Federal budget

Tallying the cost of the shutdown

worried man finances

It's hard to put a price tag on the costs of the October government shutdown. Standard and Poor's estimated the partial closure eliminated $24 billion in economic activity. Now the Office of Management and Budget has released its own assessment of the impact of the 16-day stalemate.  Among the high points:

  • 6.6 million work days lost, with $2 billion paid to idled workers. (A conservative estimate according to OMB Director Sylvia Mathews Burwell, because it does not take into account the work hours sunk into preparing for the shutdown or digging out afterward.)
  • 850,000 workers -- about 40 percent of the civilian workforce – furloughed for at least part of the shutdown, dropping to 400,000 after the Department of Defense brought back most of its civilian employees.
  • Small business contracts with DOD fell by nearly one-third, and spending on small business contracts was down by 40 percent. However, the report includes no top-line number attached to the economic impact of lost wages and layoffs for government contracts.

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Get the report.

The report details the effects of the shutdown on government programs, notably delays in the release of economic data and a projected delay in the start of the 2014 tax filing season. The government will continue to pay for the shutdown in other ways, including interest on late payments, such as IRS refunds and contractor awards. Burwell did not have a precise figure or estimate for these costs.

Less tangible are the effects on the morale of government workers. There's no data in the report to quantify whether employees are more likely to retire early or transition to jobs in the private sector as a result of furloughs, but there is a widespread belief inside government that the shutdown exacerbated a morale problem that was already growing because of sequestration, pay freezes and carping at civil servants by elected officials. "At the end of the day, the government shutdown risks seriously damaging the ability to attract and retain the kind of driven, patriotic Americans to public service that our citizens deserve and that our system of self-government demands," the report concludes.

The report comes as the next round of budget negotiations are starting in Congress.

Part of the deal to end the shutdown and raise the debt ceiling was the creation of a conference committee led by Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.), the chairs of the Budget committees in the House and Senate, respectively. Their job is to work out a budget or a continuing resolution by Jan. 15 to prevent a repeat of the October shutdown. The deadline to extend the debt limit is just a few weeks after that.

The OMB report serves as a reminder to the public that another budget crisis and possible shutdown loom, despite being knocked out of the headlines by the botched rollout of HealthCare.gov.

The 2014 Federal 100

FCW is very pleased to profile the women and men who make up this year's Fed 100. 

Reader comments

Tue, Nov 12, 2013

The "shutdown" cost a lot because 1) the Fed has its fingers into far more deeper in everyone's business than it should thereby whatever actions/changes it does usually costs lots of people and organizations more than what it would if it had a far softer touch and 2) the Fed is so inefficient that anything it does tends to create plenty of waste. Even when it "shutdown" it spent additional money to unneccessarily block access to roads and parks, shut down businesses on lands partially or totally owned by the Fed, then turned around to pay their laid off employees for the time they did not work. The government is about the only organization that lays off their employees then turns around to pay them for not working - sometimes even when the employee is the one responsible for the layoff (admistrative leave). Cut back the scope and depth of the Federal government, and you will see a great reduction in costs not only when it is fully working, but also when it is "shutdown".

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