US Shutdown Ends, Costing Economy $24 Billion

The US Congress passed a last-minute deal over budget passage one hour and 45 minutes before the US would have defaulted, ending a crippling government shutdown. Igor Volsky of ThinkProgress says Republicans won just one concession while Bryce Covert says the two week shutdown forced by the GOP sucked a whopping 24 billion dollars out of the US economy.

Posted on 10/17/13
By Igor Volsky & Bryce Covert | Via ThinkProgress
US House of Representative
US House of Representative

Here Is What Republicans Got For Shutting Down The Government

By Igor Volsky

After shutting down the government for two weeks, Republicans appear to have secured just one concession from a Senate-crafted deal to raise the debt ceiling and re-open the federal government: an income verification system for individuals who earn above 400 percent of the federal poverty line and qualify for premium and cost-sharing subsidies under the Affordable Care Act.

Under the emerging agreement, when subsidies begin to flow on Jan. 1, Health and Human Services Secretary Kathleen Sebelius will have to certify that the department has established an income verification system as part of the eligibility process. Six months later, the Department of Health and Human Services’ Inspector General (OIG) will conduct a more comprehensive audit of the program. It was not immediately clear what changes the Department would have to make before certification.

But health reform advocates tell ThinkProgress that they’re content with the compromise, noting that GOP-backed alternatives would have required the inspector general to certify the process before premiums could go out. The Center for Budget and Policy Priorities (CBPP) has argued that such an agreement would have effectively prevented families from receiving tax credits, since the OIG “can’t evaluate whether the new marketplaces are ‘successfully and consistently’ verifying this information until after the marketplaces are up and running and there are real cases to audit.”

Republicans began to raise concerns about the income verification provisions in July, after HHS announced that it would rely on applicants’ self-reported income information to verify whether they accurately represented their earnings in 2014. The Department said that it would “only double-check a statistically significant number of these people with large income discrepancies, rather than the entire group” and implement a more robust process in 2015.

In a statement released on Wednesday afternoon, House Speaker John Boehner (R-OH) pledged to seek more changes in Obamacare in the future. “Our drive to stop the train wreck that is the president’s health care law will continue,” he said. “We will rely on aggressive oversight that highlights the law’s massive flaws and smart, targeted strikes that split the legislative coalition the president has relied upon to force his health care law on the American people.”

UPDATE

Read the full text of the Senate deal here.

The Government Shutdown Has Cost The Economy $24 Billion

By Bryce Covert

Standard & Poor’s calculates that the shutdown that has so far lasted just over two weeks has taken $24 billion out of the economy, shaving at least 0.6 percent off of GDP in the fourth quarter.

The agency had originally predicted a 3 percent growth rate in GDP this quarter, noting that “we thought politicians would have learned from 2011 and taken steps to avoid things like a government shutdown and the possibility of a sovereign default.” But now recognizing that “our forecast didn’t hold,” it has reduced that estimate to 2 percent.

While it notes that it believes the current deal to re-open the government and avoid a default will pass, it also warns that every day that the United States gets closer to defaulting on its debt by not raising the debt ceiling will take a toll on the economy.

When the government first shut down, IHS Inc. predicted that it would cost the economy $300 million a day in lost economic output. These estimates likely don’t take all the effects into account, however. Loans haven’t gone out from the Small Business Administration, permits have been held up, and government contracts have been put on hold. Communities near shuttered National Parks have lost $76 million a day. The government stands to lose out on billions in tax revenues.

If it continues into late October or November, states have warned that a variety of public assistance programs, such as food stamps, welfare, and nutrition for low-income moms and infants, will stop issuing benefits.

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