The Atlanta Journal-Constitution
It's expensive to shut down
A federal government shutdown might seem like a great way to save money: When agencies aren’t open, they aren’t spending tax dollars. But history shows us that closing the government actually costs more than keeping it open.
“There’s nothing good about this shutdown, from a fiscal or a budgetary standpoint,” said Michael A. Peterson, chairman of the Peter G. Peterson Foundation, which advocates fiscal prudence and federal debt reduction. “We’re absolutely not celebrating not spending money.”
Here are some ways that the shutdown raises costs for the federal government:
Employees will eventually get their salaries — for work they weren’t allowed to perform
As a general rule, when the government spends money on something, it’s better to get something in return. Paying someone to empty trash bins in parks is better than paying that same person to sit at home while the trash piles up and then paying more later to actually empty the trash.
That’s what the government is currently doing with hundreds of thousands of workers.
Some taxes and fees won’t be collected
Americans still need to file their income taxes by April 15, whether or not the government is open. But the Internal Revenue Service has furloughed employees in charge of collecting back taxes. That will deprive the government of revenue.
So will closures or reduced services at national parks. Closed parks can’t collect fees.
The government will owe other payments, with interest
Laws called the Prompt Payment Act and the Cash Management Improvement Act require the federal government to pay interest on con- tracts, grants and other obligations that it is unable to fund during the shutdown. If, for example, NASA is unable to pay a contracting company on time during a shutdown, it will still have to pay that money once operations resume — plus some extra. The Prompt Payment interest rate for the first half of this year is 3.625 percent, according to the Treasury Department.
The economy will take a hit ...
When 800,000 federal workers don’t get paid, as was the case Friday, the economy loses some consumer spending power.
The same goes for federal contractors, from cafeteria workers to technology specialists, whose livelihood depends on getting paid by the federal government.
Businesses and landlords grow uncertain about how much money they will earn in the near future, which could lead them to hold off on investment.
... And so will tax revenues
Slower growth would likely lead to lower tax revenues, adding to a federal budget deficit that is on pace to top $1 trillion for this fiscal year.
The payments on that debt are getting more expensive thanks to higher interest rates.