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  • Writer's pictureMichael McAuliff

The Battle Over Trump's $5.7 Billion Wall Cost $11 Billion, CBO Says

You could call it double for nothing.

According to Congress's non-partisan budget score keeper, the government shutdown caused by President Donald Trump's battle for his $5.7 billion border wall cost the economy almost twice that much -- $11 billion.

Nancy Pelosi and Chuck Schumer speak to reporters after President Trump agreed to end the government shutdown for three weeks.
Nancy Pelosi and Chuck Schumer speak to reporters after President Trump agreed to end the government shutdown for three weeks.

In a report released Monday, the Congressional Budget Office declared that the economy lost about $3 billion at the end of 2018 after the Dec. 22 standoff started, and then another $8 billion in 2019 as about a quarter of the government remained closed.

"As a result of reduced economic activity, CBO estimates, real (that is, inflation-adjusted) gross domestic product (GDP) in the fourth quarter of 2018 was reduced by $3 billion (in 2019 dollars) in relation to what it would have been otherwise," the CBO said.

"In the first quarter of 2019, the level of real GDP is estimated to be $8 billion lower than it would have been —- an effect reflecting both the five-week partial shutdown and the resumption in economic activity once funding resumed," it added.

Congress and the president ended the shutdown after 35 days last week by passing a three-week stop-gap measure that covered workers backpay, but that runs out Feb. 15.

Democrats were quick to seize on the data, and warn Trump not to back away from cutting a bigger deal.

“As the dust settles from the Trump Shutdown, it is clear as day that the president’s temper tantrum caused serious and lasting damage to our nation’s economy," said Senate Minority Leader Chuck Schumer (D-N.Y.). "If President Trump didn’t appreciate the error of his ways after seeing the human suffering his needless shutdown caused, maybe the extensive economic damage he inflicted will set the president straight: No more Trump Shutdowns.”

The CBO report noted that the cost amounted to a relatively small portion of the nation's total GDP, amounting to .1 percent reduction in the final quarter of 2018 and a .2 percent drop in the first quarter of this year.

It also said that some of the losses would be recovered as delayed spending resumes.

But it also pointed out that it's brad-scope measurements do not capture more specific and damaging impacts.

"Underlying those effects on the overall economy are much more significant effects on individual businesses and workers," the report said. "Among those who experienced the largest and most direct negative effects are federal workers who faced delayed compensation and private-sector entities that lost business. Some of those private-sector entities will never recoup that lost income."

Democrats who highlighted such concerns during the shutdown also pointed to that part of the report.

"This shutdown harmed federal employees and their families, small businesses who lost customers, and millions of Americans who couldn’t access government services," said House Majority leader Steny Hoyer. "I strongly urge President Trump and Congressional Republicans to work with Democrats in good faith over the next three weeks to responsibly fund government and prevent another costly shutdown.”

Trump said over the weekend that he believed odds of actually arriving at a compromise and keeping the government open were "less than 50/50."

House Speaker Nancy Pelosi also warned Trump to back away from shutdown politics.

"Families across the nation are still trying to recover from a month of missing paychecks and overdue bills, but the President is already threatening a second shutdown if he doesn’t get his way," she said.

The White House did not immediately return a request for comment.

The conclusion of the report also offered something of a warning, noting that if the shutdown went much longer, the impacts were sure to grow:

"Other Possible Effects of the Partial Shutdown
"CBO’s estimated effects of the five-week partial shutdown do not incorporate a number of indirect negative effects, which are more difficult to quantify but were probably becoming more important as the shutdown continued. For example, during the shutdown, some businesses could not obtain federal permits and certifications, and some faced interrupted access to federal subsidies and loans provided by the federal government. Those types of disruptions were probably beginning to reduce economic output.
"In addition, the absence of funding for agencies that help minimize various risks probably increased the risk of low-probability but high-cost events. Also, federal statistical agencies’ inability to publish economic data increased uncertainty about the economy among investors, households, and policymakers. Such factors were probably beginning to reduce investors’ confidence and to affect firms’ plans to invest and hire. Finally, funding lapses were probably beginning to reduce the credibility of the federal government as an employer and a contracting party, making it more difficult for federal agencies to attract and maintain a talented workforce and more expensive to enter into contracts with private firms.
"Although their precise effects on economic output are uncertain, those factors would have had increasingly negative effects if the partial shutdown had extended beyond five weeks. And other disruptions would have probably emerged. For example, a longer shutdown could broadly dampen consumer spending by significantly disrupting federal benefit programs, such as the Supplemental Nutrition Assistance Program, housing programs, and other income support programs and by reducing consumer confidence. Although CBO did not observe a significant drop-off in grants, subsidies, or other payments made to individuals during the five-week shutdown, a longer shutdown would probably have disrupted those payments."


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