What is the cost of a government shutdown?

September 25, 2013

With Congress showing no signs of averting a shutdown, taxpayers may be wondering: How much would a shutdown cost or save the federal government?

(Pete Marovich/Bloomberg)
(Pete Marovich/Bloomberg)

It may sound counter-intuitive, but experts say closing down would definitely come with a price tag.

“I think of it like moving — it costs you to pack, and it costs you to unpack,” said Douglas Holtz-Eakin, former director of the Congressional Budget Office and president of the American Action Forum research institute. “Uninterrupted operations are cheaper than starting and stopping.”

In 1996, the White House budget office estimated that the shutdowns during that fiscal year cost $1.4 billion, according to a recent report from the Congressional Research Service. That amounts to roughly $2.1 billion in today’s dollars.

Some of that cost resulted from the financial toll of winding down and ramping up again, but most of it came from Congress granting back pay to federal workers who had been furloughed during the shutdowns, according to a 1997 report from University of Maryland, Baltimore County political scientist Roy Meyers. There is no guarantee that lawmakers would reach a similar agreement to compensate employees this time around, so the loss might not be as steep.

Either way, the government still incurs costs from paying workers to prepare for closure when they could be focusing more on their normal missions.

“All the agencies are running a fire drill for what do we do if we shut down,” Holtz-Eakin said. “They’re not doing things they would otherwise do.”

Regardless of what Congress might do about pay, the total cost is still hard to predict based on the 1996 numbers, because no one knows exactly when the potential closure would end this time around — it depends on when lawmakers finally agree to a spending plan. The Clinton-era shutdowns lasted a total of 26 days, taking place in two brief phases.

Another factor to consider with the cost of a shutdown is whether Congress passes appropriations bills to keep some parts of the government operating, as it did in 1996. So far, lawmakers have passed no such legislation, meaning the costs this time around could be more steep, at least under the assumption that closures cost money.

The private sector could also feel the impact of a shutdown, with government contractors facing potential slowdowns. In 1996, Signet Banking conducted a survey of its federal contractor customers, with nearly one-third of the 67 respondents saying they had to furlough employees because of the closures, while two-thirds said federal agencies paid them late, and more than half said they went more deeply into debt, according to a Washington Post report that year.

Contractors might respond to the shutdown by raising premiums on federal agencies and ultimately increasing costs for the government in the long run, according to the Meyers report.

(Correction: An earlier version of this article incorrectly identified Roy Meyers as a professor with the University of Maryland. He works with the University of Maryland, Baltimore County.)

To connect with Josh Hicks, follow his Twitter feed or e-mail  josh.hicks@washpost.comFor more federal news, visit The Federal Eye, The Fed Page and Post Politics. E-mail federalworker@washpost.com with news tips and other suggestions.

Josh Hicks covers the federal government and anchors the Federal Eye blog. He reported for newspapers in the Detroit and Seattle suburbs before joining the Post as a contributor to Glenn Kessler’s Fact Checker blog in 2011.
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Eric Yoder | September 25, 2013