WASHINGTON, D.C. — The 16-day U.S. government shutdown cost the U.S. economy $24 billion, or $1.5 billion per day, according to Standard and Poor’s (S&P). The financial rating agency also estimated the shutdown will decrease the fourth quarter GDP by 0.6 percent. “The bottom line is the government shutdown has hurt the U.S. economy,” said a S&P spokesperson.
Though the 800,000 federal employees furloughed since Oct. 1 were among those most directly affected by the shutdown, they were not the only people to suffer the shutdown’s effects. The New York Times reports that Paul Edelstein and Doug Handler of IHS Global Insight, an economic research firm, calculated that the price tag of a three week government shutdown was approximately $3.1 billion in gross domestic product. This amount accounts for lost government services, lost private sector jobs, and the damage to consumer and business confidence.
According to the Guardian, global leaders at the recent 2013 International Monetary Fund (IMF) meeting had warned members of the potential impact of a U.S. government shutdown. Tharman Shanmugaratnam, Singapore’s finance minister and chairman of IMF’s key policy-making committee, underscored the crucial elements of recovery in private sector investments.
“Private investment relies on confidence and if we don’t see a resolution of the U.S. fiscal dispute, it is hard to see how that is going to come back,” said Shanmugaratnam.
The Guardian reports that the IMF advised emerging market economies to prepare for possible instability during U.S. stimulus cutbacks, since the cutback schedule is likely to be setback for several months following the shutdown.
When the United States finally recalled its furloughed employees, the World Bank Group President Jim Yong Kim welcomed the news.
“This is good news for developing countries and the world’s poor. The global economy dodged a potential catastrophe. Going forward, we hope policymakers in all countries continue to focus on crafting and implementing policies that promote economic growth and boost jobs and opportunity for all,” said Kim in a press release.
However, despite the relief of the international community, the consequences of the shutdown are impossible to ignore. In a world where 1.4 billion people live on less than $1.25 a day, $24 billion can make a world of difference. To put this loss in perspective, here are nine life-changing programs and items that cost $24 billion or less:
1. Provide for 6.4 million Syrian refugees.
According to the Carnegie Endowment for International Peace, it costs the Jordanian government 2,500 dinars ($3,700) per year to host each Syrian refugee. The Jordanian government has hosted 500,000 Syrian refugees at a cost of $800 million since the Syrian War began.
2. The entire annual GDP for developing countries like Trinidad and Tobago, Cote d’Ivoire and El Salvador.
Trinidad’s gross domestic product was $23.98 billion, Cote d’Ivoire’s GDP was $24.68 billion and El Salvador’s was $23.86 billion for the year of 2012, according to the World Bank.
3. Seven and half years of operating expenses for the American Red Cross.
NBC News reported that the American Red Cross published $3.3 billion as their total operating expenses for the 2012 financial year.
4. Change the lives of 1,400 women who live in the fishing communities of rural Nyanza and Western Kenya, at the cost of $1.9 million.
Value Girls is a program jointly funded by the United States Agency for International Development (USAID) and the Nike Foundation that improves the socio-economic status of young women, ages of 14 and 24, by training them in skills that will bring alternative sources of income.
5. Feed 11 million people in Somalia suffering from a severe famine, at the cost of $1.6 billion.
In 2011, UN Secretary-General Ban Ki-moon made a passionate appeal to the global community for $1.6 billion to help Somalia, which was on the brink of a major catastrophe due to conflict, drought and famine.
6. Support the transition of Iraq’s private commercial banks to modern standards.
The combined value of the 400,000 microloans that USAID disbursed in Iraq was estimated at $1 billion, with 98 percent payback rate.
7. Modernize Ghana’s agricultural sector to promote growth at $547 million.
Millennium Challenge Corp’s five-year compact program has trained over 66,000 farmers, supported over 52,000 hectares of land, installed 10 cooling facilities, upgraded N1 highway in Accra, added 110 kilometer of rural feeder roads, and built 197 water points for farm communities. In addition, 37,000 students are now able to attend class in 235 new or rehabilitated schools. There are 127 rural banks with 547 branches that provide access to a national financial system and allow for prompt payment.
8. Alleviate food crises for 11.3 million people in the Sahel region with $220 million of humanitarian aid assistance.
Approximately, 1.5 million children are at risk of severe acute malnutrition.
9. Pay for $30 million worth of new equipment for the Nelson Mandela Children’s Hospital.
This new facility would allow all South African children to have access to quality medical service, regardless of their socio-economic status. The USAID announced their new partnership with Nelson Mandela Children’s Fund USA and the Nelson Mandela Children’s Hospital Trust on Sept. 21, 2013.
– Flora Khoo
Sources: Millennium Challenge Corp, NY Times, Carnegie Endowment for International Peace, NBC News, UN, USAID1, USAID2, The Guardian, World Bank1, World Bank2, RT, CNN Money