With federal workers averaging $108,500/year in salary and benefits, if all 820,000 furloughed federal workers never came back, the total savings to the Treasury would be $90 billion/year. In a budget of roughly $3.5 trillion, that’s just 2.6% of all spending. Even as a percentage of the $642 billion FY13 deficit, a reduction of $90 billion is just 14%! Entitlement reform, and nowhere else, is where savings will be found.
Tag Archives: government Closure
Loathsome Lawmakers
After excluding 590,000 postal employees and 1.4 million active military personnel, that leaves 2.15 million civilian non-defense federal workers. Should the government close, 40% of them, or 860,000, would stay home as they are non-essential. A one month shutdown would probably knock 1% off GDP and a two month shutdown would probably put us back into a recession. This is the case even if furloughed workers ultimately get retroactive pay.
Government Closure as a Tactic
The 20 day State of MN government shutdown this July cost MN $60 million in lost revenue but saved about $65 million n salaries not paid, according the MN Management and Budget Department. Of course, the report failed to look at the damage caused to the state’s reputation. However, given that Gov. Mark Dayton (D) blinked and did not raise taxes, the threat of closure must be considered a valid future negotiating strategy for Republicans.
No Government, No Problem!
If the federal gov’t closes does it matter to the economy? NO! Social Security checks will continue arriving and air traffic controllers will still land planes. The fragile recovery will not be harmed. The most serious and negative consequence; a strong signal that the upcoming debt ceiling increase and FY 2012 budget battles will be very contentious, which while not surprising is not good news.