A government shutdown occurs when Congress fails to pass or the president refuses to sign a spending bill to fund the federal governments operations, resulting in a funding gap that can cause several government functions to be temporarily disrupted. Here are some reasons why government shutdowns are harmful:
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Costly: Government shutdowns are expensive. A government shutdown pauses programs and government operations, only for them to eventually start up again, and that has costs. For example, the lost productivity of government workers during the shutdown in 2013, which lasted 16 days, cost the government $2 billion.
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Bad for the economy: Government shutdowns can harm economic growth and certainty. They can impose costs on the economy such as increasing the unemployment rate, lowering the growth in gross domestic product (GDP), and raising the cost of borrowing. The government shutdown in October 2013 reduced fourth-quarter GDP that year by 0.3 percentage points.
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Interrupt federal programs and services: A government shutdown leads to the temporary closure or reduced operation of non-essential government services. Some federal employees may be furloughed or temporarily laid off, while essential employees continue to work without pay. Shutdowns can be disruptive, leading to delays in processing applications for passports, small business loans, or government benefits; shuttered visitor centers and bathrooms at national parks; fewer food-safety inspections; and various inconveniences.
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Cost to the economy: Shutdowns tend to cost – not save – money for several reasons. For one, putting contingency plans into place is expensive. Additionally, longer shutdowns negatively affect private-sector investment and hiring decisions as businesses cannot obtain federal permits and certifications or access federal loans. The 2018-2019 shutdown reduced Gross Domestic Product (GDP) by a total of $11 billion, including $3 billion that will never be recovered.
Shutdowns are sufficiently likely that the White House Office of Management & Budget posts detailed contingency plans that government agencies maintain for shutdowns, as well as a Q&A on shutdown procedures.
