“Two government shutdowns so far have cost taxpayers about a billion and a half dollars.” ~ Bill Clinton, January 20th, 1996. In today money, that is over $2 billion. But where does all that money come from? Intuitively, shouldn’t we be saving money by shutting down the government? Something along the lines of $2-3 billion per day? Actually, we probably won’t save very much, if any, money at all, and the money we do spend will be more inefficient than you would believe.
So why don’t we save money?
We don’t save $2-3 billion per day because we only furlough unnecessary employees, and because in past government shutdowns, we have often given out a lot of back-pay. The little money we do save is offset by serious costs like decreased tax revenue and increased government inefficiency.
So why is there increased government inefficiency?
There are a number of problems with running a large organization with half (or fewer) as many employees as you would ordinarily have. First, somebody has to plan it all out. That is a lot of man-hours spending taxpayer dollars doing something other than run the government during a time when people to run the government are scarce. Second, a lot of the work that would ordinarily be done by paid government employees is shrugged into the arms of the unpaid interns and volunteers who are supposed to be there to LEARN. Those individuals, all intentions aside, are simply less efficient than the individuals hired for the positions. Third, during a government shutdown, the IRS stops hounding people about paying their taxes, and we are lucky if someone is there to accept the checks that come in anyways. The EPA will not be collecting tens of millions of dollars worth of fines, let alone protecting our water quality.
In the long-term, government shutdowns can impact the government’s ability to hire and keep talented and valuable employees. Then you have to consider the opportunity costs. The government generally makes certain contracts at certain times. It spends its money in (to some extent) an efficient manner. When you take a few weeks, or a month out of the equation, you are forcing the government to spend some of its money in a less than optimal manner. That means that when the government does spend that money, it will be a) a larger amount of money for the same goods and services, or b) the same amount of money for less valuable goods and services.
So what other costs can be associated with a government shutdown?
The economy will take a small hit. People simply lose faith in the economy and the government when this sort of thing happens, if for no other reason than that the powers that be say it will impact the economy. Shutting down the government is a self-fulfilling prophecy. Calamity happens partly because calamity is predicted. Calamity also happens because putting a million people out on the street with no paychecks for a month just has a way of coming back to bite you.
The pandemonium of hundreds of government websites lacking tech support, national parks being left defenseless, and office buildings being run by volunteers can lead to dire consequences. Rumor has it that the Lewinsky-Clinton thing started in the midst of the 1996 shutdown when fate brought them together.
Of course the single biggest reason that shutting down the government is a bad idea is that it affects EVERYONE. I, for one, thought that I would be able to escape unscathed. When I realized that someone I know has an uncertain paycheck over the next month, I felt a little bad. Then I needed a transcript of a previous tax return from the IRS to prove just how not rich I really am. But thanks to the tea party, I am now doomed to go through life as a billionaire.
Sometimes Profound 