Bacon's Rebellion

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Trump Budget Bullet Barely Grazes NoVa

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by

James A. Bacon
in , ,

President Trump’s proposed budget would cost the Washington metropolitan region up to 24,600 jobs and billions in lost salaries and procurement spending, according to a new analysis by regional economist Stephen Fuller.

But Washington’s Virginia suburbs would get off easier than Maryland and the District of Columbia, reports the Washington Business Journal. The district would lose 14,000 to 15,000 jobs and Maryland would lose 5,500 to 6,000. But in Northern Virginia, where cuts to the federal bureaucracy would be partially offset by an increase in defense spending, would lose only 500 to 3,600 jobs.

Overall federal spending in the Washington region would drop between $4.2 billion to $5 billion, reducing growth in the region’s gross domestic product by 1%. If GDP tracks job losses, the impact on Northern Virginia will be even milder.

Bacon’s bottom line: Trump’s budget will not be enacted as submitted. Congress will tinker, undoubtedly sparing some non-defense programs on Trump’s chopping block. (I’m rooting for preservation of funds for Chesapeake Bay restoration.) But assuming that Fuller’s projections are in the ballpark, it doesn’t look like Virginia has much to worry about. The loss of 500 to 3,600 jobs in Northern Virginia’s dynamic economy will cause no more than a burp in growth.

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9 responses to “Trump Budget Bullet Barely Grazes NoVa”

  1. LarrytheG Avatar
    LarrytheG

    If the GOP is true to their words – they’re not going to increase the deficit.

    And if you believe the TRump budget and the GOP leadership words – they’re going to shift money in the existing budget rather than increase it and add to the deficit.

    IF they do that – and I do have my doubts, but if they do – it’s merely abolishing some jobs.. and adding new ones and it may not allocate out geographically in the same way.

    for instance, if we get more DOD jobs – we may lose non-DOD jobs.

    If we increase defense spending but we fund it by cutting MedicAid – that means a reduction in health-care providers that are reimbursed by MedicAid.

    I’m not arguing pro or con at this point – only suggesting that we do recognize that 90+% of the Federal budget is for salaries of personnel.. whether it be direct for govt employees/soldiers or for money spent on services – like medical services for Medicare and MedicAid that goes to providers – jobs.

    Virginia gets it’s share of the DOD and MedicAid jobs. Medicaid funding is the number two item in our Virginia budget and that money is 1/2 from the Feds and 1/2 from us and while we think of it as going to people as entitlements – where it is actually going is to pay providers for giving medical services to those who are getting MedicAid.

    If the Feds cut Medicaid and give that money to DOD – we’re going to receive a lot less money for Medicaid – and in turn money that would have been used to pay providers for medical services to those on MedicAid. That means a lot less medical providers in the areas of Virginia that have significant populations of people who currently rely on MedicAid for their care.

    That’s kids , moms, the handicapped, and the elderly in nursing homes.
    the jobs that provide services to these folks will go away.

    Again -not arguing pro or con – only that we do recognize what happens if we move money from Entitlements to DOD such that we do not increase the deficit.

  2. LarrytheG Avatar
    LarrytheG

    so.. in terms of dollars.. how much is spent on MedicAid in Va versus how much is spent on DOD ?

    Here’s DOD (2014): $53.0 billion 246,553 jobs <——–

    Defense spending was $59.6 billion or 13% of gross state product
    Military spending accounts for 44% of federal spending in Virginia

    Total Medicaid spending in Va = 8 billion

    back of the envelope :
    8 billion / $75,000 per job = 100,000 jobs <——

    http://kff.org/medicaid/state-indicator/total-medicaid-spending/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D

  3. TBill Avatar
    TBill

    According to WTOP, last week the FBI was supposed to announce their selected location (MD vs. VA) for the new FBI Headquarters. No such announcement was made however. There was no comment from VA but some MD politicians said MD was to be the choice. But I am wondering if the shifting tides in Washington bode well for NoVA in this regard.

  4. LarrytheG Avatar
    LarrytheG

    Virginia will lose 1.8 billion over 6 years if Medicaid is block-granted , according to an analysis from the State’s Secretary of Health and Human Resources.

    300 million is about 4000-5000 jobs which maybe might be offset by increases in jobs to DOD (in NoVa/Hampton) and/or putting the FBI in NoVa but either way – it’s likely that NoVa will end up paying the lions share of MedicAid costs in Va since it represents much or it’s economy.

  5. Steve Haner Avatar
    Steve Haner

    Any president’s budget, even if he is the same party as a majority in Congress, is at best a starting point and the editing starts immediately. These days it will be impressive enough if Congress can agree at all on a budget resolution and then abide by it with appropriations bills passed on time. Still working under a CR at this point for this fiscal year as I recall….

  6. Peter Galuszka Avatar
    Peter Galuszka

    Guess it depends on which economist you read:

    http://www.loudountimes.com/news/article/economist_proposed_trump_budget_could_cost_northern_virginia_up_to_10000_jo

    1. James A. Bacon Avatar
      James A. Bacon

      Yeah, I saw that. I guess it does depend on which economist you read.

  7. djrippert Avatar
    djrippert

    Reading what gets written on Baconsrebellion makes me wonder if President Trump wants to build a wall between the US and Mexico or between NoVa and Md / DC.

    Jobs lost in Maryland and DC will lower the value of real estate across the Washington metropolitan area. This will lower local tax receipts including the high percentage of those taxes sluiced from NoVa to elsewhere in Virginia. The last time this happened and the money flow slowed McDonnell raided the rainy day fund rather than follow the allocation formulae.

    Jobs lost in Maryland and DC will result in an increase in the metropolitan unemployment rate. Some of those people will take jobs in Virginia possibly raising the Virginia unemployment rate.

    NoVa is intrinsically linked to the rest of the Washngton DC metropolitan area. The idea that problems in DC and Maryland won’t affect NoVa is wishful thunking in my opinion.

    1. James A. Bacon Avatar
      James A. Bacon

      I’m just going on what Stephen Fuller said. Like Peter observed above, if you don’t like that economist, there are others who reach different conclusions!

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