Longest Federal Shutdown in U.S. History Costs $11 Billion, CBO Says

Longest Federal Shutdown in History Costs $11 Billion

The longest federal government shutdown in U.S. history lasted over a month and cost the economy $11 billion, according to a report from the Congressional Budget Office (CBO). Even after workers receive back pay, an estimated $3 billion may be lost permanently.

The government reopened on January 25 with seven stopgap spending bills that will keep the affected agencies open through February 15. Questions remain over whether Democrats, Republicans, and President Trump will reach an agreement to fully fund the government beyond that date. Failure to reach an agreement could force another shutdown, and Trump has suggested he could use executive powers to declare a national emergency and build sections of the border wall he promised during his campaign.

Some lawmakers have introduced bills to ensure government shutdowns can’t happen ever again. For instance, House Minority Leader Kevin McCarthy (R-Calif.) said he’d support a proposal where members of Congress and the Senate aren’t paid until a spending deal is negotiated. Senator Mark Warner’s (D-Va.) proposal, called the Shutdowns Transferring Unnecessary Pain and Inflicting Damage in the Coming Years Act, or the Stop STUPIDITY Act, would keep the government running at previous fiscal year levels when a spending deadline is missed and withhold funding for the legislative branch and Executive Office of the President, according to an article in The Hill. A proposal from Senator Rob Portman (R-Ohio) would fund the government at existing levels, but reduce it by 1 percent after 120 days and again every 90 days lawmakers don’t reach an agreement.

The five-week partial shutdown closed 25 percent of the government, delayed $18 billion in federal spending and lowered projected GDP in the first quarter of 2019 by $8 billion, according to the CBO analysis. It furloughed 800,000 federal workers and thousands of government contractors. It slashed economic growth, threatening to push the country into an economic contraction, according to an article in The New York Times. Federal funding stalled at 2018 levels, which can create further deficits.

To pay their bills, many furloughed federal workers and contractors resorted to the “gig” economy, hiring themselves out as editors, dog walkers, or even paid product reviewers. On January 15, tens of thousands of employees were called back to work—albeit without pay.

Electrical Contractor Magazine and the National Electrical Contractors Association published guidance for contractors during the shutdown. Since the shutdown has ended, ECs may be entitled to extra costs or time. ECs should always keep detailed records of costs incurred and extra time required as a result of the government shutdown.

"A government shutdown is never good for anyone, especially electrical contractors," said Marco Giamberardino, executive director of government affairs, NECA. "When a shutdown occurs, no bids can be submitted for federal construction projects, which further delays vital repairs to the country’s aging infrastructure. Additionally payments for government contractors will be deferred, jeopardizing the finances of contractors who are small businesses. Ultimately, it is not in the best interest of the employers, employees, or the American people to shut down the government. A shutdown no matter how short, is economically disruptive and create uncertainties for the U.S. economy."

The shutdown impeded work in many departments. Without federal funding, highway construction projects planned for 2019 and bidding on federally funded projects halted. Instead of construction, many state and local governments focused on maintenance and operations during the shutdown.

The partial shutdown had mixed effects on the energy sector and renewables. Solar and wind projects are treated as exempted activities under the Bureau of Labor Management's (BLM) shutdown contingency plan. If the BLM has money available to use outside of the government’s budget cycle, such as grants, it can keep projects going. Some experts said the shutdown has little effect compared to market uncertainty around solar tariffs.

Every department and project varies. Activity in the Bureau of Ocean Energy Management ceased, delaying offshore wind projects. Avangrid Renewables and Copenhagen Infrastructure Partners was expecting to start building its 800-megawatt wind farm off the Massachusetts coast, but two public meetings on the project’s draft environmental impact statement were postponed during the shutdown. The Department of the Interior’s BLM, meanwhile, continued to operate and develop wind and solar projects on federal land.

Lengthy development timelines can add a buffer for wind and solar projects located on federal land. But delays will affect projects. The typical timeline for these projects ranges from nine months to two years, according to an article in Green Tech Media.

Electrical Contractor magazine will continue to monitor the situation and will provide further coverage and guidance as developments continue.

About the Author

Marlena Chertock

Freelance Writer

Marlena Chertock is a former editorial intern at Electrical Contractor magazine who now writes for the magazine as a freelance journalist. Her articles have appeared in The Washington Post, Marketplace, NBC News, News21, WTOP and The Gazette. Contact...

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