Defense-heavy D.C. area will feel economic hit most
Because of the burgeoning post 9/11 intelligence and military ramp up, Northern Virginia didn’t really feel the Great Recession. But economists expect the state to go into recession as sequestration bites into defense.
The New York Times
ARLINGTON, Va. — To listen to the human side of sequestration, wait in line here for the 595 bus to Reston, Va., a journey across a suburbia grown fat and happy on a federal spending boom in the past decade, primarily military.
While the rest of the country experienced a corrosive recession, unemployment in Arlington County, home of the Pentagon, never rose above 5 percent. Nearby Fairfax County, with a cyberintelligence industry that took off after 9/11, gorged on government contracts to private companies.
“It was easy, and people got comfortable,” said Stephen Fuller of George Mason University, an expert on the regional economy. “They haven’t come to terms with the fact it isn’t going to be as easy.”
The Washington, D.C., metropolitan area, especially Northern Virginia, is in line to experience the largest economic hit of any region from the $85 billion in spending cuts that President Obama made official late Friday.
Because the automatic cuts, known as sequestration, fall unevenly across the country, many Americans are greeting them with a shrug. Their nonchalance is heightened because the 2.4 percent lopped from a federal budget of $3.55 trillion is relatively small and will not happen all at once. Moreover, congressional Republicans have accused the White House of exaggerating the impact for political gain.
But in Northern Virginia the cuts will be deeply felt, economists said, assuming that there is no political deal to undo them, a dimming prospect. A White House official said the Defense Department would furlough 90,000 civilian employees based in Virginia, the most of any state, reducing their salaries by 20 percent this year.
The ripple effect, as those employees pare expenses, put off car purchases and delay buying a home, is expected to be large. Some economists predict that Virginia will slip into recession.
“No more movies, no more out-to-dinners, no more fun,” Robin Roberts, a civilian budget employee in the Defense Department, said as she waited for the 595 outside the Pentagon for the ride home. She and her husband, who is retired, have canceled their summer vacation. They switched to a cheaper phone plan. “It’s just pay the mortgage, pay the utilities, no more frills,” Roberts said.
Americans far from Washington who say government spending is reckless and unsustainable may not shed a tear for its suburban counties, six of which are among the 10 richest in the country, according to the census. But that prosperity has largely rained down on government contractors Federal employees, especially younger ones, depend on their middle-class wages.
“Most of my paycheck goes toward child care,” said Sarah Stein, another rider of the 595. “We’ve cut out what we can cut, and we’re going to be in trouble.”
Stein’s husband lost a job two years ago and now works for much less repairing automobile wheels. Stein said she earned $64,000 in a civilian Pentagon job and pays $24,000 in child care for her two daughters, ages 3 years and 10 months.
The Pentagon has told civilian employees to plan on taking 22 days off without pay, about one a week, from late April through September. Stein said she would not be able to save on child care even on the days she is home.
“We still have to pay for five days a week, whether we go or not,” she said. “People are just very worried.”
The Center for Regional Analysis estimates that federal spending drives 37 percent of the Northern Virginia economy, largely spending on private contractors that soared in the past decade.
“It was mostly on the war on terrorism,” said Fuller, the director of the center. “It was a spending bubble that made this economy grow 2 percentage points faster than the national economy, and Northern Virginia got most of it.”
But as the federal government began cutting back two years ago — with foreign wars winding down and congressional Republicans fighting spending — a regional slowdown that followed may be a taste of the future.
Virginia employment rose in December by only 0.8 percent, half the growth in the nation as a whole, said Christine Chmura, an economist in Richmond.
“If the sequester occurs as it’s currently stated, I would expect the state of Virginia to go into a recession,” she said.
The Pentagon’s share of the cuts is the largest of any federal department. Robert Hale, an undersecretary of defense, said on Feb. 20 that the Pentagon would cut $4 billion to $5 billion through civilian furloughs and $40 billion in purchases from the private sector.
Some business owners and people facing furloughs said the cuts were manageable, even a good thing. Moe Jafari, whose company Human Touch in McLean does technology work for the military, said he saw a new cost-consciousness in the government that pleased him.
“They’re looking at budgets that are not unlimited,” said Jafari, whose contracting includes work for the Space and Naval Warfare Systems Center in Charleston, S.C. “We see the government for the first time having discussions with us in ways we never thought. They’re looking at saving money. They’re starting to act like businesses.”
Even some government employees facing furloughs spoke of the 20 percent dock in salary as a sacrifice to a greater good. “The rest of the country is suffering and needs help; this is the least we can do,” said Mort Anvari, a civilian employee of the Army. “I can make it.”
He and others who said they could manage their lower earnings were older, with personal savings and without children to support.
Mary Ann Fortana, who works for the secretary of the Air Force, said, “We older ones feel — at least I do — to help the country, it’s fine.” But, “The real worry are the young ones,” she added, lower on the government pay scale and living paycheck to paycheck.
Matthew Bourke, a public affairs specialist with the Army, fits that description. He is looking for a part-time job to make up the loss to his salary. “I’m talking the restaurant business, a server, a food runner, anything,” he said. He applied to be a cashier at Harris Teeter, a grocery chain.
“If you know something, let me know,” he said before jumping on his bus.