Government Shutdowns Are Actually Really Expensive

Lost wages, canceled vacations, and dampened consumer confidence all make government shutdowns the ultimate own goal.

The federal government shut down at midnight on Saturday after Republicans and Democrats in Congress failed to agree on a spending deal, leaving agency offices dark and federal employees around the country waiting to be furloughed.

The standoff could inconvenience millions of Americans, depending on how long it lasts. But if nothing else, at least we’ll save some money in the meantime, right?

Not at all, actually. We might assume that government grinding to a halt would spare us some taxpayer dollars. But past shutdowns have demonstrated that the opposite is true ― these interruptions are actually quite expensive, both for government and the broader economy.

There are lots of ways that government closures waste money. For starters, while members of Congress bargain and posture in the days leading up to the deadline, federal agencies have to prepare for the possibility of a shutdown, whether it happens or not. That means they’re basically spending time and money getting ready to close, rather than carrying out their basic functions.

Once Congress hashes out a deal and operations finally resume, these agencies have to play catch-up. They inevitably have backlogs to deal with, and the disrupted workflow hurts customer service and makes offices less efficient, as the Government Accountability Office has found in the past. Think about when you come back to work after being sick for a few days ― the work didn’t disappear, it just piled up on your desk.

But don’t we save money on labor costs with all the furloughs? Nope. In previous shutdowns, Congress has retroactively passed legislation to pay federal workers for all the work they missed ― as well it should. These folks have bills to pay and families to feed. Why should they pay a price because their representatives couldn’t get their act together?

That means the government ends up paying for work that simply didn’t get done. After the last shutdown ― a two-week closure in late 2013 ― the Office of Management and Budget was able to put a price tag on the squandered labor: roughly $2 billion for 6.6 million furloughed work days.

Of course, there are plenty of workers who end up losing paychecks altogether: federal contractors, who normally aren’t granted back pay by Congress. When the Smithsonian closes, the cook who handles a grill inside the Smithsonian is out of a job. He might recoup some his pay by applying for unemployment insurance, but it won’t cover everything he lost because the government shut down.

“The federal government ends up paying for work that simply didn’t get done.”

That’s money the cook normally would have pumped into the economy. And then there are all the visitors who won’t be going to the Smithsonian or other federal sites and spending money there.

During the 2013 shutdown, the National Park Service estimated it was losing 715,000 visitors and around $500,000 in revenue each day. (Knowing just how much Americans love their national parks, the Trump administration has been trying to find a way to blunt the political damage by keeping parks open ― even though experts say it’s foolish and dangerous to do so.)

The museum and park closures only hint at the broader economic output lost because of a shutdown. Standard & Poor’s estimated that the 2013 shutdown sucked $24 billion out of the economy, cutting quarterly gross domestic product growth by 0.6 percent. The ratings agency noted that shutdowns deliver a blow to consumer confidence, particularly for the hundreds of thousands of workers who don’t know if or when they’ll get paid.

It’s possible that lawmakers and the White House will strike a deal soon. But even if the shutdown is brief ― and even if the next one is averted entirely ― there will still be a cost to the way Congress does business now. That is, cobbling together short-term continuing resolutions, rather than long-term deals, and always taking brinkmanship to the midnight hour.

After all, we can’t expect the government to run efficiently when the possibility of a shutdown is pretty much always around the corner.