President Obama has expressed his frustration that the two-week partial government shutdown cost the economy $24 billion, according to an estimate from Standard & Poors. Whatever the correct number is, it’s a pittance when compared to what the president’s economic policies have cost the economy over the nearly five years he’s been in office.
First, let’s put that number in perspective. The U.S. Gross Domestic Product for 2013 is estimated to be about $16.7 trillion. That means $24 billion, while a lot of money, is only a fraction of 1 percent of GDP—about 0.14 percent. Given the size of the U.S. economy, that’s a rounding error.
Yes, that would be the same National Park Service that went out of its way—actually spent money—to keep veterans from seeing the wide-open World War II Memorial. Wonder what the estimate would have been had the Park Service simply allowed people to visit parks that had no barriers anyway?
Time also says there was $217 million per day lost in federal and contractor wages in the Washington DC area. But those federal wages will be restored to furloughed workers. And many contractors were still likely racking up some billable hours during the shutdown.
Of course, just because tourists didn’t spend their money going to a shuttered national park doesn’t mean they didn’t spend it somewhere.
So while the shutdown likely cost the economy something, much of the normal activity was only delayed or redirected.
Even so, Obama says the loss could hurt the economy. S&P writes, “We believe that to date, the shutdown has shaved at least 0.6% off of annualized fourth-quarter 2013 GDP growth.” S&P was predicting a 3 percent annualized growth for the fourth quarter, and now thinks it will be closer to 2 percent.
But given that GDP has only hit 3 percent or more in five out of Obama’s 18 reported quarters as president—with the last 3 percent being the first quarter of last year—dropping the estimate to the 2 percent range is probably a good bet, regardless of the shutdown.
The bigger question is how the shutdown could do any more damage to the economy than Obama’s policies?
Let’s start with ObamaCare. We are being inundated by news stories of companies choosing to remain under 50 employees (or full-time equivalents) to avoid triggering the employer mandate requiring them to provide health insurance or pay a $2,000 per-employee penalty.
And there are just as many stories of companies that have decided to turn current full-time employees into part-timers (under 30 hours per week) or to only hire part-timers going forward.
Does the president think THAT has a negative impact on the economy?
Obama has recently begun to talk about how economic uncertainty discourages businesses from hiring and investing. But no president since FDR has created more economic uncertainty than Obama. As a result, companies are sitting on cash, unsure whether they should hire more people because they don’t know how much it will cost them to do so, or invest in more equipment or resources because of proposed business tax increases.
Perhaps worst of all, Obama thinks the way to grow an economy is to increase government spending. And that cutting government spending is a sure-fire recipe for going back into recession. Actually, the reverse is true.
Last March Obama whined that implementing the sequester cuts would harm the economy—because the government would be spending less money. As it turns out, the economy grew by 2.5 percent in the second quarter—the biggest uptick in nearly a year.
And what about Obama’s new taxes, 21 in ObamaCare alone, and his soak-the-rich tax demands? Think that might have a negative impact on economic growth?
As Forbes contributor Peter Ferrara points out, “Today, 5½ years, or 22 quarters, after the recession started, the economy (real GDP) has grown only about 3% above where it was when the recession started. By sharp contrast, at this point in the Reagan recovery, the economy had boomed by about 20%, or one fifth.”
Yes, Obama should be concerned about damage to the economy. And no doubt the two-week shutdown rattled many people and businesses, especially those who depend on the government. But it isn’t Republicans’ efforts to control government spending that’s causing the real damage; it’s the president’s incessant quest to raise taxes and increase regulations and government spending that’s taking the real toll.