The U.S. economy is taking a larger-than-expected hit from the ongoing partial government shutdown, according to a report from Reuters, White House estimates showed on Tuesday, as contractors and even the Coast Guard go without pay.  Talks to end the impasse appeared to be stalled.

On Tuesday, the Trump Administration estimated the shutdown could cost the economy 0.13 percentage point every week because of the impact of work left undone by 380,000 furloughed employees as well as work left aside by federal contractors, a White House official said. The economic risk prompted Federal Reserve officials to call for the central bank to pause interest rate hikes.

In addition, longer lines have formed at some airports as more TSA security screeners fail to show up for work.

The longest government shutdown in U.S. history dragged into its 25th day with neither President Trump nor Democratic congressional leaders showing signs of bending on the topic of funding for a wall that President Trump has promised to build along the border with Mexico.  The President wants Congress to provide $5.7 billion for the wall funding this year.

Democrats have rejected the border wall but back $1.3 billion in other border security measures this year.  They have insisted the government be fully opened before negotiations occur.

Approximately 800,000 federal workers are not being paid during the shutdown.  The Government Employee Free Treatment Act of 2019 passed Congress on January 11 and President Trump has indicated that he would sign it.

The legislation stipulates that federal employees will be paid at their standard rates of pay and at the earliest date possible after the lapse in appropriations ends, regardless of scheduled pay dates.  The legislation also says that federal employees, who were furloughed, will receive back pay for the time period of the lapse in appropriations.

Homeland Security Secretary Kirstjen Nielsen said she is working with the White House and Congress to pass legislation to fund the Coast Guard.  While the Pentagon is not affected by the shutdown, the Coast Guard budget is part of Nielsen’s department.

With the shutdown dragging on, federal courts are expected to run out of operating funds on January 25 and face “serious disruptions if the shutdown continues,” according to a court statement.  The Internal Revenue Service said it planned to bring more than 46,000 furloughed workers back to their jobs as the IRS enters its peak season of processing tax returns and refunds.

Lawmakers were supposed to be in their districts and states next week after Monday’s Martin Luther King Jr. Holiday, but the House and Senate planned to cancel the recess if the shutdown persists.

 

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