Shutdown Sequel? As Deadline Looms, Lessons from 2018

As we approach the end of September 2023, the specter of a government shutdown looms once again. The last time the government was shut down, December 22, 2018 through January 25, 2019, the Congressional Budget Office estimated a $3 billion hit to GDP resulting from the five-week closure. With employees furloughed, spending delayed, and demand depressed, the CBO pegged the short-term economic loss at $11 billion, of which only $8 billion was recovered after the shutdown ended. That was the longest shut-down thus far (see image below).

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Now, Congress is scrambling to pass a stopgap funding bill to keep the government open past this Sunday's deadline. But infighting may derail the bipartisan Senate bill, as a faction of the House refuses to support it despite pressure from Speaker Kevin McCarthy. Their opposition leaves McCarthy unable to bring the measure to a vote. And with the Senate vote potentially delayed by Rand Paul over Ukraine aid provisions, time is running out to avert a repeat of 2018's costly shutdown.

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The looming crisis highlights the high economic stakes of partisan gridlock. With growth fragile amid high inflation and rising rates, America can ill afford the drag of another extended closure. Leaders in both parties would be wise to find common ground before the deadline. Our economic health depends on it.

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