economy politics shutdown Trump

Shutdown Will Cost US Economy More Than Trump’s Wall Within 2 Weeks

And for what?

Donald Trump is pretty sure that the invisible, indestructible, vibranium, 2,000-mile-long monument to xenophobia he wants so desperately to build along the southern border will “pay for itself.”

Of course the original pitch was that it didn’t need to “pay for itself” because Mexico was going to pay for it, but as it turns out, Vincente Fox was entirely correct when he told Trump, via a series of hilarious video messages posted on social media, “we are not payin’ for that fucken’ wall.”



With Fox’s contention having been thusly borne out over the last two years, Trump is left to defend his “Mexico will pay for it” fairy tale by saying things like this (from angry remarks he delivered to reporters on Thursday):


Got that? “Obviously” he “never meant” Mexico was “going to write out a check.”

Sorry, but that’s exactly, 100% what he meant and what’s happened since the campaign is that it’s dawned on Trump that he cannot compel another country to fund a multi-billion dollar infrastructure project unless he wants to just invade said country and plunder their reserves. So now, you get belabored attempts to explain how Mexico is de facto “paying for it” via the trade deal or via some other convoluted logic like that which Trump rolled out during his Oval Office speech when he said this:

The border wall would very quickly pay for itself. The cost of illegal drugs exceeds $500 billion a year. Vastly more than the $5.7 billion we have requested from Congress.

Sadly, that will go over well with his supporters. Something like this: “Illegal drugs cost 100 times more than what Trump wants for the wall!” And while someone has undoubtedly attempted to “explain” what Trump actually meant, taken at face value it makes absolutely no sense unless you want to suggest that the government’s plan is to shut down the Mexican drug trade and then step in to fill the void with its own dope-running business, the proceeds from which will dwarf what we spent on the wall.

You get the idea. This is insane, but it’s also hilarious to watch Trump have to reconcile the fact (because that’s what it is) that if this thing ever does get built, it will be U.S. taxpayers who foot the bill, not Mexico and not anybody else.

In the meantime, the government remains shut and amusingly (or not, depending on how you want to look at it), the cost of that shutdown will actually exceed the cost of the wall within two weeks.

That’s according to S&P, who notes that what is now the second-longest government shutdown in US history will lop some $1.2 billion off real GDP for every week it persists, which means we’re just two weeks away from this farce costing more than the $5.7 billion Trump wants for his invisible “steel slats”.

You could look at that and say it argues for just giving Trump his damn money in the interest of putting the brakes on this insanity which looks set to exacerbate a nascent deceleration in the U.S. economy. But what kind of precedent does that set? Does that mean that any time he wants something he can just shut the government and point to how much it’s costing the economy to justify his demands? If so, how will that go over with Republicans if/when a Democrat president uses the same strategy?

Meanwhile, analysts are busy trying to quantify all of the second order effects.

“In 2013, when over 800k workers were furloughed for 17 days, the BEA estimated that the shutdown reduced real GDP growth by 0.3pp, meaning approximately a 0.1pp drag on growth per week that the full government is shut down”, BofAML writes, in a new note, adding that if you “use this rule of thumb, given that about 380k workers have been furloughed (about half that in 2013), the current shutdown has been a drag of 0.1-0.2pp on growth [which] led us to revise down our 4Q GDP tracking estimate to 2.8% from 2.9%.”

But that’s just the mechanical effect. Here’s what the bank has to say about the knock-on effects:

There will also be indirect impacts felt from disruptions in consumption and business spending. Unpaid workers, both public and private, could delay spending, temporarily reducing PCE, and potential delays in tax refunds could further curb consumption, especially for low-income households who rely on the extra income for day-to-day spending. Also, a sustained shutdown into March may lead to cuts in food stamp benefits. Additional drag could be felt if the shutdown generates uncertainty shocks in the economy leading to a decline in business and consumer sentiment and/or a decline in US equity markets.

And all of this for what? Border “security”? Most assuredly not. There is no “crisis” and there is no “national emergency”. This is a complete and total fabrication and you can be absolutely sure that Trump knows it. This is about vanity for him, and also about manufacturing crisis after crisis in order to make it appear, to his supporters, that he’s still “fighting the good fight”, so to speak.

There is nothing “good” about this fight. Again: taxpayers are being extorted for money earmarked for what will, if by some miracle he manages to build it, go down in history as one of the most ill-conceived boondoggles in the history of the republic.



6 comments on “Shutdown Will Cost US Economy More Than Trump’s Wall Within 2 Weeks

  1. I’m furloughed. My wife is furloughed, too, so we currently have zero income.

    After providing that (brief) background, let me say that this shutdown is 100% the fault of Donald Trump, and 20% Mitch McConnell’s fault. I know that is more than 100%, but it’s not like there’s an abundance of logic among our leaders these days. McConnell could end this any time, of course, by simply bringing up a vote to override Trump’s veto of the various spending bills, but I guess he is scared of being called names on the interweb.

    At any rate, I completely agree with your assessment above. Giving in here (by the Democrats) will just open the floodgates to becoming the “new normal” of the president demanding a new, different policy concession every fall. This is nonsense. Policy should not be combined with withholding (or threats of withholding) funding for already-existing government programs. There are some nuances to that, of course, which I just deleted because they went on for awhile and are irrelevant to what is happening here.

    There’s also the issue that the $5.7B is just the first payment of what will ultimately cost around five times that much.

    Whenever there is a shutdown, I am sometimes asked, as a Federal Government employee, who do I blame? The answer is always the same: It is the party (or, in this case, the person) who is attempting to alter the status quo by bootstrapping a policy argument or demand a change in existing law onto a standard annual funding bill. It’s pretty clear who that is every. single. time.

    Finally, why isn’t anyone clamoring for a wall along our northwest border? Alaska is only three miles from Russia! By my calculations, I think we can construct a barrier along the entire Alaskan coast for only $370T. Totally worth it.

    • George, Sorry to hear about the furlough situation for you both. I think your math is a bit off…it’s 100% Trump and I am going to give Mitch 120% fault. If he could remember that as a Senator, his allegiance is to the Constitution rather than his party, so much of this wouldn’t have come to pass. I would venture to say we wouldn’t have Trump because the whole make Obama a one-term president strategy helped give rise to the loons on the right and he would have had the guts to issue the statement prior to the election that the Russians were in cahoots with Trump.On the bright side, if he declares a state of emergency, the Dems can use that the next time in office to declare climate change an emergency or lack of health care access an emergency.

      • Thanks. I had the good fortune to listen to H last June and sold my emerging markets holdings, so we’ll be fine for awhile, unlike many of my colleagues at work.

        Great point on the climate-change emergency. I hadn’t thought of that!

  2. Just a couple of quick thoughts — I have stuff to do and in a hurry — President Assface does not give a hoot about the financial costs of his lying bullshit Wall vs Shutdown because tax money is being used/wasted and since he does not even pay taxes, it ain’t his money anyway. We recently learned that one of his arts of making deals is to walk-out of negotiations as he did the other day so why in the hell doesn’t he just go ahead with that and walk out of the damned White House? ♫ Joy to the World

  3. Well, I’m still shocked this dipshit got elected. Long story short, as bad as Trump is (and he’s the worst), the Dems still continually fail to get Americans ‘on their side’:

    Dems needs some serious, basic schooling, in PR. It’s NOT DIFFICULT to craft a consistent, intelligent, uplifting msg and then get your BEST people out there to sell it. Stop putting your least-liked, or least-respected people on the ballot, or in front of the camera.

    C’mon. End this nightmare. This free ‘consultation’ is worth $millions.

    • haha! that ballot process has barely started and I already have more than 3 I like! After what assface has done to the GOP, they will all be afraid to run…waste of time!

      I think you are just not following the correct news coverage or not doing your homework. No, your advice is silly and produces the wrong contenders. It’s not a game show or realty tv. Nice try, though. hahaha!

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