When Congress fails to approve a budget in time and a closure of government occurs, the effects go far beyond the political. Although it seems a distant political conflict, the reality is that every week of inactivity it costs billions to the country’s economy and directly affect your pocket, both immediately and in the long term. You, as a worker, as a taxpayer or as a public services user, end up paying the consequenceseven if you have nothing to do with Washington.
According to economist Gregory Daco, from Ey-Parthenon, Every closing week it costs the US economy $ 7,000 million. Besides, Gross Domestic Product (GDP) of the country loses 0.1 percentage points for each week without normal federal operations. This is not just a number: it represents services that stop, payments that are delayed and jobs that are put at risk.
One of the main expenses is represented by federal employees that are suspended (furlouned) without working. However, The law requires that their complete salary be paid once the government resumes operations. The Congress Budget Office (CBO) calculates that, during the current closure, The government continues to pay $ 400 million daily in salariesalthough employees are not working. That money comes out of the federal budget, that is, the taxes that you and millions of citizens pay more.
And this is not something new. In the last three federal closures (2013, 2018 and 2019)it is estimated that taxpayers lost almost $ 4,000 million, of which At least $ 3.7 billion were to pay unbalanced salaries. In addition, there were $ 338 million in administrative expenses, lost income and penalty for backward payments, according to a Senate report.
During the longest closing of history, in 2018-2019, which lasted 34 days under the government of Donald Trump, The country lost $ 11,000 millionaccording to the CBO. Of that figure, $ 3,000 million of dollars never recovered, due to the loss of productivity and interrupted services.
But the cost is not just prosecutor. There is also loss of income for small businesses, especially those that depend on contracts with the government or tourism in national parks, which usually close. If you or someone in your community works in this type of sectors, the economic impact can feel in the form of less sales, cuts or even dismissals.
Besides, closures cause delays in essential procedures: Migratory permits, requests for social benefits, visa processing and more. All this accumulates and directly affects those who depend on these services.
The current situation could be even more serious. President Donald Trump and his budget director, Russell Vought, have warned that Permanent cuts are already preparing. Vought froze or eliminated funds for projects in Democratic states, including $ 18,000 million in works in New York. Climate change programs are also being canceled and massive dismissals of federal employees are planned under the figure of “personnel reduction” (RIF).
“We can do things during closing that are irreversible to them … how to cut programs they like (Democrats),” said President Trump.
In addition to direct economic damage, Closing also affects consumer confidence. During the end of 2019, the strongest drop in the consumer confidence index has been recorded since 2012according to the University of Michigan. Uncertainty impacts the spending of families, which in turn slows economic recovery.
In other words, it is not only the government that is paralyzed. You pay more taxes for less services. You waste time in delayed processing. In the end, the one who ends up paying the total cost of these is you and all the workers.
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