What Happens During A Government Shutdown - Part 2

The term government shutdown, as you're aware, is inaccurate in the first place. The federal government doesn't actually shut down. Instead, it prioritizes. During a partial federal government shutdown, there's a great deal of discretion with regard to what stays open and what doesn't. Over the years, but especially these days, I've come across as much inaccurate information as anything that's actually true. In the first story I broke down the facts for shutdowns and now I'll explain the impact on you.   

Picking up on a few key points from my first story, during the typical government shutdown only about 86 of the 430 federal agencies don't operate. The reason why most people never see, touch or feel the impact of partial government shutdowns is that they aren't working on the receiving end of some type of arrangement with those agencies. One of the most visible which was impacted during the last meaningful partial shutdown in 2013 were the park's services. 

You hear that the economy is hurt by these shutdowns. So, what's real? Here are the facts. First, our average federal spending is about $11 billion per day. That means that with about 20% of the federal government not operating there's potential savings of $2.2 billion per day.   

In other words, if we operated under these conditions for a full year, we would save around $803 billion in a year. However, that's not always the case due to back pay for furloughed federal workers having been part of some prior budget deals. But what about the economy? Last year the federal government was 20.7% of the US economy. That means that under a partial government shutdown 4.1% of the US economy is impacted or in other words, 95.9%, of the US economy isn't impacted. And that's before we get into economic arguments. 

Obviously, the federal government doesn't have anything unless it takes it from us. So, while you'll hear the woe is (insert victim here stories) what's better for our economy and us over the long term. Lower debt and lower taxes or higher debt and higher taxes? In other words, despite short-term, minor, economic blips related to shutdowns, there's a solid economic argument to be made that we're better off with them in place to restrain government spending.

Photo by: Drew Angerer/Getty Images



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