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Does the government shutdown have an effect on the budget deficit / national debt?

If so, how much money does it save/cost?

I'm looking for an answer that tries to estimate the actual impact that the shutdown will have, rather than a theoretical answer in a frictionless vacuum.

  • It is unclear what you are asking here. The deficit is a measure of receipts to outlays for the FY2014, the shutdown has reduced that by $612 billion). This is a savings of $1.67 billion/day. This savings effect on the debt (the amount we have borrowed =~ $16,700 billion) is a reduction to the increase in total debt from ~$17,312b to ~$16,730b, (or as a percentage of increase in the debt from 3.67% to 0.018%). The government shutdown hasn't ended, so we cannot give you a total cost/savings. The best we can do is give a day savings of $1.67 billion, or a savings for the entire year $612b. – user1873 Oct 15 '13 at 19:40
  • What is most interesting is that the shutdown actually might balance the budget. – user1873 Oct 15 '13 at 19:47
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As noted in this question here, the shutdown has resulted in a 17% reduction in spending:

Based on estimates drawn from CBO and OMB data, 83 percent of government operations will continue. This figure assumes that the government pays amounts due on appropriations obligated before the shutdown ($512 billion), spends $225 billion on exempted military and civilian personnel, pays entitlement benefits for those found eligible before the shutdown (about $2 trillion), and pays interest costs when due ($237 billion). This is about 83 percent of projected 2014 spending of $3.6 trillion.

This means we are spending $2,988 billion this fiscal year (Oct2013-Sept2014) instead of $3,600 billion, or a savings of $612 billion in FY2014. According to CBO figures in July, we will decrease the deficit from $642 billion to $30 billion. During the shutdown, we will increase our debt at a rate of $30 billion per year instead of $642 billion (or as a percentage, 0.18% instead of 3.84%)

If the current laws that govern federal taxes and spending do not change, the budget deficit will shrink this year to $642 billion

PolitiFact says that the 85% estimate is plausible.

In order to reach Paul’s 85 percent threshold, the government would need to be spending $404 billion from its "discretionary" (or appropriated) budget beyond military personnel. That means the government would be spending 43 percent of the remaining discretionary spending on activities that continue through the shutdown.

Experts we spoke to said that percentage is plausible. Even if you cut that $404 billion figure in half, Paul would still be pretty close -- the figure would be 79 percent rather than 85 percent. We’ll only know the final number for certain after the shutdown is over.

If you assume that the economy will be affected by the shutdown the same way it was during the 1995-1996 shutdown, you have to reduce the savings estimate by $27 billion. This would mean that the deficit would be reduced by $585 billion, and the debt would increase $57 billion instead of the projected $642.

To figure a day to day savings, multiply these figures by (1/365). To figure total savings during the entire shutdown (multiply by #days shutdown/365). If employees get paid retroactive back pay for not working, ending the shutdown will cost $27b * (#days shutdown/365).

  • @SamIam, all estimates above are based off CBO estimates of FY2014 which begins in Oct, and ends in Sept 2014. To figure savings based upon an arbitrary date (such as the end of the year), take my answer and multiply it by the (# of days shutdown/365). If you specifically wanted that, you should have asked in the OP. Furloughed employees havn't been assured back-pay, but will likely get it since the House passed a bill.If you assume all will be paid, even if they didn't work, the shutdown cost $27b, or 0.16% the debt or 4.2% the deficit – user1873 Oct 15 '13 at 17:38
  • Almost all of your figures are directly extrapolated from that 83% figure that you quoted from what I'm guessing is the Washington examiner, and you're operating under the assumption that suspending 17% of government operations doesn't carry with it any overhead costs whatsoever. I don't think that that is a valid assumption. – Sam I am Oct 15 '13 at 20:16
  • @SamIam, What are the overhead costs of not doing something? I have not seen any estimates from the CBO or OMB regarding the cost of not operating the 17% of the government that is shutdown, but when they do I will be sure to include them. Do you have or have you heard any estimates regarding the cost of not running any particular department? – user1873 Oct 15 '13 at 20:26
  • I say this on SO all the time, and I'll say it here. If you don't have enough information to actually answer the question, than maybe you shouldn't post an answer. – Sam I am Oct 15 '13 at 20:32

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