A Treasury official clarified Wednesday that the ongoing two-week federal government shutdown could cost the U.S. economy as much as $15 billion a week in lost output, not a day, as Treasury Secretary Scott Bessent mistakenly claimed earlier in two separate appearances.
Bessent urged Democrats to “be heroes” and join Republicans in ending the shutdown using the incorrect daily estimate. The revised weekly figure, the official noted, is based on an analysis by the White House Council of Economic Advisers, as reported by Reuters.
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Bessent told a news conference that the shutdown is starting to “cut into the muscle” of the U.S. economy.
The wave of investment in the U.S. economy, including in artificial intelligence, is sustainable and just beginning, but the federal government shutdown is a growing obstacle, Bessent said.
“There is pent-up demand, but then President (Donald) Trump unleashed this boom with his policies,” Bessent said at a CNBC event on the sidelines of the International Monetary Fund and World Bank annual meeting in Washington.
“The only thing that’s slowing us down here is the government shutdown,” Bessent said.
He said the incentives in the Republican tax bill and Trump’s tariffs will keep the investment boom going and support continued growth.
“I think we can be in a period like the late 1800s when the railroads came along, like the 1990s when we saw the Internet and office technology boom,” Bessent said.
The US deficit has narrowed, says Bessent
Bessent also said the U.S. deficit for fiscal year 2025, which ended Sept. 30, was smaller than the $1.833 trillion deficit reported in the previous fiscal year. He gave no figure but said the deficit-to-GDP ratio could fall to as low as 3% in the coming years.
The Ministry of Finance has not yet announced the amount of the annual deficit.
The Congressional Budget Office estimated last week that the U.S. fiscal year 2025 deficit fell only slightly to $1.817 trillion despite a $118 billion jump in tariff revenue from Trump’s tariffs.
“The deficit to GDP, which is an important number, now has a five in front of it,” Bessent said at a CNBC event.
Asked if he wants to see a three-digit deficit-to-GDP ratio at the start, Bessent said: “Yes, it’s still possible.”
He added that the ratio would decrease if the U.S. could “grow more, spend less and cut spending.”
A judge temporarily blocks the Trump administration from firing employees
A federal judge has temporarily blocked President Donald Trump’s administration from laying off employees during the government shutdown, saying the cuts appeared to be politically motivated and made without much thought.
U.S. District Judge Susan Illston in San Francisco repeatedly pressed the assistant U.S. attorney to explain the administration’s reasons for the more than 4,100 layoff notices that began Friday, even though furloughed employees do not have access to their work emails and there are no human resources specialists to help them with next steps.
“It’s very well set, fire, aim for most of these programs and there’s a human cost,” she said. “It is a human cost that cannot be tolerated.
The government shutdown, which began on Oct. 1, was triggered after Democrats blocked a short-term funding bill demanding that it include an extension of federal subsidies for health insurance under the Affordable Care Act. Those subsidies will expire at the end of the year, potentially raising monthly costs for millions of Americans.
President Trump and Republican leaders have said they are open to renegotiating the subsidies, but insist the government must reopen first.
The only thing slowing us down is the government shutdown.
It’s very set, shoot, aim for most of these programs, and it comes at a human cost.
With both sides refusing to compromise, the path to ending the shutdown remains unclear.
(With input from agencies)
