He's worried about what a shutdown means for power in the short term.
It's not incompetence on his part, it's active malice. Trump/Musk/GOP has made it clear they don't want a shutdown and there's nothing to suggest there's any ulterior motives behind that. Schumer's argument that shutting down the government is exactly what Trump wants quickly falls flat. If there was a legitimate case, then how come literally every house Dem voted for the shutdown? Besides, a government shutdown, even one that's comparatively lengthy, will be less destructive to the country than the GOP budget bill in the long term. It's not even a close call.
Schumer's political career seems to be coming to an end anyway.
Then he should never have been the leader of the Senate Democrats right now to begin with. It really says something that he's willing to appease the fascists simply because he won't be majority leader in the future (or even run for reelection if he opts for retirement) since that's the easier option than actual, meaningful resistance. But regardless of how he voted, the underlying problem is still there.
The Democrats can't bank on the fact that Trump's unpopularity will solely occur because of his own reckless governance and economic fallout, especially given how cultish MAGA really is- they're already blaming the falling stock market and looming recession on "fixing Biden's mess". Effective opposition from the Dems is a powerful, necessary tool to make Trump less popular and more hated. And that's the problem with Schumer- he's utterly incapable of meeting the moment. While (up until this moment at least) Schumer has been a fine statesman and voted the right way, this is not nearly enough. Schumer has no rizz. How many people are actually enthusiastic about him? He has governed like a bureaucratic administrator instead of a politician- which requires being popular- which is not only ineffective in regards to tackling Trump but also as the de-facto leader of an entire political party to begin with.
The Dems need people like AOC and Bernie to replace Schumer and Jeffries. Whether they're "too far left" or not doesn't matter- they are literally the most popular and widely known Democrats and also the loudest, most fearless voices in the defense of democracy. Third Way neoliberalism is not only incapable of defeating fascism, but ill-suited to prevent it from taking hold in the first place. Moderate dems need to come to terms with the fact that literally any Republican is a much bigger threat than the progressive/leftist dems, which requires both a unified front and potentially ceding some of their influence in the party.
Whatever it is, I wouldn't assume that Schumer's flip is idiocy. It might still be the wrong choice, I couldn't tell you, but I think Schumer sees a real threat in shutdown.
Here's the most likely scenario. Schumer, like Jeffries/house Dems, was initially on board with the shutdown. Then, he got some phone calls, from the party's biggest, most influential ultra-wealthy/corporate donors. They're worried about what a shutdown will mean for the stock market and their own bottom line, and urged Schumer to reconsider. Because Schumer is not only immune from fascism (due to advanced age, wealth, and likely not running for re-election/minority leader), he caved, but also because he is still trying to court the few remaining elite donors that are loyal to the party and to make sure they don't also shift towards the GOP. It's the same reason why he and Jeffries have met with tech billionaires not long after Trump's inauguration. They are more accountable to capital than their own constituents, let alone the future trajectory of the nation.
Here's the more cynical scenario. There was much more widespread panic among the Democratic Party about voting for the shutdown- both concerns regarding donors, and about re-election for reps/senators in less safe seats stemming from the conventional wisdom that governing as a "moderate" will ensure their seats. So Schumer (assuming he doesn't run for re-election) is the fall guy. Almost the entire party is outraged by him, rightfully so, but in the end he faces no real consequences. Democrats only have themselves to blame if they lose in 2026 and 2028, as being too weak of an opposition and without any coherent vision or narratives will betray the base and do nothing to convince independent or apathetic voters, no matter how much of the lesser evil they really are.
Nevertheless, Schumer, and the 9 other "moderate" senate dems behavior is aiding and abetting a fascist takeover of the United States, full stop. They are collaborators and complicit in whatever happens as a result. At the very least, they deserve a brutal primary.