New report from OMB lays out cost of the government shutdown
Last week the Office of Management and Budget released a report detailing the impact the federal government shutdown had on the US economy. The report has found that, ironically, the government shutdown—borne out of a desire to save money and prevent further government spending—will end up costing the U.S. between $2 billion and $6 billion overall.
The most significant portion of this cost is the value of the work lost by furloughed federal workers. Over the course of the sixteen-day shutdown, furloughed government employees lost a combined 6.6 million workdays, more than any other shutdown in U.S. history. This translates to $2 billion in lost wages, all of which will be paid back to federal employees in accordance with the new debt ceiling agreement.
Tourism at National Parks took a significant hit too, as they were forced to close during the shutdown. National Parks, which normally generate about $33 million per day, lost a total of $500 million in direct revenue from visitors nationwide. The Smithsonian museums in D.C. lost an estimated $4 million. The closing of these National Parks had a trickle-down effect, impacting local businesses situated around these attractions that relied on tourism for their primary source of income.
The shutdown also had severe effects on the private sector. Business and consumer economic confidence reached their lowest levels since December 2011, and important information about the state of the economy such as the Unemployment Situation and Consumer Price Index were unavailable. Loans to small businesses and individuals were brought to a halt, as the financial institutions that make these loans could not get income verification information from the IRS. By the end of the shutdown, the IRS was backed up with 1.2 million of these requests. In addition to all of this, small businesses that had contracts with the federal government suffered. Payment delays during the shutdown forced these businesses to temporarily lay off workers.
The complete fallout from the shutdown is far-reaching and has yet to be entirely determined, but even these early projections have indicate that will be costly. Time will tell whether the costs will be significant enough to impact voters’ decisions for the next congressional election cycle.
The complete OMB report can be found here.
Photo: Keith Ellison via Flickr