Shutdowns cost billions as US federal workers paid to stay home
Bloomberg September 25, 2023
The costly truth about U.S. government shutdowns: They don’t save taxpayers a dime.
Government services may grind to a halt as federal workers get sent home. But, thanks to uncollected entrance fees at national parks, lack of sales from government gift shops and back pay provided to government employees, shutdowns can end up costing billions of dollars.
“The main thing government shutdowns do is leave the government to waste money,” said Marc Goldwein, a senior policy director at the Committee for a Responsible Federal Budget, a Washington-based watchdog group. “We pay federal workers their regular salary in many cases not to deliver government services.”
With less than a week left before a lapse in federal funding that would shutter a host of government services, Congress is struggling to pass a short-term spending bill needed to keep the government open past the new fiscal year beginning Oct. 1.
While federal workers are not paid during a shutdown, legislation signed into law providing back pay for some 800,000 workers after the shutdown in fiscal year 2019 also required employees affected by future government funding lapses to receive missed payments.
The last three government shutdowns combined cost taxpayers nearly $4 billion, including at least $3.7 billion in back pay to furloughed workers and about $338 million in other fees including extra administrative work, lost revenue and late fees on interest payments, according to a 2019 report by a subcommittee of the Senate Homeland Security and Governmental Affairs Committee.
The report, which looked at shutdowns that occurred in fiscal years 2014, 2018 and 2019, found that the cumulative number of furlough days represented an estimated 56,938 years of lost federal worker productivity.
The National Park Service alone lost $7 million in revenue during the 16-day shutdown in fiscal year 2014 because it didn’t have staff to collect fees and issue permits, according to the National Parks Conservation Association.
Reopening the government after a shutdown costs money, too. Time spent by Treasury Department employees on restarting operations after shutdowns cost between $11 million to $12 million each, according to the Senate report, which was written by the Permanent Subcommittee on Investigations.
It’s not just the federal government that loses money during a shutdown. The shutdown in fiscal 2019 reduced gross domestic product by a total of $11 billion in the following two quarters — including $3 billion of which will never be recovered, according to the Congressional Budget Office.
A shutdown could have other economic impacts, too. The 35-day shutdown that began in December 2018 and ended in January 2019 delayed over $2 billion in Small Business Administration loans, while mortgage applications dropped 7% during the second week of the shutdown in fiscal year 2014, according to a brief published earlier this month by the Senate Joint Economic Committee.
Also at risk, some $13 billion per week in federal contracts that could be halted or delayed during a closure, according to the document, which was published by committee Democrats.
“I don’t think people who are arguing we should shut down the federal government have thought through all of the unintended consequences,” said Bill Hoagland, a former Republican budget director in the Senate now with the Bipartisan Policy Center. “It does affect people definitely.”