Background on the Government Shutdown
As of October 29, the US federal government shutdown entered its twenty-ninth day without a clear end in sight. Republicans in the Senate have requested Democrats’ support for a temporary measure to fund federal agencies until November 21, while Democrats demand negotiations for extending federal tax credits that expire, aiming to assist Americans in acquiring private health insurance through the Affordable Care Act.
CBO’s Economic Impact Assessment
The nonpartisan Congressional Budget Office (CBO) reported that the ongoing government shutdown could cost the US economy between $7 billion and $14 billion, potentially reducing the fourth quarter’s Gross Domestic Product (GDP) by up to 2%. This reduction stems from the disruption of public spending, affecting employee compensation, goods and services procurement, and food assistance for low-income Americans.
CBO Director Phil Swagel’s Letter
In a letter to Representative Jodey Arrington, a Republican from Texas who requested the analysis, CBO Director Phil Swagel stated, “Although most of the real GDP decline is expected to be temporary, the CBO estimates that between $7 billion and $14 billion will not be recovered.” He also noted, “The economic effects of the shutdown are uncertain and depend on decisions made by the administration during the shutdown.”
Impact on Federal Workers and Economy
Approximately 750,000 federal employees have been furloughed since government funds ran out on October 1, marking the beginning of fiscal year 2026. The Trump administration has ensured military personnel, law enforcement agents, and immigration officers receive their salaries. Other federal employees continue working without pay.
CBO’s Cost Estimates
According to the CBO, a shutdown lasting until the end of this week would result in a permanent $7 billion loss. A six-week shutdown extending until November 12 would cost $11 billion, while an eight-week shutdown lasting until November 26 would amount to a $14 billion loss.
Key Questions and Answers
- What is the current status of the US government shutdown? The shutdown entered its twenty-ninth day on October 29, with no clear resolution. Republicans in the Senate seek Democratic support for a temporary funding measure until November 21, while Democrats demand negotiations to extend federal tax credits that expire, aiming to help Americans acquire private health insurance.
- What is the CBO’s assessment of the economic impact? The CBO estimates that the ongoing shutdown could cost the US economy between $7 billion and $14 billion, potentially reducing the fourth quarter’s GDP by up to 2% due to disrupted public spending.
- How many federal employees are affected by the shutdown? Around 750,000 federal employees have been furloughed since October 1. Military personnel, law enforcement agents, and immigration officers continue receiving salaries, while other federal employees work without pay.
- What are the CBO’s cost estimates for different shutdown durations? A week-long shutdown at the end of this week would result in a permanent $7 billion loss. A six-week shutdown extending until November 12 would cost $11 billion, while an eight-week shutdown lasting until November 26 would amount to a $14 billion loss.
