Treasury Secretary Scott Bessent has issued a stark warning that the ongoing federal government shutdown is inflicting mounting damage on the U.S. economy, potentially costing billions of dollars each day as the standoff in Congress enters its third week.
Speaking at a news conference on Wednesday, Bessent said the partial shutdown is “starting to cut into muscle here,” emphasizing that the impasse has moved beyond symbolic politics and is now threatening core economic functions.
He initially estimated that the shutdown could cost the U.S. economy up to $15 billion a day, though the Treasury Department later clarified that the figure was $15 billion per week.
The shutdown, which began on October 1, stems from Congress’ failure to pass a new funding bill before the start of the 2026 fiscal year.
Lawmakers remain deadlocked over several key provisions, most notably a Democratic push to extend Affordable Care Act (ACA) premium subsidies, which are set to expire this year.
The subsidies – originally introduced in the American Rescue Plan of 2021 and extended through 2025 by the Inflation Reduction Act – provide lower insurance premiums for millions of Americans.
Democrats have refused to back the Republican-led continuing resolution without a guarantee that the temporary health benefits will continue, while Bessent has urged “moderate Democrats to be heroes” and support reopening the government.
This latest shutdown has already disrupted operations across multiple federal agencies.
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Non-essential workers have been furloughed, and essential personnel are continuing to work without pay until the funding lapse is resolved.
Key services, including small business loans, energy project permits, and national park operations, have been halted or delayed, amplifying the economic toll.
While past shutdowns have had limited long-term impact, the duration and scope of this one could make it more damaging.
Federal Reserve Bank of Chicago President Austan Goolsbee noted that short shutdowns often “do nothing to the aggregate economy,” since workers expect back pay.
However, he cautioned that a longer or broader funding lapse could force a reassessment of that outlook.
A Goldman Sachs analysis found that each week of a shutdown could trim quarterly economic growth by 0.15 percentage points of GDP, with a compensating rebound once government operations resume.
The firm also projected a temporary uptick in the unemployment rate, as furloughed workers are classified as “unemployed on temporary layoff.
”The Office of Management and Budget (OMB) previously documented disruptions from past shutdowns, including suspended IRS income verifications, halted small business loans, and tourism losses from closed national parks – all issues reemerging in the current crisis.
As the shutdown drags on, economists warn that confidence in U.S. fiscal management could erode if lawmakers fail to act soon.
With each passing day, the pressure mounts – not only on Washington but on an economy already showing signs of strain.
Source: Fox Business
