Could the Bloom be off D.C.'s Boom?

Annie Lowrey looks at how the taxpayer funded expansion of private contracting for the federal government turned D.C. from "national embarrassment" to creative class hot spot, and why those boom days may be coming to an end.

Lowrey traces Washington D.C.'s decade of boom (the area's population grew by 650,000 between 2000-2010) even further back, to the privatization of public projects inaugurated during the Reagan Revolution, and to your paycheck. Although during the Reagan and Clinton years this transformation picked up steam, "[i]t was not until the Bush years...that this increasingly wealthy not-federal-but-still-government work force truly metastasized," notes Lowrey. "The amorphous war on terror and the creation of the Department of Homeland Security — plus the wars in Afghanistan and Iraq — bloated the country’s spending by about $1 trillion. The contracting dollars that were pumped into the local economy, [Stephen Fuller, a professor of public policy at George Mason University] says, more than doubled between 2000 and 2010, when it reached $80 billion a year. This, in turn, created hundreds of thousand of desk jobs and fostered a sprawl of nameless, faceless office parks lining the roads out to Dulles Airport."

"In the process, tens of thousands of new workers, often well-paid young white-collar professionals in areas like technology, bioscience and engineering, also entered the local economy....The growth has arrived in something like concentric circles. Increased government spending has bumped up the region’s human capital, drawing other businesses, from technology to medicine to hospitality."

However, with 40 percent of the regional economy dependent on federal spending, looming defense cuts and the $1.2 trillion in budget cuts known as the "sequester" may bring an end to the party. "It is not hard to imagine how this marked decrease in federal spending might ripple through the regional economy," says Lowrey. "Scant job growth will mean lower wages, meaning slower consumer spending, meaning less demand for new bars and clubs and stores and luxury apartments. But just how deeply this will affect the economy is unclear."

Full Story: Washington’s Economic Boom, Financed by You

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