The Congressional Budget Office (CBO) in the United States indicated on Wednesday that a government shutdown could result in economic losses of $7 billion to $14 billion for the country, with a potential 2% decline in the fourth-quarter Gross Domestic Product (GDP) due to the interruption in government spending.
According to Reuters, the partial government shutdown has entered its 29th day on Wednesday with no signs of ending. Republicans in the Senate have called on Democrats to support a temporary funding bill to provide funds for federal agencies until November 21. Democrats, on the other hand, are pushing for negotiations on extending the Affordable Care Act subsidies, which are set to expire at the end of the year and could lead to a rise in insurance premiums.
The CBO estimates that delays in federal government expenditures on employee salaries, goods and services, and food stamp benefits for low-income Americans will cause economic losses.
“CBO estimates that while most of the actual GDP decline will eventually be recovered, the $7 billion to $14 billion in losses will not be recouped,” wrote CBO Director Phillip Swagel in a letter to House Budget Committee Chairman Jodey Arrington on October 29.
Swagel noted that the ultimate impact of the government shutdown on the economy remains uncertain and will depend on the decisions made by the government during the shutdown period.
Since the government funding expired on October 1, approximately 750,000 federal employees have been forced to take unpaid leave. The Trump administration has taken measures to pay military personnel, federal law enforcement officers, and immigration officials. However, other federal employees continue to work without receiving pay.
The CBO stated that if the government shutdown were to end this week, there would be a permanent economic loss of $7 billion. If the shutdown were to continue for six weeks until November 12, it would result in a $11 billion loss. And if the shutdown were to persist for eight weeks until November 26, it could lead to a $14 billion loss.
President Trump, while aboard Air Force One en route to South Korea, suggested on Wednesday that Republicans and Democrats could cooperate to find an alternative to the Affordable Care Act, commonly known as Obamacare, and find a “much better” solution.
“We have to reform healthcare because Obamacare is a disaster,” Trump said. “Just look at the skyrocketing premiums under Obamacare, it’s never worked and it never will work. We can come up with something much better than Obamacare together with the Democrats.”
President Trump emphasized the rising insurance premiums under the Obamacare policy, stating that insurance companies are making huge profits. He believes that now is the right time for Republicans and Democrats to come together and devise a truly effective plan that allows insurance companies to make reasonable profits without excessively profiting.
On Tuesday, the Retail Industry Leaders Association (RILA), representing major retailers in the United States, called on Congress to pass a clean short-term funding bill to reopen the government. The American Federation of Government Employees, the largest union representing federal employees, also urged Congress the day before to pass a similar bill.