It’s bad enough that the apparent collapse of plans for a new headquarters for the Department of Homeland Security in Southeast marks a major setback for the District.
The city was counting on the DHS project to deliver a jolt of economic energy to some of its poorest neighborhoods east of the Anacostia River.
To make matters worse, the reversal also offers an ominous lesson for the entire Washington area: We cannot trust the federal government any longer to underwrite our prosperity.
Blame it on the tea party and obstructionists in Congress, if you’re liberal. Blame it on the deficit and incompetent bureaucrats, if you’re conservative.
Regardless of who or what is responsible, the fact is that slowed federal spending has become a drag on our local economy — and seems likely to remain so for some time.
The fate of the DHS plan is a symptom of the broader ailment. It was originally touted as the most ambitious federal construction effort in our region since the Pentagon.
More than 50 buildings were to be renovated or built from scratch. They were to house 14,000 employees on the historic grounds of the former St. Elizabeths mental hospital.
It’s not happening. My Washington Post colleague Jerry Markon reported Wednesday that Congress has no appetite for finishing the job, which it just barely started. It’s $1.5 billion over budget and more than a decade overdue.
The plan fell victim to Capitol Hill gridlock (infuriating) and a desire to restrain spending (understandable). The same factors have also combined to shrink the federal workforce in our region each month for 36 straight months.
It’s been easy for the public to overlook this new structural weakness. The District’s population is growing, and there’s still life in the downtown construction boom.
But the federal retrenchment is a prime discussion topic for local business leaders and analysts. They’re concerned that Northern Virginia has acres of empty office space, and that low-wage retail jobs are replacing good-paying government ones.
The trend also has spawned an important debate over whether the region is doing enough to respond.
Steve Fuller, our region’s best-known economics guru, thinks we’re too complacent. He says that local governments and chambers of commerce should do more to attract private industry to offset the federal decline.
The drop in federal jobs is “awful — it’s a bloodbath,” said Fuller, director of the Center for Regional Analysis at George Mason University.
Total federal employment in our region has dropped by more than 20,000 jobs since the peak in 2010. Fuller projects that it will drop by an additional 20,000 in five years.
“I’ve been trying to get people to pay attention to the consequences of the federal cutbacks and the sequester,” Fuller said. “I think people are sitting around waiting, still in denial. Nobody is looking to a new future. They’re waiting for federal spending to come back.”
But Jim Dinegar, chief executive of the Greater Washington Board of Trade, said Fuller was overly pessimistic.
Fuller is “a very bright guy” but has an “alarmist approach,” Dinegar said. “He’s missing a lot of the bigger picture and a lot of the opportunities.”
Dinegar contended that local private industry was growing or attracting investment in several sectors including media, hospitality, law and cybersecurity. He pointed to the recent purchase of Pepco by Chicago-based Exelon, and of The Washington Post by Amazon founder Jeff Bezos.
“We’re attracting the best and the brightest to purchase here and merge here,” Dinegar said.
I hope Dinegar’s right, but the numbers cited by Fuller look foreboding. In 2013, he noted, the Washington area’s economy grew by one-half percent — or less than a third of the 1.9 percent growth rate for the nation as a whole.
We’re not used to trailing the country that way.
In the District, union leaders and neighborhood activists were despondent over the DHS project.
“A lot of people in D.C. were really hoping on that one,” said Stephen Courtien, business and legislative representative of the city’s Building Trades Council, which represents 25,000 construction workers.
The jobs at St. Elizabeths paid an average of $27 an hour, with benefits. The unions were hoping to use the project to train unemployed District residents in skilled crafts.
Rev. Anthony Motley, chief executive of the Inner Thoughts community group, was disappointed at the federal cost overrun.
“We could have done a lot with that $1.5 billion — housing the homeless, feeding the hungry, providing programs that increase home ownership,” he said.
For previous columns, go to washingtonpost.com/mccartney.