Federal Employees News Digest

Shutdown hit economy by $11 billion

The recently-ended federal government shutdown was not cheap—in fact, one initial estimate says, in the near-term, it cost the U.S. economy more than $11 billion.

That's $3 billion in the last quarter of 2018 and then another $8 billion in the first quarter of 2019—for a Q1 2019 hit on the overall economy of 0.2 percent, according to a report from the Congressional Budget Office.  

The 35-day partial shutdown—at least in terms of the CBO's initial estimate, which calculates "projected GDP" immediate impacts—was even more expensive than the costly line item being fought over, the $5.6 billion in funding President Trump had demanded to get started on a wall along the southern border of the country.           

Of course, opponents of the idea note that actually completing any version of the president's ambitious plans for a barrier would, according to estimates, cost much more than that amount—which was, after all, just one request in an anticipated series of outlays.

Cost estimates for the full wall project have ranged from a low of $16 billion to scores of billions of dollars.

The spending compromise that ended the shutdown will remain in effect only through mid-February—and, from there, the president could force another shutdown if Congress fails to fund the wall or come up with another deal by that time.

The threat looms of yet another shutdown, costing the economy—and feds—even more money.

“Families across the nation are still trying to recover from a month of missing paychecks and overdue bills, but the President is already threatening a second shutdown if he doesn’t get his way,” House Speaker Nancy Pelosi said in a statement several days after the compromise.

In addition to the direct cost to the economy, shutting down nine departments and numerous agencies, also “delayed” $18 billion in planned federal spending and interrupted significant federal services, the CBO said.

The CBO report noted other likely knock-on losses to the economy.

“CBO’s estimates do not incorporate other, more indirect negative effects of the shutdown, which are more difficult to quantify but were probably becoming more significant as it continued,” the CBO report said. “For example, some businesses could not obtain federal permits and certifications, and others faced reduced access to loans provided by the federal government. Such factors were probably beginning to lead firms to postpone investment and hiring decisions.”

The CBO report also noted that some shutdown costs should be mitigated as government spending resumes—but that about a quarter of the $13 billion in GDP impact is projected to be permanently lost.

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Edward A. Zurndorfer Certified Financial Planner
Mike Causey Columnist
Tom Fox VP for Leadership and Innovation, Partnership for Public Service
Mathew B. Tully Legal Analyst

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