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AP Photo/Susan Walsh

How much did the government shutdown cost the US economy?

Hint: It’s nearly ten times Ireland’s budget adjustment.

IN JUST 16 days, the partial shutdown of the US government took $24 billion dollars out of the US economy, forcing economists to change economic projections.

The ratings agency Standard and Poor’s said that it had revised America’s fourth-quarter GDP growth forecast, taking 0.6 per cent off the prediction.

Overall, it said that the shutdown and nervousness over a potential US default would take almost 1 per cent off the annualised growth rate. The agency says that the US economy will now grow two per cent this year, instead of three.

“In the summer of 2011, as we approached the last debt ceiling standoff, consumer confidence plummeted and hit a 31-year low in August when the debt ceiling issue came to a head. Given that this round of debt-ceiling negotiations is occurring after two-plus weeks of a government shutdown, the total impact on the economy will likely be even more severe,” said a statement by the agency.

They continued that a default on US loans would take four per cent of government spending out of the economy immediately.

“The impact of a default by the US government on its debts would be devastating for markets and the economy and worse than the collapse of Lehman Brothers in 2008.

“If people are afraid that the government policy brinkmanship will resurface again, and with it the risk of another shutdown or worse, they’ll remain afraid to open up their chequebooks. That points to another humbug holiday season.”

“Manufactured crises”

Earlier today, President Barack Obama praised Senate and Congressional lawmakers for getting a deal done, but said that compromise and negotiation needed to continue.

“The American people are completely fed up with Washington,” he said.

There’s no reason we can’t govern responsibly, without lurching from manufactured crisis to manufactured crisis.

“We come from different parties, but we’re Americans first. We can’t degenerate into hatred.”

Read: US employees ordered to return to work today as shut down ends

Read: US avoids default as last-minute deal is struck

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28 Comments
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    Mute Jamie McCormack
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    Oct 17th 2013, 5:15 PM

    Maybe if they didn’t spend 700 billion dollars a year on their military they mightn’t be in so much trouble.

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    Mute Ireland Uncensored
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    Oct 17th 2013, 5:16 PM

    Wouldnt the shutdown have saved the government money ?

    800,000 non essential employees sent home, what I want to know is why they were employed in the first place if theyre ‘non essential’

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    Mute Maria Pearse
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    Oct 17th 2013, 5:22 PM

    Congrats on having absolutely no clue how an economy or government works.

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    Mute Alan Burke
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    Oct 17th 2013, 5:50 PM

    Maria I like the cut of your jib, welcome to the Journal :)

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    Mute Mary Kavanagh
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    Oct 17th 2013, 6:35 PM

    Not so hot on what non-essential means either, are you Irish Uncensored?

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    Mute Lynn Wilford Collins
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    Oct 18th 2013, 4:02 AM

    Their were about 500,000 ” nonessential” – that’s not only in reference to their daily job, but how it supports the military or some crucial job for life vs death. The amount it saved was negligible. A posture by politicians.

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    Mute Michael
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    Oct 18th 2013, 4:22 AM

    Sorry guys, he’s right. The money was now borrowed from China/Japan.

    Recall that government has nothing. It only has what it takes from others. Kinda like a thief, right?

    3
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    Mute Nigel Sinnott
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    Oct 17th 2013, 6:56 PM

    “forcing economists to change economic projections” That’s all they do anyway!

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    Mute Sergé
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    Oct 17th 2013, 8:48 PM

    Why won’t they do that? New data comes up all the time.

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    Mute Peter M Buchanan
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    Oct 17th 2013, 4:58 PM

    Not a quarter as much as Obamacare will cost taxpayers

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    Mute Maria Pearse
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    Oct 17th 2013, 5:02 PM

    You’re right. Let the poor die off. Only the strong survive.

    96
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    Mute Paul Nolan
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    Oct 17th 2013, 5:03 PM

    Yeah what a pack of fools taking care of sick people who can’t afford insurance, it’s truly sickening stuff.

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    Mute Ireland Uncensored
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    Oct 17th 2013, 5:15 PM

    +1 too right

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    Mute Terry McSweeney
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    Oct 17th 2013, 5:23 PM

    Yeah but war kills people and health saves people.i know where i would rather my money spent.we send the poor to war and they loose their lives and that’s ok but good forbid we should try and look after them with proper health care.

    49
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    Mute joe stodge
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    Oct 17th 2013, 5:27 PM

    How can anyone in the right mind be against public health care?

    This alone shows how broken America is.

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    Mute seamus mcdermott
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    Oct 17th 2013, 5:41 PM

    1.5 trillion for the F35 fighter….

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    Mute Emily Elephant
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    Oct 17th 2013, 5:52 PM

    Obamacare isn’t primarily about public health care. The contentious parts are “guaranteed issue” (which prevents insurers from denying coverage to pre-existing claims) and the “individual mandate” (which requires individuals who aren’t covered by an insurance scheme to get one or pay a fine/tax).

    The US actually spends about the same on public health care as a proportion of GDP as the likes of France (~9%). It just does it spectacularly badly.

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    Mute Stephen McMahon
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    Oct 17th 2013, 8:12 PM

    Actually Seamus the F35 costs between 150-200 million per plane depending on version. It’s a lot bit not trillions, unless they buy 5000!

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    Mute Lynn Wilford Collins
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    Oct 18th 2013, 4:04 AM

    No one wants the ” poor to die off”. There are plenty of places in the US to get free health care. It is not the govt job to force healthcare on the people of the US. Not to mention, the fiscal irresponsibility of it all.

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    Mute Lynn Wilford Collins
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    Oct 18th 2013, 4:05 AM

    No it doesn’t.

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    Mute Michael
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    Oct 18th 2013, 4:24 AM

    If anyone think that Obamacare is about taking care of poor people then you need to get your head examined.

    This bill is and will continue to be a disaster, and I’ll hear no apology from anyone when I’m proven right.

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    Mute Michael
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    Oct 18th 2013, 4:25 AM

    Joe, you’ll be happy to hear that only medical corporations will succeed out of this.

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    Mute Shit you not
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    Oct 17th 2013, 8:45 PM

    This pisses me off. There was a very strong chance they’d default yet they weren’t downgraded. F**king hell!! It seems animal farm was closer to reality than we thought. All countries are equal but some are more equal than others!!

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    Mute Aidan Church
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    Oct 17th 2013, 8:58 PM

    How were they ever realistically close to a default? No debts were due larger than cash on hand till Nov 1st. The 17th Oct date was symbolic because it ended the Treasury’s ability to borrow further.

    There was a slim chance of a default even if the Oct 17th deadline passed. If they were still stuck in a rut come Oct 31st, then sure. That’s when mass panic happens.

    If you’re comparing this to Ireland’s problems, the market decided the risk associated with Ireland was too high of a bond yield rate for us so we were forced into a bailout. The US maintains lower yield rates, so they can theoretically borrow from the market without a problem, it’s just congress wouldn’t authorize that borrowing for crappy political reasons. Two completely different scenarios.

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    Mute James Gorman
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    Oct 17th 2013, 11:13 PM

    How anybody would vote Republican is beyond me – unless motivated by greed and disingenuity of course.

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    Mute Alan Grouse
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    Oct 18th 2013, 3:51 AM

    Ron Paul is one of the world’s greatest politicians – certainly in the USA. His views on the economy, the war on drugs, america’s foreign policy and domestic affairs make total sense.

    He is a republican though he describes himself as a constitutionalist

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    Mute Lynn Wilford Collins
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    Oct 18th 2013, 4:00 AM

    You obviously do not understand the difference in the parties. More than half the country wonders the same about the democrats.

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    Mute Michael
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    Oct 18th 2013, 4:20 AM

    Why would anyone vote for the war-mongering, Union promoting, corporofascist, anti-civil liberties demopublicans?

    Has anyone even looked at how bad the exchanges are for Obamacare?! The best plan found doesn’t even have dental.

    Another boondoggle for the medical companies.

    Poor America, gone the way of us Europeans sadly

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