Shutdown Costs $300 Million A Day, Drives Up Deficit

Way to go, Tea Party!  Their clear thinking, erudition, planning, and devotion to smaller government by engineering a shutdown will save American taxpayers billions of dollars… er… uh… um… oops!

A partial shutdown of the federal government will cost the U.S. at least $300 million a day in lost economic output at the start, according to IHS Inc.

While that is a small fraction of the country’s $15.7 trillion economy, the daily impact of a shutdown is likely to accelerate if it continues as it depresses confidence and spending by businesses and consumers.

Lexington, Massachusetts-based IHS, a global market research firm, estimates that its forecast for 2.2 percent annualized growth in the fourth quarter will be reduced 0.2 percentage point in a weeklong shutdown. A 21-day closing like the one in 1995-96 could cut growth by 0.9 to 1.4 percentage point, according to Guy LeBas, chief fixed income strategist at Janney Montgomery Scott LLC in Philadelphia.

“Government spending touches every aspect of the economy, and disruption of spending, more than the direct loss of income, threatens to damage investor and business confidence in ways that can seriously harm economic growth,” LeBas said yesterday in an interview.

And then there’s this:

At first blush, it might seem that a government shutdown would have a positive effect on the budget deficit, reducing its growth by constraining spending. But not so fast.

A BofA Merrill Lynch Global Research report says that the shutdown is likely to “put upside risk” on the budget deficit because of the threat it poses to the collection of government revenues, shutdown costs and other demands

By: dave-dr-gonzo

David Hirsch, a.k.a. Dave "Doctor" Gonzo*, is a renegade record producer, video producer, writer, reformed corporate shill, and still-registered lobbyist for non-one-percenter performing artists and musicians. He lives in a heavily fortified compound in one of Manhattan's less trendy neighborhoods.

* Hirsch is the third person to use the pseudonym, a not-so-veiled tribute to journalist and author Hunter S. Thompson, with the permission of his predecessors Gene Gaudette of American Politics Journal (currently webmaster and chief bottlewasher at Liberaland) and Stephen Meese at Smashmouth Politics.