Skip to main content

The Costs of Government Shutdown

So the US government has shut down for the first time since 1996, and the reason we are in this situation varies depending on whom you ask.

The facts are that House Republicans, in what is the 42nd attempt to cripple the Affordable Care Act or Obamacare, tied a measure defunding the law to a must-pass appropriations bill. This was not a complete budget, but merely another continuing resolution to keep the government running.

Democrats are suggesting that, after both the 2012 election and the ruling by the Supreme Court, Obamacare is now “law of the land” and paint the Republicans as trying to use what is essentially their mandate as legislators (to fund the government) as a bargaining chip. The Republicans, however, say they are just trying to save taxpayers money.

However, this is disingenuous as government shutdowns actually cost everyone money, with a number of economic analysts predicting the shutdown will definitely slow economic growth.

The 21-day, 1996 shutdown cost $1.4 billion, according to a recently released report. Adjusting for inflation and the modern government, a shutdown of a similar length would cost over $2 billion.

According to a spokesman from the CBO, “a short…shutdown is not a very important event, it’s a hiccup,” adding that the bulk of the costs come via back-pay and lost revenues – although back-pay for furloughed workers is not guaranteed.

There are other economic concerns, as well. Washington D.C. may lose $200 million a day in tourism and D.C. Mayor Gray has made efforts to keep all D.C. employees at work during the shutdown, which also has costs. Wall Street began the new quarter up, but the shutdown could affect the market if it continues. During the last shutdown, the stock market rose but the US economy was on much different footing then. 


Popular Video