The shutdown hurt the economy

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 Senate Minority Leader Mitch McConnell says that repealing the Affordable Care Act would never again be used by Republicans to shut down the government.
“One of my favorite old Kentucky sayings is there’s no education in the second kick of a mule,” McConnell told The Hill newspaper. “The first kick of a mule was when we shut the government down in the mid-1990s—and the second kick was over the last 16 days.”

We certainly hope McConnell is right, but we have reasons to remain skeptical.

Last Wednesday night, Congress passed a deal to end the government shutdown and raise the debt ceiling. It would fund the government through Jan. 15, 2014 and suspend the debt limit until Feb. 7.

The deal also calls for an agreement by mid-December on a long-term budget plan, which sets the stage for yet another round of negotiations. That’s when we will really find out if House Republicans learned the lesson that a government shutdown is not a good way to achieve a policy objective.

For over two weeks the extreme right wing of the Republican Party shut down the government, wreaking havoc on those dependent on federal services and paychecks.
While the full economic effects of the 16-day partial government shutdown will take months to tally, it is already clear that it hurt key areas of the economy.

Overall, the shutdown cost the U.S. economy $24 billion, according to Beth Ann Bovino, an economist at Standard & Poor’s. The shutdown caused Bovino to reduce her forecast for growth in the October-December quarter to a 2.4 percent annual rate from an earlier estimate of 3 percent. Other economists have also downgraded their forecasts.

The shutdown hurt consumer confidence, a key factor in the economy.

According to J.D. Power and Associates, some Americans postponed or canceled auto purchases.
The shutdown also impacted investors.

It caused uncertainty which resulted in an increase in interest rates on one-month, three-month and six-month Treasury bills. Investors grew nervous, fearing the Treasury Department would miss an interest or principal payment on the debt. The highest rates will increase U.S. borrowing costs $114 million this year.
Let’s be clear: The shutdown was not the fault of all Washington or Congress in general.

The government shutdown was engineered by a specific group of tea party-backed congressional Republicans led by freshman Sen. Ted Cruz of Texas.
These extremists jeopardized the nation’s borrowing authority, economic growth and international reputation to pursue their narrow political agenda.

(Reprinted from the Philadelphia Tribune)

 

 

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