Smooth Move, Sen. Cruz – Shutdown cost at least $24 Billionby David Pinar on Oct. 16, 2013, under Pol. & Govt.
S&P estimates the 16 day federal government shutdown, led by the crusade by Texas Senator Ted Cruz to defund “Obamacare” (Affordable Care Act) or our government get its, has taken $24 Billion out of the economy, and taken .6% out of GDP growth for the fourth quarter 2013, and that’s just for starters. S&P predicts the hit to our economy will be even greater as the effects of the shutdown and pushing our debt limit right up to the last day devastates consumer and business confidence in our economy.
In the summer of 2011, as we approached the last debt ceiling standoff, consumer confidence plummeted and hit a 31-year low in August when the debt ceiling issue came to a head. Given that this round of debt-ceiling negotiations is occurring after two-plus weeks of a government shutdown, the total impact on the economy will likely be even more severe.
While we believe the Senate deal will be passed and the debt ceiling will be raised, the impact of a default by the U.S. government on its debts would be devastating for markets and the economy and worse than the collapse of Lehman Brothers in 2008.
The bottom line is the government shutdown has hurt the U.S. economy. In September, we expected 3% annualized growth in the fourth quarter because we thought politicians would have learned from 2011 and taken steps to avoid things like a government shutdown and the possibility of a sovereign default. Since our forecast didn’t hold, we now have to lower our fourth-quarter growth estimate to closer to 2%.
The impact to the economy this time will be worse than in the summer of 2011, when Republican brinkmanship last reared its ugly head. Smooth move, Mr. Cruz – just as consumers and business gets ready for the busy holiday shopping season they’ll be thinking “they shutdown government, and now by Jan. 15 we gotta go through this all over again? Better keep the wallet closed“. The S&P thought “politicians had learned a lesson” from the brinkmanship of pushing America to the brink of default in 2011? Naw, not with new conservative darlings like Senator Ted Cruz to cheer them on. I’m not sure what is more damaging: a freshman Senator a whole 10 months into his job thinking he can undo the results of the 2012 election, or the conservative lemmings who followed him to the edge of the cliff. The Republicans in the Senate have now negotiated the terms of their surrender, and the Senate will now vote this evening to restore government funding to what it was on Sept. 30 though Jan. 15 2014, and to raise the debt limit through Feb. 15. In exchange, the Republicans get . . . . nothing, exactly what they deserve. And with Senate Republicans now surrendering, Sen. Cruz has offered his unconditional surrender: he will do nothing to block the vote, saying doing so would “accomplish nothing”. We wish we could say his 16 day government shutdown also accomplished nothing, but unfortunately it made a direct hit on our under-performing economic recovery.
$24 Billion, just from the 2 week plus government shutdown. Let’s put that in perspective:
Determined to cut government spending on the safety net for our fellow citizens in need, the Republican House voted to cut $40 Billion from the SNAP “food stamp” program, $4 Billion a year for the next 10 years. Well, the $24 Billion the government shutdown cost us would have paid for 6 years of the current funding level – with no one going hungry.
The only federal government “welfare” program that provides direct cash payments is the Women and Infant Children (WIC) program, which provides temporary benefits to families in need with infant children needing food and shelter costs $6.8 Billion per year. The cost of the government shutdown would have paid over 3 years of that program.
Funding for the Corporation of Public Broadcasting (PBS), a frequent target of conservatives, cost only half a billion dollars per year, the cost of the government would have paid for almost 50 years of that government support for public broadcasting.
The cost of the Apollo Space Program, which accomplished President John F. Kennedy’s vision for putting an American on the moon by the end of the (1960s) decade was . . . you guessed it, $24 Billion, the amount we lost of the 16 days of the Cruz/Republican government shutdown.
The next time a Republican politician tries to tell you he or she is for for “fiscal responsibility”, remember the Cruz/Republican government shutdown, and enjoy a good laugh. Or better yet, tell them to go Cruz it.