Washington got richer while America got poorer. The contrasting trajectories aren’t coincidental.
The Washington, DC-area has just eclipsed Silicon Valley as the most prosperous metropolitan market in the nation. The median income for DC-area households stood at $84,523 last year. Nationally, median household income was $50,046. Encircling America’s wealthiest city are America’s wealthiest counties. The three richest counties in the United States surround the nation’s capital. Nine of the top fifteen counties also reside within Washington’s neighborhood.
Why is Uncle Sam suddenly Daddy Warbucks?
As recently as the 1990s, Washington, DC distinguished itself as the “murder capital” of the United States. Now it’s the money capital. Some point to the heavy presence of lobbyists, lawyers, and politicians in the region. But when wasn’t it this way? The capital has more capital now because the federal budget has ballooned so rapidly. It took 200 years for federal spending to eclipse $1 trillion in 1987. It took just fifteen more years for it to reach $2 trillion in 2002. Just seven years later, in 2009, federal spending expanded to more than $3 trillion. And now, just two years later, a $3.8 trillion budget quickly approaches the $4 trillion benchmark.
Despite talk of spending cuts from both Congress and the White House, federal spending is actually up in 2011. The summer’s debt-ceiling agreement, and the spring’s ballyhooed Boehner budget cuts that averted a government shutdown, didn’t cut anything—at least not yet. For the first nine months of the year, Washington spent $120 billion more than what it spent for the corresponding period last year. That is a five percent increase. Just as in Greece, where public employees riot over “austerity” measures that have resulted in a 7 percent increase in state spending this year, American pundits such as economists Paul Krugman and Robert Reich decry illusory spending cuts.
It has been an era of austerity and budget cuts in America—just not in Washington. In the decade leading to Obama’s presidency, federal pay rose 58 percent. The spike has been even more dramatic the past three years. The number of federal workers making in excess of $150,000 has more than doubled during the Obama presidency. The average annual salary and benefits package for federal workers are nearly double those of their private sector counterparts. The growth of Washington-area wallets is a direct result of the growth of Washington’s budget.
The contrast of rising bureaucrat income with falling citizen income is jarring. Median household income dropped seven percent the last decade, the first decadal decline since the Census Bureau began tracking the metric more than a half-century ago. The number of Americans living in poverty is the most in two decades. Unemployment? Inflation? Deficits? Up, up, and up. In the private economy, unlike the government economy, the cuts really have been draconian.
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