Tag: CBO

  • America’s Longest Shutdown Ends. But at What Cost?

    America’s Longest Shutdown Ends. But at What Cost?

    By Prof. Indrajit S Saluja
    By Prof. Indrajit S Saluja

    Americans suffered enormously because of the government shutdown—an ordeal that millions across the nation widely believe was both unnecessary and entirely avoidable. For 43 days, the “land of the free and the home of the brave” watched its own people scourged by political brinkmanship: federal workers lining up at food banks, families forced to choose between rent and groceries, airports pushed to the brink, and businesses frozen in uncertainty. But thank God, after weeks of hardship and chaos, the shutdown has finally ended. The relief is palpable—among employers, employees, lawmakers, and every American who felt the tremors of a government brought to a halt.

    Yet as the nation exhales, another set of questions rises urgently to the surface: Why did this shutdown happen at all? What did it accomplish? Who gained, who lost—and what does it mean for the American people going forward? The Readers of The Indian Panorama deserve a clear and analytical examination grounded in facts, figures, and the lessons this painful episode has left behind.

    How It Began: A Political Showdown With National Consequences

    At the heart of the shutdown was a bitter standoff over federal spending, tied to a contentious border-security funding demand. Though disagreements over the national budget are not new, the scale and duration of this shutdown were unprecedented. It became the longest in American history—43 days—surpassing the previous record of 35 days in 2018–19.

    The immediate victims were the 800,000 federal employees who were either furloughed or forced to work without pay. Millions more—federal contractors, small-business owners, service workers, and families dependent on federal operations—felt the shockwaves. Approximately 4 million federal contract workers lost income, much of which was never reimbursed. Scientific research projects halted, court proceedings slowed, IRS operations were compromised at a critical tax-season moment, and food-safety inspections were scaled back.

    This raised a critical question: Was it necessary to shut down the world’s most powerful government to resolve a political disagreement? To millions of Americans, the answer was clearly no.

    The Economic Cost: Billions Lost, Recovery Partial

    Shutdowns have always been costly, but the severity of this one left a measurable dent in the national economy. The Congressional Budget Office (CBO) produced a clear, data-driven assessment:

    $11 billion in total economic losses.

    $3 billion permanently lost—never to be recovered.

    Thousands of delayed loans to small businesses by the Small Business Administration,

    Hundreds of millions lost by airlines and airport-service vendors. 

    National parks, operating without staff, suffered millions of dollars in damage from vandalism, littering, and infrastructure wear. In Washington, D.C., restaurants that depend heavily on federal workers reported revenue drops of 30–50%. Across the country, families canceled vacations, postponed purchases, and withdrew from local commerce.

    No political objective—whatever its merit—justifies economic losses of this magnitude.

    Political Gains and Losses: Costly Gamble for All

    Shutdowns are often viewed through the prism of political victory and defeat. Yet this episode revealed something unusual: there were no winners.

    For the Administration

    The administration framed the shutdown as a strategic necessity to secure funding for a central policy commitment. But public opinion told a different story. 

    Surveys showed:

    53% of Americans blamed the administration for the shutdown.

    34% blamed the opposition party.

    Presidential approval ratings dropped nearly 4 percentage points during the crisis. 

    More importantly, the shutdown ended without achieving the policy goal that triggered it. This raised doubts about whether the strategy had ever been viable—or merely symbolic.

    For Congress

    Congressional leaders projected firmness, arguing that yielding would set a dangerous precedent allowing any President to shut down government to extract concessions. In that sense, Congress succeeded in protecting the constitutional balance of powers.

    Yet within this broader struggle, it is important to acknowledge the courage of Democratic lawmakers who chose principle over partisanship to help end the impasse. Among them was Congressman Tom Suozzi, who represents this writer in Congress and who broke from party lines in the interest of the American people. At a time when political polarization seemed immovable, leaders like Suozzi—willing to step across the aisle and support measures to reopen the government—played a meaningful role in easing the suffering of millions. Their commitment to country over political calculation deserves recognition and appreciation.

    Still, in terms of public perception, the legislature as a whole appeared dysfunctional. Nearly 70% of Americans expressed frustration with both parties’ inability to compromise and avert the crisis.

    For the American People

    The greatest burden fell on federal workers and ordinary citizens. The shutdown produced images that shook the nation:

    TSA agents working without pay. 

    Coast Guard families visiting food pantries 

    Air-traffic controllers filing stress and hardship reports.

    Federal prison guards unable to pay utility bills.

    Scientists forced to stop critical experiments mid-stream. 

    These are not abstract policy consequences; they are snapshots of real American lives thrown into turmoil.

    Why Americans Believe the Shutdown Was Unnecessary

    Public frustration stemmed from a simple perception: there were multiple alternative paths to negotiation that would not have required halting government services. Past administrations—Republican and Democratic alike—have navigated bitter disagreements without shutting the nation down.

    Three core arguments shaped public sentiment:

    Shutdowns do not work.

    Historically, they have rarely produced policy concessions.

    Shutdowns inflict severe and disproportionate harm.

    The economic losses far outweigh any political leverage gained.

    Shutdowns undermine global confidence in American governance.

    Allies and markets watch closely. Political chaos weakens the credibility of a nation that prides itself on stability.

    The shutdown was widely seen as a political gambit whose costs far exceeded any conceivable benefits.

    Lessons Learned: A Warning for the Future

    The episode leaves the nation with sobering lessons.

    First, America must acknowledge that governing through brinkmanship is unsustainable. Essential governmental functions cannot be weaponized in political disputes.

    Second, lawmakers must consider structural reforms.

    Automatic continuing resolutions to prevent shutdowns.

    Protection of essential workers from unpaid labor.

    Faster dispute-resolution processes.

    Stronger bipartisan budget negotiations.

    Third, the shutdown highlighted the fragility of public trust in national institutions. When the world’s richest democracy cannot pay its own employees for more than a month, the credibility of its governance comes into question.

    A Moment of Relief—But Not Without Reflection 

    With the shutdown finally over, the nation feels relief—but also anxiety. Relief that paychecks will resume. Relief that airports and national parks will function properly again. But anxiety that another shutdown may loom in the future, should political divisions once again reach a boiling point.

    For the sake of federal workers, the economy, and the very reputation of American democracy, this episode must serve as a clear warning: shutdowns do not strengthen the nation—they fracture it.

    The longest shutdown in American history should remain exactly that: the longest ever, never to be repeated. The suffering of “the free and the brave” should not become a recurring cost of political ambition. America deserves better—more responsible leadership, more principled negotiation, and a government that never again turns its own people into collateral damage.

    Readers are requested to post their Comment,  or email it to editor@theindianpanorama.news

  • National debt will exceed $50 trillion by 2034, budget watchdog estimates

    National debt will exceed $50 trillion by 2034, budget watchdog estimates

    The Congressional Budget Office says this year’s federal deficit will hit $1.9 trillion, as defense and social safety net costs rise

    • By Jacob Bogage

    WASHINGTON, D.C. (TIP): As lawmakers grapple with increasing defense demands and spending on social safety net programs, the Congressional Budget Office projected Tuesday that the federal debt will equal 122 percent of the United States’ annual economic output by 2034, far surpassing the high set in the aftermath of World War II.
    The deficit will swell to $1.9 trillion this fiscal year and keep growing until the overall national debt hits $50.7 trillion a decade from now, Congress’s nonpartisan bookkeeper said in its latest report. The group revised its forecast from four months ago, when it projected that the debt would reach $48.3 trillion in 2034, and 116 percent of economic output.

    The new figures add to the urgency facing policymakers in 2025 — and on the campaign trail — to tackle the nation’s financial health. Next year, vast portions of the tax code are set to expire, potentially forcing a steep tax hike on individuals and families. Congress suspended the debt limit in 2023, but that, too, will expire next year, setting up a showdown between the two parties over federal spending.

    And Medicare and Social Security are running low on funds, which could force a benefit cut for tens of millions of Americans just as the national debt crescendos.

    The debt is a bipartisan problem: Spending shot up under both President Biden and then-President Donald Trump. And Trump’s 2017 tax cuts, the ones that are set to expire next year, added nearly $2 trillion to the existing debt, according to a nonpartisan estimate. Trump has proposed extending all of those cuts, which could add trillions more to the debt, and Biden also wants to keep the lower rates for people who earn less than $400,000, as well as new social spending paid for by allowing some of the tax cuts to expire.

    “At a moment we should be looking at what spending to reduce and how to increase revenue, the national agenda is full of conversation about huge new tax cuts and major spending initiatives,” Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, told The Washington Post. “The risks that we run from this growing mountain of debt run the gamut from slower economic growth to lower incomes, an inability to respond to emergencies and a weaker role in the world. Nothing could be more urgent, but none of our leaders have a plan to address this glaring problem.”

    The debt burden could present risks in bond markets as creditors look increasingly skeptically at the government’s ability to make good on its ballooning borrowing, experts say. A high debt balance would probably also keep federal interest rates high, forcing Congress to divert a significant amount of tax revenue to debt service.

    The U.S. has $34.7 trillion of debt, according to the Treasury, the vast majority of which is held by the public through bonds and other borrowing instruments. The cost of that debt keeps climbing as the federal government spends more — and must borrow to afford it. The rest of the debt is held by other government programs, such as Social Security and Medicare, that have taken in more money than they’ve paid out.

    Already in the 2024 fiscal year, which ends Sept. 30, interest payments are set to eclipse the size of the United States’ massive defense spending. Rates shot up over the past several years as the Federal Reserve has tried to wrestle inflation under control.

    “The harmful effects of higher interest rates fueling higher interest costs on a huge existing debt load are continuing, and leading to additional borrowing. It’s the definition of unsustainable,” Michael A. Peterson, CEO of the nonpartisan Peter G. Peterson Foundation, a budget-focused think tank, said in a statement.

    The expected deficit grew 27 percent from CBO’s last projection in February, mostly because of new spending laws passed after that report came out. Since then, lawmakers have enacted $1.7 trillion of annual spending legislation, averting an automatic trigger that would have forced a 1 percent cut across all federal spending if Congress hadn’t passed full-year appropriations laws.

    The CBO factored that 1 percent cut into its February projections, because the full-year spending laws weren’t yet adopted.

    But since then, Congress and Biden have been on a spending spree. Besides the annual appropriations, lawmakers approved a $95 billion foreign aid bill to support Ukraine, Israel and Taiwan and make investments in the U.S. industrial base, and Biden announced plans to forgive billions of dollars in student loans.

    Other technical spending and revenue measures played a part in the debt increase. Federal banking regulators have been slow to recover payments from recently failed institutions. And projected Medicare outlays increased by $50 billion, according to the CBO, as the aging U.S. population continues to draw down social safety net trust funds.

    Much of the recent debt spike is tied to pandemic emergency spending and Trump’s 2017 tax cuts. Early pandemic stimulus legislation and executive orders added $3.6 trillion to the debt, according to the nonpartisan Committee for a Responsible Federal Budget.

    The Tax Cuts and Jobs Act, Trump’s 2017 law, lowered rates for individuals of almost all income levels, though it cut taxes most for the highest earners, and slashed the maximum corporate tax rate from 35 percent to 21 percent. It added $1.9 trillion to the debt, according to the group.

    Many of those cuts are set to expire next year, and extending them could add almost $5 trillion more to the long-term debt total, the CBO projected last month. Trump and some congressional Republicans are discussing lowering the corporate tax rate further if the GOP wins control of Washington, which could add $1 trillion to the debt.

    The CBO report did include a small silver lining for the country’s financial well-being. A surge in immigration exceeding federal projections will increase economic output by $8.9 trillion, or 2.4 percent, in the next decade, according to the forecast, and will lower the deficit by $900 billion. That’s because noncitizens contribute payroll taxes that fund Social Security and Medicare and other social safety net programs, but they’re ineligible to receive benefits.
    (Source: The Washington Post)