Government shutdowns tend to increase government spending

Within two years of President Trump taking office as the nation’s first “very stable genius,” external opposition and internal dissension have led to a string of funding lapses and threats of shutdowns if policy demands are not met. Even as rhetoric of compromise spills from the mouths of newly-elected officials, our leaders have allowed political differences to distract them from their purpose: to create legislation that’s beneficial to the masses.

The game of politics is often marred by false promises and catchy jargon. While I admit that I am mildly entertained by the backbiting during campaign season, I still believe that political leaders can assuage the political divide in Washington. As I recall the 2013 government shutdown, a daunting memory that still creates palpitations in the hearts of many government workers, my faith in politics is razed. I remember the anxiety I felt as I awaited news on budget negotiations and feeling my hope dashed as another day without a resolution passed by.{mosads}

Now, as we enter a new fiscal year and the ending of another continuing resolution, threats of an end-of-the-year funding lapse echo throughout Washington. I have always questioned whether our economy was strong enough to recover from a production freeze by the nation’s largest employer. I considered the economic effects, particularly changes in consumption, resulting from millions of workers being forced into a furlough.

Data obtained from the Bureau of Economic Analysis confirm that during a shutdown, government consumption declines, then rises sharply in subsequent periods, and remains at those levels long after funding is fully restored.

Government expenditures increased sharply during the 2007-2009 recession but began to stabilize in 2010. Government expenditures remained at relatively low levels in 2010, 2011, 2012, and 2013 but rose sharply in 2014, 2015, 2016, and 2017. The government shutdown of 2013 reversed the decreasing trend in expenditures.

Historical data show that Congress often allocates additional funding to ease the government’s transition following a closure. Furthermore, economic projections from the Congressional Budget Office now estimate the national deficit will be 100 percent of the gross domestic product by 2028. In other words, our nation’s debt will be equal to production. You don’t need to be a financial wunderkind to understand that this prediction is no bueno for the U.S.

Given that there is sufficient evidence that a short-term government closure could lead to an increase in government spending, what can our leaders do to reverse this outcome?

I propose the creation of a rainy day fund that would subsidize the cost of restoring government operations following a shutdown. I wonder if such a measure would result in expedited budget negotiations and more “fiscal responsibility,” a phrase that politicians often parade around but fail to heed. Perhaps this is just wishful thinking.

For now, we can only hope that “Make America Great Again” is a call to action to bandage the political divide in this nation and to restore America to a time when leaders spoke on behalf of those without voices and fought for the dignity of the oppressed and underrepresented. Yes, let us return this great nation to a time of healing.  

LeRoynda Brooks is an economist with the U.S. Department of Homeland Security; previously she has worked for the U.S. Coast Guard and the Bureau of Economic Analysis. She is a published author and Board Member of the Society of Government Economists.