The partial government shutdown driven by President Trump’s demand for a $5.7 billion down payment on his proposed border wall will exceed the costs of his demand within less than two weeks, according to S&P Global Ratings.
According to the report, the U.S. economy has already lost $3.6 billion through the first 21 days of the shutdown, or roughly $1.2 billion per week. The shutdown, which is now the longest in history, will cost more than the $5.7 billion that Trump is demanding sometime in the next two weeks, the agency projected.
"The longer this shutdown drags on, the more collateral damage the economy will suffer,” S&P Global Ratings said.
The shutdown has had numerous direct and indirect effects on the economy. Roughly 800,000 federal employees have either been furloughed or asked to work for no pay. Nearly $2 billion in pay was not distributed last week when workers were scheduled to receive their paychecks.
Contractors cannot work during the shutdown, so their employees are not being paid either. Some of those employees may never receive back pay after the shutdown, as the federal workforce presumably will.
On the business side, CNBC reported that a furlough of employees at the Securities and Exchange Commission has led to a slowdown in initial public offerings, so companies are not going public as scheduled.
Along with federal workers who are unable to contribute to the economy because they aren’t being paid, the closure of national parks, federal museums and monuments has also led to canceled vacations and an associated decline in tourism revenue.
It’s unclear how much longer the shutdown will continue. Trump said last week that it could stretch for months or even years. While the second scenario is unlikely, the uncertainty means it is currently impossible even to estimate the full cost of the shutdown.
In 2013, the Bureau of Economic Analysis estimated that the 16-day government shutdown cost the United States 0.3 percent in real GDP growth, Vox reported. Ian Shepherson, the head economic at consulting firm Pantheon Macroeconomics, told the outlet that “if the shutdown lasts through the whole quarter, we would look for an outright decline in GDP.”
Federal Reserve chair Jerome Powell also warned Thursday that a prolonged shutdown could have a significant impact on economic growth.
“A longer shutdown is something we haven’t had,” he said at an Economic Club of Washington event. “If we have an extended shutdown, I do think that would show up in the data pretty clear.”
Trump has been unrelenting in his pursuit of wall funding and there have been no tangible steps toward ending the shutdown since it began. House Democrats have approved bills that would reopen the government, but Senate Majority Leader Mitch McConnell has refused to allow a vote on any legislation without a guarantee that Trump will sign it. Since the Senate unanimously passed a spending bill that would have kept the government open had Trump signed it, a veto-proof majority in the Senate is more than conceivable. What is currently lacking, of course, is the political will.
“It seems clear to nearly everybody but Leader McConnell that Congress needs to move forward without the president,” Senate Minority Leader Chuck Schumer, D-N.Y., said Monday. “At every juncture, the president has been the obstacle to progress.”