The price of a shutdown

The price of a government shutdownDuring the 1995 shutdown, the National Gallery of Art in Washington lost gift shop revenue when visitors were turned away. By Charles Riley, staff reporter


NEW YORK (CNNMoney) -- So if the federal government shuts down, taxpayers would save a lot of money, right?

Not quite.

It would actually cost taxpayers money. And for every day the shutdown continues, the bill would go up.

"There is absolutely no way this saves money. Zip," said Bo Cutter, former director of the National Economic Council and a senior fellow at the Roosevelt Institute.

It's pretty hard to put an accurate price tag on a shutdown. Official estimates of the costs incurred during last major shutdowns in 1995 and 1996 vary widely.

And the White House hasn't produced an estimate of how much a shutdown might cost, but it does say it will cost something.

First, the government actually has to spend money in order to complete an orderly shutdown.

"When you have to shut something down, that costs money, and ramping something back up costs money," Jeffrey Zients, deputy director of the Office of Management and Budget said Thursday.

Imagine a government construction project. Since it's impossible to know how long the shutdown will last, workers are forced to wind down all operations and secure the work site. That all costs money.

It's a process that will be repeated all across the country, and in every government agency. Plus, whenever funding is restored, it will cost money to get the project back up to speed.

In the meantime, costs will increase the longer a shutdown drags on.

"The longer a shutdown is in place, the more extensive the costs become," said John F. Cooney, a partner at law firm Venable who designed shutdown plans for the government while employed at the Office of Management and Budget.

There is also the issue of federal worker pay.

When the clock strikes midnight and a shutdown starts, paychecks for federal workers stop. But that won't be saving taxpayers any money.

When a shutdown ends after Congress passes a spending bill, the "essential" workers who were kept on the job will automatically be paid for the time they worked during the shutdown.

And the 800,000 or so workers who might be furloughed? In every previous government shutdown, Congress has authorized back pay for them as well, even for days they didn't work. One caveat: There is no guarantee that will happen again.

But if it does, it'll be a double whammy. Workers will get their paychecks, but the work they normally do will have piled up in the meantime. When workers return, agencies might have to pay overtime just to catch up on all the work that wasn't done during the shutdown.

And not only will the government end up with a bigger bill, there will be less revenue as well.

Some agencies -- like the National Park Service -- charge user fees. When they close, no fees are collected. On an average day, visitors spend $32 million at National Parks.

There are also intangible costs, especially when the productivity of federal workers is considered.

"You've been working your ass off ... and someone comes to tell you that you are non-essential?" Cutter said. "There is a huge management morale issue when everyone comes back to work."

Of course, when a shutdown is considered in the context of the larger budget negotiations, the whole process will almost certainly result in savings for taxpayers. That's because both Democrats and Republicans agree that a compromise spending bill will slash tens of billions from the federal budget. To top of page

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