US Treasury Secretary: Government Shutdown Costing Billions, Deficit Concerns Rise

Government Shutdown's Impact on the US Economy

US Treasury Secretary Baisen stated on Wednesday that the two-week federal government shutdown has cost the US economy approximately $15 billion per week. The initial estimate suggested a daily loss, but it was later corrected to a weekly loss. Baisen made this statement during an assessment of the economic losses resulting from the government shutdown, urging Democrats to cooperate with Republicans to end the crisis.

During a press conference, Baisen explained that the shutdown is beginning to negatively affect the US economy. He emphasized that the government should stop hindering economic growth and work to promote investments in vital sectors such as artificial intelligence.

Investment and Economic Growth

Baisen affirmed that the wave of investments in the US economy, including investment in artificial intelligence, is sustainable and is just the beginning. However, he noted that the federal shutdown is becoming an increasing obstacle to this growth. He added that there is pent-up demand and that President Trump's policies have stimulated this boom.

Speaking at a meeting of the International Monetary Fund and the World Bank in Washington, Baisen indicated that the Republican tax incentives and Trump's tariffs will contribute to the continuation of the investment boom and promote economic growth. He expressed optimism that the US economy could experience a period similar to the prosperous periods it experienced in the 19th century with the emergence of railways, and in the 1990s with the boom of the internet and office technology.

Concerns About the Fiscal Deficit

Baisen also touched on the issue of the fiscal deficit, noting that the US deficit in fiscal year 2025, ending on September 30, will be less than the $1.833 trillion in the previous fiscal year. He did not provide specific figures but indicated that the deficit-to-GDP ratio could fall to around 3% in the coming years.

It is worth noting that the US Treasury Department has not yet published the annual deficit figures. The Congressional Budget Office estimated last week that the US deficit in fiscal year 2025 will only decrease slightly to $1.817 trillion, despite the fact that Trump's tariffs increased customs revenues by $118 billion.

Speaking at a CNBC event, Baisen said: "The deficit-to-GDP ratio, which is an important number, is now in the 5s." When asked if he would like to see the deficit-to-GDP ratio return to "the 3s," Baisen replied: "Yes, it is still possible." He added that this ratio would decrease if the United States could "achieve more growth, reduce spending, and control it."

Analyzing the Impact: Beyond the Numbers

While Secretary Baisen's statements provide a snapshot of the immediate economic impact of the government shutdown, it's important to consider the broader, less quantifiable effects. Government shutdowns can erode public confidence in government institutions and create uncertainty for businesses, potentially leading to delayed investments and hiring freezes.

Furthermore, the long-term consequences of increased national debt, even if the deficit-to-GDP ratio improves slightly, can impact future generations. Increased debt levels can lead to higher interest rates, potentially crowding out private investment and hindering long-term economic growth. The ongoing debate over fiscal policy highlights the complexities of balancing short-term economic stability with long-term financial sustainability.