Bessent Warns Shutdown ‘Cutting Into Muscle’ as Economy Loses Billions

The federal government shutdown has entered its fourth week with no end in sight — and economists now warn it’s inflicting real damage on America’s economy. Treasury Secretary Scott Bessent put it bluntly: the shutdown is “starting to cut into muscle,” costing the U.S. economy up to $15 billion per week in lost activity.

A Stalemate With Growing Consequences

What began as a familiar budget standoff is quickly becoming one of the most disruptive government closures in decades. Unlike the 34-day shutdown of 2018–19, when most agencies were still funded, this time no full appropriations bills have passed.

The White House has moved to permanently eliminate thousands of federal positions in what officials call an overdue bureaucratic “rightsizing.” Budget Director Russ Vought said workforce reductions will likely exceed 10,000 jobs, describing the effort as an opportunity “to shutter the bureaucracy, not just pause it.” A federal judge has temporarily halted the firings, calling them politically motivated, but the administration remains defiant.

While conservatives have long called for smaller government, the immediate economic effects are hard to ignore. Economists estimate the shutdown is trimming 0.1–0.2 percentage points off GDP growth each week — equal to roughly $7–15 billion in lost output, consistent with Bessent’s own Treasury estimates.

Bessent Urges Democrats to “Be Heroes”

During a press conference, Bessent called on moderate Senate Democrats “to be heroes” and break ranks with their leadership by supporting the Republican continuing-resolution that would temporarily reopen the government.

So far, Democrats have blocked eleven votes on the GOP’s stopgap measure. Their main demand: an extension of Obamacare premium subsidies set to expire at year-end — subsidies that send direct federal payments to insurance companies to lower premiums. Republicans argue that tying a massive health-care entitlement to basic government funding is “a hostage tactic,” not fiscal responsibility.

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An Economy on the Edge

Even before the funding lapse, the economy was slowing under the weight of high interest rates and weak consumer confidence. Now, key sectors are starting to show strain:

• Small businesses are unable to secure federal loans from the SBA, which typically guarantees $860 million in new loans each week.
• The travel industry estimates $1 billion in weekly losses from shuttered national parks, museums, and the Smithsonian.
• Contractors tied to federal projects have begun layoffs and furloughs, while visa processing delays are rippling through farms, seafood suppliers, and seasonal employers.

“The shutdown is harming small businesses and costing American economic growth that can’t be recovered,” warned Neil Bradley, EVP at the U.S. Chamber of Commerce.

Manufacturers and energy producers are also feeling the pain. The National Association of Manufacturers said halted permitting and inspections threaten project timelines, while the American Petroleum Institute cautioned that extended delays could “add regulatory uncertainty” and stall critical energy infrastructure.

Why This Shutdown Hurts More Than the Rest

Scope and Timing:
Past shutdowns spared much of the federal government. This one does not — hitting everything from agriculture and housing to research grants and environmental reviews. The timing is especially poor: October is a crucial month for farmers and small-business borrowing, and the holiday retail season is approaching.

Data Blackout:
With key agencies closed, the Federal Reserve and private analysts are flying blind. Employment, inflation, and manufacturing data are not being released, forcing policymakers to rely on incomplete information.

Private-Sector Shockwaves:
Small contractors and local economies built around federal activity — particularly in Virginia and Maryland — are tightening budgets. Some families are visiting food banks, while others are delaying rent and loan payments as missed paychecks pile up.

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Even Economists See This One as Different

Goldman Sachs analysts found that each week of a full shutdown can shave 0.15 percentage points off quarterly GDP growth — but they also noted that most past shutdowns were brief and only affected a fraction of federal operations. This one is far wider.

Even Federal Reserve officials are taking notice. Austan Goolsbee, president of the Chicago Fed, warned that the halt of official economic‐data releases during the shutdown is a major concern: “It pains me that we wouldn’t be getting official statistics at exactly a moment when we’re trying to figure out is the economy in transition.”

With federal operations at a near standstill, those reasons are already obvious.

Political Fallout and Public Perception

Polls show a divided public. Roughly 60 percent of Americans say President Trump and Republicans bear significant responsibility for the impasse, while 54 percent say the same of Democrats — an unusually even split.

For now, both parties appear dug in. Senate Majority Leader John Thune insists Republicans will not “negotiate under hostage conditions,” while House Democratic Leader Hakeem Jeffries says his caucus “won’t bend or break.”

The Conservative Crossroads

For fiscal conservatives, the challenge is balancing reform with stability. Yes, Washington’s bureaucracy has grown bloated and inefficient — but prolonged shutdowns risk doing more harm than good.

The right strategy is to:

• Reopen government immediately to protect economic stability and small-business growth.
• Pursue structural reform separately, through targeted agency reviews and performance audits, rather than blunt shutdown tactics.
• Communicate clearly that the fight is about efficiency and accountability, not ideology.

What to Expect Next

The longer this shutdown lasts, the greater the risk that temporary disruption turns into lasting economic scarring. As Secretary Bessent warned, it’s already “cutting into muscle.”

If moderate Democrats heed that warning and break the stalemate, the government could reopen within days. If not, America could be staring down the most damaging shutdown in its history — one measured not just in lost paychecks, but in lost confidence in Washington’s ability to function at all.

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