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Who Paid for Washington‘s Boom?

by Douglas Kellogg / /

In case you hadn’t noticed already with all the news over recent years about the D.C. area’s rising real estate prices, or new status as a millennial hotspot, or the city’s weathering of the recession, the Washington Post’s feature story on the beltway’s decade-long boom should bring the point home.

Certainly there are other regions that have done just fine during the “Great Recession”, an oil and gas boom in North Dakota has created thousands of jobs, while Texas has worked to maintain a friendly business environment, fostering new business, and snagging existing businesses from tax-heavy states like California.

Yet, these states earned that growth, Washington, D.C. has a better trick: let someone else earn it. Thus, as the Post points out, government spending and power fueled this growth in the District, and that means taxpayers.

The Post writes:

“Two forces triggered the boom.

“The share of money the government spent on weapons and other hardware shrank as service contracts nearly tripled in value. At the peak in 2010, companies based in Rep. James Moran's congressional district in Northern Virginia reaped $43 billion in federal contracts — roughly as much as the state of Texas.

“At the same time, big companies realized that a few million spent shaping legislation could produce windfall profits. They nearly doubled the cash they poured into the capital.”

Since 2000, and including 2013 projected revenue, the federal government has taken in $31 trillion in revenue – still managing to run a deficit all but two of those years… It won’t comfort taxpayers much that another $8.2 trillion was thrown on to the credit card after the last surplus in ‘01.

The long and short of it is that while D.C. has been living it up, taxpayers throughout the rest of the country have provided the backing for the good times being doled out through federal contracts, not to mention rising costs for government workers and programs like the stimulus.

The increase in lobbying expenditures may seem less connected to the direct flow of cash into Washington at first glance, but it is clearly no coincidence that a growing government would offer more opportunity – or require it from any business reluctant to take part – for lobbying.

We all pay the price for a system that is increasingly based on power and favor trading, rather than fostering a market system that truly responds to the needs of individuals.

The Post takes a somewhat optimistic track on how cottage industry built around this spending boom may lead to new private sector-only entrepreneurship. But will the taxpayers who provided a decade of seed money while dealing with a struggling economy see any return on that “investment”?

It’s an unwieldy example, however, it’s worth remembering that in the old Soviet Union the big cities starved the countryside to insulate themselves from the country’s economic failures (heck even in the currently-popular Hunger Games series we see a capital city’s excess maintained on the backs of an oppressed outer population).

That’s not to suggest that’s precisely what’s happening, those examples and more simply illustrate why this sort of trend is worth keeping a cautious eye on.