This month, Congress averted another federal government shutdown. In doing so, it prolonged the increasingly common practice of funding the government through continuing resolutions — an unfortunate tradition that has occurred each year since 1998. Despite this temporary reprieve, the country still faces an ever-increasing federal debt, thanks to Congress also voting to raise the debt ceiling this month, which steadily ticks upward year over year.
The last government shutdown, which began three years ago this month and ran for 35 days, was estimated to have a negative impact on U.S. GDP. While a permanent reduction in government spending can be a net positive, temporary shutdowns are disruptive and have economic costs, including negative effects on the stock market. In addition, allowing steady increases in the federal debt creates its own opportunity costs, which deserve to be acknowledged and debated by our elected representatives but are frequently glossed over.
