Senator James Lankford, R-Okla., joins ‘Varney & Company’ to discuss the government shutdown, China’s rare earth trade restrictions and their impact on US security and the economy.
Treasury Secretary Scott Besant Said on Wednesday that the current government shutdown could cost the US economy billions of dollars per day.
Besant said partly in a press conference government shutdown “The muscle is starting to be cut here” as the shutdown continues into its third week.
“We believe this shutdown could cost the U.S. economy up to $15 billion a day,” Besant said. The Treasury Department later clarified that they meant $15 billion per week. The shutdown began on October 1, because Congress and the White House had not enacted a funding bill that day to begin fiscal year 2026.
The Treasury Secretary called on moderate Democrats in the Senate to “be heroes” and “break out of the hive of radicalism” by supporting Senate Republicans’ continuing resolution and voting to “reopen the government to the American people.”
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Treasury Secretary Scott Besant said the ongoing government shutdown could cost the economy billions per day. (Elizabeth Frantz/Reuters/Reuters Photos)
senate democrat The stopgap funding measure has been blocked nine times after another failed vote on Wednesday. Democrats are seeking an extension of health insurance subsidies under Obamacare that are set to expire this year. The temporary subsidies, which are direct payments to insurance companies in exchange for lower premiums, were passed in the American Rescue Plan in 2021, and were extended through the end of 2025 in the Inflation Reduction Act. The law allowed those earning up to 400% above the poverty level to qualify for discounted premium rates.
Government shutdowns have occurred periodically since 1995, when Republicans won control of Congress for the first time in 40 years. Whereas, non-essential employees are furloughed during the shutdown essential workers Stay on the job – although both groups do not receive a paycheck under federal law until the government funding shortfall ends.
Shutdowns have generally had minimal impact on the economy, although it is unclear at this time what the impact of the current shutdown will be.
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The government shutdown began on October 1. (Bill Clark/CQ-Roll Call, Inc./Getty Images/Getty Images)
federal Reserve Bank of Chicago President Austin Goolsbee said in a discussion moderated by Fox Business’s Edward Lawrence at the Midwest Agriculture Conference earlier this month that although the central bank is not involved during the shutdown, the economic impact varies depending on the duration and scale of the federal funding lapse.
“Historically, super-wide shutdowns that don’t last very long have no effect on the overall economy because, yes, they weren’t paid, but people don’t spend less because they know they will eventually be paid,” Goolsby said.
“So it depends how long it goes on. It depends how widespread it is. If there are reasons why this shutdown looks different from previous shutdowns, we’ll have to modify. But this is kind of a starting point,” he said.
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House Minority Leader Hakeem Jeffries, D-N.Y., and Senate Minority Leader Chuck Schumer, D-N.Y., are calling for an extension of expiring Obamacare subsidies. (Nathan Posner/Anadolu/Getty Images/Getty Images)
An analysis by economists at Goldman Sachs said most government shutdowns have been short-lived and the longest shutdown in 2018 lasted 35 days – though it had only a 15% impact on the federal government because Congress funded about 85% of its operations at that time.
Goldman found that for each week of government shutdown, federal furloughs will decrease quarter-over-quarter. economic development About 0.15 percentage points of GDP growth in Q4, a similar-sized positive impact on Q1 growth assuming the shutdowns end by then.
The firm’s analysis also found that the shutdown could temporarily increase the unemployment rate, but the impact should be minimal because furloughed workers are reported as unemployed while on temporary layoff.
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OMB analyzed shutdowns during fiscal year 2014 and found that some areas were economic disruption Due to shutdown.
These included restrictions on permitting, review, and licensing (such as for energy projects); suspension of IRS income verification for financial institutions that screen borrowers; Freeze on hundreds of small business loans; Also disruption in tourism and travel due to closure of national parks.
Editor’s note: This story has been updated with comment from the Treasury Department clarifying that Secretary Scott Besant meant the shutdown could cost the U.S. economy $15 billion per day, not $15 billion per week.