Shutdown Cost US Economy $11 Billion. Maybe Mexico Will Pay For That Too!
The Congressional Budget Office has produced a quick estimate of how much activity was taken out of the US economy by Donald Trump's dumb government shutdown, and projected that the five-week shutdown cost roughly $11 billion. The partial good news: Now that federal workers will be repaid and government can start paying for goods and services, about $8 billion of GDP will be made up over the next three quarters. But a full $3 billion of losses are gone forever, bummer, but no doubt all the unpaid contractors who won't ever get their money back (among others) will all say it was worth it to get NO WALL but some insane Donald Trump pervo fantasies about women being bound with duct tape. Also, the CBO warns it simply couldn't estimate some indirect costs of some parts of the shutdown, like losses from businesses that had to delay getting licenses or had to try to get by without government loans. Maybe some folks went bankrupt as a result, but too bad, President Babyshits had a tantrum so it was well worth it.
The CBO estimate was requested last week by Democratic Reps. John Yarmuth and Tom O'Halleran. Yarmouth chairs the House Budget Committee and O'Halleran co-chairs the House's "Blue Dog Coalition."
"I am hopeful that we have finally reached a turning point with these mindless shutdowns, but this CBO estimate serves as a stark warning to President Trump on the consequences of using American workers as a bargaining chip," Yarmuth said in a statement.
The report said that while the economy as a whole will mostly bounce back, a lot of federal employees and their families were hurt, and many companies doing business with the government are permascrewed:
Underlying those effects on the overall economy are much more significant effects on individual businesses and workers [...] Among those who experienced the largest and most direct negative effects are federal workers who faced delayed compensation and private-sector entities that lost business. Some of those private-sector entities will never recoup that lost income.
Another lesson of the longest government shutdown in history: It was bad enough as it was, but if you REALLY want to take hostages and fuck up the economy, your shutdown needs to last "months or years" like Trump originally wanted. Again and again the CBO report reminds us that serious follow-on economic effects (like the BEER CRISIS) were starting to emerge as the shutdown continued, and they would only have gotten worse had the shutdown gone on longer. Here's a cheery excerpt from Page 11, with a bit of highlighting by Yr Wonkette:
That second paragraph is a doozy: As the shutdown continued, the loss of federally produced economic data would have fucked up private investments, and a knock-on effect would have been depressed hiring. People would lose confidence in the government (even more!), and good lord, somehow agencies would find themselves stuck hiring even less-qualified people than the bozos Trump has already loaded them up with.
As it is, the report notes that some of the disruptions to the economy that did take place will simply be impossible to measure, and that the long-term damage to the economy is "subject to considerable uncertainty."
Federal employees who went without pay, for instance, will eventually get reimbursed, but it's likely they won't spend that money the same way they'd planned to before the interruption of their income. The report doesn't go into detail, but you don't need to be a Rocket Mortgage scientist to imagine a lot of that restored income will be going to missed payments (and late fees), not to deferred Christmas gifts or holiday travel. All those restaurants near federal buildings that saw their business evaporate during the shutdown will start having lunch crowds again, but nobody's going to be eating two lunches to make up for a month's worth of empty booths and untipped waitstaff.
Similarly, there will be a slight upward bulge in the demand for goods and services as the government starts buying again, but it may not restore spending that would have gone to suppliers that would have gotten business if the government had stayed open. Contractors that laid off custodians will hire some back, but some will have found other work, and nobody's going to get income back for floors that were unswept and shitters that went uncleaned for five weeks. Those contractors lost about $245 million a day, and for a lot of them, the money is just plain gone.
Update: Wouldn't you know it, just after this story went up, we saw this Washington Post story about the shutdown's ripple effects for just one government contractor. Everyone in the outfit lost their health insurance after the insurer refused to grant an extension on the premium (so much for Donald Trump's Bedford Falls scenario). One employee's husband has multiple sclerosis, and was in intensive care for an infection when the insurance stopped. He needs a prescription that costs $7,600 per month. They have enough of the meds to last until Friday, but the company won't be paid by the government until next month, and insurance won't be restored until ????? But don't worry, maybe they're Democrats, in which case Donald Trump won't have to think about it at all.
And in case you're wondering how this shutdown compares to the teeny-tiny Ted Cruz shutdown of 2013, the CBO estimated that sucker, which lasted just over a week, sucked about $1.6 billion (about $1.86 billion in 2019 dollars) out of the economy. Again, much of that was made back up as spending resumed, but some was lost forever. Heck, that was only on a par with a mild natural disaster, like the flash floods that devastated Colorado the same time as the Cruz Shutdown. You might remember Senator Michael Bennet giving Ted Cruz holy hell about that all over again, just last week.
So just imagine what a five-times-greater disruption would be like. Maybe as bad as a hurricane in some US territory Trump forgets is part of the USA.
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Doktor Zoom's real name is Marty Kelley, and he lives in the wilds of Boise, Idaho. He is not a medical doctor, but does have a real PhD in Rhetoric. You should definitely donate some money to this little mommyblog where he has finally found acceptance and cat pictures. He is on maternity leave until 2033. Here is his Twitter, also. His quest to avoid prolixity is not going so great.