Trump’s pro­posed bud­get could plunge D.C. into re­ces­sion

Thou­sands of jobs at risk with cuts

The Washington Times Daily - - METRO - BY BEN NUCKOLS

The boom­ing Washington re­gion has long been an easy tar­get for Repub­li­can law­mak­ers who want to cut fed­eral spend­ing. Last year, a GOP con­gress­man from Iowa tweeted a pic­ture of construction cranes on the wa­ter­front south of the Capi­tol with the com­ment, “D.C. needs a re­ces­sion.”

In the un­likely event that Congress ap­proves Pres­i­dent Trump’s bud­get pro­posal, Washington could get one.

Mr. Trump has pro­posed deep spend­ing cuts at nearly ev­ery fed­eral agency other than the De­fense De­part­ment and elim­i­nat­ing 19 in­de­pen­dent agen­cies al­to­gether.

Although his bud­get has lit­tle chance of be­ing en­acted, it of­fers a glimpse into the pri­or­i­ties of Mr. Trump and his ad­vis­ers, in­clud­ing chief strate­gist Steve Ban­non, who has pledged the “de­con­struc­tion of the ad­min­is­tra­tive state.”

While many of the tar­geted fed­eral agen­cies have of­fices out­side Washington, Mr. Trump’s dream bud­get would hit the re­gion dis­pro­por­tion­ately, with tens of thou­sands of jobs at risk.

The cuts would be felt through­out the city, with fewer peo­ple rid­ing the al­ready be­lea­guered Metro sub­way or eat­ing at restau­rants. It also would hurt Washington’s al­ready-shaky mar­ket for of­fice space.

Econ­o­mist Stephen Fuller of Ge­orge Ma­son Univer­sity, who has stud­ied the re­gional econ­omy for decades, es­ti­mated 20,000-24,000 fed­eral em­ploy­ees and 10,000 fed­eral con­trac­tors would lose their jobs un­der Mr. Trump’s pro­posal. That equates to 5 per­cent of fed­eral work­ers in the re­gion.

With those work­ers earn­ing an av­er­age salary of $111,000, the job losses would mean more than $2.2 bil­lion in lost wages, Mr. Fuller said. That would re­ver­ber­ate around the city.

“These are ba­si­cally shut­ting agen­cies down whose prin­ci­pal con­tri­bu­tion to the Washington econ­omy is jobs,” Mr. Fuller said. “These are re­ally good jobs. The av­er­age job in a restau­rant [pays] $28,000. You’ve got to cre­ate a lot of restau­rant jobs to re­place one of these.”

Washington has come a long way since the 1980s, when it was dubbed the na­tion’s mur­der cap­i­tal amid a crack­co­caine epi­demic, and the mid-1990s, when the lo­cal gov­ern­ment went bankrupt and Congress took over the city’s day-to-day op­er­a­tions.

Yesim Sayin Tay­lor, ex­ec­u­tive di­rec­tor of the pro-busi­ness D.C. Pol­icy Cen­ter, said ma­jor fed­eral job cuts trig­gered that fis­cal cri­sis, show­ing the city can ex­pe­ri­ence a “fed­er­ally en­gi­neered re­ces­sion.” She be­lieves Mr. Trump’s bud­get could spark a sim­i­lar re­ces­sion.

Fed­eral spend­ing in­creases after Sept. 11, 2001, helped re­vive the city’s econ­omy, and Washington was largely in­su­lated from the im­pact of the Great Re­ces­sion be­cause new fed­eral spend­ing made up for the re­gion’s pri­vate-sec­tor job losses, Ms. Tay­lor said.

Of the 19 agen­cies that Mr. Trump wants to elim­i­nate, 16 are head­quar­tered in Washington, and an­other is just across the river in Ar­ling­ton, Vir­ginia. Most of the of­fices are clus­tered around down­town.

Agen­cies on the chop­ping block in­clude the Na­tional En­dow­ment for the Arts, the Na­tional En­dow­ment for the Hu­man­i­ties and the U.S. In­sti­tute for Peace, which has a strik­ing head­quar­ters that was com­pleted just six years ago near the Lin­coln Me­mo­rial.

A loss of 10,000 fed­eral jobs head­quar­tered in Washington would trans­late into at least 1.5 mil­lion square feet of va­cant of­fice space, Mr. Fuller said.

“That’s a lot of space, and no­body’s lin­ing up to take it be­cause the pri­vate sec­tor’s con­tract­ing,” Mr. Fuller said. “It sends out the mes­sage — if I were the mayor, I would be con­cerned — that we’re not open for busi­ness. We’re a com­pany town and our core busi­ness is shrink­ing. What mes­sage does that send out to other in­vestors and busi­nesses?”

Washington’s pop­u­la­tion is 48 per­cent black, and African-Amer­i­cans in the area could be dis­pro­por­tion­ately af­fected by the cuts. Earn­ing gaps be­tween whites and blacks in the fed­eral work­force are smaller than in the gen­eral pop­u­la­tion, Ms. Tay­lor said.

“The fed­eral gov­ern­ment is an im­por­tant source of high-pay­ing jobs for the African-Amer­i­can com­mu­nity in the Metro re­gion,” Ms. Tay­lor said.

Metro, too, could feel the sting. The tran­sit agency has been be­set by re­li­a­bil­ity is­sues, and rid­er­ship has been de­clin­ing since 2009. The sys­tem’s board of di­rec­tors re­cently agreed to raise fares, re­duce ser­vice and lay off em­ploy­ees to bal­ance this year’s bud­get, and a con­tin­ued drop in rid­er­ship would mean an­other round of painful cut­backs next year, a cy­cle many of­fi­cials have re­ferred to as a “death spi­ral.”

Demo­cratic Mayor Muriel Bowser’s ad­min­is­tra­tion re­leased fig­ures last month say­ing the city has iden­ti­fied $103 mil­lion in fed­eral fund­ing to lo­cal pro­grams that would dis­ap­pear un­der Mr. Trump’s bud­get. The city is an­a­lyz­ing what the pro­posal would mean for lo­cal tax rev­enues, but that, too, is ex­pected to be sig­nif­i­cant.

“It’s go­ing to be a dou­ble whammy on the fis­cal side at the lo­cal level,” Mr. Fuller said.

Fewer work­ers with less buy­ing power would hurt the city’s restau­rant in­dus­try. While Mr. Trump has said there are few good restau­rants in Washington, the city has in fact be­come an in­ter­na­tional din­ing des­ti­na­tion in the past decade.

“The restau­rant and food ser­vice in­dus­try in Washington has ex­panded sig­nif­i­cantly in re­cent years, gar­ner­ing much-de­served at­ten­tion from Bon Ap­pétit, Miche­lin and Za­gat,” said Kathy Hollinger, pres­i­dent of the Restau­rant As­so­ci­a­tion of Metropoli­tan Washington. “If fed­eral jobs are lost, it will shrink the pool of din­ers and ul­ti­mately re­sult in re­duced busi­ness for lo­cal restau­rants that rely on neigh­bor­ing fed­eral of­fices to fill their din­ing rooms.”

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.