U-M experts discuss government funding as clock ticks toward shutdown

September 28, 2023


University of Michigan experts share insights as fights over funding continue in the U.S. Congress—and the clock ticks down toward a government shutdown.

Betsey Stevenson is a professor of public policy and economics at the Ford School of Public Policy. She served as the chief economist of the U.S. Labor Department from 2010-11 and a member of President Barack Obama’s Council of Economic Advisers from 2013-15, during which there was a 16-day shutdown.

“A government shutdown harms not only the roughly 1 million government workers who are either sent home without pay or, like Transportation Security Administration workers, asked to work without pay, but it also harms the many people who rely on government services and government funding,” Stevenson said. “A government shutdown means parents whose children lose access to preschool and school readiness programs, pregnant women lose access to nutrition assistance, farmers lose access to loans, disruptions to the businesses that provide goods and services to the federal government, and a pause in research and data collection that is critical for understanding human health and the U.S. economy.

“These are just a few of the many costs of a shutdown. I watched the harm that was done firsthand in 2013 and have seen how the costs ripple through the economy expanding as a shutdown continues.”

Contact: betseys@umich.edu

Daniil Manaenkov is an economist at the Research Seminar in Quantitative Economics, U-M’s economic forecasting arm. He worked at the Federal Reserve Bank of Minneapolis, where he managed the bank’s macroeconomic forecasting model.

“At this point, a shutdown appears almost inevitable, and a swift resolution seems unlikely, either,” Manaenkov said. “Recent prolonged shutdowns in 2013 and 2018-19 were largely centered around partisan political issues such as funding for a border wall or defunding the Affordable Care Act. Both shutdowns ultimately ended without significant victories for the GOP, following a turn in public opinion against Republicans.

“This upcoming shutdown, however, is different. It is primarily an intra-party fight within the GOP over the best approach to constrain spending growth. This internal conflict may become contentious and potentially lead to the ouster of House Speaker Kevin McCarthy. Due to the unusual nature of this shutdown, it is challenging to predict its duration and the fallout. However, the likelihood of a historic shutdown is uncomfortably high.

“A prolonged shutdown would add to the already lengthy list of headwinds the U.S. economy is expected to face in the fourth quarter, including the ongoing UAW strike, the resumption of student debt payments and rising energy costs.”

Contact: daniil@umich.edu