Government shutdown hit economy, wasted money: White House

Reuters News
Posted: Nov 07, 2013 6:07 PM
Government shutdown hit economy, wasted money: White House

By Mark Felsenthal

WASHINGTON (Reuters) - The White House budget office on Thursday catalogued the economic damage from the 16-day government shutdown, saying the closure wasted billions of government dollars and hurt individuals and businesses that depend on government functions.

Broadly speaking, the shutdown shaved an estimated 0.2 to 0.6 of a percentage point off U.S. gross domestic product in the last three months of the year, the budget office said, citing private-sector analysts.

It is also calculated to have dampened job creation by 120,000 jobs, the budget office said, pointing to an analysis by the White House Council of Economic Advisers.

The closure, which prevented some government employees from going to work, also cost the government $2 billion "for services that could not be performed," the budget office said.

Budget Director Sylvia Matthews Burwell said the report was prepared at the request of Democratic Senator Barbara Mikulski and because the White House wanted to document the impact of the shutdown.

"One thing that did come out of the shutdown is a greater appreciation for a number of the things that government did," she told reporters on a conference call.

Lawmakers have begun meetings to hash out differences over the budget between the Republican-controlled House of Representatives and the Democratic-led Senate. Lawmakers of both parties have said they want to avoid another shutdown, but the parties are deeply divided over spending and taxes, and they must agree on a spending bill in order to avoid another shutdown on January 15.

The closure, which took place in a budget standoff as congressional Republicans sought to block or delay the president's signature healthcare law, affected individual and businesses on a range of levels, from people who seek loans or permits from the government, to those expecting tax refunds or to be enrolled in clinical trials, the White House said.

Among specific setbacks caused by the shutdown, the Bureau of Land Management was unable to process about 200 applications to drill, delaying energy development on federal lands, the budget office said in its report.

The closure also held back international trade as import and export license permit applications and export promotion activities languished, officials said. They noted that the Export-Import Bank, which provides financial support for U.S. firms to trade abroad when private-sector financing is hard to come by, and which typically backs exports valued at $4.2 billion in a month, had to suspend approvals of new applications.

The report detailed some of the smaller effects of the shutdown, noting, for example, that the Alaskan crab fishing season was delayed by three to four days, costing fishermen thousands of dollars.

(Reporting by Mark Felsenthal; Editing by Peter Cooney)