Gravy Train About To End For The Washington, D.C. Area?

Some people in the D.C. area are worried that the Federal spending gravy train may be coming to an end. They should be.

With Republicans set to take over the House in two days and austerity the word of the week, The Washington Post is lamenting what that could mean for the D.C. Metro area, which has largely escaped many of the worst parts of the economic downturn that began in 2008:

The Washington region rose above all other metropolitan areas in 2010 when it came to economic progress. Bolstered by federal hiring and a boost in procurement, the region recorded the nation’s highest net number of jobs gained during a 12-month period as the year came to a close.

But economists are concerned that the momentum may now be threatened as the region’s major industry — the federal government — prepares to face the budget ax. Many in Congress have expressed an interest in slowing federal spending in order to bring the $1 trillion or so deficit in line.

Welcome to the era of government austerity.

The last time the federal government went down this path, in 1995, the region felt the pain. During a two-year period, the federal workforce in the Washington area shrank by 32,000 with cuts at NASA, Agriculture, Transportation and numerous other agencies. Federal contracts were canceled. The government scrapped construction projects in the area. The after-shocks reverberated throughout the region’s economy. Consumer confidence plummeted, driving down retail sales and exacerbating a depressed housing market. Declining federal aid and local tax revenues prompted several jurisdictions, including Prince George’s County, to lay off employees to help close their budget gaps.

This time, the private sector in metropolitan Washington is more diverse. But federal spending and procurement still represent about one-third of the region’s $443 billion economy. Some forecasts suggest that the growth of federal spending and procurement could plunge to 1 percent or below in 2011 from an average of about 8 percent annually during the past several years. That could hurt even if the local economy benefits from improvements this year in the U.S. economy.

Over at his own site, OTB co-bloggerDave Schuler  has what I think is probably the pithiest response to this bellyaching in a post appropriately entitled Boo-Freaking-Hoo:

What’s next? Pleas to go easy on organized crime because fighting it would reduce the market for pinky rings and armor-plated limos?

Indeed, or as Ed Morrissey puts it, rather than belly-aching about the end of a gravy train, perhaps the D.C. area needs to diversify:

If the DC area wants to prosper, perhaps it should make itself less dependent on government largess for its economy.  The rest of us feel that our nation’s capital should be sharing in the same pain in these tough economic times rather than picking our pockets — now or in the future — to live high on the hog.  At any rate, it’s not the business of Congress to transfer our money to the Beltway, a lesson Republicans taught in 1995 and apparently have to teach again.

Indeed it’s not, and to a large extent the D.C. area is far more diversified economically than it was even fifteen years ago. Most importantly, it is far from being the government “company town” that it may have been in 1960s, 1970s, and earlier. More importantly, though, its fairly obvious that whatever cuts in the government that we’re going to see over the next two years are going to be minimal at best, and that the Post is essentially engaging in no small degree of fear-mongering here. Northern Virginia and Suburban Maryland are going to do just fine.  The District of Columbia is a major city that will continue to suffer the problems of every other major city (and,  in fact, the District itself hasn’t benefited nearly as much from all that government spending as the suburbs have). Whatever temporary pain they feel will just be a reminder that you don’t build economic prosperity on the backs of the American taxpayer.

FILED UNDER: US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. JKB says:

    The pump austerity fear but the body fears a reduction of growth in government spending from 8% to 1%. So a reduction of growth from 16 times inflation to just twice inflation, if we assume a +0.5% inflation instead of the average of zero the last couple of years.

    Over the last two years, inflation has been zero. Over the last year, it has been just 1.3 percent. Over the last six months, it has been below zero — negative 0.7 percent. NYTimes

    If government spending growth had been held at inflation for the last 10 years, we wouldn’t have a debit crisis now.

    Well, poor little DC you haven’t seen nothing yet. The medicine we need to take will require negative government spending growth. Think +1% will be bad, well wait until you meet -1%. And that’s if we start today, if we have to wait 2 years to get started, I’m thinking -10% for a couple of years.

  2. DC Loser says:

    The major beneficiaries of the DC Gravy Train were the Beltway Bandit contractor firms that got fat from DoD and intelligence community plus ups (see Boeing, Northrop Grumman, SAIC, Lockheed Martin, etc.) By all means start slashing the money going to them.

  3. Zelsdorf Ragshaft III says:

    Those in Washington DC are about to lose their credit cards.

  4. john personna says:

    Very Funny.

    A very simple formula for a story. Take something that has a snowball’s chance in hell of actually happening, and then write a sky-is-falling story about it. Fun for everyone.

    I imagine that it is a new years’ resolution vibe. You know, eat better, exercise more, reduce the size of government.

    A couple months from now government will wonder why it still can’t fit in its old jeans.

  5. Zelsdorf Ragshaft III says:

    DC, you loser, What we get from the names you named are actual products. What do we get from our federal employees, which number in the millions? How much to they get for their LABOR? I think if we put these jobs up for bids, we would find people who are willing to do what the current job holders are doing for far less tax payer dollars than what we are paying. I am tired of Democrats buying votes with tax dollars.

  6. john personna says:

    Food that won’t kill me (immediately)?

  7. An Interested Party says:

    “At any rate, it’s not the business of Congress to transfer our money to the Beltway, a lesson Republicans taught in 1995 and apparently have to teach again.”

    On the contrary, it seems to be the business of Congress to transfer money from mostly Blue states to mostly Red states, another lesson Republicans have no problem teaching…

  8. DC Loser says:

    ZR3 – You’re an idiot. That’s been done for the past 15 years, contractors replacing government employees. Current going rate for a contractor doing yeoman work in the DC area is $250k – $300k a man year. You think that’s a saving?

  9. DC Loser says:

    ZR3 – I guess you mean actual products such as the Future Imagery Architecture (http://en.wikipedia.org/wiki/Future_Imagery_Architecture), the Expeditionary Fighting Vehicle (http://en.wikipedia.org/wiki/Expeditionary_Fighting_Vehicle), the Littoral Combat Ship (http://en.wikipedia.org/wiki/Littoral_combat_ship), etc….

  10. Andy says:

    I have to laugh, this article say’s the gravy train is about to end but then explains why it won’t. Repubs why are you so upset with paying people earning a working wage? $300 000 is not a massive wage if you compare it to the millions the bankers are making. these hard working people are doing a job and getting paid for it. In republincan indoctrination that is what must be held above all else, don;t worry about those that have not had the oppertunities you have had , dont help those that are struggeling to get a job or are sick and don’t have money for overpriced third world medical care, support people who work and earn there way, those in DC that have worked there way up and have worked to get those salaries need tax cuts and need to be given assurances there jobs will not be cut, just as businesses need tax cuts and regulations to keep them in business making billions of the hard work, and misery of the american people.

  11. Rock says:

    Do not fear, DC. Nothing much will change. Now it’s the Republicans turn to slop the hogs.

  12. John Burgess says:

    For a long time now, I’ve been advocating the decentralization of the federal government. With the exception of four-six cabinet level agencies–DOD, State, CIA, Justice, etc.–most agencies do not need to be in Washington. Their supported constituents are not in the DC area and could be better served with, say, Agriculture being based in Nebraska and NOAA just about anywhere.

    Spread the wealth, DC. Not only will other geographic areas thrive, but people around the country will be more in touch with the end-user of their tax dollars.

    DC as a city could make up for the shortfall in incomes by dropping their silly ‘Taxation without Representation’ nonsense and go for ‘No (federal) Taxation without Representation’. Doing away with both individual and corporate federal income taxes for those based in DC would permit the city to increase its own tax rates to 20% and end up far ahead of the game.

    Of course, that still leaves DC in the hands of easily corruptible local politicians, but that’s an issue for another day…

  13. john personna says:

    Better to put Agriculture in Arizona 😉

  14. An Interested Party says:

    “Now it’s the Republicans turn to slop the hogs.”

    Indeed! The Tea Party crowd is going to be so disappointed…

  15. DC Loser says:

    AIP – The tea partiers have already been indoctrinated in the ways of DC by throwing expensive fund raising parties with lobbyists and whining about their government provide health insurance.

  16. An Interested Party says:

    Yeah, I realize that for the actual people elected to office, but what about all those stalwart good people out there in flyover country, with their tea bags hanging from their hats and their guns strapped to their legs…the poor dears….oh well, won’t be the first time they’ve been disappointed, I’m sure…after all, I would bet that many of them strongly supported George W. Bush at one point…