CBO warns US shutdown shutdown could cost $400M daily, 750K employees at risk of furlough

The Congressional Budget Office (CBO) has issued a stark warning about the potential financial consequences of a looming U.S. government shutdown, highlighting the heavy toll it could take on federal employees and the broader economy.

In a detailed letter to Senator Joni Ernst, the CBO projected that a lapse in government funding could lead to the furlough of nearly 750,000 federal workers each day. The estimated daily cost of this disruption is about $400 million in lost compensation. These findings draw upon lessons from past shutdowns, including the record-breaking 35-day partial shutdown from late 2018 to early 2019.

The CBO explained that its analysis was based on agency contingency plans and data provided by the Office of Personnel Management (OPM). According to the agency, while some of the lost economic output from a shutdown can be recovered once normal operations resume, not all damage is reversible. For example, in 2019, the CBO concluded that roughly $3 billion in real GDP equal to 0.02 percent of annual economic activity was permanently lost due to disruptions during that shutdown.

The timing of this latest warning coincides with renewed political gridlock in Washington. Earlier this week, President Donald Trump suggested during a press briefing that another shutdown was likely. He argued that disagreements over healthcare and immigration funding were at the center of the stalemate, repeating claims that Democrats want to extend benefits like Medicare to undocumented immigrants. While these assertions have been widely disputed, they reflect the partisan divide preventing Congress from agreeing on a continuing resolution to keep the government funded.

Both Republican and Democratic leaders in the Senate scheduled votes on their respective short-term funding proposals, but neither side was able to secure the 60 votes required to move legislation forward. With the deadline for government funding set to expire Tuesday night, federal agencies are preparing for the possibility of another funding lapse.

Shutdowns are not new to American politics. Since 1980, there have been 15 instances of the government halting operations due to funding disputes. Although the frequency of shutdowns has declined over the years, their duration has tended to increase. The 2018–2019 shutdown, lasting 35 days, remains the longest in history and one of three that occurred under Trump’s presidency.

The CBO emphasized that the true economic fallout of any new shutdown will depend largely on how long it lasts. Short-term closures typically create temporary disruptions, with much of the economic activity eventually bouncing back once federal employees receive back pay. Longer shutdowns, however, can permanently reduce economic output by delaying contracts, slowing consumer spending, and creating uncertainty for both businesses and workers.

Ultimately, the CBO’s warning underscores the real cost of political deadlock in Washington. While lawmakers continue to clash over spending priorities, hundreds of thousands of federal employees could once again face furloughs, missed paychecks, and economic instability. And as history shows, even when government operations restart, the nation’s economy rarely escapes entirely unscathed.