Government Shutdowns Cost About $1 Billion a Day

Government Shutdowns Cost About $1 Billion a Day

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By No Labels

Government Shutdowns Cost About $1 Billion a Day

With the deadline looming today, Congress approved a deal last night to keep the government funded for another two weeks. The move averted a shutdown and perhaps saved some money — because shuttering the government, in round numbers, costs the country about $1 billion a day.

When the government shuts down, it has broad impact. Government services halt, slowing travel and tourism, stalling federal revenue, ballooning interest on unpaid federal bills and leading to lost wages for workers and federal contractors. Consumer spending can slow. Lending can be disrupted. Unemployment can rise.

“A shutdown affects not only Washington and its employees but has ripple effects across sectors throughout the country,” economist Beth Ann Bovino told Bloomberg earlier this year.

The last time the government shut down, a 16-day stretch in 2013, the cost was estimated at $24 billion, according to Standard & Poor’s. Another report said the 2013 shutdown resulted in 6.6 million days of lost work.

While the spending impasse in Congress that led to the 2013 shutdown was a relative rarity, there have been 18 shutdowns since 1977, according to the Congressional Research Service. Many lasted only a day or so. The longest was a 21-day stretch in 1996.

Because government spending is considered must-pass legislation, Democrats and Republicans in Congress often use it as leverage to pass unrelated bills. This year, immigration and health care solutions are in the mix as Congress negotiates over spending priorities. When politicians threaten to “shut down the government” over this issue or that, this is what they mean, tying a bill to spending legislation and holding out to get both passed.

Despite the rhetoric, shutdowns are both unpopular and costly. An estimate by S&P Global this year put the cost at $6.5 billion a week. And, of course, the battles over funding are not over. Congress must approve spending levels for 2018. This week’s deal only gave lawmakers more time to negotiate. If they fail, they will again face a shutdown.

The new deadline is Dec. 22 — three days before Christmas.

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