Would a government shutdown really hurt the U.S. economy?

Last week, it was reported that the Republicans passed a bill in the House of Representatives and sent it to the Senate that would attempt to defund President Obama’s Affordable Care Act. It has now being expected that the GOP leadership will try to do the same thing when it comes to the government’s negotiations over the debt ceiling.

Akin to the sequester discussions late last year and early this year, there has been talk of the sky falling. One of the biggest concerns is that the government shutdown will hurt the United States economy, whether it’s for just a few days or for a few weeks – the last time the federal government closed its doors for nearly four weeks was in 1995 when it shut down twice.

Specifically, some economists project that a shutdown that lasts even just a few days could cost the economy two-tenths of a percentage point – one that lasts a few weeks could reduce the GDP by 1.4 percentage points.

The key question that must be asked is: why would the private sector be hurt by Congressmen and Senators not legislating anything or bureaucrats filing paperwork that hurts businessmen and landowners? If the U.S. economy ran on a truly free market system then it wouldn’t really matter if the president, senators and congressmen took a one-month vacation.

Another point that should be addressed is that perhaps this potential shutdown would be beneficial to the economy because then Washington can’t impose new laws and regulations that would further hurt small, medium and large-sized businesses and the general public. Financial experts and media outlets disagree, though.

CNN notes, for instance, that if the government does experience an interruption then a federal department or agency in charge of protecting life and property would not be disrupted, but other bureaucracies that spend large sums of money for just intervening into the private affairs of Americans would feel the pain.

What does government even do anyway? One side wants more war and the other wants more welfare. What happens at the end of the legislative debate? The Republicans and Democrats vote for more war and more welfare.

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