October 16, 2013 8:54 am -

The Republican refusal to keep the government open is having consequences that need to be more widely reported. For example:

[A] new study, conducted for the Peter G. Peterson Foundation by Macreconomic Advisors, a private research firm with no obvious political leanings, attempts to tally the total impact of those political machinations on the U.S. economy. It’s a lot more substantial than the political class would prefer to acknowledge.

In 2013 alone, political uncertainty cut GDP growth by 0.3 percentage points and pushed the unemployment rate 0.6 points higher than it would have been with more effective government. That happens because troubling news out of Washington tends to push stock prices down and interest rates up, “undermining wealth and raising private borrowing costs,” according to the study. Consumers and businesses spend and invest less as a result. That equates to 900,000 lost jobs—without taking into account the recent jitters caused as Washington gets closer to defaulting.

If the government actually does default, it will most likely cause a new recession and dwarf the negative impacts of the last several standoffs. “Partisan divided government has failed to address this long-run problem sensibly,” the study says, “instead encouraging policy that is short-sighted, arbitrary, and driven by calendar-based crises.”