Bacon's Rebellion

Democracy Thrives in Sunlight

What the Obama Giveth, the Trump Taketh Away

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by

James A. Bacon
in , , , ,

Slash and burn

The federal budget sequestration may have kept a lid on escalating federal budget deficits, a good thing, but it was a disaster for Virginia’s economy. The cap on federal spending hammered a Northern Virginia economy built largely around the Pentagon. The ascension of Donald Trump to the presidency signaled a possible return to the region’s glory days as the new president promised to increase defense spending by $50 billion.

But the president has created massive uncertainty with a vow to slash discretionary spending in civilian programs and bureaucracies. The Washington Post is all in a dither:

The cuts Trump plans to propose this week are also expected to lead to layoffs among federal workers, changes that would be felt sharply in the Washington area. According to an economic analysis by Mark Zandi, chief economist for Moody’s Analytics, the reductions outlined so far by Trump’s advisers would reduce employment in the region by 1.8 percent and personal income by 3.5 percent, and lower home prices by 1.9 percent. …

Trump’s emphasis on defense spending might provide a buffer for Northern Virginia, although, as noted previously on this blog, there are some within his administration who believe that the Pentagon civilian bureaucracy needs to be whacked down to size in order to free more resources for fighting forces. Under a serious effort to rebuild the U.S. Navy, Hampton Roads’ military bases and shipbuilders could be big beneficiaries.

We can’t say anything with certainty until Trump releases the details of his plans later this week. But at this moment in time, it looks like the new budgetary policies could be a mild plus for Virginia with boosts in defense spending offsetting cuts in other areas. Conversely, Maryland and Washington, D.C., with their large non-military exposure, could be in for a world of hurt

Adding to Washington’s woes…. The metro area’s job performance in 2016 has been revised downward. Reports the Washington Business Journal: “The D.C. region added 55,600 jobs in 2016, according to final data released Tuesday by the Bureau of Labor Statistics — about 16,800 fewer than the agency had initially counted.”

“We are talking slashing and burning several different agencies on the discretionary, non-defense side. That could have a pretty chilling effect for the local economy,” said Clifford Rossi, a professor of the practice at the Robert H. Smith School of Business at the University of Maryland-College Park.

Rossi agreed that the revised job growth numbers reveal an economy that was weaker than it originally appeared, and that the federal spending cuts proposed by Trump could have a compound effect on the regional economy.

Bacon’s bottom line:

Actually, the loss of 1.8% employment and 3.5% income is no worse than what dozens of other metros experienced in the last recession. But have compassion! Washington has never been through anything like this before.

(Hat tip: Rob Whitfield)

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7 responses to “What the Obama Giveth, the Trump Taketh Away”

  1. djrippert Avatar
    djrippert

    I remember when Jim Bacon was writing Boomergeddon. During that time I wonder what he would have said if I told him that the one man in America who might be able to avert Boomergeddon was Donald Trump. Didn’t see that one coming now did you Bac-O?

    As a life-long Northern Virginian I’d be thrilled to see Trump get his way on this one. With notable exceptions like Reston, Alexandria and Arlington we really haven’t been able to keep up with the growth. The Johnny and Jenny come lately’s are annoying as hell. If I hear one more half wit talk about how much they wish they were back home in Cleveland I’m going to pour gasoline on their lawn and light it on fire so they’ll fell like they’re looking out the front window at good old Lake Erie. The Come Lately’s can get the hell out and take their snowflake thoughts and votes with them.

    My house value will take a hit. Fine. It’ll still be worth more than when I built it. I get just enough less traffic to make driving bearable again. Total tax revenues decrease and the localities invariably have to tighten their belts. Fine. It’s about time. Less of our money gets transferred out to pay for things downstate. Fine. Those areas need to figure out how to get of the dole anyway. Some of the people who get displaced will stay and try new, non-Federal types of business. Fine. Washington is still the best educated major metro in the US – there should be plenty of talent.

    It will be 10 years of pain for Northern Virginia and the rest of the state. Fine. Hopefully, the voters will see what a shambles the Imperial Clown Show in Richmond and the elected dogs in the localities have made of things and we will finally ….

    THROW THE BUMS OUT

  2. James A. Bacon Avatar
    James A. Bacon

    I still worry about Boomergeddon. You might have missed this post.

    Deregulation is good. Tax restructuring is good. Busting up the “deep state” is good. But the Obamacare replacement will cost a lot of dough, as will increasing the defense budget and cutting taxes. Meanwhile, there’s always the possibility that Trump might ignite a trade war. Can his economic policy increase the growth rate enough to pay for all his extra spending? I won’t rule it out, but I’m dubious.

  3. LarrytheG Avatar
    LarrytheG

    well.. what can you say about folks who want to require insurance companies to cover pre-existing conditions and call it the “free market”?

    from that point on – it’s pretty much living in LA LA Land.

  4. Steve Haner Avatar
    Steve Haner

    It will indeed be interesting to watch this year play out. So far it has not disappointed. It is not likely the new administration feels any need to protect VA-MD-DC, which gave all their electoral votes to the other side. The smaller government advocates now have the votes in both chambers, have a president who has made the same promises, and have the voters who sent them there watching them intently. Failure to deliver will have consequences. I agree, the Northern Virginia economy may bear the brunt of this and if the defense boost focuses on uniforms and weapons, and not on beltway consultants, it won’t fully compensate in Virginia.

    What will be the macro economic impact over the long term? On that I might be slightly more optimistic than you, Jim.

    1. TooManyTaxes Avatar
      TooManyTaxes

      “Greater Washington’s job growth in the second half of 2016 has been revised downward and that has regional economists worried about the region’s resilience in the face of potential federal spending cuts.
      The D.C. region added 55,600 jobs in 2016, according to final data released Tuesday by the Bureau of Labor Statistics — about 16,800 fewer than the agency had initially counted. The downward revision was reflected largely in only the last few months of the year, according to economist Stephen Fuller.” http://www.bizjournals.com/washington/news/2017/03/14/greater-washington-added-fewer-jobs-in-2016-than.html?ana=e_ae_set1&s=article_du&ed=2017-03-14&u=8SPtS7ANLxTP%2BLI9HDUgLA011e94ed&t=1489520109&j=77648791

      And according to Fairfax County, most of the new jobs are low-end service jobs. And Larry, below, is quite correct, few people outside the area will shed tears for NoVA. That is until state tax revenues continue stagnant and RoVA has to raise local real estate taxes.

  5. LarrytheG Avatar
    LarrytheG

    Oh I can hear the refrain from the current folks in charge right now:

    ” we can’t fix this in 4 years”!

    and you know what? My view is that this will fly quite well among the supporters”… because a large part of their support is to simply “break up” the current system..”deep state” and all – that alone is a “success”.

    Oh and the stock mostly-rural-ish Trump supporter is going to shed zero tears if “Blue” Northern Va gets “whacked” over spending cuts!

    Their motto is ” we got screwed in this economy, now it’ s your turn”!

  6. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    This is a good post. Jim hits so many nuances, ironies, and paradoxes. As do the all the commenters.

    Like for instance, Don’s: “With notable exceptions like Reston, Alexandria and Arlington we really haven’t been able to keep up with the growth.”

    I love the paradox inherent in the title too:

    “What The Obama Giveth, the Trump Taketh Away.”

    On one level and viewpoint, how true this title. On another level and viewpoint, how false. One could just as truthfully have titled it”

    “What The Obama Taketh Away, the Trump Giveth.”

    For example: “You did not build that.” Could a US president have chosen more damaging words to deliver to a US Citizen than this effort to strip that entrepreneur of his identity along with a central achievement in his life and one of his great contributions to his community and family. Indeed with those words the US President stripped from that citizen his claim to his property, what he had built with his own time, talents and hands, at his own risk. And, in his next breath, Obama suggested that the Presidents government built that man’s business for him, so can take it away.

    Or, for another example: “You can keep your own doctor.” Could a US president have chosen more damaging words to deliver to an ailing or now healthy US Citizen, words that because they were a lie stripped that citizen of the right to make one of the most critical and important choices of any free citizen, the right to chose the physical into whose hands he will place his health and his life and livelihood critical to him and his family’s future.

    Or, for another example: “You can keep your own Health Care Insurance.” Could a US president have chosen more damaging words to deliver to a US Citizen, another lie that stripped that citizen of the right to make one of the most critical choices of any free citizen, the right to chose the means and entity that will insure his ability to pay to restore and maintain his health and that of his family health and also to insure that his family’s wealth is not drained by others who have no business interfering with his most private decisions on which so much of his personal happiness depends.

    Or, for other examples: “America is not exceptional, ad nauseam.”

    Could a US president have chosen a more damaging and never ending apology tour. Or do it while he ran endlessly for and acted as President of the United State, yet posed as a “Citizen of the World” so as to pander to all peoples and all nations as he belabored and showcased his sorrow for his litany of declared sins and harms that American and Western Civilization inflicted on others. What a show he put on for the world at large. How his people, their country and culture had damaged such noble and timeless causes and moral obligations such as World Globalism, World Multi-multiculturalism, and World Diversity, with all their special needs that America had to rectify so as to atone for America’s sins, whether they be inflicted at home or abroad against Peoples of Color, Women and their special rights, most especially young women, young college women, all well as other specially gendered people, all of them parts of an ever expanding and refined groups of victims, all seemingly helpless without Obama’s government, each and every group with ever more grievances and needs to be attended to Obama’s Government using everyone’s else money while his government deemed part of the solution to be destroying the culture, beliefs, religions, homes, history and ways of life of those groups in American paying the bill for all his good works. Hence the bad people that caused all this harm to other Obama people lose their identity and rights so as to fix the newly found hurt feelings and grievances of ever more and newer victims that Obama now declares and places under the government care.

    All this of course will insure the ever expanding supply of victims (VOTERS) with ever expanding rights ranging from wedding cakes to toilets to safe spaces to the punishment of OTHERS such as sorority girls who steal other peoples cultural artifacts like sombreros while these thieving young girls are stripped of their own culture, traditions, history, identities and sense of self worth, all of it they otherwise would hold dear are flushed down the toilet in the name of equality, diversity, and multi-multiculturalism.

    Yes its gotten his bad. And a good deal worse.

    Obama’s government even now digs in and metastasizes, spreading everywhere throughout the land, spoiling peoples local identities, their locally controlled self governments,and indeed now they must be subject most every aspect of their lives to non elected non accountable bureaucracies of all sorts in alliance with all sorts of not-profits and crony capitalists, whether they be in mountains, along the shore, in higher education or secondary school or out on the farm, or in the office or on the toilet.

    The truly Leviathan state is here and its everywhere, growing out of control, and growing ever more wasteful and incompetent. As its power grows, so does its lack to accountability and its lack of any sense of reality or restraint.

    If Trump cuts off the Leviathan state’s money and yanks out its roots, he will be giving back to America’s and its people, their history, culture, homes, freedom and wealth in ways and amounts beyond measure.

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