Tea Party Republican extremism has already taken a bite of as much as $31 billion out of the economy since October 1, according to Wall Street analysts. And the price tag is about to get much higher now that the recalcitrants in the House of Representatives have brought the country to the very edge of default.
Late Tuesday Fitch Ratings put the United States’ debt rating on a negative watch list, citing the inability of the Republicans in Congress to come to an agreement with the Democrats and the White House on reopening the federal government and raising the debt ceiling. As that news hit the markets, the yield on the 10-year Treasury note, an important benchmark for interest rates, rose four basis points, or 0.04 percentage point, to 2.73 percent. Three-month notes went up to their highest rates in more than two years.
As late as last month, the Treasury was able to sell some short-term notes at a negative interest rate; banks were literally paying for the privilege of buying Treasury notes. Those days are now a casualty of Tea Party brinksmanship.
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With these increased borrowing costs, tax dollars that could go toward providing needed services and boosting the economy are instead going to lenders, and the budget deficits conservatives now claim are the reason they are refusing to open the government – having abandoned their initial goal of “defunding Obamacare” – are that much harder to shrink.
That means taxpayers are already starting to pay dearly for the gamesmanship of the Tea Party Republicans, and the unwillingness of House Speaker John Boehner to stand up to them. In this interview with Anna Chu of the Center for American Progress Action Fund, we explain some of the costs imposed on the American people.
The $31 billion figure is based on a Moody’s Analytics estimate that a four-week government shutdown would cost the economy $55 billion. Another report from Goldman Sachs estimated the impact would average $10 billion a week. (The National Priorities Project is using a much lower estimate of the shutdown impact from the IHS market research firm, which calculates the impact as a $160-million-a-day hit, or $2.6 billion so far.) Bolstering these estimates is a new survey that found that four out of 10 consumers have cut back their spending as a result of the government shutdown, including nearly half who make $35,000 a year or less.
Whatever the numbers, they only begin to capture the staggering cost of the Tea Party Republican shutdown. News reports collected by the Center for American Progress Action Fund document the damage. Some samples:
- In addition to the 450,000 federal workers who are being furloughed not getting paid, hundreds of thousands of state and local public workers and employees of government contractors face being laid off as federal support for state, local and nonprofit programs dries up – with serious consequences for the people those workers serve. North Carolina laid off 366 employees working for a federally funded nutrition program for women and children. In Colorado, more than 5,000 workers connected to the state’s defense contractors and military installations were laid off. The Minnesota Department of Health could lay off 71 nurses by the end of this week. Michigan has put 20,000 state workers on notice that they could be laid off if the shutdown goes on much longer.
- Small businesses are losing access to nearly $100 million in capital supported by the Small Business Administration each day the shutdown continues.
- At a time of increased market volatility, nearly the entire staff of the Commodities Futures Trading Commission has been furloughed. CFTC Commissioner Bart Chilton told the Los Angeles Times, “”The do-badders have an open reign to try and commit nefarious acts.”
- A broad range of research has been cut off, seriously compromising fact-finding efforts in such vital fields as climate change. Virtually all of the National Oceanographic and Atmospheric Administration has been closed down, and such projects as important climate research in Antarctica that had to be done this month before weather conditions make the research impossible is being shelved. Influenza research at the Centers for Disease Control and Prevention is at a standstill at the onset of the flu season, and all but two of the 80 staffers that normally analyze food-borne pathogens at the agency have been furloughed. Vital medical research at the National Institutes of Health is also stalled, and patients aren’t being admitted to clinical trials. “Americans will pay dearly for these slowdowns, sequestrations, and shutdowns in finding cures and on maintaining economic competitiveness, “ warned American Society for Cell Biology executive director Stefano Bertuzzi. “Today I am wondering what U.S. science will look like in a week, a month, five years from now.”
This shutdown continues to affect a growing number of low-income families who need help feeding their children and keeping a roof over their heads, ex-offenders trying to rebuild their lives, and students. The pain and disruption go beyond what can be measured in dollars and cents, not just for the people directly affected but for the country as a whole.
America is a diminished nation – less financially strong and globally competitive; its people less economically secure – because Tea Party delirium has been allowed to overtake the Republican party. It is still possible that sometime on Wednesday Congress will be able to pull back from the brink and avoid an unprecedented default, with all of the catastrophic consequences that such an event could bring. But damage has already been done. And, notwithstanding the continuing “both sides” heresy of mainstream media pundits, only one set of actors on this drama donned a political suicide vest and brought the American economy to the edge of destruction. And, when voters do their accounting next year, it should be clear that one side will be held responsible.