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7 January 2019

How much is the Trump Shutdown costing America? As much as half a billion dollars a day

Figures from an OMB study of the 2013 shutdown show that, between lost GDP growth and wasted spending, shuttering the government is very costly indeed.

By Nicky Woolf

As the Trump shutdown enters its third week, thousands of federal employees from eight government departments remain furloughed as Trump digs in over funding for his border wall.

But how much is it costing the US to have its federal government shuttered? Working out the true cost is more complicated than you might think, as there are several different angles to explore. Trump’s shutdown has now passed the length of the 2013 government shutdown, which lasted from October 1 to October 17, so that makes for a useful comparison point.

The first and greatest cost of any shutdown is that of paying the federal workers when they return. In 2013, according to a study by the Office of Management and Budget (OMB), reconciling the federal payroll alone for those 16 days cost $2.5bn – around $156m per day.

This is, of course, payroll that would have been paid out anyway – but it is being paid to workers who have not been working. That, according to the OMB report, meant a vast increase in backlogs for a wide range of things, from the fulfilment of veterans’ disability claims and delays in payment of tax refunds – which means the accrual of additional late-fees – and processing of home loans, to the interruption of clinical trials being performed by the National Institutes of Health.

On top of that, there are other costs to extended government shutdowns. The National Park Service estimated that the 2013 shutdown cost it $7m in direct revenue from the more than 700,000 people who visit US national parks every day, while the Smithsonian Institution lost $4m in direct revenue. That is not the only direct cost: tourists visiting national parks spend much more than just the entrance fee on buying tourism products in communities that surround the parks; the National Park Service estimated that the shutdown led to a loss of over $500m in tourism spending. 

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This $500m equates to roughly another $31m per day to our running total, which, along with the loss in NPS revenue of $11m and the $156m per day from the federal payroll, brings us to $198m of wasted taxpayer money every day by the Trump shutdown.

Those are just the direct costs. The indirect impact on the economy is even worse: analysts at the ratings agency Standard & Poor’s estimated that the 2013 shutdown “shaved at least 0.6 per cent” off the GDP growth that quarter, which would translate to around $6bn in lost economic growth. Partly because of this slowdown in growth, the Council of Economic Advisers estimated that 120,000 fewer private sector jobs were created during the 2013 shutdown.

That translates to around $375m in lost growth, on top of the $198m in wasted spending, for a (rough) total cost of around $573m every day for the Trump shutdown.

These numbers are an estimate, of course – but they are based on 2013’s economy, so they are, if anything, likely to be underestimates. Gordon Gray, director of fiscal policy at the American Action Forum, told Time that, compared with 2013, the impact of the shutdown today would be bigger because “the economy is bigger, and the government is bigger.”

Then there are the non-fiscal costs to consider. Federal employees may be eventually paid back, but while their paychecks are withheld their families are having to go without income that some of them sorely need. Veterans are unable to access badly needed services, and the already swamped Veterans Affairs department will fall even further behind in processing their claims for medical care and other support.

Key research, from flu monitoring to Antarctic ice research to the operation of the nation’s radio telescope arrays, was set back – often by much longer than simply the shutdown period, because studies that were interrupted may need to be started again from scratch.

The Trump shutdown has already gone on longer than 2013’s, seemingly with no end in sight: congressional Democrats have presented a raft of bills that would open some government agencies and mitigate some of the damage, but Trump is digging his heels in over his wall. It remains to be seen who will crack first, but in the meantime Trump’s intransigence over a gigantic folly – his stupid wall – is costing American taxpayers an awful lot.

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