Of all the post-election spin and hyperventilation about the ramifications of a new Republican majority in the House, today’s Washington Post report on the potential economic hit to the nation’s capital has to be among the most amusing. The likelihood of reductions in federal spending mean an end to the boom times in Washington DC, thanks to the heartless conservatives about to end the spending binge:
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.
But — but — but I thought the Clinton era was a beacon of economic growth! Isn’t that the era to which Democrats claim to hearken when talking about fiscal and tax policy? Only now are we hearing about the Clinton recession in the DC area, and that’s no coincidence. Republicans actually cut government growth in 1995 after taking power in the first Clinton midterms.
Now, with a new Republican majority in the House, the Post seems eager to paint it as negatively as possible. The problem with this analysis, though, is that the DC economic bubble came at the expense of the rest of the country. The Obama administration and its Democratic allies in Congress borrowed vast sums of cash to inflate this bubble, and the rest of us will be left holding the debt. That not only amounted to an unconscionable wealth transfer from the states to the Beltway, but also yet another unsupported government economic intervention, this time in the immediate geographic area of the power base.
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.