Policy Points: Government Shutdown Would Be a Job-Killer

By Zach Bernstein

As much fun as a relaxing vacation can be, coming back from one can be stressful. After spending days away from the office, returning to your desk only to find wave after wave of unread emails can be a daunting prospect.

If you think you’ve got it bad, though, consider this: 535 Americans returned from a month-long vacation recently, only to find they had a month to avoid something that could cost the economy billions of dollars.

We’re talking, of course, about the threat of a government shutdown.

Congress is supposed to pass legislation to fund the federal government, but progress has stalled in the run-up to the Sept. 30 deadline. The debate in Congress centers on funding for Planned Parenthood, which has been besieged by controversy over a series of recently-released videos.

The bottom line is this: If Congress doesn’t pass a funding bill by Sept. 30, the government will shut down – and jobs will be lost as a result.

Dj vu all over again

If it feels like we’ve been here before, we have: The government shut down for 16 days in October 2013. In that case, the debate was about continuing to include funding for the Affordable Care Act in the federal budget; Republicans called for defunding the law, something Democrats and President Barack Obama refused to consider. That shutdown ultimately ended with some minor adjustments to the law, but it remained in place.

While there has been continuing debate over the Planned Parenthood videos, and what if any federal funding should go to that organization — and indeed, whether a shutdown would even affect Planned Parenthood’s operations — there’s little debate that a government shutdown is nothing but bad news. Unfortunately, this knowledge comes from experience.

One estimate from financial ratings agency Standard and Poor’s said the 2013 shutdown cost the country $24 billion, or $1.5 billion a day. We’re not just talking about impacts on, say, federal contractors: The shutdown had direct adverse impacts on a number of businesses and industries, according to a White House report (PDF).

Of course, federal employees were also not paid during this time, slowing down spending for a number of businesses that count those employees among their customers. Even though they got back pay once the shutdown was over, not all of that lost spending — particularly on things like trips to restaurants or the movies — was going to be made up.

That helps explain why another White House report (PDF) found that, through the first 12 days of the shutdown, congressional inaction reduced job growth by 120,000.

And that’s just one 12-day stretch. By another estimate, fiscal policy uncertainty since 2009 cost the economy 900,000 jobs.

The spirit of reconciliation

Following the 2013 shutdown, President Obama spoke about the need to “get out of the habit of governing by crisis. We could get all these things done even this year, if everybody comes together in a spirit of, ‘How are we going to move this country forward and put the last three weeks behind us?’”

That sentiment still rings true today. In addition to passing a budget, congressional leaders have a lot on their plate that needs immediate action.

They could work on reforming the tax code to reward businesses with good workplace practices and remove loopholes that allow others to stash profits overseas. They could pass good workplace legislation to expand paid leave and earned sick days to more American workers. And they could take steps to cut carbon emissions and address climate change.

Unlike a shutdown, each of these would contribute to an economic boon, helping boost the bottom line for companies across the country. Many, if not all, of those policies also have majority support, including among businesses.

First do no harm

Even if Congress still refuses to get on board with those policies, there is no reason to even contemplate another government shutdown. The fact that we’re even discussing this as a possibility could chill economic activity. After all, would government employees be as willing to make new purchases if they have to worry about missing out on paychecks? Will companies that work with the government be certain they’ll be paid for their services on time?

Whatever political points either side may be looking to gain from this, they should be asking themselves: How many points is it worth scoring if the economy takes another multibillion-dollar hit in the process?

Both sides of the aisle may disagree on a lot, but they should at least be able to recognize that smart businesses don’t operate crisis-to-crisis — and that government shouldn’t either.

Image credit: Flickr/NCA Photos

Zach Bernstein is Research Manager for the American Sustainable Business Council.

Policy Points is produced by the American Sustainable Business Council. The editor is Richard Eidlin, Vice President – Public Policy and Business Engagement.