By Eric Morrissette
Earlier this week, I spoke with a Washington, D.C.-based contractor who has dedicated her career to helping minority- and women-owned small businesses thrive in technology and innovation. Over the past few months, she has watched every one of her federal contracting lines disappear. “It’s been devastating,” she told me. “Not just for me, but for the country.”
Her story reflects a deeper truth: the ongoing war on the public sector has not only upended lives, but it also has weakened America’s economic foundation. Programs that once powered inclusive growth — the Community Development Financial Institutions (CDFI) Fund, the Minority Business Development Agency (MBDA), the Small Business Administration, and the Department of Agriculture’s entrepreneurship initiatives — have been frozen, defunded or dismantled altogether.
Even after months of erosion, the 42-day shutdown delivered a new blow, halting the very agencies responsible for ensuring that economic opportunity reaches every community.
According to new analysis by the Congressional Budget Office, this shutdown (the longest in U.S. history) erased an estimated $14 billion in permanent economic output, with as much as $74 billion in delayed federal spending. These losses are not abstract. They represent shuttered labs, canceled research, unprocessed small business loans and missed contracts that drive local economies. Federal workers will receive back pay; federal contractors will not.
This pain is also deeply concentrated and represents a crisis that was bubbling before the shutdown. A Bank of America Institute analysis released this week found that while roughly one-quarter of U.S. households live paycheck to paycheck, that rate soars to nearly one-third for lower-income families — a direct reflection of sustained economic pressure. For the millions of Socially and Economically Disadvantaged Individual (SEDI) business owners, the contracts and supports provided by government agencies are the difference between growth and collapse.
The Senate-passed bill to reopen the government is a hybrid measure — a short-term funding extension paired with three full-year appropriations — designed to stabilize some critical sectors. The bill includes everything from SNAP and WIC food assistance to new Government Accountability Office guardrails. It is not, however, singularly a reopening of the government. It restores pay for furloughed workers and reverses the administration’s aggressive “reductions in force” that sought to permanently eliminate federal jobs. By reopening agencies that serve as lifelines to rural communities, veterans, and historically disadvantaged entrepreneurs, the bill represents an essential, if temporary, restoration of capacity.
Yet, the near-term costs of the shutdown cannot be undone, and the political roots of this crisis threaten an even steeper economic cliff ahead. While the immediate shutdown caused unrecoverable losses in productivity and innovation momentum — felt particularly acutely by SEDI businesses that have been under siege this past year — the longer-term costs stem from the administration’s ongoing willingness to use government funding as leverage in ideological battles. If efforts to undermine the Affordable Care Act continue, disruptions to coverage and medical spending could eclipse the shutdown’s $14 billion in permanent losses many times over, breaking the backs of businesses and workers.
What was lost in those 42 days was not just time, but trust — trust in the idea that government can still serve as a reliable partner in shared prosperity.
Reopening the government must therefore be more than an administrative restart; it must be an act of renewal. Restoring and buttressing agencies, like the MBDA and the CDFI Fund, are essential to repairing the social contract and to rebuilding an economy that works for all.
The opinions expressed in this commentary are those of the writer and not necessarily those of the AFRO.