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How much did the shutdown cost? Billions

by Josh Hicks

The Washington Post

Shutdowns aren’t cheap. This year’s closure, which ended Thursday, has probably cost the government and the economy billions of dollars, according to economists and policy analysts.

Below are some estimates of the financial effects of the 16-day closure, which forced hundreds of thousands of government employees and contractors off the job.

The lapse in appropriations ended last week with a deal to fund the government through mid-January and allow more federal borrowing. But that agreement provides only temporary relief from the financial uncertainty, because lawmakers could end up in another stalemate when the resolution expires.

Congress and the White House agreed to retroactively compensate federal employees for the shutdown period, but private-sector workers are not so lucky.

The estimated impacts:

$24 billion in lost economic output, or 0.6 percent of projected annualized GDP growth, according to Standard & Poor’s. Similarly, Moody’s Analytics estimated the impact at $23 billion.

The ratings agencies calculate their estimates using complicated formulas that consider past economic behavior combined with the number of federal employees and contractors who were not paid during the shutdown, according to Moody’s chief economist. Mark Zandi.

At least $21 million per week in lost sales-tax revenue for the D.C. metropolitan area. That’s based on early estimates from the offices of the D.C. mayor and Maryland’s governor, both of whom are Democrats. The office of Republican Virginia Gov. Robert McDonnell did not provide initial numbers but said it plans to include them in its November revenue report.

Maryland estimates that it may have lost $15 million a week in projected sales tax revenue as a result of the shutdown, according to Samantha Kappalman, a spokeswoman for the governor’s office.

D.C. may have missed out on as much as $6 million a week in anticipated revenue from sales tax, according to David Umansky, a spokesman for the district’s chief financial officer.

Though Virginia did not provide early estimates, McDonnell spokesman Paul Shanks said, “Governor McDonnell believes that the shutdown of the federal government was near-sighted policy that has had a negative impact on the citizens of Virginia and the nation as a whole.”

The fiscal 1996 shutdowns cost the government $2.1 billion, calculated in today’s dollars, according to Office of Management and Budget estimates at the time. The impact could be worse this year because the 2013 shutdown forced more government employees off the job. Most of the cost of the 1996 closure resulted from agencies paying furloughed workers for hours they didn’t work.

$450,000 a day in lost revenue at the National Parks, according to the National Park Service. That was until a handful of states agreed, about a week before the shutdown ended, to fund operations for the some of the parks within their boundaries. The costs may have been lower from that point forward, as some parks reopened and began collecting fees again.

The numbers come from top-line estimates by the Park Service, which made projections based on October 2012 park attendance and fee collections.

$2.4 billion in lost travel spending, based on the U.S. Travel Association’s estimate of $152 million a day. The organization said it based its numbers in part on the Park Service projections, as well as estimated reductions in business travel for federal employees and the government.

Treasury Secretary Jack Lew said Sunday that the shutdown and the threat of a debt default proved financially costly for the government and the economy, though he stopped short of talking specific numbers.

“I can’t give you a number today of what it is — I know the direction,” Lew said on NBC’s “Meet the Press.” “The direction is, it took an economy that is fighting hard to get good economic growth going to create jobs for the American people, and it took it in the wrong direction. Our job in Washington is to move things in the right direction.”