The Heritage Foundation has launched a town hall tour across the country to urge Republican lawmakers to block a bill that would fund the government and keep it operational unless the Affordable Care Act (ACA) is defunded. Speaking at one of those town halls, Heritage President Jim DeMint stated, “The risk of that [a government shutdown] is so much less than the risk to our country if we implement Obamacare.” What he leaves out is that the ACA will actually reduce government spending, while a shutdown would have catastrophic economic effects.
The nonpartisan Congressional Budget Office (CBO) found that the ACA will reduce the federal deficit by $210 billion over the next decade and save about $1 trillion in the second decade. On the other hand, the CBO also found that blocking funds for implementing the ACA would actually drive up government spending in the long run, increasing costs by $5.6 billion over a decade, and reduce revenues by $100 million. A total repeal of the law would increase federal budget deficits by $109 billion over a decade.
Meanwhile, the costs of a government shutdown could be enormous. Analysts at Goldman Sachs predict it could shave 0.2 percentage points off of economic growth for every week the government isn’t operational. By increasing the costs of funding the government’s debt, a shutdown could actually increase the deficit. It would likely cause 800,000 federal employees to be furloughed. States would be hit hard by the loss of important federal funds and the shuttering of national parks, which generate a lot of tourism revenue. The housing market would take a hit, as would small business loans, workplace safety inspections, tax refunds, and of course, Social Security recipients.
Despite these risks, many Republicans say they will shut down the government unless the ACA is defunded. Led by Sen. Mike Lee (R-UT), 15 Republicans, who also include Sens. Marco Rubio (R-FL) and Rand Paul (R-KY), have signed a letter pledging to do just that. Yet others in the party, including more moderate Republican Congressman and state governors, have come out against this tactic. Some have had to explain why this idea is unworkable to angry town hall attendees. But those vocal constituents don’t speak for the majority of the party: Heritage’s own poll found that Republican voters would blame their party for a shutdown and most people think Obamacare should remain on the books.