Federal shutdown cost $2 billion, OMB says

WASHINGTON — October’s 16-day partial shutdown of the federal government cost taxpayers about $2 billion in lost productivity from 850,000 furloughed employees, the White House budget office said Thursday in a report quantifying the ripple effects of the impasse in Congress.

On top of those costs, Sylvia Mathews Burwell, director of the Office of Management and Budget (OMB), said the shutdown set off a cascade of “negative ramifications on a number of fronts.” From $500 million in lost spending by visitors to closed national parks to stalled oil drilling permits, the first shutdown in 17 years disrupted private industries, slowed home buying and delayed crucial safety inspections, according to the OMB report.

The Obama administration has said the shutdown and uncertainty about raising the government’s borrowing limit will slow fourth-quarter economic growth by 0.2 percentage points to 0.6 points, or $2 billion to $6 billion in lost economic activity. It also probably cost 120,000 new private-sector jobs during the first two weeks of October, White House officials have previously said.

The effects of the closure were felt nationwide, the report said. Alaska’s crab-fishing season was delayed by three to four days, costing thousands of dollars in lost revenue. Nearly 6,300 children in the Head Start program lost services for up to nine days until private philanthropists stepped in.

About 1.2 million people applying for mortgages faced delays because the Internal Revenue Service could not process paperwork needed to verify their incomes. Almost $4 billion in tax refunds to late filers was delayed, which will push back the start of the 2014 filing season by up to two weeks.

The number of small-business contracts with the Pentagon decreased by almost a third, and National Transportation Safety Board investigations of 59 airplane accidents were delayed.

One of the biggest impacts was on the federal workforce, Burwell said. Furloughed employees missed a total of 6.6 million days of work during the shutdown. Congress agreed to give them back pay, which came to about $2 billion, the figure that budget experts used to measure the employees’ lost productivity.

That number doesn’t include the thousands of hours that federal employees spent preparing for the shutdown and then reopening their agencies.

“The uncertainty and strain [on federal employees] we will see over time,” Burwell said, referring to long-term effects on the government’s ability to recruit and retain top talent.

The analysis was released as Democrats and Republicans on Capitol Hill start negotiating over a new budget before the current stopgap agreement expires Jan. 15.

OMB’s report was requested by Senate Appropriations Committee Chairman Barbara Mikulski, D-Md. She called the details proof that “this manufactured crisis damaged the economy, cost us jobs and hurt middle-class families.”

Republicans, however, accused the White House of using the shutdown’s cost to deflect the public’s attention from the issue that forced the impasse: President Barack Obama’s health-care law and the GOP’s attempt to overturn it.

“We would have preferred to avoid the shutdown and any economic impact,” said Brendan Buck, spokesman for House Speaker John Boehner, R-Ohio. “But this report is little more than a transparent attempt to change the subject from the epic and growing failures of ‘Obamacare’.”

Don Stewart, spokesman for Senate Minority Leader Mitch McConnell, R-Ky., called it “curious” that the White House could detail the shutdown’s effect on employment nationwide but can’t say how many people have enrolled in the new health-care exchanges.

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