(MENAFN- Live Mint) The Trump administration announced on Wednesday (October 1) that it is placing a hold on roughly $18 billion allocated for a new rail tunnel beneath the Hudson River connecting New York and New Jersey, as well as the expansion of New York City's Second Avenue subway. The pause comes amid the federal government shutdown that began at midnight .

White House budget director Russ Vought said on X that the decision was influenced by the administration's view that the funding was“based on unconstitutional DEI principles,” referring to diversity, equity, and inclusion initiatives.

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An administration official, who spoke on condition of anonymity because they were not authorized to comment publicly, as per AP report, added that the shutdown had furloughed Transportation Department employees responsible for reimbursing workers on the projects, further delaying the disbursement of funds.

Projects at stake

The Hudson River rail tunnel, a key infrastructure project for the Northeast Corridor, is intended to improve commuter rail connections between New Jersey and New York City. The Second Avenue subway expansion aims to ease congestion on Manhattan's Upper East Side. The suspension of funding could delay timelines and disrupt ongoing work on both projects.

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The United States entered a government shutdown on Wednesday after President Donald Trump and Congress failed to agree on funding to keep federal programs and services running. Roughly 750,000 federal workers face furloughs , with some potentially fired, while offices and services are disrupted nationwide.

Trump , speaking before the midnight deadline, said,“We don't want it to shut down,” but was unable to broker a deal between Democrats and Republicans. The president warned that programs favored by Democrats could be cut, adding plans to push his deportation agenda and shrink government operations.

Democrats demanded funding to extend health care subsidies under the Affordable Care Act, while Republicans refused to negotiate until the government reopens. Senate Majority Leader John Thune said the GOP is willing to discuss health care separately but not as part of shutdown talks.

Essential services like Medicare, Medicaid, the Pentagon, and Department of Homeland Security operations will continue, though staffing shortages may cause delays. Smithsonian museums are expected to remain open temporarily, but former national park superintendents have urged closures to avoid risks to visitors.

The shutdown marks Trump's third time presiding over a federal funding lapse, highlighting the deep partisan divide over budget priorities.

(With AP inputs)

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