Cost of the Government Shutdown? Billions and Rising. It’s Cheaper To Keep the Government Running

January 9, 2019, 10:55 PM UTC

The partial government shutdown comes with a high price: in the billions, maybe tens of billions of dollars so far, and increasing in scale daily. It costs more to shutter the government than to keep it open, so long as accumulated bills and deferred salaries are eventually paid as they have following all previous temporary closures. And the lack of spending drags down the country’s economy, especially in communities with government workers or those near national parks.

Standard and Poor’s estimated in 2017 that a full government shutdown would cost the U.S. economy about $6.5 billion a week. This partial shutdown affects only about a quarter of government spending, a little under half of all federal employees (about 800,000), and some significant agencies, such as the IRS and Homeland Security. In departments without current funding, about 425,000 employees are required to report to work without pay.

Furloughed workers will almost certainly receive back pay based on congressional promises and past practice, but their work will have remained unperformed. The Office of Management and Budget estimated a 16-day shutdown in 2013 cost the government $2 billion in lost productivity or about 6.6 million workdays lost. At the same time, workers not receiving paychecks—whether on the job or furloughed—reduce their spending and default on payments owed, rippling effects throughout local economies in which they work around the country and, for some, internationally.

While tax payments remain due, the government won’t be able to make all its payments in a timely manner, incurring penalties, accumulated interest, and in some cases kicking in higher interest rates in contracts with private parties.

The National Park Serviced has left many areas and attractions open, as opposed to in previous shutdowns, but is not collecting service fees, which add up to millions. But there’s a higher cost to communities around parks. The 2013 shutdown resulted in $414 million in lost revenue for communities adjacent to parks. This time around, many park contractors have been allowed to remain open along with parks, which should cushion that blow initially, but the park service has had to close some areas due to visitor damage and overflowing lavatories.

In 2013, Standard & Poor’s estimated that the full shutdown took a $24 billion bite out of the U.S. economy and decreased the gross domestic product’s growth rate from 3% to 2.4% across the quarter.

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