Fiscal Cliff (lets keep this apolitical) (Arlington, Fairfax: sale, 2013, home)

[VTHokieFan]

According to this table from WaPo, we're looking at $55 billion in federal cuts next year, including $30 billion in defense spending. Since this entire metro area's economy is basically engined by the Federal Government, there is a huge multiplier effect (compared to other metro areas) from just a small cut (Bob works for the Pentagon, he gets paid by the Feds, he uses his income goes to buy groceries at Harris Teeter. This income pays the cashier at Harris Teeter. The cashier gets paid and he goes to Best Buy to purchase a DVD, which sale funds the employment of the Best Buy employee, etc. etc.).

What do you think the impact will be of these cuts will be on the area's economy if they go through? Even if a small portion, say 5 billion of that 55 billion only applies to the DC area, that's a lot of dough sucked out of the local economy even without a multiplier effect.

Thoughts?

[tysonsengineer]

Big, which is why I keep insisting that we can no longer sustain NOVA on federal money. We have done well in diversifying to one off consultants (accounting, legal, etc) but non-federal associated employment makes up only 50% of the work force in Fairfax/Arlington/Loudoun and as you said the other 50% is dependent on that federal money continuing to pay their clients.

We have done well in spreading out to health care services (INova/Kaiser/Biotech research) and we are doing well in diversifying into financials/banking (Cardinal Bank and Capital One to name a few) but unfortunately if you are an Aerospace Engineer, Defense IT, or other technical field for the Feds there aren't many other private companies out there looking for their expertise (ie unemployment will likely increase in this area in 2013 due to this).

Its really unfortunate that so much hardship will be encountered from this, but I gotta say the Federal Government should not be an employment program, it should be a system to govern the central functions of our country. As a federal consultant I am worried, but worst case scenario I know my education and hard work will find me something.

I wish that for that hardship the GOP would concede a marginal change to the taxes for those making greater than 250k back to the Clinton levels and stop this insane GW Bush policy that got us here, but I guess thats me getting political (you know talking about compromise and all).

PS let me go on the record as saying if this trend continues Grover Norquist might go down as one of the biggest villains in our Countrys short history.

[CAVA1990]

I doubt you'll see much impact. These things generally get worked out since there are a lot of inside players with a huge stake in the status quo. Phone calls will be made.

[Darkseid]

And this is exactly why I am dubious of these continued projections for growth in the area - particularly the exurbs. The gov't spending - especially defense spending - that has fueled the growth in this area can not continue, and I don't think that it will regardless of who wins in November.

[Caladium]

Originally Posted by CAVA1990

I doubt you'll see much impact. These things generally get worked out since there are a lot of inside players with a huge stake in the status quo. Phone calls will be made.

Yup. Doesn't matter who gets elected.
Big wheel keeps on turning'. Proud Mary keeps on burning... Rollin', rollin', rollin' down the river....

[ChristineVA]

Originally Posted by Caladium

Yup. Doesn't matter who gets elected.
Big wheel keeps on turning'. Proud Mary keeps on burning... Rollin', rollin', rollin' down the river....

I agree. Until there is a total shake-up in both sides of Congress where every member of Congress is not in the pocket book of defense, you will see no changes.

[johnsonkk]

It is probable that defense spending will decrease after November and combined tax increases will also help make a small dent but overall (OP calls it a fiscal cliff) government spending is what is driving off the cliff. Far more is spent on home bailout programs, medicare, medicaid, unemployment, food stamps, subsidized housing and pet programs by our elected officials. I'm sure when NoVA feels the effect of reduced defense spending, it will be for naught without significant reduction in other federal spending.

[CAVA1990]

Originally Posted by johnsonkk

It is probable that defense spending will decrease after November and combined tax increases will also help make a small dent but overall (OP calls it a fiscal cliff) government spending is what is driving off the cliff. Far more is spent on home bailout programs, medicare, medicaid, unemployment, food stamps, subsidized housing and pet programs by our elected officials. I'm sure when NoVA feels the effect of reduced defense spending, it will be for naught without significant reduction in other federal spending.

The economy will recover and there will be no cliff. It's not government spending that's the problem as that's remained pretty flat over the past few years but is instead reduced tax revenues from a slow economy that's deleveraging. We'll work through that and consumer spending and tax collections will return to normal levels. Enough with the Chicken Little histrionics that only serves short term political aims.

[tysonsengineer]

Thats actually a good fact to point out Cava, federal spending growth is the slowest since before Eisenhower (something missed by many in the GOP) at 2%. If you listen to Romneys ads it would make you believe that spending jumped in double digits as those crazy liberals are "spending us to bankruptcy". Truth is, Bush was the only president in the past 25 years to grow spending in double digits... and was smart enough to do so at the same time as reducing tax revenue...

How did we get here again?

[VTHokieFan]

Originally Posted by CAVA1990

The economy will recover and there will be no cliff. It's not government spending that's the problem as that's remained pretty flat over the past few years but is instead reduced tax revenues from a slow economy that's deleveraging. We'll work through that and consumer spending and tax collections will return to normal levels. Enough with the Chicken Little histrionics that only serves short term political aims.

You just had to do it and try to ninja to political economics. Point is, Cava, the LAW states 55 billion will be cut. IF it goes through, what is the impact on the area. Lets stay on topic.