In a discussion with myself and Aaron Zitzelsberger (WEDC), at UW Madison, Thursday 2 October 2025, sponsored by the Alexander Hamilton Society at UW Madison .
Location TBD, sign up to email list for announcement here (and updates on this post).
Douglas Holtz-Eakin was formerly Director of the Congressional Budget Office (2003-05), Chief Economist of the CEA (2001-02), and currently President of the American Action Forum.
A recent evaluation by Dr. Holtz-Eakin of the US macroeconomy, here.
Not so off topic – “non-essential” functions of the federal government will shut down at midnight Tuesday unless Congress passes some sort of spending bill by then. Betting markets put the odds of a shutdown at 73%:
https://kalshi.com/markets/kxgovshut/government-shutdown
I wouldn’t want to make odds on this one. Games of budget chicken typically go to the last minute or a few minutes beyond. It’s a pattern that allows partisans to claim they stood their ground, but avoid public backlash; betting market odds don’t really tell us much about economic consequences.
The cost of government shutdowns as measured by GDP tend to be small. The CBO puts the short-term cost of the 2018 shutdown at $11 billion, long-term at just $3 billion. The personal cost to individuals due to payment and service disruptions, on the other hand, can be considerable.
This time is obviously different, because government operations, services and payments have all been disrupted repeatedly by the antics of the felon-in-chief. Disrupted contract payments could be the difference between survival and bankruptcy for suppliers and contractors already stressed by tariffs, bank reluctance to lend and the like.
Polling shows that Republicans are somewhat more likely to be blamed than Democrats if there is a shutdown, and Republicans are already linked to a rising pile of policies that the median voter dislikes. That should limit the duration of a shutdown.
Trump is the final hurdle. He has to sign whatever is passed. He concocted the 2018 shutdown, isn’t interested in public welfare or good governance and seems pretty untethered now.