Economist Justin Wolfers said that the economic cost of a government shutdown may be limited in terms of GDP, but the broader toll is measured in sidelined workers and eroded values.
Government Shutdowns A ‘Big Values Fail’
On Sunday, in a post on X, Wolfers said, “In GDP terms, a shutdown mostly shifts dollars across quarters,” since most federal employees will eventually get paid once the government resumes functioning again.
However, he notes that people continue to pay their taxes either way, while the shutdown sidelines civil servants “who want to serve,” which he said was a “big values fail,” despite being a relatively minor “macro hit” for the U.S. economy as a whole.
See Also: Scott Bessent Warns Military Pay At Risk By Mid November Amid Shutdown: ‘What An Embarrassment’
The post includes a snippet featuring Wolfers’ recent appearance on MSNBC’s Velshi, where he once again underscored the deeper moral shortcomings of this entire situation.
“We, the voters, [are] paying through our taxes for the government,” he said, highlighting that “the money's gonna go and get paid to government workers either way by the end.” Yet, as he pointed out, “we're not letting them work.”
Experts Split Over Shutdown Impact
Several prominent experts have weighed in on the impact of the government’s prolonged shutdown on the domestic economy.
SEC Chair Paul Atkins said last week that it has begun having an impact on the equity markets, even as initial public offerings were still going through, and the agency continues to function within its limited capacity.
Atkins said, “We're still doing our surveillance over the marketplace to make sure that it's all working as it should.” Yet, he acknowledged that the situation was “beginning to bite.”
Even as the markets continue to filter the noise, Dennis DeBusschere, an analyst at 22V Research, warned that “the longer the government shutdown lasts, the more it will add to volatility.”
Economist Peter Schiff had a rather cynical view during the early days of this crisis, when he said that “The biggest problems with government shutdowns are that they never shut down enough and the government always reopens.”
A long-time critic of government spending and borrowing, Schiff views the shutdown as a much-needed relief for America’s ever-growing federal debt.
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