WASHINGTON — The 16-day federal government shutdown in October resulted in economic disruptions and budgetary costs to the federal government, according to a report from the Office of Management and Budget released Thursday afternoon.
Independent forecasters, including Standard and Poor's and Moody's Analytics Chief Economist Mark Zandi, estimated that the shutdown will lower the growth in gross domestic product by at least 0.2 to 0.6 percentage points.
However, most of the estimates of the shutdown's economic costs only look at how the shutdown affected the direct flow of spending into the economy and did not take into account additional costs from the shutdown's impact on consumer and business confidence. They also did not fully take into consideration the direct economic disruption of government activities caused by the shutdown, according to the OMB report
One disruption was that federal statistical agencies were unable to release economic data during the 16-day period. Another was that permitting and environmental and other reviews, were halted, leading to the delay of transportation and energy projects, the report said.
Also, federal loans to small businesses, homeowners and housing and healthcare facility developers were stopped. For example, the Federal Housing Administration was unable to process more than 500 applicants for loans for developing, rehabilitating or refinancing about 80,000 multifamily rental units, the report said.
Many federal programs and services were affected by the shutdown. For example, almost $4 billion in tax refunds were delayed, and the start of the 2014 tax filing season will be pushed back by as much as two weeks.
There were a number of budgetary costs to the federal government as a result of the shutdown. One was that the Internal Revenue Service was unable to conduct most enforcement activities, and these typically result in collections of about $1 billion per week, OMB said. Additionally, the federal government will have to pay interest on billions of dollars of payments that couldn't be made on time, including refunds from the IRS, the report said.
Federal government employees were furloughed a total of 6.6 million days, and the total cost of pay for furloughed federal employees during the shutdown period was estimated to be about $2 billion. Total compensation costs including benefits are in the $2.5 billion range, OMB said.
The report noted that furloughed federal employees were compensated for the shutdown period, but "the burden of delayed paychecks on federal workers and their families was significant and harmful." The shutdown jeopardized federal employees' incomes and their abilities to focus on the missions of the agencies for which they work, OMB said. The shutdown and sequestration-related furloughs could hurt federal government's ability to recruit and retain a talented workforce.
Sen. Barbara A. Mikulski, a Democrat from Maryland and the chairman of the Senate Appropriations Committee, had asked OMB for an analysis of the shutdown's impact, and a similar report was done after the shutdown in 1995 and 1996.
"We believed it was important to have in one place the articulated impact," OMB Director Sylvia Matthews Burwell said.
Burwell added that news articles about the shutdown did a good job of helping people understand how the shutdown affected their daily lives. "One thing that did come out of the shutdown is a greater appreciation for a number of things that the government did," she said.