Brinksmanship in Washington doing economic damage

"These partisan battles not only threaten our fragile economic recovery, but they have not resulted in any comprehensive solution to our real fiscal challenge, stabilizing our long-term debt." 

Congress remains at an impasse over raising the debt ceiling and reopening the government, which has been closed for 14 days. 

Congressional leaders and the White House are working toward a temporary solution, but through Monday afternoon that deal was still elusive. 

"Based on this report’s findings, we can assert confidently that the crisis-driven fiscal policies of the last several years have damaged our still-struggling economy," said Joel Prakken of Macroeconomic Advisers, an independent research firm for the Peterson Foundation.

The government shutdown, at this point, could trim about 0.3 percentage points from growth during the final three months of the year, the report found. 

The report comes on the heels of other analyses that show losses of between 1 million and 2.3 million jobs in the past five years, as Washington's policymakers have run headlong into one manufactured fiscal crisis after another. 

The Peterson Foundation report also found that the uncertainty caused by gridlock has raised the Baa corporate bond spread by 38 basis points and lowered economic growth by 0.3 percentage points per year.

The analysis also examines two debt-limit scenarios — one that is short and quickly resolved, and another that lasts two months — both with severe consequences. 

In the short-term event, risk aversion and financing costs rise, prices of risk assets fall, and the economy enters a recession. 

Growth wouldn't start to rebound until the end of 2014, and the unemployment rate would hit 8.5 percent before starting to decline, meaning the loss of 2.5 million jobs. 

The second event would lead to a much deeper recession that is "characterized by extreme volatility" where unemployment rises to a peak of 8.9 percent — equivalent to 3.1 million lost jobs — before falling.