GROUP: NO Negative Effect from Gov’t Shutdown on GDP

‘Most of these agencies are filled with ‘nonessential’ activities that could be radically downsized…’

Failure to Protect Intellectual Property Kills Economic Growth

Stephen Moore/Photo by Gage Skidmore (CC)

(Liberty Headlines) In response to recent suggestions that the ongoing partial government shutdown will result in a one percent decline in GDP growth, Stephen Moore, FreedomWorks’ Senior Economic Contributor, commented:

A government shutdown may be a foolish way to resolve partisan disputes, but the wildly exaggerated costs of this shutdown aren’t even close to reality.

For example, the recent private estimates that the partial government closure could reduce first quarter GDP by one percentage point neglects to mention that most of this “loss” will be recouped in the 2nd and 3rd quarter activities, when the money is spent.

Americans in most parts of the country outside of Washington often don’t even notice the closure of government agencies. Many of the Departments of government, including the State Department, the Transportation Department, the Agriculture Department, and the Department of the Interior are incidental at best to most Americans lives as the shutdown has documented.

Most of these agencies are filled with “nonessential” activities that could be radically downsized. Do we need an Urban Transit Agency? This should be overseen by cities and states, not the feds. Do we need a vast diplomatic corps at the State Department? Do we need crop subsidies?

The official estimates are that the shutdown costs billions and perhaps tens of billions of dollars. But compared to what? Keeping government operating is surely more expensive, even given that the 800,000 federal employees affected will get paid for the time off when the government reopens.

Fortune Magazine recently opined that it’s cheaper to keep the government open than shutting it down, but this is, of course, preposterous on its face. When the government is shutdown it doesn’t spend money on cafeteria meals, electricity, depreciation of equipment, automobiles, machinery, etc.

What the government shutdown has taught tens of millions of Americans is that so much of the federal government is immaterial to their daily lives. When the government is reopened, it is time for Uncle Sam to figure out how it can shutdown tens of billions of dollars of spending in nonessential, redundant and wasteful programs.

FreedomWorks is a network of activists advocating the principles of smaller government and lower taxes.