspondents are telling us it's dead on Capitol Hill right now. What does that tell you about where the shutdown is going?

MICHAEL GENOVESE, PRESIDENT, GLOBAL POLICY INSTITUTE-LOYOLA MARYMOUNT UNIVERSITY: Well, I think the shutdown was different on two levels. One going in it was different because there was really no real negotiating. going on.

President Trump canceled a few meetings with Democrats, had an 11th hour meeting, but that was really just for the cameras, I think.

The other way that it's different is that this time a shutdown really will help Donald Trump. Help him in a way that in your intro suggested this. With no one else to grab the reins of power, Donald Trump will be free to do whatever he wants. And the OMB and Donald Trump have already said they want to eliminate -- literally eliminate programs. And those would be Democratic programs.

[01:34:40]

GENOVESE: And so, you know, the Democrats may may have brought us here but they may regret it in the long run because Donald Trump is going to be basically, virtually unchecked for as long as this goes on and he will eliminate programs.

NEWTON: When he -- you say that he's going to eliminate programs, though at the end of the day, midterms are coming up. I know they're not around the corner or anything like that. But the president is making the calculation, right, that there is no political price to pay for this.

GENOVESE: Well, you know, the American public had a funny way of deciding who they're going to blame and praise. If past is prelude, and it isn't always in American politics, the side that sort of buckles down in this case it would be Trump tends to get rewarded, whereas the side that wants the concessions to be made, the Democrats they tend to lose.

But in this, no one wins, everybody loses. And the biggest losers were the American people.

But we'll see who really owns it. And that's the American public will decide that.

NEWTON: And a lot of that will depend on behavior and how long it lasts.

The Democrats were spoiling for a fight. They've got their fight. And yet I do wonder if its performative, if they stand up to the president and the Republicans for a week or two, do you feel that will be enough?

Meaning it will show both their constituencies and their base that, look, we are doing something. We are fighting back.

GENOVESE: It will not be enough. But it's something. And the Democrats know that they have -- are facing a lot of pressure from their base. They want people to stand up to Trump. They want their members to be tough, to go after Trump, not to let him get away with all that he's getting away with.

But the Democrats are the minority party. They don't have many levers of power, but this is one that they may have.

But you use the word "performative". It's a show. The problem is, it may not be a long-running show, and the Democrats may not like what results -- what the results are.

NEWTON: Michael, given all your writing on the modern presidency, something that perhaps President Trump is remaking in front of our eyes here yet again in his second term, even more than he did in his first.

I'm wondering how you feel about, you know, that kind of executive power and the force with which Donald Trump seems to have a Republican senate and a Republican house really doing his bidding?

I know we've said that over and over again, but look, these lawmakers are going to hear it in their constituencies, are they not when the money from the government stops flowing here?

GENOVESE: Well, you know, the rise of presidential power has been long in coming, really, since the Depression in World War II, then the Cold War, the war on terrorism. We've seen an incredible rise in presidential power. The American public likes presidential power when it succeeds. But

then there's always the danger of Vietnam, a Watergate and Iran-Contra scandal. And so we pay a price for our devotion and our adherence to presidential authority.

This is something the framers were dead set against. They wanted to get rid of a king. They wanted to get rid of imperial power. And they built a lot of checks and balances into the system.

Many of those checks and balances wither away because political parties are now more important than checks and balances.

And so we don't have a separation of powers. We have a separation of parties. And when everyone -- and everyone and every lever is controlled by one party, then the system doesn't work the way Madison and the other framers designed it.

NEWTON: Such an interesting way to put it for us, for us to think about it that way, right. Not a division of powers, but a division of parties. Something that unfortunately, all Americans can understand at this hour as their government is now shut down.

Michael Genovese, thank you. Again, good to see you. Appreciate it.

GENOVESE: Thank you, Paula.

NEWTON: Now, the U.S. President says he's -- the U.S. President says he's giving Hamas three to four days to respond to his Gaza peace plan.

A source tells CNN the U.S. is willing to discuss Hamas' counterproposal but won't engage in lengthy negotiations with the militant group.

When pressed on what would happen if Hamas doesn't agree to the deal, Donald Trump says he's going to be, quote, "very" -- he's going to be a quote, in his words, "very sad end".

CNN's Jeremy Diamond has more now from Jerusalem.

JEREMY DIAMOND, CNN JERUSALEM CORRESPONDENT: Well, there's no question that a lot of pressure is being brought to bear on Hamas to accept President Trump's new proposal to end the war in Gaza.

But this is going to be a lot more complicated than just a yes or no from the Palestinian militant group.

President Trump says that he's giving Hamas three to four days to respond to his new 20-point proposal, which the Israeli prime minister said he is supportive of.

Hamas officials are meeting with top level officials from Qatar, from Egypt and from Turkey in an effort to get Hamas on board.

But what all of my sources are telling me the expectation is, is that Hamas is going to have some changes that it is demanding to this proposal. And that's because when you look at this 20-point plan, there are a number of provisions that either cross Hamas' red lines or that mark a kind of downgrade from Hamas' perspective from previous proposals.

[01:39:51]

DIAMOND: First among them, of course, is this question of disarmament. This proposal would require Hamas to be fully disarmed, Gaza to be demilitarized. Hamas has rejected that notion in the past.

There's also questions about the withdrawal lines of Israeli troops and also the number of Palestinian prisoners that would be released in exchange for those 48 Israeli hostages.

Keeping in mind, of course, that Hamas would be required to release all 48 hostages within three days of this proposal actually being agreed to. And of course, for Hamas, that is their leverage.

Now we will see what Hamas' response is. They have said that they just received the proposal and that they are going to be deliberating over it and then submitting a response.

Now, if Hamas rejects this proposal, President Trump has made clear that he's basically going to give the Israelis carte blanche to continue pummeling Gaza with this lofty, and so far, unachievable goal of fully destroying Hamas.

But what's interesting is that even if Hamas rejects this plan, it does lay out a pathway for that alternative, a pathway for Israel to actually begin gradually handing over territory to an international security force.

And this is the first time that we have ever seen the Israelis acknowledge, let alone agree to, any kind of plan for post-war governance of Gaza and the handover of territory in the Gaza Strip to an international authority.

The United States, so far has sounded quite an optimistic tone. We've heard from Steve Witkoff, President Trump's special envoy, who says that he believes that this is the moment to actually close all of this out.

Of course, beyond Hamas' approval of this deal, there are still questions here in Israel as well about the politics around all of this.

The Israeli prime minister, already facing fierce criticism from some of his right-wing allies who have said that they oppose this proposal.

But so far, those right-wing allies, like the finance minister Bezalel Smotrich, haven't gone quite as far as saying that they would leave the government over this. But that will certainly be something to keep an eye on.

Jeremy Diamond, CNN -- Jerusalem. (END VIDEOTAPE)

NEWTON: Ukraine's president is urging allies to impose more sanctions on Russia to make it much more painful for Vladimir Putin to carry out his war.

Volodymyr Zelenskyy condemned the rare daytime attack on the city of Dnipro Tuesday. One man was killed and 20 injured when Russian drones struck the city center, as people were working, and in school.

Local officials say the attack damaged medical facilities, office buildings, residential buildings and cars.

For the first time in seven years, the U.S. government is going into shutdown after lawmakers failed to agree on a funding plan. What will and will not be closed as a result?

We'll have those details.

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AMANPOUR: So with the U.S. Congress unable to reach an agreement on funding the government, a partial shutdown is beginning across the country. The closure will affect a range of -- will have a range of effects on the U.S. economy, from employee furloughs to a halt in some public services.

Brian Todd now runs through some of the impacts.

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BRIAN TODD, CNN CORRESPONDENT: -- open and what haven't. Here are some of what we can tell you.

What will continue to operate, crucially, Social Security and Medicare payments will continue normally. Everyone who gets those will continue to get those.

Now, the question regarding some of these benefits is if you call and have questions about your benefits, or if something is -- if you have a hitch and you need to ask someone, is there going to be someone there to pick up the phone and answer your questions at these agencies? We'll have to see about that. That's been an issue in previous shutdowns.

Unemployed people will continue to get their jobless benefits during the shutdown. That will be uninterrupted.

Now, crucially, the State Department is going to be still issuing passports and visas during a possible shutdown and will continue to assist Americans who are abroad.

But we have to say that only about 10,000 State Department employees will be considered essential workers out of a workforce of almost 27,000 people.

So how fast these visas and passports will be processed? That is going to be a big question.

Crucially also, the National Weather Service is going to continue its forecasts and warnings regardless of whether there is a shutdown or not. That is crucial because we're still in the middle of a hurricane season.

Now, what could be compromised or actually shut down in the event of a shutdown? Well, the Food and Drug Administration. We're told that their inspectors could have their work halted or delayed, or possibly that they won't go on at all.

Also, were told that Americans can expect travel delays, especially at airports, if there's a government shutdown, because TSA screeners, those security screeners at American airports will not be paid.

In the past when that has happened, some TSA employees have called in sick. You get staffing shortages. We're also told that air traffic controllers will be on the job, but they will not be paid.

Now, in a previous government shutdown, the decision by some air traffic controllers to stay away from work actually led to the ending of that shutdown, so keep a close eye on that and on travel delays in the United States.

A big question -- national parks and whether they will continue to stay open. That's a little unclear. We have contacted the National Park Service. We haven't gotten answers on that as to whether the parks and the monuments in Washington will continue to be open to visitors.

In the past, they've relied on some additional funding, some extra funding to stay open for a few days during a government shutdown. We're not sure if that's going to happen this time.

One Department of the Interior official told me they've received almost no guidance as to whether the appropriations will be available to keep national parks open or not if there is a shutdown.

(END VIDEOTAPE)

NEWTON: Hurricanes Humberto and Imelda are triggering flood warnings for parts of the U.S. East coast. This video shows the moment a house on North Carolina's Outer Banks collapsed due to high surf from the storms. It's one of the least -- it's one of at least five homes that were, in fact swept into the ocean there on Tuesday.

Authorities are warning people to avoid collapsed homes and coastal areas because of potentially hazardous debris.

While neither storm is expected to make landfall in the U.S., the National Weather Service says some vulnerable areas could see waves as high as 12 feet. Mexico's first female president is celebrating her first year in

office, but her historic presidency has not been without controversy. More on that when we come back.

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NEWTON: Recapping our top story this hour.

The U.S. federal government is officially shut down for the first time in almost seven years. The Republican-controlled Congress failed to pass a bill to keep the government funded. And now hundreds of thousands of federal employees will be furloughed.

Others who are considered essential will have to keep working and reporting for work, though they won't get paid until the impasse ends.

Both Republican and Democratic leaders are playing the blame game, with neither side willing to budge. Not at this stage, anyway.

Now, it's a historic year of firsts meantime, for Mexico and its President Claudia Sheinbaum.

But as our Valeria Leon reports, her inaugural year in office has had its challenges and controversies.

(BEGIN VIDEOTAPE)

VALERIA LEON, CNN CORRESPONDENT: Mexico's first female president, taking office a year ago.

"I call on you to keep making history".

Claudia Sheinbaum, elected with more than 60 percent of votes -- a historic win, making her the successor to Andres Manuel Lopez Obrador.

The two have been aligned on much, but since taking office, her security policy has been quite different.

Analyst Luis Carlos Ugalde says the jury is still out on whether that shift has translated into better results.

[01:54:49]

LUIS CARLOS UGALDE, POLITICAL CONSULTANT (through translator): There is a strategy of pursuit, confrontation, of restricting the spaces that organized crime had gained.

LEON: Sheinbaum has been recognized for her firm stance in tense negotiations with her U.S. counterpart, Donald Trump.

Most recently, she secured an agreement with the U.S. to curb the illegal flow of weapons and a pause on tariffs.

SHEINBAUM: We have the best possible agreement compared with other nations.

LEON: Still at home, corruption has tarnished her achievements. A scandal in the higher echelons of the country's Navy saw 14 people arrested.

There have also been U.S. accusations that her government and the country's political class as a whole are in the clutches of the cartels.

The latest when two government officials went on the run after being accused of leading a drug trafficking group. Their boss, a powerful senator in Sheinbaum's own party.

Yet, while organized crime may be hogging the spotlight, for some Mexicans, there's another crucial issue.

YURIKO GUEVARA, MEXICO CITY RESIDENT (through translator): There's also the question of whether she herself is embracing different aspects of the system that silence the very struggle.

If corruption and crime weren't enough, economic issues dominate voters' concerns. With Mexico still very much dependent on a good relationship with the U.S. the challenge of safeguarding its free trade agreement with both the U.S. and Canada will remain President Sheinbaum's greatest task.

Valeria Leon, CNN -- Mexico City.

(END VIDEOTAPE)

NEWTON: I want to thank you for watching. I'm Paula Newton.

CNN NEWSROOM continues with my friend and colleague Lynda Kinkade. She'll be up after a short break.

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