October 1, 2013

How much might a government shutdown cost? Plenty, history says

$1.4billion

The estimated cost of the two federal government shutdowns in fiscal 1996 was more than $1.4 billion ($2.1 billion in today’s dollars).

You might assume that a shutdown of the federal government, which started to take effect Tuesday, would at least save taxpayers some money, even if it meant they couldn’t visit the National Zoo or get someone from the Small Business Administration on the phone. But you’d be wrong, according to the Office of Management and Budget.

The OMB, in a 1996 letter cited in a recent Congressional Research Service report, estimated the cost of the two government shutdowns in late 1995 and early 1996 (26 full days in total) at “over $1.4 billion.” Adjusted for inflation, that’s $2.1 billion in current dollars.

Much of that sum, wrote University of Maryland-Baltimore County political science professor Roy Meyers in 1997, was for back pay granted to furloughed federal workers — in other words, “what the government paid for the outputs it largely did not get on time.” It’s unknown whether federal workers would get any back pay after the government reopened for business  this time around.

But, Meyers continued, simply looking at salaries and other input costs may understate a shutdown’s real impact: “Was the cost to the economy [of delayed economic data from the Bureau of Labor Statistics and the Bureau of Economic Analysis] only the salaries and expenses of collecting this data, or was it greater? Did delayed IRS revenue collections cost more than the bill for paying auditors for taking a long Christmas break? What were the costs to those citizens who had to delay their enrollment for benefits, or to those who changed vacation plans due to closed national parks or unavailable passports?”

Category: Daily Number

Topics: Government Spending and the Deficit

  1. Photo of Drew DeSilver

    is a Senior Writer at the Pew Research Center.

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3 Comments

  1. Darryl10 months ago

    It’s sad the general population does not realize the US economy is like a string of dominos. Topple one and it bumps into the next and so on. A company like Harris Corporation gets more than 50% of its sales from the government. An extended shut down could cause the company to layoff. These laid off workers buy homes,groceries,clothing, buy insurance, entertainment etc. Depending on the concentration of workers, any reduction of sales affects all those that supply these goods and services and their communities. It reduces the tax base. Reduced sales then trickle up to suppliers and manufacturers. Proving a point economically can due as much damage as not to do anything at all. But the question remains, who is the point supposed to be proven to and what is their point?

    Reply
  2. Ron10 months ago

    What percentage of voting citizens realize that those government employes on furlough have previously been paid for there time off?

    Reply
  3. paratrooper10 months ago

    It probably wouldn’t cost so much if they didn’t pay the workers for the time they didn’t work!

    Reply